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.