How Do We Respond To The Developers’ 100,000 Unit Target?

By Bill Oakey – August 2, 2015

While relaxing in a chair a couple of evenings ago, I was hit with an emailed blog posting with the craziest juxtaposition of terms that I’ve seen in a long time:

The Premise: “Austin Rents Are Too High. That Is a Serious Affordability Problem.”

The Cause: “It Is a Simple Problem of Supply and Demand.”

The Solution: “Build 100,000 New Housing Units As Fast As Possible. That Will Magically Make Austin More Affordable.”

The blog posting in question was fired from a cannon on Friday by American-Statesman reporter Marty Toohey. The main theme of the blog is that the Real Estate Council of Austin (RECA) has established a 100,000 target for the number of new housing units that will transform Austin into an affordable city.

At Long Last! Relief is Finally On the Way!

In the old days, the Alka-Seltzer pain reliever ads promised to bring us a lifetime of happiness. Their slogan was “Relief Is Just a Swallow Away.” The Statesman blog posting suggested that Mayor Steve Adler has already swallowed RECA’s affordability potion. But I have to wonder if he read all of the fine print in the warning messages that accompany their prescription.

alka-seltzer

The Number One Goal, In Fact the Only Goal, Is to Build “An Austin for Everyone”

Those of us who attended the Austin Monitor’s CodeNEXT panel discussion on July 27th, got a jaw-dropping introduction to the “come one, come all” approach to meeting the challenges of Austin’s growth. In the most unabashed manner imaginable, panelist Steve Yarak from a group called AURA repeatedly championed the mantra, “Let’s build an Austin for everyone.” His entire storyline from beginning to end was that every facet of Austin planning should focus on bringing as many people here as possible, as quickly as possible. To accomplish that one and only goal, we need to build, Build, BUILD – as many housing units as possible, with reduced regulations and as few zoning restrictions as possible. Build, build, build. Do it now. Do it fast. And don’t let anybody or anything stand in your way.

This unapologetic fervor on the panel was followed by sprinklings of applause, delivered in slices by pockets of followers who had swallowed the potion. Others in the audience who came out of curiosity or to learn how CodeNEXT might affect their neighborhoods, saved their applause for panel members Jim Duncan and Jeff Jack. Both of them have long histories in Austin and hard-earned reputations for balancing the exuberance of growth-at-any-price against neighborhood preservation and the interests of long-term residents.

More Growth at a Breakneck Pace Is the Solution to Affordability…Really?

Let’s put that proposition to a test with this list of questions:

1. Austin has grown tremendously since the 1970’s. Is the city more affordable now than it was in the 1990’s? the 1980’s? the 1970’s?

2. A major push to build more rental units was undertaken last year. Did the increased supply lead to lower rents? (Average rents actually increased 6.6% to $1,172 in the past year).

3. When new luxury housing units are built in older established neighborhoods, do those neighborhoods become more affordable as a result? Or do they become gentrified, with taxes rising so fast that older residents are forced to leave?

4. Transportation is the second leading component of affordability, behind housing. Is transportation more affordable in Austin as a result of rapid growth? Has growth led to improvements in traffic congestion?

5. The fastest growing cities in the country include Portland, Seattle, and several major cities in California. Are any of them more affordable now than they used to be?

Is There Some Way to Address the Challenges of Growth, While Admitting the Realities of Affordability?

Like any other problem in life, the first step toward solving it is to admit that there is a problem. Then that problem needs to be approached with openness, honesty, and a willingness to balance the needs and desires of everyone. Austin has been designated the most economically segregated city in America. It is clearly not affordable for several significant categories of people:

1. People who work for low wages, who need to be paid more for what they do, and who deserve better opportunities for better jobs.

2. Older people on fixed incomes, or who retired from jobs paying much less than today’s market salaries. These people make up a growing percentage of Austin’s population.

3. Long-term residents who struggle to make ends meet, as their neighborhoods become gentrified and they face high transportation costs if they move to the suburbs.

Here Is the Biggest Question That Many of Us Would Like to See Answered In a Positive Way…

Will our new mayor and our first 10-1 district City Council spend as much time and energy addressing the needs of long-term residents and existing neighborhoods as they do in answering to the whims and wishes of big business, the developers and the real estate industry? It takes six votes to pass an item on the City Council agenda. It also takes six votes to defeat one. Everyone has an opportunity to influence those votes and to take note of them after they have been cast.

