affordability

Affordability Unlocked and Its Impact (Part 2)

~ dankeshet

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
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6 things to like in California’s proposed transit housing law, illustrated by surfing

~ dankeshet

On January 4, California felt two earthquakes. The first was a conventional and thankfully weak earthquake in Berkeley:

The second was a political earthquake, emanating from across the bay in San Francisco:

So, here are six things to like about the transit-oriented development bill that’s making waves in state politics:

1 It acknowledges the state has an interest in land use

Many decisions are better made by cities than states. Where will the next branch library go? Should this park have a splash pad or a lawn? But some problems are too big for one city alone, like intercity transportation. If Austin and San Antonio decide to be connected by a train, Buda, Kyle, San Marcos, or New Braunfels should have input (as the train would go through these cities), but they shouldn’t be given a flat veto. It is up to the state government to help manage this process so that local interests in one city don’t hurt local interests everywhere else.

In California and some other states, housing and land use have become problems with statewide and national implications. Housing prices aren’t just high in San Francisco or Los Angeles or even Berkeley; people unable to find housing in those cities are spilling over to suburbs and exurbs all across the state. Whole companies are looking to other states to set up offices because their workers can’t afford California rents. The greenhouse gases from long commutes affect every person on the planet. When a problem is widespread, the solution needs to be widespread too; cities rules by local interests just doesn’t cut it.

When one city’s rules starts to affect not just themselves but others, it can be time for the state to set in and make rules.

2 It creates fair and impartial rules

Laws made at the local level can take into account local context better than statewide rules can be. But laws made at the state level can better take into account the statewide context. In a drought, we need fair rules so that everybody does their part to conserve water and everybody has access to the water they need. In a statewide housing drought, we need fair rules so that everybody does their part to build housing.

Everybody has to play by the same rules.

3 It forges a link between transit and density

In the sphere of YIMBY and placemaking, the problem in California is a very YIMBYish problem: there aren’t enough homes to go around for all the people who want to live in California’s cities. But the solution that Wiener proposes isn’t just focused on getting people into homes anywhere. By proposing rules for allowing more homes near transit, it creates the chance for cities to use this as an opportunity to make great places for the future, where high-capacity transportation solutions are matched with high-capacity housing solutions.

Transit is great because everybody can ride together.

4 It acknowledges how parking rules can hurt housing

One type of land use rule that’s particularly pernicious is the minimum parking regulation. These rules not only incentivize car use by forcing everybody to pay the price of car storage whether they drive or not, they also cut into the budget (both financially and physically) of new housing. This legislation will stop cities from using these pernicious rules near transit stops and opens the possibility for people to find new ways to live cheaper while using less parking.

Not everywhere is perfect for parking.

5 It helps bridge the gap between people and jobs

The problems of California’s cities aren’t their problems alone. Vast swathes of the state are home to unique industries, from Silicon Valley’s tech economy to Hollywood’s movie industry. Sure, tech jobs exists outside Silicon Valley and movies are filmed all over the world. But place has, if anything, grown more important over the last decades, not less. Young workers looking to break into an industry would do well to show up where the jobs are, and new companies looking to start up would do well to show up where the workers are. Today, though, many people are shut out of these engines of prosperity because they can’t afford to live in Palo Alto, San Francisco, or Los Angeles while they lean the trade. Who knows what great technology or film talent we may cherish tomorrow if only we make room for them today?

Some folks in California’s economy find good jobs and places to live while others are simply couch surfing.

6 It might just save humanity

With the United States federal government oriented away from action against climate change, individual states badly need to step up their game. While trying not to overstate the importance of this bill, the fate of the entire human race might depends on our ability to transition the United States and our high-emission society into one in which we can get around more efficiently.

If we don’t address climate change, there’s a wave heading our way that California — and humanity — might not be able to ride out.

So congratulations to Senator Scott Wiener! You brought a proposal that deals with the scale of the problems your state and this country are experiencing, and you may have changed the conversation on housing for good.

