Development w/out Displacement Comments on the City’s LDC January 2020 – Frank Rodriguez

From the letter of transmittal from the Mayor Adler’s Anti-Displacement Task Force, November 16, 2018  Displacement today is not simply the legally and morally neutral workings of Austin’s real estate market. Displacement and exclusion are the strange fruit of public policies put in place by city government to disadvantage citizens of color at the behest of and for the economic advantage of the white citizens of Austin. An appropriate solution will require significant public spending and bold policies. Support for these will the widespread acknowledgement that is happening in Austin today is rooted in an ongoing and unaddressed legacy of racism. An equitable solution demands that Austin plant a new crop of inclusive community building practices whose purpose is to cultivate an economically, ethnically and culturally diverse city. 

  1. Background 
  1. DWD Coalition 
    1. The Development Without Displacement coalition is comprised of representatives of various community advocates for affordable housing and anti-displacement programming in high-risk gentrifying areas and in mobility and Imagine Austin corridors. 
    1. Recent study out of Boston U. – advantaged dominated the proceedings (older, men, longtime residents, local voters, and homeowners are more likely to participate in these meetings and more likely to oppose new construction than the general public. Residents who oppose new housing are also whiter. 
    1. Housing affordability and inequality are national political issues. The newest tool against segregation and housing inequality is to let their streets get denser, through upzoning. Cities jumping on the densification train: 
      1. Minneapolis led the charge last December. The Mayor says that the precision of their solution need to match the precision of the harm initially inflicted through “planning by bulldozer.” 
      1. Others are on deck. Seattle loosened the zoning code in 27 transit oriented urban villages that will allow more homes to be built on single-family zoned plots., but only if a certain percentage of development is affordable. Seattle has tried a different tack that Minneapolis where under their Mandatory Housing Affordability rules will be paired with developer incentives: They’ll be faced with the choice to build more affordable housing or pay into an affordable housing fund. There are fears that the MHA will fail to protect existing affordable housing stock and that is doesn’t go far enough to nudge development in places that need it. 
      1. Oregon has proposed a bill to eliminate single-family zoning statewide. Charlotte leaders are asking Minneapolis for advice.
      1. The most ambitious is California Scott Wiener’s SB 50- which allows developers to build more kinds of housing with the idea that this increase in housing stock is attractive as a path to lower costs. 
    1. A frequent criticism holds that permitting more housing doesn’t necessarily mean more affordable housing, especially if developers are left to their own, market-influenced devices. In California, there is the fear that giving developers free rein to build taller will result in more displacement, not more accessibility. Given the intense demand for housing, increasing density only a little – or upzoning just in neighborhoods where it’s cheaper to build – could make matters worse. 
    1. Even upzoning advocates recognize that reforming zoning on its own is not, has never been, and never will be a silver bullet. Several cities where upzoning has been proposed or employed, loosening building restrictions has been inextricably linked to other policy pushes. SB 50, for example, would enhance tenant protections and introduce stricter affordability requirements. For communities deemed sensitive to the risk of displacement, the bill will delay implementation by five years. In Seattle, the Mayor says that building more housing in high-opportunity neighborhoods will be a challenge. Where the exit-ramp to pay into a fund rather than build affordable housing exists, the majority of developers will choose to take it. This trend will contribute to wealth and racial segregation which could be avoided with on-site development. 
    1. A recent study by Dallas Federal Reserve notes that amongst large U.S. metros, Texas metros have experienced the greatest increases in college-educated residents in area closest to the city center. Increases in college-educated residents is not as strong for neighborhoods farther from downtown, although the overall change is positive at all distances because the college educated population has increased throughout most major metro areas. Not surprisingly, median income has also surged in centrally located neighborhoods. Racially composition in Houston, Dallas, San Antonio, and Austin and racial composition in the central cities has also changed considerably since 2000. The overall non-Hispanic white population share declined overall while the proportion of non-Hispanic whites increased in the urban core for all four metro areas . In each of the cities, centrally located neighborhoods in 2000 had the lowest median income. In Austin, for example, the average income quintile of tracts within three miles of downtown was 1.57 in 2000, compared with 3.29 for tracts farther than 20 miles from downtown. By 2015, the average income quintile of the same tracts within three miles of downtown rose to 2.50. This is higher than areas than 10-20 miles plus from downtown. Given that high-income and highly educated residents are flocking to central city neighborhoods – and that housing costs are rising in these locations – is there evidence of displacement of low-income residents. The Federal Reserve concludes that data analysis of at-risk demographic groups reveals that these groups experienced a population loss in the central cities and strong population growth in the outskirts. This is also known as the suburbanization of poverty. 
