Housing Target

Austin’s new housing plan restricts housing supply and puts units in the wrong places. Its recommendations will accelerate the carving out of Austin’s current middle-class residents.

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The City of Austin is in the process of adopting a “comprehensive” housing plan (PDF) that will guide how elected officials and the housing bureaucracy make housing policy decisions.  Specifically, the plan recommends a housing unit target that will inform zoning policy and fiscal choices for the next decade. The plan’s ten-year housing production goal of 135,000 units has already been adopted by the Mayor as his policy for Austin’s high-stakes land development code re-write.

As it turns out, the oft-repeated “135,000 units” goal mentioned in the plan is actually a recommendation for 60,000 subsidized units and 75,000 “market” units.  If the plan’s recommendations were faithfully implemented by policymakers through zoning entitlements and spending choices, it would approximately triple the share of the housing market that is subsidized, as well as a dramatically reduce the share of “market” units being built in Austin today.

The 135,000 total housing number was arrived at by multiplying the 2015 unit count by a 2.95% annual growth rate. That rate is a mix of Austin’s expected population growth slow-down (2%) and the region’s expected continued higher growth (3.4%). However, by proposing an unprecedented increase in the share of subsidized housing, the annual “market” production is reduced to 7,500 units.  This represents, essentially, a halving of recent market-rate housing development, as Austin averaged 17,750 almost exclusively market-rate permitted units between 2011 and 2014.  Given expected regional job creation, this would create substantial housing cost burdens for middle and upper-middle class households trying to live in Austin, and would make it nearly impossible for lower income families to live in the city while paying market rates.

However, the plan’s recommended subsidized housing target is not realistic; and this potentially creates a lot of confusion about the 135,000 number.  While a new unit costs between $130,000 and $150,000 to build in Austin, the plan conveys that a typical subsidy for below-market-rate “affordable” units in Austin is closer to $38,000. The proposed 60,000 units at $38,000 would require $2.28 billion over the next 10 years, or $228 million per year for subsidized housing. This is a very very large number.  For the 2016-17 budget year, the entire operating budget for the Austin Fire Department was $192.3 million.  Our recent bond programs’ scale has been closer to $10.8 million per year.

Let’s assume for the sake of discussion that the City could mount an extraordinary political and community mobilization to indeed find the resources (through general fund spending shifts, new linkage fees, and continuous referendums) to spend the equivalent of our recent “Affordable Housing Bond” referendums each year of the coming decade.  That would give us the $570 million necessary for 15,000 new subsidized units. That growth in subsidized housing is paired with the 75,000 “market” units under the “Reality Boundary” scenario.  Under this scenario (even if you shift tens of thousands of unused units from subsidized into the market category) the middle-class exodus would still be accelerated relative to the status quo and there would obviously be fewer subsidized units than in the original proposal.

The plan makes some gestures at requesting that new units be spatially allocated to encourage mode shift away from car commutes. However, these recommendations are not ambitious and are likely to replicate the region’s existing sprawl approach. For example, the plan allows for 75% of the subsidized housing to be placed beyond a 1⁄4 mile of high frequency transit.

An improved plan would feature (1) a “market” rate housing construction target that is based on the actual demand in the region (i.e. at least use the 3.4% growth rate) instead of arbitrary arithmetic, (2) a subsidized housing goal that is realistically based on attainable local subsidies and productive uses of those subsidies, (3) district-by-district, and corridor-by-corridor housing targets for subsidized housing, and (4) spatial allocation of new housing that can realistically lead to a majority of commuters not relying on single-occupant vehicle trips.

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