Austin will try again to tame its housing affordability crisis with zoning reforms. Can it do it this time?

"Austin will try again to tame its housing affordability crisis with zoning reforms. Can it do it this time?" was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

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As Austin’s sky-high housing costs put increasing pressure on renters and homeownership out of reach for many working Austinites, a yearslong fight over what kind of housing the city should allow could be at a turning point.

Austin has long been the epicenter of the state’s housing affordability crisis, but the problem reached new heights in the pandemic era amid massive population and job growth.

The crisis — along with the rise of a new political bloc calling for reform — has given Austin leaders a renewed mandate to tackle the problem. After the collapse of big housing reform proposals in recent years, the Austin City Council is embarking on a new push to ease city restrictions on how much housing can be built and where.

The current restrictions, the thinking goes, impede the city’s ability to build enough homes to meet the crushing demand for housing — resulting in higher home prices and rents.

“We have a significant affordability crisis, and it is an emergency,” Austin Mayor Kirk Watson told The Texas Tribune. “We've got a supply and demand problem, and we're going to have to come up with unique and different ways than we've thought of in the past to solve it.”

City leaders have proposed a number of measures to try to stimulate more and denser housing, like allowing more single-family homes on smaller lots and taller apartment buildings near single-family homes, as well as doing away with mandates that require developers to set aside a certain amount of land for tenants to park their cars.

But these reforms will probably run into some familiar obstacles. For decades, efforts to loosen the city’s land-use regulations have run into opposition from homeowners fearful of neighborhood change, old-school environmentalists and anti-gentrification activists — even as policymakers increasingly backed the idea and the city’s housing woes mounted. A group of homeowners, deftly wielding state law to their advantage, persuaded a judge in 2020 to kill a major overhaul of the city’s land development code that would have allowed denser housing.

But as musicians, teachers, police officers and firefighters struggle to find affordable housing within city limits, Austin’s housing crisis is increasingly seen as an existential one.

“Without change, where do you think this will go? What are you preserving at that point?” said Dianne Bangle, CEO of the Real Estate Council of Austin. “Is this an Austin for everyone, or is it just for people who want to maintain their large home and neighborhood?”

An unignorable crisis

An organized and steadily growing activist movement is backing — and pushing — city officials to allow more housing to be built.

On a morning in late August, dozens of demonstrators crowded the steps of the Travis County Civil and Family Courts Facility in downtown Austin to protest a court challenge by a group of homeowners seeking to kill a popular affordable housing program and other housing initiatives. Demonstrators held signs that read “Support affordable housing” and “Housing is a human right.”

Anoosh Razian, a 34-year-old Austin therapist, saw the effects of the city's housing shortage while working for a nonprofit that helps single mothers experiencing homelessness regain their footing. Often, she said, the women would hesitate to move out of supportive housing because they couldn't find homes they could afford.

"There's nowhere to go if they had to," Razian said. "If they want to move out of supportive housing, they would have to move out of the city."

Her husband, Edgar Handal, an engineer at a tech company and a board member at AURA, an Austin organization that advocates for denser housing, said they can afford a home in East Austin but some of their friends have had to move far outside of the city.

"I'm here because I care that other people have housing, my family and my friends," Handal said. "It shouldn't be that you need to be so lucky to have a high-paying job to be able to afford a home in Austin."

Housing costs in the Austin area rose dramatically in the past decade as the region transformed into a major tech hub and companies like Apple, Google and Oracle ramped up their presence in the city. The market kicked into overdrive during the COVID-19 pandemic as more than 120,000 people moved to the region and millennials sought to buy homes, sparking fierce bidding wars for limited housing supply.

For several months last year, the typical home in the Austin-Round Rock region sold for more than $500,000, pricing droves of would-be first-time homebuyers out of the market. Nearly half of the region’s renters spend so much of their income on keeping a roof over their heads that they struggle to pay for other expenses like child care, groceries and transportation.

Housing unaffordability dominated Austin’s most recent citywide election, which brought new faces to the Austin City Council and solidified its pro-housing bloc. Observers say the City Council and Watson, who also took office this year, got a clear signal from voters to do something about the city’s housing crisis. Over the summer, council members gave their first stamp of approval to a slew of housing reforms.

“I think people are seeing the hurt, the pain, the frustration, and it's unfortunate that it took so long to get to this point,” said Austin City Council Member Zohaib “Zo” Qadri, one of the new members.

Housing advocates place much of the blame for the crisis on the city’s land development code, which governs how land is used. The code hasn’t had a substantial overhaul since 1984, when Austin’s population was less than half its current size. Each time the city has tried to give it a significant makeover, homeowner groups have successfully killed those efforts.