    1. The Development Without Displacement Coalition is concerned with Austin’s Land Development Code (LDC) rewrite not because it is a housing production bill, but it falls short of equitable housing production standards – and without such standards, the LDC could do more harm than good. Here are some issues:
    1. The LDC does not truly have a meaningful equitable development policy for the LDC Instead an “Equity Overlay Zone” is proposed from Council Member Garza as communicated by her to the City Council:
      1. Equity Overlay 
        1. Boundaries – Area should be delineated by the vulnerability in the UT Uprooted report.
        1. Preserve Existing Multifamily – For current affordable multi-family
          1. Map and zone to current structure and appropriate RM zone
          1. No new height (in the base of bonus)
        1. Onsite Affordability – Promote more onsite affordability
          1. Require onsite affordability to be at least 10% of the total and no fee in lien option
        1. Future revisions of the overlay – Overlay should be looked at and revised after
      1. Missing Middle Childcare
        1. Increase the number of children allowed in the childcare large room from a max 
        1. Allow as a permitted use childcare large under R3, R4
        1. Allow a MUP for childcare commercial use under RMI
      1. Small Neighborhood Grocer
        1. Allow small neighborhood grocers as CUP in all zones

Council Member Garza’s equity overlay zone is a tool and is necessary but not sufficient to prevent secondary displacement that will affect vulnerable areas undergoing gentrification and displacement. It simply de-intensifies the zoning for these areas without providing the tools and resources to prevent secondary displacement from upzoning.  

  • Funding for gentrification and displacement housing and mitigation strategies is inadequate. The Development Without Displacement provided the following COA Budget Request for the 2020 budget which was not considered. The City is only proposing to spend less than $9 million annually (see NHCD Housing Displacement Mitigation Strategies )
  SOURCES OF FUNDS General Fund One-Time
Corridor Mobility Affordable HousingDesignate $10 million for Corridor Housing Preservation and to ensure transit access to jobs and preservation of affordable rental units targeted to construction Corridors in the Eastern Crescent that have high vulnerability and development pressure for displacement $10.00
Corridor Mobility Small Business Preservation Designate $2 million for Corridor Small Business Preservation targeted to construction Corridors in the Eastern Crescent that have high vulnerability and development pressure for displacement$2.0 
Expand Use of Neighborhood Conservation Combined Districts and Historic DistrictsDevelop and Implement 20 NCCD plans               $1.00 
Develop and Implement 20 historic preservation plans              $1.00 
Support for historic preservation surveying of homes/buildings in low-income gentrifying areas not surveyed yet. $1.0
Increase Housing Trust Fund for Very-Low Income ResidentsIncrease resources and services for very low-income residents in gentrifying areas to stay $3.0 
Certificates of Obligation (CO) Issue COs and designate these funds for Gentrification and Displacement targeted at East Crescent Corridors for affordable housing and displacement mitigation activities ($18.0)
 TOTAL  $ -0-            
  • LDC and Affordability Observations
  1. Affordability – Affordability is as much about urban design as it is about brick and mortar costs. Housing affordability is not simply the cost of the home itself. An affordable home must be a home with access to jobs, goods and services, educational, medical and governmental institutions and entertainment and recreational venues. The LDC offers limited income-restricted housing and upzoning isn’t a sufficient affordability program in of itself.
    1. Current and proposed public investment is planned and to be put in place for:
      1. Transportation
      1. Opportunity Zones
      1. Upzoning
    1. Equitable Development is lacking
      1. Equitable Development is community development and urban planning aimed at revitalizing disinvested communities and ensuring that all residents of urban places can shape urban development and benefit from economic growth in an equitable fashion. There is no equitable development analytical framework and scorecard in place that coordinates and assesses place-based public and private investments, programs, and policies in neighborhoods to meet the needs of marginalized populations and to reduce disparities, providing access to education, living wage employment, healthcare, healthy environment, small business preservation, affordable housing and transportation. UT’s displacement risk index identifies areas of Austin where displacement of marginalized is more likely to occur and where opportunity exists with good access to services and amenities. The City attempted through the Mayor’s office several years ago to implement an equitable development framework through its “Spirit of East Austin” initiative. But due to lack of focus and funding the program never saw fruition. 