We also know that five Council members – Greg Casar, Sheri Gallo, Delia Garza, Leslie Pool, and Don Zimmerman will be up for re-election next year.

If anything in this posting leaves you feeling a bit uneasy, don’t take any medication without reading the warning label. As an alternative, you might consider reaching for a drink, while listening to Eddie Noack’s 1959 song, “Relief Is Just a Swallow Away.” (Later recorded by George Jones).

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12 thoughts on “How Do We Respond To The Developers’ 100,000 Unit Target?

  1. Todd

    This idea that everyone and anyone should be able to live in Austin is absurd. People who cannot afford to own or rent inside the city limits should live in a suburb or in the country. They will need to drive in or find a bus if they work in Austin. It has always worked out in the past. Politicians should stay out of the free market. Todd Jones

    Sent from my iPhone

    >

    Reply
  2. ljcurtis

    Hey Bill. Didn’t know you were a CW fan. Thanks for sharing!

    We need to answer those very important questions you asked.

    We also need to make sure we have a cross-partisan effort across the city and region that unites homeowners and renters. Methinks the growth lobby is really about no-growth as they push the city towards one giant “correction”. These are reckless times.

    Don’t give the millennials away to these ruthless people. Ultimately all our futures are at stake.

    Reply
  3. Larry Sunderland

    If you don’t imbed the strategy for housing within the real world you cannot hope to ever make any progress. No one on any side of this issue is doing that. Who is talking about the institutional investors who are driving the housing market and their expectations of ROI? Who is talking about these investors and how the decline in the power of foreign currencies and what that means to investment in US real estate as these foreigners seek haven in the best of the worst currencies? Who is talking about current “affordable housing” and how the city helped create an insurmountable problem by ignoring for generations health and safety issues in multi family complexes and now cannot crack down without putting thousands of folks on the street? Who is talking about lenders and insurance companies that constrain housing types to protect their investments or their risks? Who is talking about a bureaucratic cesspool that even if we were to overcome all the other issues would still be a nightmare to deal with and sustain? Who is talking about the industrial affordable housing industry that is sucking up government monies and not even beginning to meet the needs? Who is talking about our trade agreements that have devastate our working classes and driven down wages? Who is talking about the very real decline in resources and the ever increasing demands on the remaining?
    Removing barriers to development that can be removed will change little. Attempting to preserve a vision of Mayberry in a dystopian world is equally fruitless. People have to realize that their is no Silver Seed to the Sun fueled up at city hall waiting to take us all away. So quit patting your favorite city hall rats on the back and get real.

    Reply
  4. itsmeink

    We’ve been back & forth with Mr. Yarak & other AURA folks on the neighborhood list serve. This organization which calls itself “grassroots” also “funds itself”. They do not reveal their membership online or what groups are involved in their funding. They have issued a pro-ADU (Accessory Dwelling Units) video recently– calling them the charming & or innocuous sounding “Granny Flats” or “Alley Cottages”– adorable? Meanwhile in E. Austin houses are being bulldozed for houses with ADUs– both of which will likely become Commercially Owned Short Term Rentals.

    They basically advocate cramming apartments (mainly) and dwellings everywhere– without regard to current zoning or the existing residents. They claim the infrastructure will work itself out eventually. Presumably when people can no longer get where they are going, then the city will then be retrofitted with the appropriate infrastructure. They have a 40 page report they say explains everything. These guys are full of certainty that this model will accommodate the great influx of people which we are somehow supposed to welcome– at the expense of the existing residents. Absolutely terrifying.

    Reply
    1. Larry Sunderland

      Not a member of AURA or ANC. Both organizations have been very effective in getting their message across. So what does that have to do with affordability? What is terrifying is the future that will sneak up and crush your dreams while you piss about and degrade the honest efforts of others.

      Reply
  5. mdahmus

    Bill, you are delusional. AURA is a grass-roots organization funded by its members mainly through yearly dues, and many of its members and supporters (such as Steven or myself) are actually arguing against our own parochial self-interest as property owners, unlike the narrow, selfish, behavior behind the ANC.

    Reply
  6. Jason Briggeman

    Someone who *really* wanted to know who AURA’s members are would go to one of AURA’s frequent public meetups and ask people their names. They’re not shy.

    AURA does not require ordinary members to have their names published on the Internet, since that would be ridiculous. AURA’s board members are listed here: http://aura-atx.org/who-we-are/ They’re all quite engaged and open about themselves, on Twitter for example.

