Recommendations for getting the most out of Austin’s proposed CodeNEXT density bonus program

The CodeNEXT Density Bonus is a remarkable opportunity to achieve greater ethnic, racial and economic diversity and integration in Austin. If implemented correctly, the program has the potential to put affordable units on the ground both in areas where lower income people are trying to stay in place and in racially and economically segregated high-opportunity areas where low income people of color have never been able to choose to live.

I have long been concerned about the lack of opportunity for low income people of color to live in Austin’s well-serviced areas, and about the involuntary displacement of such families from historic neighborhoods. I was the principal author of the City of Austin Human Relations Commission’s Housing Patterns Study: Segregation and Discrimination in Austin, Texas in 1979. In the 1980s and ’90s I worked for several African-American and Hispanic neighborhood associations to establish and oversee affordable housing development through nonprofit, neighborhood-based community development corporations (Clarksville, Guadalupe, Blackshear, Blackland, Robertson Hill and Montopolis). I’ve been the co-director of Texas Low Income Housing Information Service since 1988. Over my 43 years working in affordable housing, fair housing and low income community development I have come to understand the critical importance of expanding housing opportunities for lower-income people of color in quality neighborhoods of their choice.

My experience has taught me that Austin has an affordability problem and a problem of racial and economic segregation, but most of the attention has been directed at the former. Any equitable public program must address our city’s historic challenge of racial discrimination and segregation, a problem greatly magnified in the lives of people of color living with lower incomes.

It is the poor – families earning less than 30 percent of area median income – who suffer the most from our city’s affordability problem. According to the National Low Income Housing Coalition, 81 percent of Austin-area renter households in this income bracket spend at least half of their income on housing costs, compared to just 2 percent of those earning the median. In the Austin area there are only 20 affordable and available rental housing units for every 100 families earning at or below 30 percent of median income, and just 41 for every 100 households at 50 percent of median. For families earning 80 percent of the median there are 97 units per 100 households, and at median income there is actually a small surplus of 105 rental units per 100 households.

Yet the current CodeNEXT density bonus units targets households at 60 percent of area median income. This does nothing to help those lowest income households with the greatest rent burden and the largest affordable housing deficit. I understand that a market-based density bonus can only produce so much affordability. But these numbers tell us that we have to look to layering other forms of subsidy on top of density bonus.

It is critically important that developers receiving density bonuses must not be permitted to discriminate in any way against people with Housing Choice Vouchers and other subsidies, in any of the units for the life of the development, including a ban on exclusionary practices such as minimum income requirements. These exclusions are prohibited under the rules of our state housing agency for recipients of Low income Housing Tax Credits, and the City of Austin should apply the same rules to density bonuses.

The map analysis above details the likely impact of the current CodeNEXT density bonus proposal. Based on its findings, I have six concerns and 14 recommendations that I have shared with city leaders. Our objective should be to ensure the density bonus program offers low income Austinites of color both the right to stay in their traditional neighborhoods by preventing involuntary economic displacement, and the right to choose to live in whatever neighborhood best meets their family’s needs. The latter includes neighborhoods that have traditionally been unavailable to low income people of color, people with disabilities and people generally in need of affordable housing.

Concern #1: Austin’s density bonus program must apply throughout the city and especially in council districts with less than their fair share of government-subsidized affordable housing units. Western council districts 5, 6, 7, 8 and 10 especially need every tool at their disposal to increase opportunity for low income people of color. However:

• West, central and central-north neighborhoods are largely exempt from the density bonus and any “missing middle” opportunities in CodeNEXT.
• Residential/mixed-use zones that offer a density bonus are largely missing in high-opportunity Imagine Austin centers, especially west of the Mopac Expressway. If these zones are where the City hopes to concentrate amenities and jobs, we should provide the option of affordable housing and centers in the areas west of Mopac.

Recommendation #1: If the density bonus will only be offered for the multiplex housing type in residential zoning categories, we need to ensure required lot widths and depths for this housing type in CodeNEXT match what has been mapped T4 in order to maximize opportunity to produce affordable units. Consider mapping more neighborhoods T4 or offering this housing type in more residential zoning categories.

Recommendation #2: Consider permitting additional housing types to apply the density bonus in more neighborhoods.

