Austin Contrarian

Vertical mixed use: The grown-ups go first

On Thursday night, City Council began considering the neighborhood opt-in/opt-out applications for vertical mixed-use zoning.   First up:  South Manchaca, Bouldin Creek, and Greater South River City (Travis Heights and the St. Edwards area).  (I've posted a short primer on VMU here.)

Back in February, Council foolishly amended the VMU ordinance to permit neighborhoods to recommend that specific properties be opted out of the VMU district.  I am confident that it will regret that vote.

But not on this Thursday night.  Both Bouldin Creek and South River City acted responsibily.  South River City asked to opt out one property; Bouldin Creek did not ask to opt out any.  South Manchaca, which didn't have any properties originally zoned VMU, asked to opt in several properties, mostly decrepit strip malls.

VMU is off to a good start.

Brewster commended the neighborhoods, citing them as proof that Austin's neighborhoods are unfairly tagged as anti-density.  Perhaps he just meant Bouldin Creek and South River City.  He knows perfectly well that many neighborhoods have asked to opt out broad swaths of property.  (Allandale's application is best understood as a temper tantrum; it has asked to opt out all properties except Northcross Mall and a tiny strip along Burnet.)

The city has posted the opt-out applications on its website.

A VMU primer

Every time I post on the Vertical Mixed Use ordinance, one of the commenters asks me what it is and why it's a good thing.  Here's a very short VMU primer.

For reasons that I still do not understand, residential development is forbidden on commercially-zoned tracts.  Since most properties lining busy streets are (understandably) zoned for commercial uses, there are few places on these streets to add new housing.  But it is difficult to add multi-family residential in neighborhood interiors -- neighborhoods fight it tooth and claw.  This leaves little room for new multi-family, at least without a zoning fight.

VMU zoning is supposed to fix that.  The "VMU" designation permits residential development on commercially-zoned tracts on "core transit corridors" (major streets like Lamar and Riverside), unless they have been specifically opted out.  The VMU ordinance promises to open up thousands of new tracts for residential development. 

VMU comes with strings attached:  the residential must be bundled with ground-floor commercial or office uses (whence "mixed use"), and the development must meet stringent design standards.  (The ordinance even specifies minutiae like glass height and tinting in excruciating detail.)  VMU projects remain subject to compatibility (height), impervious coverage, floor-to-area ("FAR") and density limitations (where applicable).  However, FAR and density limitations are waived for developments that reserve 10% of the units for affordable housing. (A density limitation  -- "minimum site area requirement," in code lingo -- is an anachronistic suburban-style zoning tool that limits the number of units per acre, regardless of the allowable height, lot coverage, or floor-to-area ratio.)

The waiver of FAR limits is important.  For example, the FAR limit for a CS (general commercial) lot is 2.  This means a half-acre lot can hold a 43,560 square foot building.  That might sound like a lot, but that's just a three-story building, assuming development to the minimum setbacks.  The height limit might permit six stories, though, which means the FAR restriction chops the buildable area in half.  Waiving the FAR limit might give the development 25%-100% more space.  (Density limits are even more draconian when they apply.) 

Neighborhoods get a say in the process.  They get to set the level of affordability necessary for the FAR/density waivers -- e.g., 60% or 80% of median family income.  Or they can opt out of the relaxed dimensional requirements completely.  They can relax the minimum parking requirements.  And they have the option of opting in properties that were not originally zoned VMU.

As originally drafted, the VMU ordinance did not permit neighborhoods to opt properties out of VMU altogether.  That was one of the ordinances' strongest features:  it eliminated the contentious property-by-property haggling that marks Austin's land-use regulation.  However, in February 2007, Council amended the VMU ordinance to permit neighborhoods to recommend that specific properties be opted out of the VMU district.  Some neighborhoods, predictably, now want to scale back VMU zoning. 