    Re: funding, AURA hardly spends any money, so it’s perfectly credible (and true) that there are no “groups” funding them. AURA writes things, and tweets, and sends representatives to speak at panels, and occasionally has a meetup at a bar or in someone’s backyard. None of that costs squat.

    And, AURA originated in a very public fashion, with the founders and early members finding each other on online forums about urbanism, then they met up, then they organized and started speaking out. Again, someone who *really* wanted to know about AURA’s origins would just scroll back through the last three years of their Twitter accounts. It’s all there.

    But, of course, “itsmeink” (whoever that is!!) doesn’t *really* want to *know* about AURA. He or she would rather continue refusing to know so that he or she can continue whispering darkly about them.

    Reply
  7. Seth Goodman

    Alright, I”ll bite:
    1. Austin has grown tremendously since the 1970’s. Is the city more affordable now than it was in the 1990’s? the 1980’s? the 1970’s?
    By “grown” do you mean population or housing stock? Before you say “both” remember that RECA, AURA, et. al. have argued that housing stock has not grown AS MUCH as population, and that in turn is driving rents higher. As for who is causing everyone to move to Austin, I think some of the credit / blame should go to our state government for bribing companies to move their offices here from other states. Most urbanists have little interest in whether the overall population goes up or down. What we are interested in is whether that population is able to live centrally in walkable, transit oriented neighborhoods, or whether most people are forced to the car-dependent fringes. Fighting construction in the center will inevitably lead to the latter.
    2. A major push to build more rental units was undertaken last year. Did the increased supply lead to lower rents? (Average rents actually increased 6.6% to $1,172 in the past year).
    A better question to ask would be: Has the recent increase in housing supply been enough to satisfy the existing backlog of demand plus the additional increases in demand over that time? I would answer that it has not.
    3. When new luxury housing units are built in older established neighborhoods, do those neighborhoods become more affordable as a result? Or do they become gentrified, with taxes rising so fast that older residents are forced to leave?
    It depends on your definition of luxury and what kind of new housing we are talking about. When an old bungalow is torn down to make way for a larger, more expensive single family house, of course the result is gentrification. No one in AURA is arguing for bungalows to be replaced with new single family mansions. However, if an old bungalow is torn down to make way for a multifamily building, the overall property value may increase while the per unit price decreases. Many of the new apartment buildings going up are marketed as “luxury” but really aren’t. It’s an overused buzzword that real estate types are fond of. In my case, the “luxury” apartment that my wife and I live in is the only way we can afford to live where we do. We could never afford to rent one of the nearby “established” houses.
    4. Transportation is the second leading component of affordability, behind housing. Is transportation more affordable in Austin as a result of rapid growth? Has growth led to improvements in traffic congestion?
    Despite a recent increase in multifamily building in central Austin, it is still a drop in the bucket compared to massive amount of (less visible) building that has happened on the fringe. The huge increase in sprawl is to blame for Austin’s traffic problems, not the relatively small amount of building happening downtown, West Campus, etc. Do you know anybody who bikes to work from Circle C? How many people take the bus from Anderson Mill? Remember when Round Rock used to be its own town? You won’t find anyone in AURA arguing for more growth on the fringes. You will find them advocating for better transportation solutions that don’t involve turning I-35 into the Katy Freeway. It’s also worth noting that a lot more students are able to walk to campus rather than drive due to all of that West Campus construction.
    5. The fastest growing cities in the country include Portland, Seattle, and several major cities in California. Are any of them more affordable now than they used to be?
    A lot of people all over the country suddenly decided they wanted to live in the city rather than on the suburban fringes. There are not enough dwellings in central cities to accommodate them so prices are going up everywhere. Existing residents across the country have fought new building, but obstructing new supply has not make the demand go away. Additionally, existing residents’ demands that all new housing provide an over-abundance of expensive garage parking has driven construction costs much higher than they need to be. The average garage parking spot in the U.S. costs $18,000 to build. Garages here in Austin are never full, but all we ever hear are demands for more, more, more. Despite what some would claim, development costs do affect rents. We need to stop requiring parking and start requiring apartments to lease parking separately in order to encourage alternative transportation. If there are spillover problems, these should be addressed with meters or permit only parking for existing residents.

