Austin Contrarian

What's for sale in central Austin? (3/07 edition)

Past editions are here and here. 

My search results (run on 3/31/07) are below.  Here are the parameters I used:  1400+ square-foot; single-family; active MLS listing; $300,000 or less.  (See here for an explanation.  I exclude condominiums and townhomes even if they are listed in MLS as "single family.")

South Austin (MLS areas 6 & 7):  One.  (There were three last month.) 

North Austin (MLS areas 1B, 2 & 4):  21.  (Up from 18 last month.)  Almost all are in the Crestview, Wooten, Allandale or Highland neighborhoods.  There are none in the rectangle bounded north-south by 45th and Town Lake and east-west by I-35 and MoPac. 

East Austin (MLS areas 3 and 5):  42, down from 48 last month.

See you next month. 

Ad hoc affordability deals

Sunday's Statesman had an interesting article on the ad hoc deals developers are cutting with neighborhood groups in order to stave off neighborhood opposition to the their re-zoning requests.

I did not know until I read this article that two of these deals involve the payment of large sums of cash to the neighborhood associations:

1.  The Bouldin Creek Neighborhood Association will get $500,000 from the developers of the Fairfield condo project next to the Hyatt Regency.

2.  OWANA will get $300,000 from the developers of a VMU project at 5th and Pressler.

Both neighborhood associations ostensibly will use the money for affordable housing projects of some kind.

My reactions, in no particular order:

1.  Paying neighborhood associations to promote affordable housing is like giving the fox money to invest in hen-house security systems.  If these neighborhood associations really cared about holding down spiraling housing costs, they would promote denser development rather than fight it, and they would open more residential acreage to multi-family.  Their single-minded battle to preserve the status quo in the face of surging demand for housing is affordability's real enemy.

2.  Having said that, I'd be interested in learning exactly how these two neighborhood associations plan on spending this cash.  Who knows, maybe they'll do something useful.  Will they use this money to subsidize the construction of new, permanently affordable multi-family?  Will they use hand out housing vouchers to low-income residents?  Or donate the money to one of Austin's established affordability non-profits?  "Affordability" is an awfully vague mandate -- it could include anything from these suggestions to subsidizing property taxes to offering down-payment assistance.  If you take the view -- as the Bouldin Creek NA president apparently does -- that new construction causes high prices, I suppose preserving affordability might even mean fighting off new development.  (Yes, I've heard of gentrification, but I think there are relatively few instances in which new construction actually increases the amount of demand for housing in a neighborhood.)

3.  How will we know how these two neighborhood associations spend the money?  I don't believe that neighborhood associations are government units subject to the open records act.  I would be surprised if they keep their plans a secret, but it probably will be impossible to compel any kind of accounting.

4.  Neighborhood association boundaries suddenly matter a great deal.  Take the Fairfield project, next to the Hyatt Regency on Town Lake's banks.  That parcel is not within a quarter mile of a single-family home in the Bouldin Creek neighborhood.  On the other hand, it is directly across the South First Street bridge from City Hall and the Second Street Retail District.  Practically speaking, it is an extension of downtown's housing boom, and more naturally belongs to the downtown neighborhood.  You might disagree. What is beyond debate, though, is that potentially hundreds of thousands or even millions of dollars now depend on some fairly arbitrary line drawing.

5.  I'm not opposed in principle to cash payments.  Neighborhood associations have always used their political clout to extract valuable concessions from developers.  The true cost of these concessions usually is very difficult to value, particularly since the developer has an incentive to overstate the cost.  Cash payments are transparent.   They also may make a deal possible where the developer otherwise is unable to offer in-kind concessions sufficient to satisfy the neighborhood.

6. Cash payments also make it clear that, at the end of the day, most zoning battles are over wealth transfers between one group of property owners (usually, a single owner) and another group of property owners (the homeowners).   A project may inflict externalities like extra traffic congestion on a neighborhood.  In an ideal world, those externalities could be precisely valued and the developer required to write a check for that amount.  Precise valuations like that are not possible.  This gives neighborhood associations an opening to demand more than is necessary to compensate them for the project's bad effects -- an opening some exploit quite skillfully, in my opinion.  I suspect that cash payments will make it easier to show what they are up to.

