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Austin’s (Not So) Secret Shame

Austin’s (Not So) Secret Shame

I used to be proud to tell people I was from Austin, Texas. That pride has unfortunately turned to disappointment and shame.

Beginning in 2009 I became heavily involved in the process of writing a new comprehensive plan for the city I loved. The new plan would be called “Imagine Austin”, and would be based on a vision statement that declared what kind of community we supposedly wanted to become by 2039, Austin’s 200th birthday.

Imagine Austin, when it was ultimately adopted in June of 2012, declared that we wanted to become a “beacon of social equity”, with affordable, economically and otherwise diverse “neighborhoods throughout all parts of the city”, a city that would “view our people as our greatest asset”, and a city that would ensure that the best of Austin, its amenities, its neighborhoods and its financial benefits, were “accessible and affordable to everyone”.

This was a plan of which I could be proud, for a city that I loved. Both as an individual citizen, and as the comprehensive plan chair for the local chapter of the Congress for the New Urbanism, I advocated persistently and with great intensity for an ethical, responsible and welcoming version of Imagine Austin, a version that would actually make the city more affordable and accessible for everyone. The plan was ultimately adopted unanimously by the city council and supported by 19 boards and commissions, by the staff, the consultants, and by a near-unanimous citizens’ advisory task force. And this was in spite of a sustained and vigorous effort by the protectionist-dominated Austin Neighborhoods Council (ANC) to defeat the plan. All seemed to be going well.

Unfortunately, all was not well. Whatever one thinks of ANC, you have to admit that its leadership has been persistent. They didn’t give up on trying to undermine the new plan. After 5 years of trying to help implement a plan that was so generous in spirit, my pride has turned to disappointment, frustration and, yes, shame, thanks to the unrelenting efforts of ANC and its sympathizers.

What Austin has once again proved is that when it comes to neighborhoods, this faction of its population supports a protectionist policy that gives the affluent, home-owning voters favored status over the rest of the population. And those voters loudly and repeatedly proclaim to city hall that they deserve that favored status (and unfortunately some city council members agree with them, or at least go along with the idea).

Largely due to our city’s residential zoning policy, a policy that is little changed over the 86 years that Austin has regulated construction of housing in our neighborhoods, those neighborhoods have made us the most economically segregated city in America.   And the plain truth is that many of us just don’t care – and in fact will fight aggressively to retain the title.

Virtually every person who knows the business of developing housing will tell you that without a certain amount of density, housing simply cannot be made affordable in the middle of a large, thriving city. It’s always been that way. The reality is that the land cost in any housing project, whether a single home or a large apartment project, cannot make up more than a certain percentage of the final sales price of the completed housing product. That maximum percentage has historically been around 20%. Thus, in order for a housing product to be viable on a specific parcel, the final price, including profit and overhead, had to be at least 5 times the cost of the lot or lots.

As land in central Austin has gotten more expensive over recent years, that percentage has arguably increased a bit, perhaps to 25%, or for some projects, even 33% (although at 33% financial feasibility is difficult or even impossible for most projects).

The effect of this real life relationship between land cost and final purchase price (which most of Austin refuses to think about, much less talk about) is that the amount of housing product that can legally be constructed on a given parcel – in terms of the number of housing units – must go up in almost direct proportion to the increase in land cost, or affordability goes down dramatically.

For example, let’s say that the cost of a typical 1/8 acre lot, due to basic forces of supply and demand found in growing American cities, is $500,000 (which is about the median price in central Austin). That means that, in order to be financially feasible for development of new housing using a 25% ratio of land cost to total sales price, one must be able to legally construct a housing product worth about $2,000,000 on that lot. If that $2,000,000 takes the form of a single family home, you get by definition only one home, and it is a home that few people can afford.

If, on the other hand, one can legally build a small 6 unit apartment or condo project, that $2,000,000 cost can be split into 6 homes costing a little less than $350,000 each – not exactly cheap, but at least a price range that a much larger segment of the population can aspire to.

What’s been happening in Austin and a number of other cities across America for decades now is that a certain faction of the population has selfishly sought to keep an affordable level of density out of the neighborhoods in which they already own their own homes. The result has been a national housing affordability crisis.

When affordability goes down, economic segregation is the obvious and inevitable result. As many have heard, Austin now has the worst economically segregated neighborhoods in the entire country. Why? It’s not hard to figure out: Austin has had for several decades now a political climate that is one of the worst in America in terms of embracing the change in housing policy that is necessary to retain and improve affordability in our neighborhoods.

That policy is based upon the idea that “protecting” our central neighborhoods from relatively inexpensive housing in the form of more apartments is a good thing. It’s not.

First of all, the market itself will do plenty of “protecting” on its own, without help from the government in the form of restrictive zoning policy. In a free market, at least until and unless people once again flee to the suburbs (which I suspect will never occur again in our lifetimes), neighborhoods close to downtown will virtually always cost more than those located farther out from the center of the city. It is not a proper function of government, I would argue, to exacerbate that price differential by limiting the types and amount of neighborhood scale housing that can be built in those close-in neighborhoods.

The fact is that our city has grown large enough that our housing stock must evolve from being dominated by detached, single family dwellings to one that is eventually dominated by multifamily dwellings – essentially apartments, small and dense townhomes and row houses, and condominiums. In other words, big cities need big city housing, especially in the core of the city where land costs are the highest. If that evolution of our housing stock is not allowed to occur, we will become more and more a city where only the affluent can afford to live, and our economic segregation, already the worst in the country, will get worse and worse.

This is where the “pride turned to shame” comes in: there is a significant segment of our city’s population that, based upon their behavior in the course of the CodeNEXT process, clearly doesn’t care about our level of economic segregation. And a number of our city leaders not only go along with that lack of caring, some of them proactively advocate in favor of that point of view.

Contrast what our altruistic and inspirational 2012 Imagine Austin plan said about neighborhoods with the pro-segregationist language from the mayor’s 2017 state of the city speech:

From the Imagine Austin vision (p 84):

“Economically mixed and diverse neighborhoods across all parts of the city have a range of affordable housing options.”

And from the mayor’s state of the city address:

“For starters, let’s agree we will not force density in the middle of neighborhoods. There’s no sense in shoving density where it would ruin the character of the city we’re trying to save in the first place, where it’s not wanted by its neighbors, and where we would never get enough of the additional housing supply we need anyway.”

In just 5 short years, we have fallen from trying to be a “beacon of social equity” to listening to our own democratically elected mayor preach in favor of keeping our interior neighborhoods “protected” from affordable housing and therefore, evermore economically segregated. Thus the transition from pride to shame.

Just as has happened at the national level, our community has made at least a temporary decision to use government policy to create an ever greater level of income and wealth inequality, and to separate those economically disparate groups geographically. As the CodeNEXT process gets closer to completion, we are showing what we truly care about, and what we don’t care about. There are clearly a significant percentage of our citizens who actually want our neighborhoods to be segregated, and a number of our council members choose to support them in that effort.

And the blame does not lie solely with the protectionists. The rest of the community, including even the so-called “urbanists” and “density advocates”, have not shown nearly enough bravery in calling for dramatic change that would result in material improvement in our affordability level or our level of economic desegregation. In large part, they have been totally content to advocate for such timid and insubstantial changes (i.e., a modest increase in garage apartments and fourplexes) that, even if they get what they are asking for, they stand no chance of creating an adequate housing supply or of improving the affordability and inclusivity of our neighborhoods.

Austin should be ashamed of itself that we continue to allow the protectionist and segregationist crowd to drive our housing policy.

Frank Harren

January 2018











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