Words by Dan Keshet. Gif selection by Susan Somers.

How my cat is like a construction technology evangelist

~ dankeshet

I have been writing this blog on and off for 5 years or so. Coincidentally, that’s about the same amount of time I have shared a home with my feline life partner, Mikey. He is now a mature, sophisticated cat.

Photo credit: Susan Kirtz

But he wasn’t always this way. He was once young and carefree, testing his limits at any chance.

He believed that any food in the apartment was, by rights, his.

When I prepared food on my kitchen counter, he would jump up on the counter to investigate. I would promptly pick him up and place him back down on the floor, then return to preparing my food for five seconds before repeating the process. Eventually, though, he got to contemplating:

He realized the problem: he was taking the wrong route! So he tried a new route to the counter:

Unfortunately for him, it didn’t work. He had misidentified the issue. The problem wasn’t that he had taken the wrong route to the food. The problem was that I didn’t want him to eat the food and I had more power than he did.

Mikey in jail.

If Mikey really wanted to get more food, he needed to find a way to either beat my defenses or appeal to my heart:

Who could say no to those eyes?

Why am I telling you this story? Is this just an excuse to show pictures of my cat? Well, yes, of course it is. But it’s also a metaphor.

If you pay attention to housing media for very long at all, you will be bombarded by news stories about how a new technology will save the world from high housing costs. Sometimes it’s a construction material, sometimes it’s a fabrication technique, sometimes it’s something totally different. As many point out, this thinking is both common and wrong:

The error is very similar to Mikey’s: failing to see the deeper, underlying issue that there are people who disagree with your goals and have the power to obstruct you. There are already construction technologies that could greatly reduce the costs of housing in cities with overheated housing markets if deployed at scale (e.g. townhouses, missing middle, or mid-rise construction techniques). These technologies are greatly restricted in their deployment not because of unresolved technological issues, but because of political disputes that have made their deployment illegal in most parts of most cities. New construction techniques will find new paths to inevitable obstruction.

This isn’t to say that pursuing improved construction technologies is useless. There are exciting construction technologies on the horizon, from higher quality modular structures manufactured in factories and pieced together on-site to cross-laminated timber offering the possibility of more environmentally-friendly, cheaper towers. I’m glad that smart people are trying to make these technologies work! But in many major cities, the cost of land alone in central locations is more than most people can afford before construction costs even play a role. The way to fix that is to change politics, not technology. When we talk about new technology as having the potential to drastically lower prices without recognizing that there needs to be the political will to make use of that technology, we’re deliberately closing our eyes from the real problems we face.

Photo credit: Susan Kirtz

Time for Some Game Theory: Five ways building market-rate housing helps affordability

~ dankeshet

How do we handle the growing unaffordability crises in many cities? Most people agree that building more subsidized Affordable Housing can help by providing an opportunity for people who struggle to pay market rates with more options. But that’s not the only type of new housing that can help. Here are five ways that building more housing–even if it’s not subsidized or rent-limited–can help affordability.

1) Fewer folks competing for existing affordable housing

In growing cities, standing still in housing stock means going backward on affordability. As new residents look for housing, they’re looking at the same houses and apartments as everybody else. If folks with money can’t find something in their price range, they often still pay more–but for housing that used to be affordable. Providing them with something new can mean fewer move into existing affordable housing and drive up rents.

2) Residents of New housing pay taxes

Most below-market-rate housing gets government subsidies in one form or another: tax credits, fee waivers, grants, loan guarantees, etc. The ability to provide these subsidies depends on having a large enough tax base to generate funds without making taxes too high. Market-rate housing builds up this tax base. Of course, the new residents will also require other government services that require taxes. In the long-term, infill housing–where new residents make use of existing streets, buses, pipes, schools, etc–can be more affordable for cities than adding miles of pipes, wires, and road networks to maintain.