Council began considering neighborhood applications in November 2007.  Since 40 or so neighborhoods filed applications, the process will drag on into the spring of 2008.  By the time it's done, though, there should be a lot more room for residential development in central Austin.

My favorite baseball blog

Fire Joe Morgan.  Written by a bunch of statheads who really hate Joe Morgan and every baseball writer who is proudly ignorant of sabermetrics.  It's the only blog on any subject that makes me laugh out loud every time.

Where density bonuses make sense (updated)

I've been bashing density bonuses lately because they raise the price of density downtown.

But there are rare occasions when they make sense.  The new development off Barton Springs Road, near Zilker Park, is one of them.  We ought to use density bonuses to encourage developers to maintain the stock of restaurants along Barton Springs Road.

Development sometimes poses a collective action problem.  Each development would benefit if everyone provided a public good (good sidewalks, retail, etc.), but no developer has an incentive to provide it unless he has an assurance that everyone else will provide it too.

Take the sidewalks downtown.  Developers have an incentive to under-invest in sidewalks.  Most of their benefits are captured by passers-by rather than the condo's residents.  Even if a developer decides to spend lots on his building's sidewalks, he has no assurance that any other developer will do the same.  It doesn't do any good to have good sidewalks along one block if the rest of them suck. Thus, left to themselves, developers usually build narrow, cheap sidewalks.

But everyone is better off if every developer builds good sidewalks -- wide, lined with trees and benches, with awnings to break up the sun.  Good sidewalks become public places that encourage loitering, which makes the area safer and encourages retail, which encourages more foot traffic, which provides more safety and retail . . . .  Good sidewalks enhance the value of the entire area, including the value of individual condo developments.  Developers are better off if they are required, or at least incentivized, to build them.  That gives them the assurance that they won't be throwing away their money.  This is the point of the Great Streets program.

The same goes with retail and restaurants.  It doesn't do much good to put retail in the ground floor of one building if no one else does the same; it takes a critical mass of retail to generate the necessary critical mass of foot traffic.  The same is true to a lesser extent for restaurants.  But if everyone has retail or a restaurant, and the location is good for retail and restaurants, then everyone is better off.

The city should be very cautious about intervening to solve collective action problems because it usually does not know that there is a collective action problem.  When the city mandates improvements that no one wants, even in the aggregate, then the city is just wasting everyone's money.

But we know that Barton Springs Road is a great place for restaurants:  It is lined with thriving restaurants.  That will be part of the appeal of the new condos.

It doesn't look like either the Zilker Park or Barton Place projects will leave any room for restaurants or other retail, though.  They will freeload off the restaurants already there.  But as other condos move in and displace restaurants, there is a real danger that the strip will lose the critical mass of restaurants that makes the strip a vibrant place.

Density bonuses make sense here.  Give the developers a carrot -- modest increases in density (I don't want skyscrapers there, either) -- in return for space for restaurants or other retail.  The condos will be more valuable because their residents will be assured of a continuing vibrant restaurant scene.  And the rest of us won't lose Barton Springs Road as a public space.

Update.  I should have done a little more homework.  For some properties on Barton Springs Road, there is already a (relatively modest) incentive to provide a mixed use project.  The lack of mixed-use in the Zilker Park Lofts may be the consequence of neighborhood meddling, though.

As Shilli pointed out in the comments, Barton Springs Road is a Core Transit Corridor.  This means that the new commercial design standards apply.  It also means that the Vertical Mixed Use regulations -- assuming they ever take effect -- will also apply because all of the properties along Barton Springs Road between South Lamar and Robert E. Lee are zoned commercial.  Normally, a developer would have to provide ground-floor pedestrian-oriented uses in order to put a residential development in a commercial district; i.e., VMU solves the "collective action" problem.   

