The Downtown Austin Plan's most controversial proposal is not to make the 2008 intermim "density bonus" program permanent, but to eliminate CURE zoning. (CURE stands for "Central Urban REdevelopment"). The recommendation provoked a sharp debate at the City Council's August meeting and it will provoke another one when the City Council takes up the Plan again in October. City staff has now recommended that the City keep a modified CURE option, validating what I and many others have contended for years: implementing a density "bonus" program while simultaneously eliminating CURE zoning would penalize density.
A bit of background. The City does not impose height limits in the Central Business District outside the Capitol View Corridors, but it does arbitrarily cap floor-to-area ratios ("FAR"). The City caps both height and FAR in Downtown Mixed Use districts. Most of west Sixth Street between Lavaca and South Lamar -- an area experiencing rapid densification -- is zoned DMU rather than CBD, so the height and FAR caps have particular bite there.
The City for years has had a process for increasing FAR and height limits downtown, namely CURE zoning. CURE combining districts are allowed to redevelop buildings that are at least ten years old or to develop vacant lots. Because the CURE regulations do not specify what benefits a property owner/developer must offer, the process results in a lot of ad hoc negotiation between the City and developers. A developer typically agrees to participate in the Great Streets program and kick in money for parks or affordable housing.
In 2008, the City adopted the interim density bonus program. The main provision requires developers who want to build residential space in excess of the allowable FAR either to devote 10% of the extra space to affordable housing or pay a per-square-foot fee on 100% of the extra floor space. Commercial developments must pay half of the fee on the extra floor space.
The Downtown Plan proposes eliminating CURE as an alternative to the density bonus program. I and others have argued that this will raise the effective price of extra density, which is bad policy because extra housing and office space downtown produces many spillover benefits. Raising the price might not eliminate all requests for additional density, but we should expect it to have an impact at the margin.
Proponents of the mandatory density bonus program, however, have argued that it is better than the CURE process because it provides developers and property owners a cheap (a relative term in Austin), predictable, administrative approval, as opposed to the ad hoc, expensive and unpredictable CURE zoning process. The mandatory density bonus program, in other words, effectively lowers the price of density, or so these advocates have claimed.
The market has proved the proponents wrong. In the three-plus years since the interim density bonus program was adopted, no developer has sought extra height or FAR under the density bonus program. Every developer who has sought additional entitlements has used the CURE process. If developers consider the density bonus a cheaper alternative than CURE zoning, then they would use it. They don't, which implies that making the bonus program mandatory would raise the price of density.
City staff more or less agrees with this view. City staff now recommends that the City keep the CURE process for now. Staff notes that no project to date has sought additional height or FAR through the density bonus program. Instead, all have opted to do so through CURE combining districts. It proposes that the CURE program be modified to require the developer to show that it has provided the density bonus program benefits to the maximum amount feasible. This would require developers to show which provisions could be met by the project and to demonstrate that compliance with certain elements of the project would make it financially infeasible.
Staff understands that CURE is useful as a benchmark for measuring the real cost of the density bonus program. Or, as staff puts it, keeping CURE zoning would provide "useful information on the economic and financial realities of compliance with the Downtown Density Bonus program."
Staff also recognizes that raising the price of density might discourage housing or office space at the margin. Specifically, it states:
One of the charges made against a density bonus program (when CURE is not an option) is that it unduly "penalizes" projects. If, in fact, a density program did do that, and if CURE was not available, then no project would seek additional density -- and no community benefits would be achieved.
That is equivocal enough, but when combined with its recommendation that the City retain CURE zoning in some form, it is an admission that the density "bonus" program might indeed discourage density.
My view, of course, is that we should allow unlimited FAR and height (outside the view corridors) as a matter of right, and impose reasonable design guidelines to ensure that new development contributes to a pedestrian-friendly, authentically urban environment.