3) Today’s luxury housing is tomorrow’s affordable housing

Many of the new, fancy buildings of today will eventually become the ordinary, affordable buildings of tomorrow. Some people like paying the extra dollar for brand new appliances, cabinets, floors, etc. Others would rather save some money and move into a place with a little less shine and a little more character. But the existence of twenty-year-old housing twenty years from now depends on us building new housing today!

4) Transportation

Where new housing is built in central cities, it opens up possibilities for more people to live without the expenses of car ownership. This means that, even if rent is higher, your overall place-based costs (rent, utilities, transportation) may be lower. Down the line, when rents for the building are no longer the top of the housing market, this effect can be even greater.

5) Political pressure on Affordable Housing

In growing cities that don’t build much new housing (like San Francisco or many other cities in California), prices skyrocket until a larger and larger percentage of the population struggles to pay rent. Politically, the pressure for politicians to allow middle class people to take advantage of programs originally intended only for poorer people becomes immense. The result is that, for people who struggle the most with housing costs, they have even less of a chance of getting government aid. Building enough housing to keep market costs down reduces the pressure to spread out housing supports away from the population they help most into the broader population.

Austin’s Killer App: How Austin Tech Can Compete with Silicon Valley

~ dankeshet ~ 1 Comment

Silicon Valley is the most important center of US technology development. Its cluster of tech workers, financiers, and services are light years ahead. There was no special natural resource that made Silicon Valley the only place for a tech boom, but once it got started, Silicon Valley built a strong First Mover Advantage–any place that wants to compete has to not only duplicate Silicon Valley’s ecosystem, but it has to do it in a world where Silicon Valley is already here. Silicon Valley also has strong network effects–each new techie that moves to Silicon Valley makes it an even more attractive place to build a company, which makes it a more attractive place for techies to move, which…

But in tech, there’s sometimes a Second Mover advantage. New companies can learn to navigate around the market leaders’ failures and steer straight for the successes. Big companies can get sclerotic and bureaucratic, unable to appreciate the problems they have or unable to fix them even if they know. Success breeds complacency–famously, Microsoft struggled after its employees became millionaires by virtue of owning stock options at the right place and the right time. Company culture becomes backward looking, focused on preserving the successes of today, rather than building toward tomorrow.

Silicon Valley’s Achilles Heel is Terrible public policy

To many residents of Silicon Valley and the Bay Area, the dangers of being First Mover are very familiar–not from their workplaces, but their local politics.

  • The bureaucratic ordeal in getting a new software development project started at a large company is legendary, but pales in comparison to getting a land development project off the ground in Silicon Valley.
  • Silicon Valley and San Francisco have their own versions of Microsoft Millionaires: Housing Millionaires. Folks who had the good fortune to own a house in San Francisco years ago and became lucky as their asset skyrocketed in value. Many of these folks have, understandably, become less concerned with making San Francisco a place where a new generation can make their fortune and more interested in protecting what they have.
  • Despite (or perhaps because of) its reputation for innovation, San Francisco’s local politics is dominated more by discussions of the past than the future. Like a company that refuses to release new products out of fear of harming their current cash cow, the city has become extraordinarily conservative in its approach to new development. New developments must first prove that they will harm no existing residents in any way, rather than merely proving they will provide a benefit to new residents.

The results are catastrophic: San Francisco and Silicon Valley are failing at one of the core competencies of any city: providing housing. Tech workers spend enormous fractions of their income to live in poorly maintained homes in the Mission, while those outside tech frequently live far outside the city and commute long distances on congested roads. New housing for tech workers is protested as are buses to transport workers from homes in San Francisco to jobs in Silicon Valley. The city and the region understand that they are in an intractable mess of antagonistic politics, but still cannot do anything to extricate itself. San Francisco and the Silicon Valley are ripe for disruption.

Housing could be Austin’s Killer App

Building the best product isn’t enough to compete with a network effect. If it were, a few more of us might be using Google Plus or Google Wave today. The new product or platform has to be close to comparable in the current feature set and, crucially, it has to have a Killer App that makes people not just like it, but want it and need it. For Austin and our platform of functional public policy, the Killer App can be walkable, bikable, transit-accessible, relatively affordable housing.

