Austin Contrarian

Zilker isn't under siege

I fear that this piece in today's Statesman is a prelude to some sort of an initiative by a Council member to put a moratorium on VMU development in the South Lamar area.

This deserves a longer response than I have time for right now.  But whenever you hear a central Austin activist spin fantasies of a looming density doomsday, remember this:

Most of Central Austin is less dense today than it was in 2000.  Most census tracts in South Austin actually lost population between 2000 and 2010, including the neighborhood supposedly "threatened" by the new apartments:

This decline in population is mostly driven by shrinking household sizes in these neighborhoods rather than declining demand.   Given the demographic trends, though, it takes a fair amount of development just to maintain the status quo.  If everything proposed is built, Zilker might show a small gain in population in the 2020 census.  The neighborhood is not in danger of being overwhelmed by people.  

Handwringing over new VMU projects in Zilker is particularly unwarranted because the Zilker neighborhood is severely underzoned for multi-family:   only 11% of the Zilker neighborhood's residential property is zoned multi-family,  and of that, only 2.6% is zoned at the reasonably dense MF4 or MF5 levels.  The VMU designation added some theretofore off-limits commercially-zoned property to Zilker's miniscule stock of multi-family-zoned property.  Given the pent-up demand for multi-family housing in South Austin, it is no surprise, and should cause no alarm, that some is being built and more is being proposed.   

And if the new developments ultimately require us to make improvements to South Lamar or other area streets, so what?  We need to make improvements to South Lamar today.  The street historically was a commuter arterial catering almost exclusively to the automobile.  But it is urbanizing.  South Lamar has seen a lot of positive redevelopment since I wrote this in 2007.   Several small strip malls have been renovated recently.  The street has added restaurants and bars.  We've lost a handful of used car dealerships the last few years, one to an Amy's Ice Cream with a small playground.   The street needs some attention from the  city today, including more stoplights, crosswalks and better sidewalks.   If new vertical mixed use developments force the city to add stoplights and crosswalks, that should be a plus, not a negative, for those of us in the South Lamar neighborhoods. 

(Update: Original map updated with more recent, accessible version.)

San Marcos and student housing

I would have rewritten this lede:

Residents cheered as the San Marcos City Council rejected a zoning change Tuesday that would have allowed a controversial high-density development in a predominantly single-family neighborhood.

to this:

Residents cheered as the San Marcos City Council rejected a zoning change Tuesday that would have allowed a controversial student housing development across the street from the 34,000-student Texas State University.  

The proposed development would have been a 42o-unit mixed-use development on 14 acres.  As you can see, there is a lot of undeveloped land on the development's side of Sessom Drive, surrounded by low-density single-family housing.   As you can also see, a very large university does indeed lie across the street.

(The outline shows the general area and size of the tract; I haven't attempted to accurately sketch its somewhat complicated boundary.)

Texas State University used to be a small, sleepy teachers' college.  The area to the northwest was obviously low-value land that developed as low-density single-family housing.  Now Texas State University is very large and generates huge demand for student housing.  Large, vacant tracts across the street are logical places to put it.

San Marcos is off my beat, so I don't presume to understand the politics in that town.  Do homeowners there believe their interests are homogeneous?  They are not.  The homeowners in the immediate vicinity might hate the idea of lots of students living nearby, but those students have to live somewhere.  If they can't live in one neighborhood, they will find another neighborhood.  They'll double-up or triple-up in homes in other single-family neighborhoods.   Rather than walk or bike across Sessom to get to class, they'll pile into a car and clog the city's streets.  If I were a homeowner in San Marcos who didn't live on or near Sessom, I'd be delighted by this project. 

And, as a San Marcos homeowner, I would also recognize that my property's value depends on the long-term health of Texas State University.  San Marcos has no particular competitive advantage over other central Texas locations other than that university.  San Marcos needs to zone its land to accommodate a large, growing university.  If it doesn't, students will be stuck with lower-quality but more-expensive housing, and the university will be a less attractive place.

The Gated City

If you generally agree with me that anti-density restrictions hurt cities, you should read The Gated City by The Economist's Ryan Avent. If you generally disagree with me that anti-density restrictions hurt cities, you should read The Gated City to see why you are wrong.

