Wednesday's Austin Monitor had a piece under the headline, "How do demolitions affect Austin's affordable housing stock?" The article glosses over the possibility that demolitions aren't much affecting Austin's affordable housing stock.
As Austin grapples with its affordability crisis, much of the focus has been on how city leaders can incentivize developers to build new housing that includes units reserved for residents at certain income levels.
Some city leaders, however, suggest that the city may be neglecting, or even encouraging the destruction of, the largest existing source of housing for those of modest means: privately owned, market-rate housing.
A 2014 report by HousingWorks found that the city had 62,000 unsubsidized units affordable to those at 60 percent of the median family income or less, compared to only 18,500 income-restricted units. In addition to being more plentiful, market-rate units carry the additional benefit of not burdening city taxpayers with management or monitoring expenses, notes a resolution that City Council will take up Thursday.
An obvious challenge, however, is that a large percentage of the low-cost market-rate housing is older and likely to soon be demolished and replaced with more expensive units. The incentives to demolish are particularly strong in the context of a booming population, including many well-to-do newcomers in search of luxury housing.
It’s an issue that Mayor Pro Tem Kathie Tovo wants the city to consider as it approaches CodeNEXT, its long-delayed overhaul of the Land Development Code.
The resolution she is asking Council to approve will direct city staff and the consultants working on crafting CodeNEXT “to evaluate the potential net loss or gain of market affordable housing” that will result from changes to zoning or entitlements in the new code.
The city, notes the resolution, should strive “to ensure that proposed changes to the Land Development Code do not inadvertently incentivize the demolition of existing market rate affordable units, especially family-friendly units.”
Tovo's resolution would, among other things, require City staff to collect detailed information on multi-family demolitions. That's a great idea. But I expect the data will show that little multi-family housing is being demolished, particularly in the fast-growing areas where one would expect demolitions to be concentrated.
Take the neighborhoods off South Lamar.
South Lamar runs through six census tracts between Lady Bird Lake and Ben White Boulevard. These six census tracts had 14,000 housing units in 2010.
Since 2010, eight VMU-style projects with 2,665 apartments have been built or are under construction directly on South Lamar. Two more large apartment buildings with 448 units have been completed between South Lamar and Zilker Park. A couple hundred condominiums and subsidized units also have been built directly on South Lamar, and another few hundred units have been built just off South Lamar, on streets like Del Curto, Thornton and Bluebonnet. The South Lamar neighborhoods will have added something north of 4,000 housing units by 2020.
Growing the housing stock by more than 25% in just ten years is pretty remarkable. Equally remarkable is that little of this growth has come at the expense of existing multi-family units.
Just one of the ten large apartment complexes involved the demolition of multi-family housing. In 2006, Post won a zoning change that allowed it to replace the 141 inexpensive Stoneridge apartments with 300 "luxury" apartments. (Post waited several years to begin construction, which is why these units show up on this decade's tally.)
None of the other nine large complexes required the demolition of a single apartment, however, and the reason is obvious. In 2008, after the hapless Stoneridge apartments had been demolished, the City upzoned much of South Lamar to allow vertical mixed use development. A bunch of large lots that had been relegated to low-intensity commercial uses were suddenly available for multi-family development. This decade's construction boom has targeted these lots and left aging apartment complexes alone. Almost all of the demolitions in the South Lamar neighborhoods have been of small, expensive single-family bungalows, and even these are usually converted to duplexes. I can't think of a single South Lamar multi-family unit that has been demolished since 2010.
Other fast-growing areas show the same pattern. Burnet, East Austin, West Campus and South Congress (south of Ben White) have all experienced a boom in construction since 2010 with minimal loss of multi-family housing. All of these neighborhoods experienced large upzonings in the 2000s. Once the Great Recession faded, construction targeted the up-zoned areas, sparing older apartment complexes. It would be nice to have an accurate count, but how many of the 62,000 affordable units identified by HousingWorks have been demolished since 2014? I would be surprised if the answer is more than two or three hundred.
That's how the new housing market ought to work. Even cheap apartment complexes generate a decent revenue stream that is difficult to replace. A developer who replaces a 100-unit apartment complex that rents for $600 per unit essentially incurs a $600/unit tax on the first 100 replacement units. That makes redevelopment unattractive as long as there is lower-hanging fruit like an old car wash or a Golden Corral.