While the construction technology for building housing at low-cost is not something new, the political technology of a functioning municipal governance platform that facilitates its creation through times of poverty and times of prosperity is something that the United States as a whole lacks. In addition, improving on current governance and providing housing to meet demand would be a difficult act to match. There are few cities outside Silicon Valley that have the right ingredients of a startup economy as well established as Austin does. All of them have had housing cost problems for far longer than Austin has had, yet none of them have adequately addressed the issue.

Tech needs long-term, Quality Public Policy Engagement

How can the technology community in Austin help with local governance? For starters, the community needs to engage with public policy at a much deeper level than it has to date. Politics is not a company to buy or a video game to win. Sometimes throwing money into politics without understanding things hurts your position more than helps. The companies and communities that have a lasting impact on politics don’t just show up when there’s an issue that directly affects them. They develop deep relationships so that when issues affect them, they understand how their proposals will affect others in the community and vice versa.

Technology companies need a supportive environment around them to succeed–angel and venture for funding, consultants to help navigate situations other companies have seen before, IP lawyers, board members, complementary companies. A good company takes advantage of all the resources they have available to them. The same is true of a smart participant in public policy. The most effective ones don’t go it alone; they have an ecosystem of allies and advocates, consultants and collaborators whose advice they listen to and cherish.

This is important for anybody who wants to participate in politics, but it’s especially important for tech. Tech, whether we choose to acknowledge it or not, does not share a background with everybody in the community. The common experiences that bring tech people together can divide us from everybody else. A company that lets its programmers do design will end up with an interface designed for programmers but clunky for everybody else. When the tech community designs its own political messaging, we end up with arguments, imagery, and optics that look good in the board room and clunky–or even offensive–to everybody else.

Learn to Listen and Not Just Lecture

When Uber and Lyft decided on putting their case to the Austin voters, they did not lack for a voice. They brought more money to the campaign than the city has ever seen spent in a race. In a campaign that will be studied for years, voters received dozens of pieces of direct mail, text messages, app alerts, and in-person messaging. Uber and Lyft did not have trouble getting heard. Indeed, many people reported having heard so much from Uber and Lyft that it got in the way of their ordinary life, soured them on Uber and Lyft’s message, and fed into the narrative Uber’s opponents campaigned on (Uber as corporate bully).

While Uber’s money succeeded perhaps too well at getting its voice heard, Uber failed at some of the basics of campaigning. Despite a large number of people and organizations that supported their cause in general, they failed to build a coalition working for them. Many of their allies dropped out of official events and organizations while others failed to rally an effort. For those familiar with the campaign, this wasn’t a surprise; Uber as a company didn’t come to this campaign with any willingness to listen to allies and understand what they wanted and needed out of a campaign.

For those who have been involved in tech, the listening deficit shouldn’t be surprising. The mythos of technology startups says that visionary founders and young startups are a special breed of people able to see what the broader society cannot. But building effective political coalitions is very different from building technology startups. If the technology community wants to participate effectively in local politics, it must bring the skills appropriate to the problem.

Not Every Problem can be solved by tech

Technology can be applied to any problem. Sometimes in the technology world, this gets combined with a frustration about the difficulty of involvement in public policy, and comes out as “every problem can be solved by technology.”

There are numerous housing technologies today being developed to improve construction techniques, from cross-laminated timber to prefabricated apartment blocks. But the technologies to resolve San Francisco’s housing crisis were developed in the early 20th century and before. The reasons that San Francisco and the Bay Area lack the housing supply to accommodate the people who want to work there is definitely not because the area lacks the technical know-how to construct housing. Developing new technologies can reduce costs, but it cannot create new housing when the purpose of the regulations that prevent new housing is precisely to prevent housing. There is no technology short-circuit to public policy engagement.