Ryan's central thesis is that tight growth restrictions in the highly-productive coastal markets have inflated housing prices there, driving people to less productive but cheaper parts of the country.  Local zoning decisions, when aggregated, reduce innovation, dampen productivity and sap our wealth.  Micro decisions have macro effects; there are trillion dollar bills on the sidewalk.

I've tried to make many of the same points here over the years, although with a particular focus on Austin:

• Wealthy cities are innovative cities.
• Density promotes innovation.
• Density increases productivity.
• Dense concentrations of people allow richer, deeper, more varied markets.
• Anti-density regulations pushed by NIMBYs drive up home prices in high-demand cities.
• Anti-density regulations pushed by NIMBYs are bad for the environment because they drive people from cities with mild climates to cities with hot climates, increasing average per capita energy use. 
• NIMBYism's root cause is homeowner risk aversion.

Ryan does not try to identify the one optimal density, or even claim that there is such a thing.  He doesn't argue that we all should live at New York or San Francisco densities.  Rather, he argues that cities benefit from rising density, whatever their baseline.  That's right. 

He's an eloquent writer who backs up his claims with academic studies.  I don't have any significant criticisms because I agree with him down the line.  I found a couple of nits to pick.  In the introduction, he states he has estimated that anti-density restrictions in the coastal markets have knocked 0.25 to 0.5% off GDP growth but didn't return to that point.  I would like to see more about this calculation.  Any discussion of rising demand for central cities should acknowledge the role of falling crime rates.  And he spends little space detailing the many ways cities restrict density.  Although it was not necessary to his argument, it would have been entertaining to read about some of San Francisco's more absurd regulations. 

The Gated City is a Kindle single but I understand it can be downloaded to your computer or phone even if you do not own a Kindle.  It is short.  It is half the price of a venti latte at Starbuck's.  Buy it.  Read it.

P.S.  When discussing density, Ryan usually used weighted density rather than standard density, and was kind enough to throw me a cite.

Complaining is cheap

The City is proposing to tighten the standards for its Residential Permit Parking Program.  This is the program by which the City transfers to homeowners, for free, effective ownership of a portion of the public right-of-way in front of their houses.  The new standards would "raise the bar on documenting need" by, for example, requiring traffic studies.

To the extent this reflects a new-found hostility by City planners to neighborhood demands to exclude outsiders, I'm of course entirely sympathetic.  I will also be happy if the new standards make it more difficult for neighborhoods to participate in the RPPP.

But as a matter of policy, this makes no sense.  Parking near busy commercial and popular entertainment centers is scarce.  It is valuable.  The scarcer the parking on commercial corridors, the more valuable the parking spots on residential streets.  The City's new standards are simply another way of telling neighborhoods and nearby businesses, "We want to make sure that public demand for parking is really, really high before we ban it."   It is as if the City wants to verify that a parking ban will inflict maximum harm.

And parking bans do harm neighboring businesses.  It is of course true that spillover parking annoys some homeowners.  There is no sense trying to tell them they should not be annoyed -- if you are annoyed, you are annoyed, and that's the end of the matter.  But this kind of externality is perfectly symmetric.  Banning parking because it annoys a homeowner inflicts a cost on neighboring businesses by stripping them of a portion of their existing, limited supply of parking.

What the City ought to do is minimize the net cost of these externalities.  Who cares more?  If homeowners value empty asphalt more than neighboring businesses and their customers value parking spaces, then we should assign the spots to the homeowners.  And vice versa.

I suspect that in high-demand areas like South Congress, the businesses and their patrons value the spaces more.  But there's an easy way to settle this:  meter the spaces.  The meter income will tell us what value the public places on the spaces.  Price the spaces accordingly and then allow homeowners to buy the spaces in front of their homes.  The spaces will go to the party who values them the most. 

Homeowners would dismiss this policy as unfair because, seriously, who will or can pay a big chunk of money to keep the street clear in front of his home.  But that's the point.  Complaining is really, really cheap.  The City today is transferring property rights from the public to groups of homeowners without any compensation to the public, based on nothing more than cheap talk.  We can't tell how much someone really cares until we make him pony up some dough. 