One of the biggest criticisms targets the limits on the kind of housing that can be built. Much of the city’s residential land can only be used to build single-family homes. On top of that, Austin requires most single-family homes to sit on at least 5,750 square feet of land — a restriction known as a minimum lot size that research has linked to higher home prices. Those kinds of restrictions, real estate and housing experts say, lead to fewer homes and apartments being built — and higher housing costs as a result.

“When we don't allow densification, that means we have a lower supply of housing units, which in general increases the price of all housing units in the area,” said Adam Perdue, a research economist at the Texas Real Estate Research Center at Texas A&M University.

The restrictions, critics say, have made it tough for Austin builders to meet housing demand.

The Austin-Round Rock region routinely ranked among the country’s busiest markets for housing construction during the pandemic years, according to A&M data. Even so, construction hasn’t kept pace with the growth in the number of households, data from the U.S. Census Bureau shows.

“We have tenants whose rents are skyrocketing, [would-be] first-time homeowners who cannot enter the market, people who want to age in place and they're not able to move to a home that better fits their housing needs,” said Awais Azhar, who’s with the advocacy group HousingWorks Austin.

The city is short nearly 152,000 homes considered affordable enough for two-person middle-income households, a recent report from the Austin Board of Realtors shows — a shortage that’s even more drastic for families of four at that income level.

“People like EMS workers, teachers and firefighters want to be able to live in the community that they're serving and really can't,” said Emily Chenevert, Austin Board of Realtors CEO.

Austin-Travis County EMS medic Claudia Cadena and her husband bought a two-story home on San Antonio’s Far West Side in 2019 for about $180,000. The house is close enough to Cadena’s parents, who live in nearby Lytle and often watch their children, but the decision to buy a home in San Antonio was also because they couldn’t afford one in the Austin area, she said.

“It was either afford child care or afford a house,” said Cadena, who makes the two-hour drive from San Antonio to her post near Austin-Bergstrom International Airport at least twice a week.

Commuting long distances is a relatively common experience for Austin-Travis County EMS employees, some of whom live as far as Killeen, about 70 miles north of Austin. Nearly one in five of employees live outside of the immediate Austin-Round Rock region, Chief Robert Luckritz said, partly because medics and other EMS staff can have a hard time finding nearby housing they can afford.

That distance can make it difficult to quickly call people in an emergency — and for workers to build camaraderie and develop a relationship with the community they serve, Luckritz said. The Austin region’s high housing costs, he said, also get in the way of hiring new recruits and filling vacancies.

The distance has taken its toll on Cadena. Years of long drives, with often sleepless 24-hour shifts in between, have left her exhausted. Cadena has stuck with the job for the benefits — and because she wants to help people.

Cadena may not endure the drives much longer. Her husband recently obtained his electrician license, which Cadena said will let her leave her Austin job and focus on getting her fledgling tattoo practice off the ground.

“I thought this was the place I was going to retire from,” Cadena said of Austin-Travis County EMS. “If the drive wasn't so long, I definitely would, but I can't imagine being here for another 30 years.”

More density, more homes

The housing crisis is not unique to Austin. By various estimates, the country needs to build millions more homes to meet the nation’s housing demand and slow the steep rise in housing costs.

A growing body of research has tied strict land-use rules to high housing costs — a conclusion embraced by the Biden administration as well as state and local policymakers across the country who have loosened zoning rules to try to juice their housing supply.

In recent years, cities like Minneapolis and Portland found some success in slowing down the rampant rise of housing costs. In 2018, Minneapolis officials enacted a series of zoning reforms — like allowing duplexes and triplexes to be built in areas previously reserved for single-family homes and getting rid of minimum parking requirements for new developments — that helped the city keep a tight lid on rental cost growth during the pandemic era, according to a recent study by The Pew Charitable Trusts. According to a recent Bloomberg report, the changes have even helped the city beat back inflation.

Meanwhile, states like California, Oregon, Washington and Montana have enacted statewide reforms to local zoning laws in order to increase housing production and short-circuit local opposition from elected officials and neighborhood groups.

Republicans in the Texas Legislature this year flirted with relaxing cities’ housing restrictions, to allow more homes to be built amid the state’s housing crunch, though those efforts ultimately failed. As GOP state lawmakers increasingly sap authority from the state’s bluer urban areas, some Austin leaders fear if they don’t loosen restrictions on how much housing can be built and where, state lawmakers will finish the job when they return to the Capitol in two years.

Now, the year after Austin became the 10th-largest city in the nation, city officials are pushing for similar solutions.

Perhaps the most sweeping proposals — and the ones likely to draw the most heat from opponents — would allow more kinds of housing units to be built in areas currently reserved for single-family homes and nearly halve the amount of land the city requires to build housing on those lots.