How to get involved

Where to? The biggest effort to reform Austin’s public policy right now is CodeNEXT, a rewrite of the extensive set of rules governing everything from the height of buildings to which streets can be used for offices and which streets for homes–a reform with the potential to shape Austin’s competitiveness for decades to come.

The author has worked in technology for 15 years and engaged with Austin politics for a few.

Four things City Council could do today to fight the housing shortage

~ dankeshet

Central Austin needs more housing. Prices have been rising, more and more people want to live where they have short commutes but are only able to afford homes near the periphery. We have a long-term plan to alter our land development code that may help with this but our need is now. What options are available to us today?

End Parking requirements in west campus

Every year, West Campus adds more and more dense student housing and along with it, pedestrian amenities like wide sidewalks and street trees.IMG_20160119_142423 A parking benefit district meters on-street parking with proceeds plowed back into neighborhood improvements. Surveys have shown the vast majority of West Campus students get around without cars. Allowing housing for students without parking could allow denser housing, lower construction costs, or allow more creative buildings that take advantage of unique lots. Removing minimum parking rules has already resulted in a few buildings downtown targeting markets that either don’t need cars or have other places to park them; the same could be even more true in student-rich West Campus.

Reduce parking requirements near transit routes

The same logic of reducing parking requirements applies outside the student market to apartments near transit routes. More and more people in Austin want to live car-free or car-light. That is easiest to do in buildings created with that lifestyle in mind–a step that can both reduce construction costs and allow room for improving other amenities. Long-term, if Austin wants to be a sustainable city, parking-free typologies should be allowed everywhere. However, in much of Austin, we wrongly treat scarce on-street parking as an endless “commons” rather than managing it as a scarce resource. This means that it may be the wiser path to improve incrementally–iteratively reducing off-street parking requirements, improving on-street parking management, and improving transportation options. Happily, this may also improve an almost universally disliked aspect of Austin’s largest apartment complexes: their architectural monotony.

Implement the Downtown Austin Plan

New high-rise towers are being constructed in downtown Austin all the time–but downtown is more than just the Central Business District. A sleepy section of downtown known as northwest downtown consists mostly of one and two story offices, with a handful of residences and a handful of larger buildings mixed in. Northwest District PlanThe demand for living in this area is very high: it is adjacent to the university, the central business district, county government, ACC, and Pease Elementary. In 2011, a stakeholder process decided on a measured, middle approach toward developing this area to be more housing-rich, commensurate with the strong demand for downtown living, but without the high-rise towers that characterize downtown. Unfortunately, with no active sponsors pushing for implementation on City Council, this plan has languished. With the heavy lifting already done, it would not be complicated to implement and could result in real gains for those wishing to live downtown but not in high-rise towers.

Implement the South Central Waterfront Plan

Map of South Central WaterfrontThe South Central Waterfront has added a modest amount of housing in recent years, with the apartment buildings the Catherine and 422 on the Lake acting as an extension of downtown across the river.  However, the area as a whole is a mess, from the enormous Statesman offices to the big-parking-lot-and-a-Hooters near the Long Center. Fortunately, the city has been working on a plan that would clean it up, add significant amounts of park land, improve transportation access by improving the street grid and adding trails, and, crucially, free up some land for more and better housing. Implementing this plan would be a great boon.

And Beyond…

Added together, these plans aren’t nearly enough. Austin is a big city and rapidly growing. Unfortunately, it’s growing in many of the wrong ways right now: our houses are sprawling outward, our towers aren’t affordable to most people, and our apartment complexes are monster buildings dominated by parking garages. But this ship can’t turn that fast and it’s time to get turning.

Affordability for the long run

~ dankeshet ~ 18 Comments

The major theme of the 2014 Austin elections was affordability and a major theme of City Council since then has been defining the word. Long-time readers of this blog are no stranger to tussles over the definition. Michael King took on the subject in the Austin Chronicle, taking aim at the Statesman’s editorial board and their false equation of affordability with “low property taxes”. I agree with King’s take here; the “taxpayer advocate” advice to cut, cut, cut has all the wisdom of a business leader saving money by eliminating the sales or R&D departments. Public spending can obviously sometimes offer public benefit.