NIMBYism and affordable housing

The federal government underwrites affordable housing in part by providing tax credits to developers who build affordable housing.  The Texas Department of Housing and Community Affairs parcels out these tax credits in Texas.  A lot rides on TDHCA's decisions and competition for the tax credits is fierce.

This Statesman article on TDHCA's scoring system is interesting because it explains how NIMBYism is baked into TDHCA's evaluations.  Although projects are scored on several criteria, local opposition (or support) carries a lot of weight.  The scoring system effectively counts local reaction twice:  it weights letters from neighborhood associations and it weights letters from the legislators who represent these neighborhoods, who, naturally, can be counted upon to do their constituents' bidding.  There is a 52-point swing between unqualified opposition and unqualified support, a big deal given the maximum score is 226.   (Although I am calling this "TDHCA's system," in fairness I should note that it is merely implementing statutory standards.)

It's worth stressing that these are not zoning cases.  Tax-credit subsidized housing can only be built where zoning allows it.  Developers, in other words, merely propose multi-family projects for parcels of land that the city has already determined are suitable for multi-family housing.  Concerns about traffic, noise, overcrowding, etc. should have been resolved when the parcel was zoned.

Weighting the neighborhood's approval and the approval of its proxy is of course bad policy.  Homeowners are notoriously risk averse.  Their risk aversion causes them sometimes to oppose a project that has a remote chance of depressing property values even though it has a better chance of raising property values.  The premise of the tax-credit program is that cities need more affordable housing.   Politicians like to talk about affordable housing in the abstract but ultimately it has to be built somewhere, which means that neighborhood opposition has to be discounted rather than emphasized.  Unless, that is, we are happy to relegate it to neighborhoods that are already full of affordable housing, which is the effect of current policy. 

I also want to point out that the TDHCA's system institutionalizes a sort of "ward courtesy" at the state level.  The Texas Legislature attempted to reform that system this session, but Perry vetoed it for murky reasons.  (Texas Housers has a detailed account.)  The proposed reform would have entrusted the decision to support or oppose the project to the local elected body rather than a single legislator, probably in the sound belief that councilmembers are more likely to make reasonable decision in the aggregate than individually.

Kid math

A common response to the "families are leaving central Austin" meme is, "I see lots of strollers and little children in my neighborhood."  The implication is that the demographic trend is reversing itself.  Brian Lindauer in the Zilker neighborhood even organized a door-to-door census of children in his neighborhood (including my micro-neighborhood) specifically to rebut AISD's pessimistic projections.  (You have to admire the hard work.)

But the presence of lots of little children is consistent with the demographic trend.  As the central neighborhoods become less attractive to families with children, they are increasingly dominated by singles and couples.  Lots of those couples eventually have children.  Families at the margin will hang around for a while, of course, but eventually leave when the kids reach a certain age.  Rising prices encourage them to leave sooner.

An increase in the number of little children (if that's the case) is actually more evidence that the central neighborhoods have become less hospitable to families with children.  We know that there are fewer children under 18 in these neighborhoods.  More little kids means fewer older kids.  Which means either (i) more families with children are choosing to leave when their children hit that "certain age," or (ii) fewer families with older children are settling in the central neighborhoods.

The Census Bureau has not yet released the counts broken down by age groups.  (Or hadn't last time I checked.)  I predict the numbers will show that very few teenagers live in the west Central Austin neighborhoods.

Central Austin's suicide pact

Mildly eccentric (colorful?) lawyer and erstwhile City Council candidate Robin Cravey, like me, worries about the flight of children from central Austin.  He's a bit more acerbic than I am; he calls it a suicide pact:

Austin’s central city neighborhoods suffer under the grip of a suicide pact.  Under this pact, the central city neighborhoods have become fundamentally unsustainable.  The question now is whether the neighborhoods will wake up, or city leaders will wake them up, or they will be allowed to go extinct, like the neighborhood around Pease School, where the lovely bungalows are full of law offices and software shops.

This suicide pact, sometimes called the Absolutely No Change pact, has led neighborhood associations to resist every effort at modernization and renewal.  They oppose apartments, condominiums, larger houses, and smaller houses being built in their bailiwicks.  Their vigilance reaches down to a grim lot-by-lot war against duplexes and granny flats.