South Lamar's spontaneous redevelopment

When I moved to South Lamar in 2001, South Lamar was teetering between "scruffy" and "seedy."  Yes, it had its share of icons, with the Broken Spoke, Saxon Pub, and Taco Xpress.  But it had more than its share of porn shops, "lingerie modeling" studios, and run-down laundromats.  It seemed to have everyone's share of used car lots and auto repair shops.  Almost every block had at least one failing business.

Over the last few years, South Lamar has seen a slow but steady rejuvenation.  It has happened one building at a time.  The turn started three or four years ago, when a long, low-slung porn shop just south of Oltorf was remodeled and carved up into a row of brightly-colored shops.  The street instantly lost one of its more menacing facades.  A few blocks north, a studio that had openly advertised "live lingerie modeling" was converted to (what I assume is) a legitimate clothing store. Nearby, a vacant building that had housed a Tuscan art studio was rehabbed into seven spanking new shops, including a barber shop, beads store, and lingerie shop.  To keep up with its neighbor, the 1960s-era strip center next door had to get a face lift.  Small, new office buildings have sprung up just off South Lamar on Collier. Citibank has opened a new branch. 

Will Mueller really be "mixed use"?

My expectations for Mueller were set by statements like this one from the City of Austin's RMMA redevelopment page:

A fundamental principal [sic] of the RMMA development is the creation of a higher intensity mixed-use community that will not depend solely upon automobiles for its transit needs. Residences and employment facilities will be developed within walking distance of one another, along with shops, open space, and future transit facilities. It is expected that many people will choose to live in the new community because of the level of convenience and the ability to avoid heavy traffic.

The key phrase there is "walking distance."  I like the idea of stepping out my front door and walking to the neighborhood bar or restaurant.  A lot of other people must like this idea, too, because that's how Mueller's been marketed since the start.

I can see that narrow lots are a prerequisite to having a walkable "village."  If you chop the standard suburban lot in two, you can put the same number of people on half the amount of land and cut the walking time in half.  What would have been a twenty-minute walk (a car trip, more likely) becomes a ten-minute stroll.   

It's not enough just to lay out a bunch of narrow lots, though.  Exploiting the density requires actually putting the retail near the residential.  Otherwise, you haven't shortened the walk.  A twenty-minute walk is a twenty-minute walk, whether you're walking past 45'-wide lots or 90'-wide lots.

This is my main concern about Mueller.  I'm beginning to worry that many of the single-family homeowners will still be a car-drive away from the nearest retail, even after Mueller is built out.

Take the homes near the red dot.  It is over 4,000 feet on a line from the red dot to to the blue dot (Town Center).  It is well over a mile over the street grid.  That is a long way.  Your typical homeowner isn't going to make that walk, at least not very often.

It's not clear that these homeowners will have a closer alternative.  The plan calls for some mixed use at the southern edge (green dot).  This conceivably could include retail, including restaurants and cafes.  But the Catellus rep told me that that ultimately depends on the specific development.  It may have retail if it's developed as apartments, but it won't if it's developed as condos. 

There don't seem to be any other good options for homeowners in the southern third of the development.  The map there is basically all yellow (residential). If retail gets shut out of the mixed-use development around the green dot, I think these homeowners will be getting in and out of their cars more than we'd expect for urban "villagers."

