# Presentation: 839289

## 
City of Austin, TexasNational Call to Action Symposium
Oct. 17, 2008

Presentation by:
Margaret Shaw, Director
Neighborhood Housing & Community Development 

**City of Austin, Texas**National Call to Action Symposium
- Oct. 17, 2008
*Presentation by:*
- Margaret Shaw, Director
- Neighborhood Housing & Community Development

**Notes:**
-I’d like to start first by thanking you for the opportunity to represent Austin, Texas. 

-Mayor Will Wynn was invited to speak with you today and was not able to be here.

-I’m delighted to be here in his place and certainly welcome any opportunity to showcase much of the hard work and commitment to affordable housing by our Austin City Council and City Management.

## Slide 2

**Notes:**
ABOUT AUSTIN

-Austin is the capital of the U.S. state of Texas and the county seat of Travis County. 
-Situated in Central Texas, it is the fourth-largest city in Texas 
-16th-largest in the United States of America
-Third fastest growing large city in the nation from 2000 to 2006.
-As of the 2007 U.S. Census estimate, Austin has a population of 743,074.
- Population of about 1.6 million people in the Greater Austin metropolitan area 
-Live Music Capital of the World
-Unofficial Slogan is “Keep Austin Weird” – it’s easier to remember than our vision statement. And seems to have served us well.

## Austin Housing Facts

- 56% of Austin area households earning below 80% median family income spend more than 30% of their income on housing (2000)
- 44% of area residents could not afford the federal fair market rent ($836/month for two-bedroom)  (2006)

- Homeownership rate was 47% -- 20% lower than the national rate of 67%  (2006)
- 17.7% of Austin residents live in poverty compared to 13.3% nationally – many are families with children (2006)

**Notes:**

-Each community is unique in terms of what drives its market – and in turn, what policies and programs are needed to produce affordable housing or maintain affordable housing stock. 
-I’d like to provide some context for what drives Austin’s affordable housing initiatives.
-Primarily, it’s our market trends and community expectations – which we refer to as our core 
values (deep affordability, long-term affordability, geographic dispersion).

FACTS
-Austin has the highest housing costs in Texas
-In 2004, 48% of Austin households exceeded this limit and paid more than 30% of their income on housing needs. 
-In 2004, over 34,000 low income households in Austin were classified as “worst case housing needs” and paid more than 50% of their income for housing.

FACTORS FUELING CRISIS 
-Rapidly appreciating real estate market spurred by population growth placing increased demands on the housing market; and
-Relatively slow growth in income and wages.
-From 2001 to 2006, the area MFI increased by less than 1.5% per year, lower than the yearly increase estimated in the Central Texas consumer price index.  
-There is no evidence that wages and incomes will keep pace with housing costs, especially in the Central Austin area. 
-Service sector jobs will continue to increase over the next six years.

## Housing Values in Austin: Ownership

- Median Residential Home Prices and MFI in the Austin MSA 1990-2007
*Source: Texas Real Estate Center and HUD Median Family Income data.*

**Notes:**

-This slide depicts the continued increased in Austin’s housing values for almost 2 decades in terms of home ownership. 

HISTORY
-Central Texas became the least affordable housing market in the state during the 1990s. Median home prices rose 71 percent between 1990 and 1998.
-In 2002, 34% (approx. 225,000) of Austin residents could not afford Austin’s median rent. 
-By 2004, the median priced home cost $163,800. In 2005, median home sales price was $174,000; current median home sales price is $186,000. {Average Rent for 2-bedroom apartment is $785. (Source:  Austin Business Journal, Jan. 26, 2006)}
-Rental values had experienced a slight decline; however, the Austin rental market is reporting occupancy levels of 95% and rents are rising. 

By 2010
1 in 3 new jobs (37%) will pay below that needed to own or rent a home. 
(Source:  Texas Workforce Commission, 2004.)
-Home prices are increasing, while income levels remain stable and service sector jobs are increasing.  On average, housing prices have outpaced wage growth in the region for the past decade. Median home prices rose 69 percent while per capita income grew only 56 percent between 1993 and 2003. 

Average Rent for 2-bedroom apartment is $785. (Source:  Austin Business Journal, Jan. 26, 2006)
-Rental values had experienced a slight decline; 
-Austin rental market is reporting occupancy levels of 95% and rents are rising. 
-In 2002, 34% (approx. 225,000) of Austin residents could not afford Austin’s median rent. 

## Industry Standards for Affordability

- Financial subsidies (ex., Low Income Housing Tax Credits; Federal, State and local funding)
- Legislative and Regulatory Mandates (ex., mandatory affordability, tax exemptions)

**Notes:**
-Nationally the most common tools to achieve affordability are financial and regulatory/legislative.

In Texas: We’re forced to take a different approach to make an impact on affordability --- 

“The Buffet” / The Menu – as an intro to next slide

## Texas Standards & Challenges for Affordable Housing

- Financial subsidies (Low Income Housing Tax Credits; State and local funding)
- No State Income Tax -- Property Tax Dependent
- Tax exemptions for nonprofit housing tightening
- Legislative and Regulatory Mandates
- State law prohibits mandating affordability

**Notes:**
-Texas requires we do things differently. 
-Texas Two Step --one step always aligned with State regulatory and legislative mandates –and stepping out at the local level to acquire more affordability.