There's more.  Read the whole thing.  I wish I could write like this.

This is particularly notable because Robin is an old-school Austinite who has lived in the Zilker neighborhood for decades and even served as ZNA president.  

On paper, he was just the kind of guy I'd expect central Austin voters to support.  But the hardcore neighborhood activists who turn out to vote correctly perceived that Laura Morrison would be more reliably anti-development.  Cravey split the anti-Morrison vote with Cid Galindo, a solid urbanist who publicly advocates quality infill development  (and who received my support).

Judging from this post, Robin has decided not to run for Council again.  That's a shame.

Three strategies for driving families with children out of Austin's urban core

A couple of weeks ago, the Statesman reported that Austin's urban core lost a lot of children between 2000 and 2010.   

The Statesman asked how to reverse the trend but did not propose any strategies.

The Statesman quoted me but did not ask me for my solutions.  It's just as well.  I doubt there are any solutions for reversing the trend.  But there are effective strategies for accelerating it.

Good strategies start with good theory.  We can't run off more families with children without understanding the current trend.

The usual explanations are wrong.  Taxes are not causing families to flee central Austin.  Suburbanites pay the same tax rates as central Austin residents.  As do singles and couples.  Why would higher taxes force families with children to move but not childless families?

Crime is not the reason.  West central Austin, at least, does not have much crime.  

Schools are a more plausible explanation.  But west central Austin has some very good schools.  My son will start kindergarten at Barton Hills Elementary this fall.  It is as good as anything in the suburbs.

The best explanation is that central Austin is filled with old, small houses that the central Austin neighborhoods are hell-bent on preserving.  Larger households tend to value larger homes.  Imagine a family with a couple of children at the margin, torn between a central Austin neighborhood with all of its advantages and a larger suburban house.  A rise in price for the central Austin home makes the extra space in the suburban house a relatively better deal.  So this hypothetical family at the margin chooses the suburban home.  

With a good theory in place, we can devise strategies that would drive more families with children to the suburbs.

1.  Limit construction of condos and other multi-family in central Austin neighborhoods.   It's true that this sort of housing is more appealing to singles than families with children.*  But -- and this is the key point -- limiting the supply of housing that singles like  will cause them to bid more for the housing that both families with children and singles like.  The family at the margin then will choose the suburb for the reason given above. 

2.  Impose draconian limits on remodeling and replacing small bungalows.  In theory, a family with children that wants more space could choose to enlarge that central city bungalow or replace it with a bigger house; the suburban home is not its only choice.  We can push more families to the suburbs by restricting that option. 

3.  Close neighborhood schools.  Schools do matter, of course.  Closing as many central neighborhood schools -- particularly the best performing ones --might be the best strategy.

Central Austin neighborhoods have successfully implemented strategies one and two.  They have fought the development of multi-family housing for years.  It's an easy strategy to sell:  just dismiss new multi-family as hipster housing built by greedy developers.

It's true that there have been oodles of new development in West Campus, but this neighborhood is dominated by students.  There have been new vertical mixed use developments here and there, but it takes a lot of housing to accommodate strong demand.  VMU is expensive; smaller projects in neighborhood interiors would be cheaper but allowing more of them is a non-starter.

The McMansion ordinance is brilliantly effective at implementing the second strategy.  And it was a brilliant piece of marketing.  The name invokes the huge, ostentatious homes that were popping up in central Austin in 2005-2007.  But the ordinance is a bait and switch; it in fact makes it very difficult to enlarge even modest homes, or to replace tiny bungalows with 2400 or 2800 sf homes.  These aren't McMansions.  But since the typical Austinite won't spend more than 15 minutes thinking about this kind of thing, there was little backlash.

The third strategy has not yet been implemented, although AISD is threatening it.  The groups most responsible for the first two strategies genuinely oppose number three.  (Me too.)   It's not really necessary to close good schools when students are clamoring to transfer to them, nor is abandoning central Austin infrastructure just to build more schools in the suburbs really prudent.   But central Austin neighborhoods are dealing with the consequence of limiting development; this strategy might yet be implemented.

