Waiving Regulations for Affordable Housing Shows Results in Austin

"Affordability Unlocked" has generated hundreds of new affordable units.

Participants at a “virtual groundbreaking” for 17 new Austin homes that will be sold to people earning up to 80% of median income. It was, backers say, the first project taking advantage of a new Austin program to relax regulations to create more affordable housing. (Photo via Civilitude)

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When the Guadalupe Neighborhood Development Corporation bought a historic Victorian house on East 9th Street in Austin a few years ago, it made an agreement with the previous owner: When the property was redeveloped, the new housing units would be affordable for low-income people. The owner was “ an excellent community member,” says Rachel Stone, the assistant executive director at GNDC, an Austin-based nonprofit developer. She wanted the historic house to remain intact, and accessible to people from the neighborhood, Stone says. The Guadalupe Neighborhood Development Corporation got to work on a proposal — a seven-story affordable housing complex, with 26 units for low-income seniors, and a rehabilitation of the historic house for community space and social services.

Even with seven stories, Stone says, it was tough to work out the logistics.

“It’s a crazy project,” she says. “It’s tall and skinny. It’s four units per floor, and it’s right on the edge of the highway. So it’s a lot of steel for not a lot of units.”

On top of that, the city’s zoning code required parking space for every resident. Stone says that the group had looked around at other senior housing complexes in Austin and found their parking lots largely empty. They were planning to market the other units primarily to residents without cars, too. It was a challenging project.

Then last November, a new program called Affordability Unlocked went into effect, which helped move things along. As Next City previously reported, the program, sponsored by Austin City Council member Gregorio Casar, is meant to help affordable-housing developers maximize the number of new units they can build by waiving certain code regulations, like parking minimums, set-back requirements and height limits. Taking advantage of the new program, Guadalupe Neighborhood Development Corporation was able to redesign the project for nine stories and a right-sized parking lot — packing eight extra units into the project.

“At seven stories the cost per square foot was very high,” Stone says. “And once we were able to go up to nine, it did make it much more feasible.”

The Affordability Unlocked program has been in effect for less than a year. But according to a presentation from the city’s Neighborhood Housing and Community Development earlier this month, it has already started to show results. At least one project that is taking advantage of the program has already broken ground. Forty-six applications have been filed as of the beginning of September, and 26 projects certified in almost every district of the city, promising some 2,700 new units of housing, of which 2,300 will be affordable, according to the presentation. The city doesn’t have a full count of how many more units are promised because of the bonuses of the Affordability Unlocked program. But according to the Neighborhood Housing and Community Development department, developers of 16 of the 26 certified projects have self-reported at least 650 additional units that wouldn’t have been possible without the program.

“It really gets rid of so many of the height and parking and other restrictions that affordable housing providers and, frankly, housing providers of all kinds face,” says Casar. “And while I do think we have way-too-restrictive rules on all types of housing in our city, we should absolutely be making the way for low-income and affordable housing in an increasingly exclusive city like Austin.”

The Affordability Unlocked program is designed to extend the impact of projects that take advantage of government subsidies for affordable housing, including proceeds from a record $250 million housing bond that city voters approved in 2018. In order to qualify for the bonuses, according to the city’s presentation, multifamily rental projects must lease apartments at a rate that is, on average, affordable to people earning up to 60% of median family income, or $58,560 for a family of four, and must include 20% of units for people earning less than half of median family income. Homeownership units must be sold to buyers earning up to 80 % of median family income ($78,100 for a family of four) for 99 years. In addition, 25% of units must have two or more bedrooms or be used for senior or supportive housing, and rental projects must include “just cause” eviction protections for tenants, a right to organize, and a ban on source-of-income discrimination.

In June, the group Civilitude broke ground on 17 new homes that are going to be sold to people earning up to 80% of median income, priced starting at around $200,000, as opposed to the typical $350,000 starting price for new builds in the area. Without the Affordability Unlocked bonuses, says Conor Kenny, the group’s director of public affairs, it would only have been able to produce ten new homes.

“It’s meant to be almost like an automatic upzone because you’re doing deep levels of affordability,” Kenny says.

The Civilitude project is taking advantage of $1.3 million in funding from the city’s housing bond to make the price reduction work. In addition to development of its own, the group helps other developers navigate the city’s regulations, and in some cases develop new affordable housing. Even with Affordability Unlocked, subsidy is critical to making affordable housing work, and there are still more incentives for producing fewer units at higher prices, Kenny says.

“Single-family housing, which is no longer in any way affordable in Austin, remains by far the easiest kind of housing to build,” Kenny says. “The market and the financing and the city procedures are still kind of working against being able to produce this affordable housing naturally. Affordability Unlocked is a counterweight on that.”

Casar says that in some cases, the Affordability Unlocked program is allowing developers to double the number of affordable units they would otherwise provide. And he hopes that in addition to providing thousands of new affordable units, it will show that paired with subsidies, changes to zoning rules can make affordable housing development easier and more productive. Rachel Stone, of GNDC, says the group has started to use Affordability Unlocked for every one of its projects.

“It both has helped us gain units and gain height, and it takes away a little bit of the difficulty of the projects, which just saves us so much money,” Stone says. “It’s been really helpful to us, and it does show that we have code issues that make housing less affordable.”

This article is part of Backyard, a newsletter exploring scalable solutions to make housing fairer, more affordable and more environmentally sustainable. Subscribe to our weekly Backyard newsletter.

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Jared Brey is Next City's housing correspondent, based in Philadelphia. He is a former staff writer at Philadelphia magazine and PlanPhilly, and his work has appeared in Columbia Journalism Review, Landscape Architecture Magazine, U.S. News & World Report, Philadelphia Weekly, and other publications.

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Tags: affordable housinginclusionary zoningaustin

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