But the part of the back-and-forth between the Statesman and the Chronicle I find most interesting is the question of growth. The Statesman states plainly that Austin’s growth “is not paying for itself,” while King offers the case that “growth does pay.” I’m a little irked by the question: we build homes for new people because they need homes, not merely because we can benefit as a city. But I think we can shed more light by changing the question a bit to: “What growth pays for itself?”

All growth isn’t equal

CMs Garza and Zimmerman had a debate I blogged about which kind of development imposes more burdens on the city: downtown towers or suburban sprawl?

In order to answer the question, I’m going to break the costs down into three types: building hard infrastructure (streets, sidewalks, water pipes), staffing soft infrastructure (police, firefighters, parks staff), and costs (externalities) we impose on one another through proximity.

The details of these questions can get pretty complicated, but I think the broad sweep actually isn’t tremendously complicated. For the most part, infill development–putting new buildings in places where there are already a lot of them–imposes lower costs and brings higher benefits to existing residents, while greenfield sprawl–expanding the city outward by putting new buildings in places where there haven’t been many before–imposes higher costs and brings fewer benefits to existing residents.

Infrastructure

To the extent that new buildings can make use of existing infrastructure without having to add anything new, this obviously costs the city less in the short and long term. If an old commercial building on Burnet gets replaced with a vertical mixed-use building that holds both a commercial shop and some apartments, the new combined building will benefit more people and pay more in taxes. If that can happen all while the new residents are using existing water and sewer lines, buses, electricity substations, etc., this is essentially free tax money to the city. If some of the new infrastructure needs to be replaced but some of it can be used intact, then we have a partial discount.

But even if all of the infrastructure needs an upgrade, it is still cheaper to provide it in the urban core. Replacing 10 miles of aging water pipes in order to handle new capacity (as happened in West Campus to accommodate the UNO boom) means that you have 10 new miles of water pipes to maintain. Adding 10 new miles of aging pipes to handle new greenfield sprawl means that you have 10 new miles and 10 old miles of water pipes to maintain.

The same is true for many of the city’s resources. Placing new families near existing parks means more kids get to play in the park. Placing new families far from existing parks means that for those kids to have the same opportunities, we will need to build and maintain more parks.

Soft infrastructure

Soft infrastructure is less clear. Until recently, the Austin Police Department based its recommendations on a constant ratio of 2 officers per every 1,000 people in population. This would result in the same costs no matter where growth occurs. If we are to gain (or lose) from growth, we may have to research new policies that change as the profile of our city changes.

Externality Costs

There are certainly costs associated with dense living: more people using the same roads can slow us down; more conflicts over uses of the same park means you may have to reserve the volleyball court in advance. In part, this is the flipside of better resource utilization: a park that only serves a few people will always be available when those people need it, but its costs are spread out over fewer people. The price of having the roads or parks to yourself is paying for more roads and parks.

But there are mitigating factors here. When buildings are close together, people don’t need to drive as far to get to their destinations, reducing the amount of traffic per person. On top of that, destinations that are closer together allow for more travel modes to become practical: walking, bicycling, taking the bus. This can set up a positive spiral: the more people who take the bus, the more frequent the bus can come, making the bus more practical for more people.

Conclusions

Even the analysis above is only cursory: except for those lucky enough to own the last house they’re ever going to buy, the major affordability issues we face are private, not public: mortgage payments or rent, not taxes. A measure to require all new buildings downtown have a pink granite facade to contextually match the Capitol would have enormous private costs but little direct effect on city expenditures.

But focusing in on the public costs, as the Statesman and Chronicle are doing here, we still need better questions than “should we grow?” We will grow as a city if our children want to live here, if friends from Dallas, Victoria, or Round Rock stick around after graduating UT or ACC, and if more folks like me who grew up in the Northeast decide they’re done with winter.