Concern #2: The density bonus program should leverage the skill and momentum of private developers to see that affordable units are built at the same time as market rate units. According to the Austin Strategic Housing Blueprint, in the next 10 years the city needs about 25,000 homes for households earning 30 to 60 percent of median income. We should try to minimize the participation of developers in alternatives to building on- and off-site affordable units. There are higher present values and cost efficiencies when the affordable development happens immediately, rather than after funds or land are transferred to a City program that will utilize these resources later. Private developer decisions on where market rate housing is constructed are driven by demand and market analysis. We should recognize this and seek to secure affordable housing integrated into market rate developments in high-demand locations.

Recommendation #3: Discourage developers from participating in the program in ways other than providing on-site affordable housing units. Especially discourage land dedication and fee-in-lieu.

Recommendation #4: The City should emphasize that developers are prohibited from securing density bonuses for dedicating land in the ETJ for affordable housing. The challenge before us is to make existing Austin neighborhoods affordable and more integrated.

Recommendation #5: Require land dedication to be within one mile of the development seeking the density bonus or in an area of “high opportunity” as determined by the City’s fair housing analysis and plan.

Concern #3: Those administering affordable units must target tenants not only based on economic status, but also monitor and affirmatively market to people of color and other protected classes to achieve racial, ethnic and ability inclusion. The monitoring of affordable units should report race, ethnicity and disability status as well as income and family status, just as the State requires of its fund recipients.

Recommendation #6: A robust and specific affirmative marketing and outreach plan for all density bonus units, based on federal best practices, should be required of all developments participating in the program. The City should establish baseline marketing criteria and adjust this criteria at least every five years through a public process.

Recommendation #7: Vacancies in affordable units should be affirmatively marketed to low income people of color and other protected classes in a manner that produces results. The City should establish the equivalent of the State of Texas Housing Sponsor Report to collect and report demographic and economic data from participating properties.

Recommendation #8: The City should contract with a certified fair housing testing organization, such as the Austin Tenants Council, to monitor and strategically test housing sponsors for compliance with the program rules and to ensure compliance with nondiscrimination laws.

Recommendation #9: The City should set up and adhere to  fair and public process for announcing and marketing vacancies, consistent with the development’s affirmative marketing plan.

Concern #4: Participation in the density bonus program must be designed to produce affordable units in high opportunity area, with the objective of increasing racial, ethnic and income diversity across all Austin neighborhoods. The City must publicly report where units are being built and their affordability levels. Special attention should be paid to affordable housing deficits in high opportunity areas and additional public subsidies, zoning and land use considerations directed at addressing deficits of such housing in specific council districts.

Recommendation #10: The City housing department should prepare an annual report of affordable housing production, pegged to fair share housing affordability goals across each council district including but not limited to:

• Number of units built,
• Number of units built on site vs land being proposed by developer and its geographic location,
• Number of units built in each income affordability category, and
• Density bonus participation (and method of participation) in high opportunity areas.

Recommendation #11: Establish a program to encourage and reward neighborhood associations that embrace the task of increasing racial, ethnic and economic diversity in housing, as I have previously outlined.

Concern #5: CodeNEXT consultants have calculated estimates for unit yield by zoning category, but we must track how many of the produced actually produced via density bonuses are affordable to families at various income levels, and where those units are built. We must not merely reproduce racially, ethnically and economically segregated housing patterns through CodeNEXT.

Recommendation #12: Perform an equity analysis by council district based on existing neighborhood racial and ethnic composition, government-subsidized and market affordable housing inventories and calculate the need by income level as outlined in the Austin Strategic Housing Blueprint and the City’s Analysis of Impediments to Fair Housing Choice.

Recommendation #13: Model where staff and consultants believe affordable units will be produced and where developers are more likely to use different methods of participating in the program, such as choosing to build off-site, dedicating land or paying a fee in lieu of building on-site affordable units.

Recommendation #14: Modify CodeNEXT as needed to achieve the appropriate outcomes.

Concern #6: Ensure adoption of other affordable housing policies, particularly the recommendations of the Analysis of Impediments to Fair Housing Choice, are aligned with the CodeNEXT timeline. The density bonus program is not a silver bullet, and will not prevent displacement and create opportunity alone. Affordable housing funding and policies such as the preservation fund, bonds, Low Income Housing Tax Credits and more must be implemented concurrently with the density bonus program in order for it to succeed.

Texas Housers community planner Melissa Beeler contributed to this piece.