There's a wrinkle (as there always is with our Land Development Code).  This area is in the Butler Shores subdistrict of the Waterfront Overlay District.  Multi-family is already permitted in the WO Districts.  In some, ground-floor pedestrian uses are required, but in Butler Shores, they are required only for properties that abut Town Lake.  However, there are (relatively modest) bonuses to encourage mixed use in WO districts.  Unless I'm misreading our labyrinthine land-use code (which is entirely possible), a developer can add residential floor area equal to 60% of the base maximum -- essentially, a 1.2 FAR for residential in a CS district.  Not as generous as VMU (which has no FAR maximum with affordable units, only compatibility requirements), but still it's something.   

So why won't the Zilker Park Lofts be mixed use?  The Statesman doesn't say, but here's the story as best I can tell:  One of the tracts was subject to a conditional overlay imposing a ridiculously low FAR.  The developer sought a zoning change, to Downtown Mixed Use, because he needed a higher FAR and he wanted to put a mixed-use development there.  After lenthy negotiations with the Zilker Neighborhood Association, though, the developer agreed to a conditional overlay limiting the development to 10,000 square feet of non-residential uses and 650 trips/day.  650 trips/day doesn't leave much room for a commercial use -- the site plan TIA projected 550 trips/day from just the residential uses.

Thus, it looks like the local neighborhood association negotiated a trip limit that effectively precluded any mixed use. 

I admit I'm reading between the lines; anyone with personal knowledge of the negotiations should feel free to correct me.  The developer initially wanted more units; perhaps he intended to abandon pedestrian-oriented uses when he couldn't get the density he wanted.  However,I have to say I was suspicious when I read the Zilker Neighborhood Association crowing about its cooperation.  It clearly had an opportunity to negotiate for mixed use.  At best, it passed up the chance.  At worst, it actively opposed mixed use through trip limits.

New look

As you can tell.

The light print against the shaded background was hard to read, so I'm trying a white background.

The big, momentous change:  I put a space between "Austin" and "Contrarian," mainly because everyone put the space there anyway.  (I figured running them together would make me easier to find on search engines.  Not necessary.) 

Zoning and trade

I've been reading Don't Call It Sprawl: Metropolitan Structure in the 21st Century by economist William Bogart.  Despite its title, it's not really another ideological entry in the sprawl debate.  He uses techniques from trade theory to analyze zoning's impacts.

His basic point is this:  A city's neighborhoods trade with one another just like countries do.  The typical downtown imports labor and buildings, and exports, say, financial and legal services.  A bedroom community exports labor and imports services.

One of the effects of open trade is to encourage specialization by creating larger markets for services.  The larger markets make it feasible to offer more diverse services.  This is why big cities offer lots of diversity and small towns don't.  It's also why you find furniture stores clumped with other furniture stores:  an area that specializes in furniture "exports" can support a bunch of specialized niche stores. 

"Binding" zoning acts like a tariff on the import of labor and the factors of production -- mainly buildings.  (Zoning is binding when  (1) someone wants to build something that the zoning won't allow; and (2) the city won't change the zoning to allow it.)   By limiting the import of people and buildings, zoning limits a neighborhood's exports of goods and services.  In many ways, binding zoning acts like a tariff on exports.

Restricting exports from one neighborhood to the rest of the city is not costless.  Trade is inevitably shifted elsewhere -- perhaps to a place with fewer natural advantages.  And it stunts the economies of scale that  permit a rich offering of goods and services.

Another way of thinking about it is this:  Unless we want the city to be merely a collection of small towns, we need neighborhood commercial centers that serve the entire city.  This is the only way to get the specialization that makes a city more attractive (to some) than living in a small town.

Reading this book of course made me think of Northcross.  Despite RG4N's claims, the Northcross area is not "neighborhood" retail.  One day while waiting on a delayed flight, I totaled up the commercial and retail square footage in the Anderson/Burnet/Steck area.  I got nearly 2 million square feet without even counting all the little stuff.  This area is one of the city's main commercial and retail centers.