The political calculus of congestion pricing

There's a good article here by some UCLA urban planning professors on congestion pricing.  They argue that congestion pricing has structural political barriers that cannot be surmounted merely by pointing out that it is economically efficient:

Policymaker's great sin of omission -- their failure to price the roads -- is not the result of senseless intransigence, or of their inability to "get it."  Congestion pricing looks good only from an economic perspective.  Politically it looks risky and potentially disastrous.  We cannot assume that people will vote for congestion pricing simply [because] it is economically efficient.  The solution is not to make drivers want congestion pricing.  Good ideas require advocates, and successful advocates are rarely those who pay the costs.  Only the prospect of significant rewards will create strong advocates.  Most discussions of congestion pricing's political acceptability revolve around using the toll revenue to buy the acquiescence of drivers, but acquiescence will not generate strong political support, and it is in any event highly unlikely.

. . .

We contend that the toll revenue should be earmarked for cities, preferably the cities that are penetrated by the freeways.  Cities are well organized and large enough to be powerful, but small enough to engineer consensus among their constituents about how to spend the money.  The toll revenue can advance both environmental and equity goals, provided these goals do not undermine the political incentives for local governments to pursue congestion pricing.

I think they're probably right about the politics.  Imagine if Austin were allowed to capture the revenue from congestion pricing I-35.  Our city council (any city council) would be all over that -- a 25% or more budget increase, for free.

It's not like congestion tolls have to be spent for a specific purpose.  Tolls used to finance construction (SH 130, 183A) are dedicated to retiring construction debt.  But congestion-toll revenue reflects the cost of an externality, not the cost of capital; it can be spent however the recipient sees fit.

I think the virtue of this idea is also its drawback, though.  Giving the money to cities creates a powerful lobbying group, which is great for getting congestion pricing put into place.  But giving the money to cities creates a powerful lobbying group, which is bad for getting congestion prices set at the efficient rates.  Cities will lobby to maximize revenue, not efficiency.  Overcharging is the likely result.   

Oh, I missed the final report

When I wrote about the Affordable Housing Incentives Task Force last week, I didn't realize it had submitted its final report.  (The task force's web site only had the draft report at the time.)

Here's the final report.

Disappointing.  I guess the draft recommendations would have produced too much new, permanently-affordable housing.

One of the draft's best ideas was to permit automatic up-zoning of multi-family property in return for "deep" affordability guarantees.  That is, a developer who set aside 10% of the units for 60% MFI would get to develop any MF-2 or denser property at MF-6 densities.

In English:  MF-2 property is limited to a density of 24 or fewer units per acre.  (It depends on the number of bedrooms in the units).  MF-3 has a slightly higher cap, and MF-4 and -5 even higher.

MF-6 doesn't have a hard cap.  It has minimum open space requirements (100 sq. ft.) per unit.  And it has height limitations and setback limitations.  But there is no pre-set density limit, even though there is a practical limit.  Depending on the height and setback limitations, an MF-6 property might hold two or three times as many units as an MF-2 property.

The draft report allowed a developer to redevelop low-density property as high-density property in exchange for reserving 10% of the units for families who make less than 60% of the median family income.

The draft report protected the neighborhoods by imposing hard height limits on up-zoned properties.  It also required developments to comply with neighborhood compatibility standards.  This was a good compromise: increased density + affordability in return for protecting neighborhoods from "inappropriate" mass and scale.

The best part of the deal, in my opinion, was that it would apply pretty much everywhere.  Any MF-2 or denser property, developed or undeveloped, would be eligible for denser development.  That's a lot of property.  There are a lot of 70s-era, low-density complexes out there.

Alas, it was too good to be true.

The final report limits this up-zoning entitlement to "greenfield" sites:  "sites that are zoned multifamily but have no developed housing units."  I haven't conducted a survey, but I'll wager there aren't a whole lot of large, completely undeveloped, multi-family sites in central Austin.  (Some people call these "meadows," although the more accurate term for many may be "flood plain.")

So between the draft report and the final report, most multi-family property was taken out of play.  And this particular recommendation lost any real bite.

Oh, if you want to know who fought to obstruct dense redevelopment, read the task members' draft comments here.  (The task force had affordable housing advocates, developer representatives, and neighborhood/ANC advocates.  If you can't tell who is who, the people complaining about the multi-family recommendation are the neighborhood reps.)