Affordability Unlocked and Its Impact (Part 2)

Today, we continue with part 2 of our guest post about Affordability Unlocked by Brian Poteet.

All of the projects we discussed in Part 1will make a dent in Austin’s ever-escalating affordability crisis, but that’s unfortunately all they’ll make – a dent. In 2017, City Council committed to building at least 135,000 housing units over the subsequent decade. Before moving on, I’m compelled to say that this goal is embarrassingly low for the core of a metropolitan area that is adding 50,000 people each year. It implies that the city is entirely indifferent about the vast majority of people moving to live in car-centric suburbs outside of Austin. It also absurdly implies that building 135,000 units before 2028 is enough to stabilize prices.

I could continue this rant for a while, but I’ll leave it at that. Anyway, here’s how we were doing at the end of 2019, before AU came into effect:

From the 2019 Strategic Housing Blueprint Scorecard

Given that this is two years into a 10 year goal, the circle should be at least 20% full, but we only reached ~16%. The city is missing the mark by the widest margins below the 30% MFI mark and between 61-80% MFI. Predicting how AU will move the needle isn’t easy, but I’ll try anyway. Here are the yearly goals compared to all of the projects that have been certified under Affordability Unlocked so far:

A few major caveats – not all certified projects will get built, and there’s no telling at what rate they’ll be built. On the other hand, many affordable units being built right now don’t even use AU. This chart is merely meant to illustrate the general scale of the problem and the impact AU might have on closing the gap. Even if we assume the proposed AU projects so far represents how many real units we can expect from the program yearly and none of the units would otherwise be built (which is definitely false), the city still wouldn’t be meeting its goals in any income bracket outside of 31-60% MFI.

Next, let’s take a look at where these projects are geographically located:

Nothing is planned west of MoPac, and the vast majority of units are east of I-35 or in Far South Austin. Charting the data on a council district level and comparing to median home price, it’s clear what’s going on here.

Developers aren’t going to shell out for expensive land in West Austin if they can build the same number of units on cheaper land elsewhere. Also, the prominence of single-family zoning in West Austin means you can build a maximum of 8 homes on the vast majority of lots. Not many developers have deemed it worth building projects under 10 units anywhere in the city with AU:

Given the allowance of 6 and 8-plexes in SF zones with AU, I was really hoping I would see more missing middle projects in the pipeline. Alas.

Some Fixes

Affordability Unlocked will likely net the city thousands of additional affordable units over the next several years, but that’s still not enough to meet even our paltry housing goals. Given that AU passed unanimously, surely a better AU exists in a parallel universe that our 6 most progressive council members could support. Here are a few ways I would beef up the program:

  • Districts with higher land prices need bigger bonuses so developers can build as much affordable housing per dollar as they could in districts with lower land prices. Additional height and relaxed impervious cover limits in higher-cost districts would go a long way.
  • Each year a district doesn’t meet its housing goals, make the bonuses bigger. If affordable projects don’t pencil in Tarrytown until they hit 300 ft, so be it.
  • I’m not certain why the program is producing so few missing middle units, but I suspect the onerous site plan requirements have something to do with it. Site plans are required for anything bigger than a duplex, and they can add several months or more to the project’s timeline. The city should either expedite site plans for AU projects under 10 units or eliminate them entirely.

Affordability Unleashed

This all begs the question: if allowing higher density and removing parking requirements enables deeper levels of affordability, why do we still require it to be “unlocked”? 

Our elected officials have consciously created a system that makes building million dollar houses very lucrative, but building a car-free 6-plex on the same lot means you must forgo most if not all of your potential profits. Simply put, if we want more affordable, sustainable housing, building it needs to be more profitable than churning out McMansions. Let’s get back to the affordability Austin used to be known for by ending the apartment ban and legalizing missing middle housing citywide.