Paul D'Arcy

Here is a rendering published by the Statesman:



When combined with Barton Place, a 270 unit project just a few doors down, it is clear that the area on Barton Springs between the park and Lamar is now in store for a radical transformation. With two large projects on the way, tax increases will certainly put pressure on the remaining restaurants and mobile home parks that form this prime area of the city. As the blocks develop, one of the most important elements -- one that is missing from current plans -- may be a requirement for ground-floor retail up and down the street. It would certainly be detrimental to Austin to lose a full district of iconic restaurants for a few mid-rise condo buildings.

Although Wooley originally hoped to build a much taller tower, he intelligently reformed the project as a 5-story venture that fits just within local zoning requirements. The local neighborhood association has provided vocal opposition to other projects. Given Zilker Place's location adjacent to the park, it would have been very difficult to secure political support for variances.

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Here is a summary from the Austin Chronicle:

The incentives are the "bonus." For a developer, adding density is gaining additional project entitlements and additional value – more square feet, building floors (height), condo units, retail or office space to lease or sell. Zoning code limits the size of buildings; for example, in the Central Business District, entitlements are limited to an 8-1 floor-to-area ratio, or FAR. To reward developers whose projects advance urban planning and community goals, the city would grant them bonus entitlements in exchange for voluntary developer-funded community benefits – say, funding for affordable housing, parks, walkable streetscapes, and space for small, local businesses.

The thing that makes this a tough issue is the value judgment that it places on density: it assumes that high density projects are bad, and that developers should pay for the right to build bigger projects. The problem is that the Mayor and City Council's actions suggest that they believe the opposite to be true: they have worked hard to encourage high density projects for downtown.

The problem with density bonuses is that they don't seem to be supported by logic. The bonuses penalize dense projects, but do not prohibit them. If you believe that density is good, as much of our local elected officials seem to, then it doesn't make sense to put obstacles in place that will limit density. If you believe density is bad and that the current zoning rules are good, then it might make more sense to simply enforce the zoning rules and limit variances as opposed to allowing developers to pay for something which may not make sense for the city.

As we recently reported, Austin is not a dense city. While people disagree on whether they want tall buildings in Austin, density does have measurable benefits. For example, increased density is better for the environment, it enables mass transportation, and it provides for a vibrant downtown core with more residents and workers per square block. The alternative to density is suburban sprawl which has significant social costs. Additionally, dense projects provide significant tax revenue that can be used to fund important services. A large downtown condo project might contribute $50 million per year in property taxes which can pay for a wide variety of services. That revenue stream seems much more valuable than the hundreds of thousands of dollars in density bonuses currently being proposed by planners. (For more on the benefits of density, read this article).

In fact, the push for density bonuses is not really about density as much as it is about affordable housing. With rapid downtown condo development targeted toward high-end buyers and East Austin development replacing more affordable options, there is a growing consensus that action needs to be taken to ensure a diverse city center. The City wants to make sure that there will be affordable options for central Austin living. Unfortunately, the City's past efforts to achive this goal have not really worked. It's important to note that density is not the challenge to affordability. It makes perfect sense for the city to encourage bith density and affordable housing as important social goals.

When it comes to affordable housing, the big issue is cost. It is expensive to develop affordable housing when land and construction costs are skyrocketing. What the City likes about density bonuses is that they allow the city to tax large-scale projects to fund affordable housing. As reported by the Chronicle, this quid-pro-quo has not been a secret:

Last year, the City Council directed the Design Commission to recommend density bonus options. In the past several years, Downtown high-rise developers had been negotiating ad hoc exchanges of community benefits for neighborhood, commission, and council support of the variances needed to exceed existing entitlements. One early adopter was Constructive Ventures. On its Spring condominiums, the developer pledged to give $250,000 total for an affordable-housing fund and for park improvements along nearby Shoal Creek. This effectively countered Old West Aus­tin Neighborhood Association opposition; Spring received variances at council to build a slender 400-foot tower on land zoned Downtown mixed use (which sets a 120-foot height limit). That $250,000 was also the magic figure for the variance-seeking CLB Partners condo tower, T. Stacy & Associates condo tower, and Gables Park Plaza; the Novare/Andrew Urban Downtown post office projects got additional height for $200,000. (Austin has probably been leaving money on the table; by contrast, the density models suggested at right would generate millions in value for the community.)But everyone involved in all that one-off deal-making – including City Council – found the negotiations exhausting, time-consuming, random, and potentially inequitable. So council members began to push for a standard density-bonus policy.

As this debate evolves into policy, stakeholders will have to decide what is truly important for the downtown Austin. The recent report from the City's density bonus task force has expanded the debate by encouraging not just requirements for variances but also incentives for meeting other urban planning goals. If projects hide the parking garage or include a cultural institution or non-profit, they would be eligible for incentives. Certainly, it makes sense for the city to use every tool that they have to achieve their urban planning objectives. But the risk of density bonuses is clear: blocking variances is one of the city's only sticks, making it tempting for officials to penalize projects that would bring beneficial density in order to achieve other important objectives. If developers opt for lower density projects because the required concessions are too expensive, everybody will lose.

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While we have not received any confirmation from the developers, we have heard from other sources that the project is in fact on hold and is unlikely to ever be completed. If true, this represents the first major cancellation of a downtown condo project. While it is easy to blame the project's demise on the credit liquidity crisis, AquaTerra has been in trouble for many months due to weak demand. Competition is intense to market units to downtown buyers --- projects that are not attractively positioned and aggressively marketed will have trouble getting noticed.

Here is what the project would have looked like:

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Here is the summary from the Austin Business Journal:

Austin's City Council gave final approval of phase 1 of the North Burnet/Gateway master land use plan, which will create a so-called second downtown in the area around the Domain luxury shopping center by 2035.The North Burnet/Gateway plan's vision is to ultimately create clusters of dense, mixed-use, pedestrian-friendly neighborhoods in the 2,300-acre area north of U.S. 183 bounded by Walnut Creek, Metric Boulevard, Braker Lane and MoPac Expressway.The final plan will allow developers to build denser than anywhere outside of downtown, as high as 15 stories or 180 feet, and up to 30 stories or 360 feet in areas closest to planned commuter rail stops.Phase 1 immediately designates a zoning overlay district in the area to allow vertical mixed uses and other urban design elements, and to preclude interim development not in concert with the plan.A draft plan of Phase 2 -- outlining ordinances implementing the plan -- is expected in six months, says Molly Scarbrough, a city senior planner. Final approval for the entire plan is expected in a year.

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