The idea, pitched by Council Member Leslie Pool, would allow up to three housing units to be built almost anywhere single-family homes are currently allowed. It would also reduce Austin’s minimum lot size in the city's three most common single-family zoning categories to 2,500 square feet. More than half of the cost of a single-family home in Austin comes from the land, according to a recent city-commissioned study. If would-be homeowners don’t have to buy as much land, the ultimate cost of the home won’t be as high, advocates argue.

Austin’s zoning restrictions don’t just limit what kind of housing can be built and where, homebuilders say — they make it more difficult for that housing to be built quickly, which also adds to the cost of a home.

It took Austin homebuilder Scott Turner three years to build four homes on roughly a quarter of an acre in the neighborhood of South Manchaca. Even with that much land, the plot’s zoning wouldn’t allow for more than two units. So Turner opted to subdivide it — a process that took the city two years to approve, he said.

Had Pool’s proposal been in place, Turner said he would have built three homes instead of four — but they wouldn’t have taken him as long to build, which would have reduced the total cost of the project. The longer local governments take to approve housing projects, the more money homebuyers and renters also have to ultimately pay for that housing, studies show.

“You want somebody to buy a house? Don't make it expensive,” said Turner, who previously served as president of the Home Builders Association of Greater Austin.

Austin officials are eyeing other ideas to allow for more housing construction. A proposal pitched by Qadri would get rid of city rules that require new developments have a set amount of parking, which studies show lead to fewer housing units and drive up housing costs.

Another idea would ease the city’s “compatibility” requirements that limit how tall apartment buildings can be depending on how close they are to single-family homes. Austin has the strictest compatibility rules among peer cities, which “significantly restrict the development capacity for high-density residential housing throughout Austin,” a recent city analysis found.

Proponents argue relaxing the land-use restrictions will at least help slow the growth of the city’s housing costs and give more middle-class families a better shot at homeownership. Nearly three-quarters of households in the Austin region can’t afford a home going for the median sales price, according to the National Association of Home Builders.

“If [this proposal] can keep families in Austin and attract younger families to raise their families in Austin, that'll be a net plus,” Pool said.

Council members advanced Pool’s proposal and the parking and compatibility initiatives over the summer, but they haven’t taken effect. City staff first must figure out the nuts and bolts of each idea and bring the plans back to the council for final votes, the first of which is expected in December.

A staunch opposition

Some Austin homeowners have been fiercely opposed to any policies that would allow denser housing, saying they would radically alter their neighborhood’s character.

They have successfully blocked every recent attempt to change the city’s land development code to allow denser housing, including a proposed zoning overhaul in 2018. When the Austin City Council tried again to make changes the next year, a group of homeowners won a court battle to stop them.

For Frances Acuña, the homeowner at the heart of the legal battle against the changes, fighting the city on the proposed zoning reforms means making sure she and her neighbors aren’t priced out of their homes. Acuña has lived for more than a decade in her home in Dove Springs, the predominantly Latino neighborhood in Southeast Austin where she raised her three sons.

Home prices in the area have accelerated sharply during that time: The typical home went from less than $126,000 in the early 2010s to almost $400,000 in January, according to Zillow data. A 2018 report from the University of Texas at Austin deemed her neighborhood “more vulnerable” to gentrification and displacement because of its higher proportions of people of color, residents without higher education and renters, among other factors.

“I'm 52 years old,” said Acuña, a climate advocate and organizer with Go Austin/Vamos Austin, a community health coalition. “How long before I am not able to work and I don't have a home? Where am I going to go? How am I going to survive?”

In 2019, Acuña joined forces with 18 other Austin homeowners — many of whom have owned their homes for decades and some of whom have seen their home values climb north of $1 million amid the region’s hot housing market — to sue the city of Austin.

Austin officials, the homeowners alleged, broke state law by failing to formally notify homeowners of the citywide zoning overhaul — the same way they would have to if a nearby property owner wanted to rezone their land. The city also ignored a state law that requires a supermajority of the City Council to approve a rezoning if enough neighbors protest the change, they said. Lawyers for the city of Austin argued neither law applies when a city overhauls its land development code.

In a ruling that will undoubtedly complicate any other Texas city’s efforts to overhaul its zoning code, a Travis County judge sided with the homeowners — a decision later upheld by an appeals court. Ensuing efforts at the Texas Legislature to peel back the laws the neighborhood groups cited in their lawsuit have failed.

Since then, Austin officials have picked away at smaller zoning reforms intended to stimulate housing supply. Last year, council members greenlit new rules that allow developers to build housing in commercial areas and denser housing along transit corridors.

However, the same group of landowners that blocked past citywide rezoning efforts has set their sights on those changes — as well as a city affordable housing program the council passed in 2019 that has produced thousands of lower-cost units.