    Reply
  8. Patrick Goetz

    This is a nice encapsulation of the ANC crowd’s arguments, and highlights their sense of entitlement; i.e. because they’ve been here longer (mostly because they’re older), they deserve special attention. Not much to do about that, but it is important to push back on the Fox News-like questions. For example:

    > 1. Austin has grown tremendously since the 1970’s. Is the city more affordable now than it was in the 1990’s? the 1980’s? the 1970’s?

    The “I don’t know how markets work” argument. Of course growth (in population, when the housing market is artificially restricted from responding) reduces affordability; it’s a supply and demand issue, which is what AURA is trying to address.

    > 2. A major push to build more rental units was undertaken last year. Did the increased supply lead to lower rents? (Average rents actually increased 6.6% to $1,172 in the past year).

    New housing is never going to reduce cost except when followed by a recession or mass exodus. It’s all about reducing the increase in the cost of housing, not making it go down. Nothing, short of the economic catastrophe some likely long for, will do that.

    > 3. When new luxury housing units are built in older established neighborhoods, do those neighborhoods become more affordable as a result?

    Straw man attack: No one is arguing for more luxury housing in neighborhoods; in fact, this is the market’s response to restrictive SF-3 zoning; it’s a symptom of NOT easing zoning restrictions so that more small-scale multi-family units can be built instead.

    > 4. Transportation is the second leading component of affordability, behind housing. Is transportation more affordable in Austin as a result of rapid growth? Has growth led to improvements in traffic congestion?

    This is the best argument of the bunch, since there is some subtlety here. The fact is that there hasn’t been enough density increase to improve transportation; i.e. we haven’t achieved a critical mass which would necessitate a better public transit network; mostly because of the decades-long political clout of the ANC restricting infill development.

    Reply
    1. Bill Oakey Post author

      The neighborhoods have many valid concerns about how much density can be reasonably absorbed into the limited roadway systems. Who would want to wait through three or four light changes to get through every intersection? And who wants to listen to loud brawling patrons at bars at 2:00 in the morning? It’s all a question of carefully looking at each project and each set of circumstances. A one size fits all approach, or a free for all against zoning would not be good.

      Reply
      1. Patrick Goetz

        I agree with this. The issue right now is that small-scale multi-family infill isn’t allowed in most of Austin’s urban core even when the neighborhood approves. Also, one moderating issue one must take into consideration is that no one wants additional density/development near their own house. I have a book on tips for building a house written by an old (i.e. 80-yr-old) contractor . One chapter addresses this issue, and entirely in the context of suburban single family homes. He comments that if there is a vacant lot on a street and someone wants to build a house on that lot, the neighbors will generally rally to do anything they can to prevent this from happening because *they prefer it to continue to be a vacant lot*. This is why you can’t just leave development questions entirely up to neighborhood approval. In my neighborhood just north of Hyde Park there is roughly one tear down a week of some old bungalow. These are almost always replaced by huge, ugly, $600K single family houses, albeit always with a coach house apartment in the back these days. If you agree with me that we would be better off with moderately priced small-scale multi-family infill, then we have to have zoning regulations which can accommodate this kind of development.

        Regarding bars, no one is talking about modifications to the noise ordinance or allowing for loud social activities in largely residential areas — I have small children and would oppose this myself.

        Regarding transportation, this is a cultural issue. I hardly notice traffic in Austin. I live central and bike to work, bike my kids to school, and generally shop near my house. What traffic? Sure, it sometimes takes a couple of minutes to cross 38th or 45th, particularly when biking with my 5-yr-old, but that’s about it. If we had a slightly better bus system, people would start to get conditioned to use the bus more and similarly would notice traffic less, particularly if there were the political will for protected ROW transit. Many of the young people in AURA similarly bike around town or are already conditioned to taking the bus. It’s not right to restrict the housing supply because a handful of old timers can’t get used to getting around town any way other than an SOV (single occupant vehicle). Additional density / traffic woes create the political will for a better public transit system, which benefits everyone while making life livable for the visually impaired, low income, old and young. In Japan elementary school-aged children take the subway trains and rail to get to school every day — no parent taxiing required. Austin’s current density levels barely support a mediocre bus service; never mind rail or BRT. We will need to at least triple the average urban core density (easily accomplished without cramping anyone’s lifestyle or loosing any more green space) in order to be at the point where we can start talking about having an effective public transit system. However, this will require that people engage in good faith land use problem solving, not just kvetching about traffic or whatnot.

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