It is also the principle "exporter" of furniture to the rest of the city.  There are lots of small, specialty furniture stores in the area that would not exist without the Northcross area's agglomeration of furniture stores and other retail.  RG4N is effectively asking the City to impose export restrictions on this important trading center.  (What distinguishes this from most zoning cases is that RG4N is asking to impose new trade restrictions; usually, the neighbors are fighting the relaxation of existing trade restrictions.)

The trade perspective points up the conflict inherent in most zoning disputes.  If we consistently give in whenever local residents demand restrictions on trade, we cripple the diversity that makes the city a real city. 

"Northcross Wal-Mart fight about a lot more than a site plan"

So reads the subtitle of Michael King's piece in the Chronicle.

This was one of the sentences that caught my eye: 

So whatever happens in court, RG4N and the neighborhoods are to be congratulated for taking on the landlords and the city on behalf of the rest of us and insisting that whatever a decades-old plat says, the residents of the neighborhoods -- and the citizens of Austin -- have a right to be heard and considered on a project that will transform their daily lives.

"A right to be heard and considered" means a "veto."  Or at least the right to press the city for a veto.  The notion that the city can veto any use that stirs up enough intense neighborhood opposition underlies a lot of RG4N's rhetoric.

I agree that this is what the fight is mostly about.  I just come out the other way on it.  It's a very bad idea to give city council a veto over a project just because the neighborhoods don't like it, or they don't like the developer, or they think the project will harm their interests. 

For each piece of property, there has to be a bundle of entitlements that come free from public interference.  We can debate what that bundle ought to be.  A given piece of property could have a big bundle, or it could have a small bundle (e.g., just an entitlement for a single family home with a maximimum size, setbacks, impervious cover, etc.). But if everything is subject to public debate, every development becomes a potential political contest.  That might sound good to a progressive's ear -- "power to the people" and all.  But it is bad policy, for at least four reasons: 

1. The resulting uncertainty reduces expected returns and the incentive to invest, leading to systematic underinvestment;
2. Political campaigns are expensive -- they cost the property owner money and the neighbors time and effort -- but don't produce anything of value, and are thus a deadweight loss; 
3. A development may be welfare-maximizing and yet be vetoed because of the intense preference of a minority (the same dynamic saddles us with farm subsidies); and
4. Giving city officials unbridled discretion to decide who will make money is a recipe for corruption.

Note that I don't rely on "natural law" or some supposed innate right to do what you want with your property.  Natural law (like international law) does not exist.

There are of course lots of uses that require permission (conditional uses, variances, zoning changes, EPA permits, etc.).  But every piece of property carries a bundle of entitlements that do not require government approval.  That's a good thing.

Northcross is zoned GR.  The City made a determination a long time ago that general retail was appropriate for that site.  A Wal-Mart is a legal use for that site. RG4N's complaints about garden centers, trees, and drainage don't challenge that fact.  They are just attempts to force Lincoln/Wal-Mart to comply with the Big Box ordinance, which changed the rules. 

Some think traffic is different -- lots of people are genuinely worried about the traffic -- but it's not really.  Opponents can complain about traffic any time a more intensive use is proposed.  This is why the City has a fairly well-defined traffic-review process, established by ordinance, and overseen by professional traffic engineeers.  We should not turn traffic into a proxy veto.  Whatever the ultimate result of RG4N's lawsuit, it will not establish that neighborhoods have the right to veto projects they intensely dislike.

You may think that general principles don't matter here, that Northcross is a special case, but if we are willing to sacrifice principle here, why not elsewhere?  Don't fool yourself:  when neighborhoods have the power to obstruct a development, they usually use it.  My neighborhood fought a Walgreens on South Lamar (South Lamar!).  Neighborhoods fight piddling infill development all the time.  People will use the power they have to extract concessions.  You can bank on it.

(M1EK has posted his own reaction to King.)

My blog's reading level

M1EK writes about the same stuff, so out of curiosity I checked his blog:

I guess we're serving different market niches.