Dubbed Affordability Unlocked, the program eases rules like height restrictions, minimum lot sizes, parking requirements and density limits if builders set aside half of a development’s units for households making less than the city’s median family income. The program has proved to be an effective driver of affordable housing and is already helping produce more units than other local affordable housing programs, according to a recent report from the Urban Institute. Of the nearly 7,700 ownership and rental units approved under the program since it began in 2019, the report found, more than two-thirds are affordable for households making 80% of the median family income and below.

Despite the program’s virtues, the effort to block it and the other initiatives is about making sure the city isn’t violating homeowners’ rights, said Austin ethics lawyer Fred Lewis, one of the landowners suing the city.

“For most working-class and middle-class people who own a home, the biggest asset they will ever own is their home,” Lewis said. “And their home is not only an asset, it's their stake in their community and their neighborhood, and it should be respected.”

For some, blocking rules that would allow more housing development is about protecting their neighborhoods from gentrification and displacement.

After witnessing the gentrification of East Austin over the past decade, some fear that clearing the way for more housing construction will accelerate that process in the city’s low-income neighborhoods and oust Black and Latino residents who live there. There remains deep skepticism that allowing the market to produce more housing will moderate housing costs — despite a growing body of evidence to the contrary.

“This is a gentrification provision,” one resident critical of Pool’s proposal told the Austin City Council at a July meeting. “It will increase the number of luxury condos, and it will absolutely not increase affordable housing.”

Whether allowing more market-rate construction leads to displacement of low-income homeowners and renters has been difficult for researchers to prove. Recent research shows that allowing more market-rate housing eases housing costs around that development and across the broader region. Allowing more construction means the crushing demand for housing in the region won’t fall just on existing homes; more housing units mean more places for demand to go, thus moderating prices, research shows.

“When people get mad and they see a giant fancy condo building going up, they should just reflect on the fact that that building is absorbing a lot of buyers with a lot of money who might otherwise be unleashing their spending power on existing houses or the existing housing stock,” said Jake Wegmann, an associate professor at UT-Austin’s School of Architecture who studies housing affordability.

Building market-rate housing in a gentrifying neighborhood could contribute to displacement in cities like Austin with high housing demand, a shortage of housing and strict rules on what kinds of housing can be built and where, experts say. Allowing greater density across a city — including in single-family neighborhoods that aren’t as vulnerable to gentrification — and building cheaper housing like townhouses and duplexes would lower that risk, said Claudia Aiken, director of new research partnerships at the NYU Furman Center and Housing Solutions Lab.

“Having sufficient housing is critical to preventing displacement,” Aiken said. “To do that, we have to build housing. It’s just a question of where and how.”

What’s more, loosening citywide zoning restrictions could shield low-income neighborhoods from gentrification and displacement. A recent Furman Center paper found that in the decades after Houston relaxed land-use restrictions to allow more housing units on smaller lots, the places where townhouses replaced traditional single-family homes mostly took place in wealthier neighborhoods or in parts of town that already had gentrified, though some of that development has taken place in poorer neighborhoods like the Fifth Ward.

“It's not like you change the zoning and then overnight, the entire city gets torn down and replaced with townhouses,” said Wegmann, the paper’s author. “That's just not how it works. It's much, much more gradual.”

Proponents of the Austin proposals are quick to point out: the displacement that East Austin experienced happened under the current code.

Housing affordability advocates at the August protest were outraged at the attempt to end the Affordability Unlocked program.

“Opponents of affordable housing couldn't win this fight in the court of public opinion,” said U.S. Rep. Greg Casar, an Austin Democrat who authored the Affordability Unlocked proposal when he served on the Austin City Council, noting that the program passed unanimously. “So now they're trying to use the courts to try to block the overwhelming majority of Austinites who want to see housing prices come down in the city.”

Nicholette Lindsay, a 41-year-old Army veteran who lives in one of the affordable units made possible by Affordability Unlocked, said the opposition to the program was hurtful.

Her landlord evicted Lindsay in 2015 after a Microsoft supplier laid her off and she couldn’t pay rent, forcing her and her son to stay at a Salvation Army shelter. With the help of a city program to rehouse homeless veterans, they moved into a new apartment the following year.

This year, she and her son moved into a housing complex created through the Affordability Unlocked program. The complex’s affordability has helped her stay in the city while she runs a private security company, she said.

“If [program opponents] understood how much of a lifeline affordable housing was for individuals … it’s not just a lifeline, it’s life-saving,” Lindsay said.

Disclosure: Apple, Google, HousingWorks Austin, Microsoft, Texas A&M University and University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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This article originally appeared in The Texas Tribune at https://www.texastribune.org/2023/09/19/austin-housing-affordability-zoning/.

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