I'm confident that maintaining or implementing these strategies would complete Austin's segregation by children.  Perhaps the complete package could be sold to the public with the slogan, "More dogs, fewer children".

*It's worth noting, though, that 10% of all children in 78704 live in just two city blocks in the Bouldin Creek neighborhood.  These are low-income housing projects.  I don't see any more of these being built.

Related posts:

Are luxury condos good for Austin's housing market? (Sept. 11, 2006)

Seven reasons to hate the McMansion ordinance:  Reason No. 1 (Sept. 17, 2006)

Reason No. 2 to hate the McMansion ordinance (Sept. 18, 2006)

Reason No. 6 to hate the McMansion ordinance (Sept. 22, 2006) 

A VMU primer (Nov. 30, 2007) 

Apartment complex mentality (Aug. 27. 2008)

Taxing density

I've owed a comment on this for a while.

ROMA, the outfit charged with developing a plan for downtown Austin, has proposed a density bonus ordinance for downtown residential development (available here).   Austin's had a temporary density bonus program since 2007.  ROMA is proposing to make that program permanent.

All things considered, it is not a particularly onerous proposal.   ROMA would allow commercial and hotel developments an automatic bonus if they comply with "gatekeeper" requirements, which mainly means complying with the city's urban design guidelines and submitting a detailed site plan for review and approval.   ROMA and its economics consultant concluded that the market for office and hotel space will not support a density bonus program.

The big change is for residential.   Residential properties seeking an increase from the district's base zoning must not only comply with the gatekeeper requirements but also must pay a bonus on the extra square footage.   Half the bonus must be satisfied by providing on-site affordable housing or an in-lieu fee of $10/sf.   The other half must be satisfied by providing a "community benefit," chosen from a menu of public space (fine), music venues (dumb), daycare or senior-care (dumber), or "family-friendly," three-bedroom apartments (dumbest).

The "temporary" density bonus scheme retained CURE zoning, a tool for obtaining additional square footage by providing ad hoc benefits, subject to city approval.   Some have criticized that exception as an ad hoc loophole for allowing developers to "get away" with providing merely nominal community benefits.

ROMA claims the new scheme will benefit even developers/property owners by providing certainty.  But my understanding is that every increase in entitlements since 2007 has been obtained through the CURE exception.   There is already a predictable way to get more entitlements, in other words, but developers and property owners have opted for ad hoc. This hardly supports ROMA's claim.  No, the evidence is that the bonuses have bite.

I was befuddled by the initial density bonus plan and I'm befuddled now.

A density bonus is a tax on marginal increases in density.  Don't be confused by the rhetoric.   It is a tax.  The plan raises the cost of that last square foot.   The claim that it does not raise the price because no one is entitled to an increase in density is a bit of misdirection.   The fact is that the city has an unwritten policy allowing increases in base square footage.   A property owner who wants more square footage can reasonably expect to get it for the payment of a nominal amount.   And it is expectations that determine property values, not the words written in the code.   Raising that cost -- frustrating those expectations -- reduces the incentive to build that last square foot.

The density bonus program is a bad idea because extra space downtown is an unmitigated good.   We shouldn't tax economic goods; we should tax economic bads.

More space means room for more people.  And more is better, at least for downtown.   More people means more demand for downtown businesses, a livelier streetscape, more eyes on the street.   We should encourage the clustering of people downtown.  Density bonuses shunt people elsewhere.

Density is downtown's reason for being.   That's why businesses and residents pay a premium to be there.  Agglomerations are valuable.   While they sometimes generate negative externalities, they do not downtown.  Downtown is not a desirable place despite the crowding together of people; it is a desirable place because of the crowding together of people and businesses.   Residents like being close to other people and to downtown establishments.  Downtown businesses like being close to other businesses.   That's why law firms, advertising agencies, government workers, accounting firms and others cluster downtown despite the cost.

Then there's the fiscal benefit.   Every extra square foot of downtown space generates gobs of revenue for the city.   Another square foot, valued at $400, generates $10 per year in extra taxes -- twice the proposed density surcharge.  And that's an annual payment.   If we use the city's cost of money as the discount rate, the present value of that square foot to the city, county and school district is $200 or so.   Why risk that for a one-time payment of $5?

