Frequent (if involuntary) guest-poster Miggy responds to my criticism of density bonuses. (Let this be a lesson to those who leave long comments.)
I, too, have a lot of misgivings on this policy, and yet, while I would agree that this is a marginal tax, so is the ad-hoc system….the unwritten rules that you mention here. Preference therefore cannot be given to the status quo on that basis alone. As you suggest, one way to compare the two systems is by the relative ‘bite’ – have past developments paid more for increased entitlements than they would under this proposal? The monetary value is not an easy comparison to make in most cases, but my layman’s research would indicate that some have paid less but some have definitely paid more and that’s without other factors such as attorney costs for taking it through the exception process or the value reflected back in sales prices from the investment. If this is indeed the case, it also raises a question of equitable treatment – why should one project pay more tax than another on that last square foot based simply on the political winds or the political stroke of their lawyers? We do not leave it to people to hire attorneys to individually negotiate their property, sales or income tax bill on an ad-hoc basis because we punted on creating a systemic, equitable approach to revenue generation. There’s an argument to be made, too, that this situation is not terribly unique – there is a marginal benefit of income, sales, capital gains and the improved value of real property. “Sin taxes” or levies on marginal negatives are great for behavioral modification but also unreliable for public funding which is why they make up relatively little of the overall revenue pie at any level of government.
I cannot speak to anyone else’s motives, but my best supposition for why the development community is objecting to these rules is not necessarily for the cost of what’s proposed. As you say, is not that onerous or, on average, dramatically different than the cost of the status quo… but there is a threat of the unknown. In other words, a failure to object at this juncture will increase the risk of more onerous fees being institutionalized. There is also a very real potential threat of tweaking ROMA’s proposal in the political process to where it definitively falls in the bad policy column.
I would further concur with your assessment that the arguments against the policy that use utility infrastructure costs are a red herring and are likely being used as a mask for other motives. Those infrastructure costs are significant and I realize that they’re paid for in real dollars not relative ones, but a long-term plan should not be bogged down by such obvious short-sightedness.
Bringing this back on topic – I personally believe that the current proposal is an improvement on both the status quo and the interim density bonus (which sends money to a city-wide affordable housing slush fund rather than having the same flexibility to reinvest in the project or immediate area of downtown). Now…that being said, the proposal is also far from ideal. Density is a necessary component to a vibrant and valuable downtown, but it is also an insufficient quality on its own. While it’s tempting to simply say that the laws should be loosed and no restrictions be placed on a marginal positive, that’s also taking away an important point of leverage for achieving those other qualities that make for a successful downtown. That little bit of leverage is important in a state, that, as I am frequently reminded, has taken away a lot of sticks and leaves municipalities only to dangle their few remaining carrots.
It should be pointed out, too, that not all ‘community benefits’ are budget patches or crutches for poor general fund support from the city that could be made up by the taxable value of the new building. TDRs from the Warehouse district are not possible under an ad-hoc system and other benefits, such as green building or the burying of parking garages, are strictly the preserve of the private developer where incentives need to be in place to move projects in that direction at the time of construction. Moreover, what remains largely un-discussed are the market and construction variables at play and why ‘the sweetspot’ square footage for development is where it is (where density bonuses likely play a minor role). An ideal policy would seek to mitigate those variable costs or market limitations and move that sweetspot higher, but I’ve never heard that approach discussed seriously. There is only the assumption that the developer demand for greater density is insatiable (when we have a lot of empirical evidence of underbuilding and not a lot of empirical evidence of burj dubai’s passing on Austin because of its density bonus program).
In an attempt to wrap up this rambling comment on this wide-ranging topic, let me say that I look forward to hearing the completion of your thoughts on this. From your post here your argument would seem to condemn both the status quo and the density bonus proposal but it leaves open to suggestion what regime could replace both. I mean this more in an inquisitive than a challenging way, but: what is your proposal? What is the third way? Feel free to be ambitious and perhaps make it applicable to TODs / future town center nodes… but keep in mind that a proposal that is great urban planning but so audacious as to be politically DOA is also of little use. Again, I look forward to hearing your ideas on this topic…and thank you, as always, for raising important questions on public policy in Austin.
I'll respond in a separate entry.