Similarly, the questions we have to ask ourselves about affordability are not simplistic ones about whether taxes go up or down. We can cut taxes and postpone spending for a short period–or redirect taxes in the short term from homeowners to renters and business owners, as this Council has opted for. But ultimately, if we build roads we need to maintain them. If we want a city that doesn’t have potholes, we need to pay for it.

To truly tackle affordability, we need to get beyond the short-term fiscal questions and move into the long-term structural questions about how the shape of the city affects the costs of building and maintaining it.  The question is not: “Should we grow?” The question becomes: “How should we grow?” Should we grow together or should we grow apart?

Homelessness, the problem that affects all of us

~ dankeshet ~ 6 Comments

A very small percentage of Austinites are homeless. During the January 2015 count of homeless individuals in Austin, a total of 1,877 homeless residents of Austin were found, or roughly 0.2% — 1 in every 450 Austinites. Yet, homelessness is a problem with an extremely wide reach. The knock-on problems that come from our inability to end homelessness emanate out in so many ways it can be hard to even be aware of all them. These are just a small sample:

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3 types of affordable housing in Burnet / Rockwood debate

~ dankeshet ~ 2 Comments

I’ve previously discussed the difference between two kinds of affordable housing: the mandatory kind (means-tested, reduced rent programs) and the market kind (housing that is inexpensive on the open market). In the Burnet / Rockwood case (history: 1, 2), however, there were really three concepts of affordable housing under discussion: lowering market rents, providing selective rent reductions, and providing deeply affordable housing for the very poor.

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What we talk about when we talk about affordable housing

~ dankeshet ~ 6 Comments

One of the most confusing terms in Austin politics today is affordable housing. There are two very different definitions in use.

affordable housing

The first definition, which I tend to call affordable housing without using capital letters, is the plain meaning: a housing unit that doesn’t cost very much.  There are many reasons why some housing is less expensive than other housing. It might be smaller, older, lack amenities like pool access or parking or hardwood floors, be in a worse location (whether unpleasant or distant), or offer less privacy (e.g. shared rooms, shared apartments).  This doesn’t mean that these housing units are terrible by any means! But it does mean that the people who have top dollar would rather pay that top dollar to live in other units.

Affordable Housing

The second type of Affordable Housing, which I tend to spell with capitals, is legally-binding, and either mandated or subsidized. This comes in many flavors, but basic characteristics are:

  • It is mostly means-tested.  That is, they must prove that they have a low enough income to qualify.
  • It is legally bound to remain Affordable Housing for a period, often measured in decades.

There are various programs that create or require Affordable Housing in Austin.  Voters approved a bond to subsidize creation of Affordable Housing units. Some denser developments are required to set aside some of their units to be mandated, subsidized Affordable Housing, and others are allowed to buy their way out of this provision by paying taxes into a fund that subsidizes the creation of Affordable Housing units elsewhere.  There are niche housing developers who specialize in building Affordable Housing, such as the nonprofit Foundation Communities.

There are different types of Affordable Housing.  Permanent Supportive Housing is targeted at the chronically homeless, heavily subsidized (residents may pay rent of $50 per month or no rent at all), and comes paired with social services to help the residents get on their feet.  This housing feels more like a social service than a straight affordability program; it is tightly entwined with other social services and serves a population that otherwise may literally have no housing at all otherwise. On the other hand, a mandated Affordable Housing unit in a VMU development is at the opposite end of the scale. While it only serves people in the lower half of the income scale, it only serves people in a narrow band of that scale, because residents must both prove that they make little enough money to qualify for the program and enough money to pay their rent.  Rents on these units may be as high as $700 for a 1BR, well beyond what many of the neediest are able to pay.