That extra square foot imposes no cost on the city.   Adding twenty residents to a 200-resident project imposes no extra burden on our schools.  Nor on the fire department.   Nor on our streets or utilities.   By contrast, without the extra space, these twenty residents will need twenty homes in the 'burbs (or displace twenty other central Austin households who will land in the 'burbs), with the new infrastructure necessary to support them.

I've heard the argument that all the new downtown development will require the city to make massive upgrades in downtown infrastructure.  That's an argument for another day.  But we're concerned here with the impact of a marginal resident.  How much will that last resident cost the city in addition to the investments it must make anyway? Anyone who blames that last resident (or ten or hundred) for new infrastructure investments is engaging in hand-waiving, not evidence-based argument.

And then there's the argument that the new condos are making downtown less affordable.  What people really mean is that the new condos are not adding to the supply of affordable housing.  They are expensive (relative to the city's MFI) but that does not imply that they are raising the cost of the existing stock of affordable housing.  I suppose they are reducing the relative share of the existing stock of affordable housing (and there is some older, affordable stuff downtown).  But many central Austin neighborhoods have little affordable housing.  No one is pushing to require property owners in Pemberton Heights or Tarrytown to pony up money for affordable housing.  Many of these property owners have seen a windfall of hundreds of thousands of dollars from the run-up in property values during the last decade.  I'm not suggesting that we tax those windfalls, but it makes no sense to saddle downtown properties with the responsibility of providing affordable housing while letting relatively wealthy central Austin homeowners -- the main beneficiaries of central Austin's pricey real estate -- off the hook.   

Council is scheduled to consider the density bonus program at its next meeting.  The Planning Commission at its last meeting recommended deferring a decision for more study.  I suspect that the members who pushed for it are not worried that the plan is too onerous; they want to make it more onerous and need time to generate more public opposition to the plan.

I've heard some Council members are growing skeptical of the plan, for just the reasons laid out here.  Here's hoping they do the right thing.

Super Duper Neighborhood Objectors and Appealers Organization

A reader has pointed me to this registered neighborhood organization.  (Go to the city registry and scroll down to Super Duper).  The organization's "main contact"  identifies himself as the "Great and Powerful Oz."  The "organization's" declared boundary includes virtually all of Austin and much of its extra-territorial jurisdiction.  

Anyone in Austin can form and register a "neighborhood organization" and define its boundaries as arbitrarily as he pleases.   The Great and Powerful Oz figured this out and evidently is enjoying a little joke.

Except this joke is costing the rest of us.  City code entitles "interested parties" to notice of public hearings before the city can act, and registered neighborhood organizations are "interested parties" when the property falls within their boundaries.   This applies not only to Council hearings, but to boards and commission hearings, such as the Board of Adjustment and the Planning Commission.

Notice is expensive.  City staff must print and mail a separate notice for each hearing.  There can be  dozens of hearings per week -- zoning changes, variances, site plan approvals, subdivision approvals, and a host of others.  And the Super Duper Neighborhood Objectors and Appealers Organization is entitled to written, mailed notice of each and every one.  (If you doubt SDNOAO is entitled to notice, go to the city's GIS, pull up the zoning map, check the circle next to "neighborhood association," and click "identify" on any point on the map.)  

The Great and Powerful Oz might object that lots of other organizations get free notice of citywide hearings (e.g., ANC, the Homebuilders Association of Greater Austin, the Homeless Neighborhood Organization.)  If they can ask for free notice, why not me?

Rather than attempt to distinguish between "legitimate" and "nonsense" organizations, the City should simply charge notice recipients a fee.  I'm sure that applicants are entitled to free notice.  Nearby property owners may have a good argument for free notice as well.  But everyone else should monitor the city's posted notices  like the rest of us, particularly since the typical organization cares about only a small fraction of the hearings.  If they want premium service, they should pay for it.

Update:  Karl-Thomas Musselman identifies the Great and Powerful Oz as 1993 Special Election City Council candidate Bill Gammon.  (The registry lists Oz as William Gammon without further ID.)