Another Northcross update: Lincoln wins the conditional-use argument

The judge has ruled that Wal-Mart's proposed garden center "may qualify as an 'accessory' use."  This means that the site plan did not require a conditional-use permit.

In other words, the site plan did not require a public hearing and Planning Commission approval.

The remaining claims are going to trial beginning Tuesday.

I've argued before that the conditional-use argument was the most important one.  Not necessarily from a legal standpoint, but because it was the only basis for the widely-bandied claim that the neighborhoods were entitled to a public hearing and community review.  RG4N has other claims -- City staff allegedly failed to enforce the tree ordinance, perform an independent traffic analysis, or enforce a drainage note on a plat map.  Whatever the legal merits of these claims, though, they aren't claims that there should have been a public hearing.

In case you're wondering, I deliberately have not handicapped the remaining claims.  They all allege, at bottom, that City staff failed to give the site plan the review mandated by City ordinances.  Given the contentiousness of the site plan review, not to mention the public scrutiny it got, I find it hard to believe that staff cut corners.  Still, these claims ultimately depend on evidence.  I'm not privy to the evidence, so I don't have any special insight.  (Not that I ever do . . .)

I'll be at a hearing of my own out of town on Tuesday, so I'll miss the fireworks.

Postscript:  RG4N has issued a statement claiming that "[t]he ruling on ANA's motion does not affect a claim RG4N made about the proposed garden center . . . ."  Now Judge Cooper did not just deny ANA's motion, she granted Lincoln's motion.  She has ruled that a garden center "may be an accessory use."  RG4N may not technically have been a party to the partial judgment motions, but as a practical matter, this legal conclusion disposes of RG4N's argument that a garden center cannot be an accessory use.  (The trial court certainly will have discretion to revisit Judge Cooper's ruling, but I will be surprised if it does given that Judge Cooper sat through one and a half hours of argument and took a week to rule.)   

Thus I've been trying to figure out what RG4N is talking about.  Here's what I've come up with: 

ANA argued that a garden center could not be an accessory use because it is a "conditional use" in a GR district, and only "prohibited uses" can be accessory uses.  Judge Cooper (rightly, in my opinion) rejected that argument.

Even if a garden center may be an accessory use, though, there are still a number of criteria it must satisfy.   I've discussed those before (scroll down to "Is the Wal-Mart garden center an accessory use?").  As I parse the ordinance, there are six distinct criteria.   But I didn't think then that anyone could seriously dispute that the garden center satisfies all six, particularly when you factor in a number of admissions RG4N made in its petition.  In fact, I thought it so unlikely that I predicted the "conditional use vs prohibited use" argument that ANA made would be the only one they would even try to make.

Apparently I was wrong.  RG4N evidently intends to dispute that the Wal-Mart garden center would be an "incidental" use, or one of the other criteria.  Either that, or they intend to tell the trial judge that they get another bite at the apple because they weren't a party to ANA's motion.  I don't think the latter position would sit very well with the trial court.  But armchair analysis can be pretty murky sometimes.  We'll just have to wait and see.

RG4N is correct that it has three other complaints (trees, traffic and drainage) that were not affected by Judge Cooper's ruling.

Density Bonuses II: Why downtown high rises are so valuable

In a past post, I discussed the density-bonus plan being floated around City Hall.  (Council will consider the Downtown Design Commission's recommendation tonight.)  I'll discuss density bonuses in more detail in future posts.  But the gist is that the City is considering charging developers more -- possibly millions more -- to develop high-rise condominiums and office buildings. 

It seems to me that the people who are pushing density bonuses have their analysis backward.  They start by trying to figure out what additional concessions the City can extract from new development.  But I think it's smarter to start by figuring out what downtown high rises already provide.  Imposing millions of dollars of special obligations on new high rises will discourage the marginal ones; we need to know what we stand to lose.   

So let's get to it.  The three main benefits of downtown condos are housing, the property tax windfall, and the development of an urban environment.