DT Density Bonus Program & Rainey cases

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Kathie Tovo
Posts: 100
Joined: Thu Oct 30, 2014 11:18 am

DT Density Bonus Program & Rainey cases

Post by Kathie Tovo » Fri Apr 02, 2021 5:36 pm


I’m looking forward to having the delayed Downtown Density Bonus Program discussion on April 6. I thought it might be useful to provide some context in advance since we haven’t yet had an opportunity to address the subject.

As I said previously, I think we need to have some time to discuss what I see as a complex and critical policy conversation about community benefits in our voluntary density bonus programs - in this case the Downtown Density Bonus Program. I thank you for your patience as we carve out some space in work session to discuss. This is a lengthy post, but I’m hoping it will save us time on April 6, 2021.

This conversation is prompted by the 3 Rainey cases, but my post today is focused on the process (and lack of guidance in the Code) through which these cases are advancing to Council and a code amendment I’ve posted for April 8.

Our voluntary incentive programs (density bonus programs) are one of the best tools we have in Texas to create income-restricted affordable homes and to help pay for other affordable housing efforts, such as housing choice vouchers. As we all know, developers who provide on-site affordable units or in-lieu fees can access additional development entitlements in exchange. This equation should be well-balanced: the community benefits should be commensurate with the increase in entitlements.

Those of you familiar with my work know that my voting history and the resolutions I have sponsored show that I support these programs, and I support them in being as up-to-date as possible to reflect current market conditions so that 1) we are encouraging developers to participate and 2) we are yielding the strongest and deepest level of community benefits.

The Rainey cases posted for 4/8 raise the following question: should we allow an exception to the maximum allowable FAR in Rainey and other areas of Downtown, and, if so, how do we calculate the additional community benefits that would be provided through these new entitlements? I see two issues I believe should be fixed right away with regard to community benefits.

(1) The density bonus program in-lieu fees have not changed since 2014. So while Downtown values have increased substantially since 2014, the community benefits required in exchange for entitlements haven’t increased at all. I believe we should immediately recalibrate and update the fee schedule. The IFC I have posted for 4/8 with CM Renteria, CM Fuentes, and CM Alter as co-sponsors would initiate these changes.

(2) As it’s currently written, the Code limits Council to either approving or denying cases seeking to exceed FAR caps and only requires the applicant to apply the same method for calculating benefits as used for the baseline density bonus program. In other words, such projects don’t need to provide community benefits at a higher level, even though they are exceeding the parameters specified in the density bonus program. I look forward to the conversation, but I regard it as reasonable for Council to require an increased level of community benefits from projects seeking entitlements that exceed allowances in a particular density bonus program. The IFC initiates this conversation, as well.

The Rainey cases have arrived to us because the Code grants developers the opportunity to appeal to Council if they want to exceed the allowable maximum FAR in the Downtown Density Bonus Program.

In 2014, after an extensive community engagement process, the Council passed the Downtown Plan. Among other things, this plan provided various floor-area-ratio (FAR) caps throughout Downtown.

During Council consideration of the plan, an amendment was brought forward that allowed developments to seek approval from Council on a case-by-case basis should a developer wish to exceed the maximum allowable FAR. Another amendment directed staff to go seek review for this amendment by the Downtown Commission and the Planning Commission and to bring recommendations back advising how Council should appraise developer requests to exceed the maximum allowable FAR in Downtown.

To my knowledge, this staff review and recommendation process did *not* occur. What was codified instead is that the existing community benefit calculation in the Downtown Density Bonus Program apply to the additional FAR being requested. I see that as a problem for two reasons:

1. Our *existing* fee and affordable housing calculation for projects that participate in the Downtown Density Bonus Program *without* seeking an exception is woefully outdated.

2. I believe a more escalated fee schedule and more affordable housing units should be required from applicants asking to exceed what is allowed in the Code.

In 2015, I sponsored Council Resolution No. 20151015-038, which directed the City Manager to compile a report updating the data on the effectiveness of the various density bonus programs in generating affordable housing resources, present a potential Code amendment for Council consideration, and conduct a review of best practices of using and calibrating fees-in-lieu within density bonus programs.

The report came forward; the updates were deferred to the Land Development Code rewrite.

Council suspended the Land Development Code rewrite approval process in 2018 and passed Resolution No. 20180823-077, which reaffirmed the direction provided in Resolution No. 20151015-038: it directed the City Manager to develop recommendations regarding amendments to City Code and regulating plans necessary to recalibrate density bonus program affordability requirements and fee-in-lieu requirements and to return to Council with recommendations.

In response to these resolutions, on March 6, 2019, Neighborhood Housing and Community Development (NHCD) issued a memo outlining recommendations for existing density bonus programs and regulating plans, including the Downtown Density Bonus Programs.

The memo stated, “given the dynamics of housing submarkets change over time, and many affordability requirements in these policies have not been comprehensively re-evaluated since their adoption, staff recognizes this as an opportunity to not only recalibrate the City’s density bonus policies, but also to offer recommendations for policy updates.”

For *all* of the density bonus programs, including the Downtown Density Bonus, staff recommended that Council “update the affordable unit set-asides and affordable housing fee rates in all policies to reflect the results of the new recalibration, and move affordable housing fee rates from disparate ordinances and land development code sections to the City’s Fee Schedule.”

Another critical change to the Downtown Density Bonus Program that NHCD recommended be addressed: add an affordable housing fee requirement for non-residential development where it does not exist today.

NHCD writes, “These policies do not currently have fee rates for non-residential development, although non-residential projects can access a bonus. The City has likely foregone revenue due to this omission and will likely continue to do so if a non-residential fee is not adopted.”

To put it plainly: a developer building a non-residential development (office or hotel) can access the Downtown Density Bonus Program. Their required fee-in-lieu? $0.

Updating this fee FROM ZERO is a high priority of mine. Fees generated by the Downtown Density Bonus Program pay for permanent supportive housing and – because of a resolution I sponsored in 2017 – for low-barrier housing vouchers for people experiencing homelessness. (Resolution No. 20171109-089).

Planning Commission approved all of these recommended changes to our density bonus programs in Spring 2019. Council has not yet approved these recommendations.

So, to summarize my thoughts: our current Downtown Density Bonus Program is outdated, it is underperforming when compared to other density bonus programs, and I believe we should update calculations for the projects that participate in the program but *don’t* wish to exceed what is allowed by Code *before* we even begin to talk about applying that formula to a project once they exceed the 15:1 FAR cap. And the other question still remains: should we apply an entirely different formula to projects that are approved to exceed the 15:1 cap?

My motivating desire here is to incentivize the appropriate amount of affordable housing – or fees – for affordable housing within these programs. I know that we all share this motivation as we grapple with our City’s need for more affordable units throughout our city.

So, thank you all for taking the time to understand what I have been attempting to work on with city staff and the applicants for the past several weeks. I look forward to hearing your thoughts, either in this space or on Tuesday. I look forward to the conversation.

Kathie Tovo
Council District 9