When they conflict

There are some people who support both Affordable Housing and the broader movement towards more affordable housing through other means.  Pretty often, however, affordable housing and Affordable Housing actually come into conflict.  As mentioned above, one mechanism that pays for Affordable Housing is taxing the creation of new, dense development, like the Downtown Density Bonus (DDB) and the VMU affordability provisions. In the case of the DDB, a developer must pay fees if they want to build a taller building with more homes. In the case of VMU,  a developer must set aside units if they want to build less parking.  Parking is very expensive, whether it’s building garages or just dedicating land to surface lots, so accepting reduced rent on some units for decades may still be more profitable than being forced to build parking spaces. This sets up two different ways these programs for Affordable Housing cause conflicts between affordable housing and Affordable Housing:

Taxing Development Reduces The Number of New Homes

By focusing so much taxation on dense, new development, there are probably some projects that would get built or built larger if it weren’t for the tax. Note that this isn’t true for the Affordable Housing bond, which was funded by a broad-based property tax increase, but specifically for the development taxes like the DDB that target only new development. As I discussed before, one of the major reasons for the lack of affordable housing in Austin is that there just isn’t enough housing altogether. In a game of musical chairs, when there aren’t as many chairs as there are players, somebody ends up without a chair–or else sitting in somebody’s lap.  In a game of musical homes, players end up homeless, doubled up, or leaving the city altogether. Landlords and developers have freer rein to raise rents, knowing they will find somebody to pay, reducing the supply of affordable housing. Even if the new developments that would have been created would have been expensive housing, they help to create more slack in the rental market, removing the ability of landlords of cheaper places to raise their rents.

Giving development taxes to Affordable Housing providers creates constituency against allowing more development

There are many supporters of Affordable Housing in the city.  Providing a mechanism that allows some types of new housing to be created only if it they pay for Affordable Housing provides a strong reason for these supporters to oppose any measure that allows other types of housing unless it also creates Affordable Housing. It also provides a much stronger incentive for people to oppose lifting restrictions on building because the taxes that are raised by allowing developers to buy out of those restrictions are dedicated to a particular, organized constituency.

This has happened at City Council most recently in the discussion of a very positive development to allow the creation of more affordable housing.  The ordinance would allow developers to build more small housing units per building in some places than they previously could and also allows them to reduce one of the most expensive amenities housing can provide: a parking space for each unit. This measure encourages the creation of more affordable housing. Developers are always trying to balance the costs of building a unit against the potential rent they can charge (or price they can sell it for).  Some would opt for a high-cost, high-rent model, while others for a low-cost, low-rent model. What this ordinance does is allow some of the costs to be foregone (parking) and others spread out over more units (land), but only if the developer creates smaller, less desirable, more affordable units. This promotes affordable housing in two ways: directly, by encouraging developers to opt for a lower-cost, lower-rent model; and indirectly, by providing more homes overall for the game of musical chairs.

At Council, however, the biggest concern with the ordinance was that, by allowing developers to create affordable housing without requiring them to build parking spaces, the city would lose leverage over the developer to force them to create Affordable Housing. In other words, Affordable Housing advocates were afraid that if developers were allowed to build more affordable housing, they may not agree to build more Affordable Housing.

Words

If that previous sentence–and this entire article–wasn’t confusing to you, you may have been involved in Austin politics too long.  I intentionally made it difficult to read, to help clarify just how crazy using the same words to refer to different concepts can be. There have been many proposals for terms that would help clarify this (e.g. “social housing” instead of “Affordable Housing”, “affordable housing” as a condition (affordability) of housing, and “Affordable Housing” as a housing product type). My plea to my readers is simply this: when talking about either, be clear which you are referring to. When listening to people talk about either, make sure they clarify which they are referring to. If somebody reports on the number of “Affordable” units in the city, make sure they are clear about whether they are counting only means-tested Affordable Housing units or all housing units that don’t cost that much.

And a special plea to the journalists and editors out there: please, please, develop a house style that brings clarity to this issue. When you use the words “affordable housing” to refer only to Affordable Housing (as, say, the Chronicle does here), you are doing your readers a grave disservice and confusing the issue.