Texas Standards & Challenges for Affordable Housing
No state income tax—property tax dependent (tax exemptions for nonprofit housing tightening)
Legislative and Regulatory Mandates 
State law prohibits inclusionary zoning
Few protections for condo conversions under state law
Texas Property Code Sec. 82.006 provides that: 
 A legal barrier exists to requiring a permit for condo conversions
A zoning change is not permitted under State law
The ability to offer a right of first refusal to current tenants, or to pay relocation costs is also not permitted
There is no ability to require affordable units be included in a condo conversion.

## Regulatory Reform Efforts

**Affordable Housing Incentive Policies**
- S.M.A.R.T. HousingTM
- University Overlay District
- Bonus policies underway
- Downtown Density Bonus
- Vertical Mixed Use
- Transit-Oriented Development Districts

**Notes:**
-For the past several years, the City of Austin has become active in reducing local regulatory barriers.
-More successful in creating housing that fulfills the Core Values created by the taskforce (long-term affordability; deeper affordability; geographic dispersion)
-I’ll speak briefly about SMART Housing – the City’s housing policy as well as the University Overlay District and Downtown Density Bonus.
-Austin continues to address regulatory barriers with a number of policy solutions:

-While the affordability requirements in these policy goals differ, all seek to:
Improve the design quality of the built environment
Increase housing options suited to a mix of generations and incomes
Create interesting and active places to live, work and play

## S.M.A.R.T.TM Housing

- _S_afe, _M_ixed Income, _A_ccessible, _R_easonably Priced and _T_ransit Oriented
- Policy allows for full or partial City fee waivers for certified projects

| Builder   | City of Austin |
| --- | --- |
| Reasonably priced units | Fee waivers |
| 10% | 25% |
| 20% | 50% |
| 30% | 75% |
| 40% | 100% |

**Notes:**
-In 2000, the City of Austin established the S.M.A.R.T. Housing initiative. 
-S.M.A.R.T. stands (Safe, Mixed Income, Accessible, Reasonably Priced & Transit Oriented + Green Building)

SMART Housing goals
-Provide development review and inspection fee waivers to promote development of S.M.A.R.T. Housing; 
-Provide expedited development review; 
-Provide advocacy and certainty through the development and construction process; 
-Use of public resources to leverage private investment
Policy Impact
-City has waived more than $10.5 million in development fees for S.M.A.R.T. Housing Projects.
-Our return: 7,000 affordable housing units both in SF/MF communities, that meet Green Building, Accessibility standards that are higher than what’s currently required by code. 
-All are located to transit. 

## S.M.A.R.T.TM Housing Benefits

**Developer Benefits:**
- Fee waivers of $500/units in multifamily and $2,000/units in single-family
- Expedited review
- Technical Support
**Community Benefits:**
- Increased tax base and economic sustainability through mixed-income and diverse housing types
- Enhanced housing standards
- More affordable housing choices for consumers
**Policy Benefits:**
- Affordability Impact Statements

**Notes:**
EXAMPLE
Affordability Impact Statement:
-All proposed code amendments, rule changes, neighborhood plans and changes in development fees trigger an Affordability Impact Statement that identifies impacts on housing affordability. 
-This analysis has proven beneficial in adjusting proposed policies to mitigate unintended costs to housing affordability. 
-The 81-unit Austin Children’s Shelter in the Mueller Airport Redevelopment Area will save an estimated $55,000 as a result of this change.

## S.M.A.R.T. Housing Production2001 through September 2008

_**Completed Units**_**:**
**Multifamily     6,695**
**Single-family   **_**4,080**_
**       ****Total          11,075**

**Notes:**
-This chart shows production from 2001 to present. 
-To date we have completed more than 11,000 units  --- more than half of these being affordable housing units – both SF/MF (NOTE: break down not readily available).

## University Neighborhood Overlay 

- District  with height and density bonuses
- Affordability requirements
- 10% of units at or below 80% MFI
- 10% of units at or below 65% MFI (or fee-in-lieu)
- Results since 2004
- More than 2,000 units developed
- 254 units serving households at or below 80% MFI
- $950,000 in Fees-in-Lieu

## Downtown Density Bonus

- Task Force Recommendation
- Adopted January, 2008
- 10% of bonus square footage affordable
- Rental: 80% MFI
- Ownership: 120% MFI
- Unlimited density and height
- Aggressive fee-in-lieu of $10
-     per bonus square foot

**Notes:**
-An example of a policy initiative that we anticipate will yield affordable units in the future is the Downtown Density Bonus.
-In 2007, the Council-appointed Task Force recommended a development bonus for the downtown area.
-Provides unlimited height and density in exchange for affordability 10% of the bonus square footage.
-For rental, the requirement is 80% MFI.  Recognizing that the cost of land and construction is higher in downtown, the ownership MFI is 120%.  
-This is the Austin’s first policy initiative to provide incentives for development serving 120% MFI, and also the policy with the most aggressive fee-in-lieu level -- $10 per square foot of bonus area.
-This policy has only recently been adopted and it may be a few years in the future before we have significant production.  
-We also expect this bonus to change somewhat as a result of the Downtown Planning Process that will soon begin.

TOD and VMU Entitlements (they are essentially the same)
Minimum Setback waivers
Density waiver (i.e. floor-area-ratio)
Parking reduction
Waiver of building coverage limits

## 
Questions/Comments:
Margaret Shaw, City of Austin 
margaret.shaw@ci.austin.tx.us512.974.3184

- Questions/Comments:
- Margaret Shaw, City of Austin
- margaret.shaw@ci.austin.tx.us512.974.3184

**Notes:**
-Again, thank you for the opportunity to visit with you all about a few regulatory efforts underway in Austin.
-Don’t hesitate to contact me if I can be of additional assistance.