  • Fiscal/Budget Implications
    • The costs of gentrification are the displacement of the poor along with small and unique businesses, but public officials make development decisions based on revenue as much or more than community need. Gentrification provides a fiscal windfall for city government. More affluent residents contribute more income to city coffers and appreciating home values beget higher property tax revenue. These increased tax revenues allow the city to increase investment in infrastructure, public transportation, public schools, law enforcement, and other services. Urban core jurisdictions increasingly opt for large scale developments like big box retail stores, hotels, stadiums, and expanded convention centers that draw visitors from across the region. These developments often directly displace community-serving and culturally oriented businesses, opening wounds for communities that were negatively impacted by earlier urban renewal. Moreover, upzoning will provide the revenues from expanded development to assist in balancing the city budget. Due to the effect of the State of Texas’ law that reduced the property tax revenue growth factor in the State-mandated rollback rate calculation from 8% to 3.5%, the General Fund is projected to begin experiencing structural imbalance beginning in FY 2012-22. The expected gap in FY2021-22 is $8.0 million increasing to $27 million in 2023-24.  
    • Gentrification and Displacement budgeted funds are modest. Upcoming proposed and funded public investment priorities are going to “crowd out” funding capacity for gentrification and displacement mitigation and affordable housing.
      • $750 million – Transportation Corridor
      • $2 billion to $6 billion – Public Transit System
      • $ Other priorities – Homelessness (in this year’s budget overall additional Homelessness housing and programming is budgeted at $56,245,200 and $13,500,000 for housing displacement
    • City funding tools are limited. Primarily:
      • Tax Increment Financing – City policy capped at 5% and will need a policy change
      • Federal Funding – the White House would make drastic cuts to the CDBG, HOME Investment Partnerships, the Housing Trust fund and others
      • GO Bonds – Additional bonds are needed in 5 years
      • Low Income Housing Tax Credits – Only 90 Low Income Housing Tax Credit properties with 9,794 units serve the Eastern Crescent’s 412,496 population. The Housing Authority recently bought a 452-unit apartment complex in SE Austin which will be rented to tenants earning no more than 80% of median family income 
      • Repurposing public property – there is still after many years of discussion about building affordable housing on public property a lack of momentum and focus on accelerating this objective. 
  • Affordable Housing pipeline
    • Strategic Housing Blueprint calls for 60,000 affordable units to be added to the city’s housing stock. A rough calculation including the LDC generated Income-Restricted Housing and other programs shows that this is about 3,600 affordable housing units per year
      • Income-Restricted Housing. Based on the last four years total the average affordable housing units added was about 1,300 per year. 
      • Bond Funds. The City has recently approved $250 million in general obligation (G.O. bonds) for affordable housing through the November 2018 bond election. G.O. bonds have been approved three times by Austin voters and have paid for affordable housing with services to support at-risk families. In 2006, $55 million in affordable bonds created 3,400 affordable units. The 2013 G.O. $65 million affordable bond program created 2,253 affordable units. It is estimated that 7,000 affordable units could be created through the $250 million in voter-approved bonds over five years or an average of 1,400 per year. 
      • Other Income-Restricted Housing. There are also 11,200 income-restricted housing units in the “pipeline” which will be added to Austin’s housing stock in the coming years. 
      • LDC Income-Restricted Housing. Close to 45% of the overall capacity of 397,000 is from bonus market-rate units (178,000). This assumes that the market will buy-into the affordable housing bonus program producing only 9,000 bonus income-restricted units (only 2%) over 10 years.
    • The additional affordable housing is measured against displacement losses which has been estimated in ranges from as 49,000 residents (in current highly vulnerable areas) to over 178,000 residents (in highly vulnerable and areas subject to displacement). 
    • LDC – current proposed
      • Granting of new entitlements in areas currently or susceptible to gentrification will be limited so as to reduce displacement and disincentivize the redevelopment of multi-development residential development, unless substantial increases in long-term affordable housing will be otherwise achieved. Transition areas will be shallower along corridors in areas vulnerable to displacement
      • Existing market rate affordable multifamily shall not be mapped to be upzoned
  • LDC Recommendations
  1. Delay implementation in “sensitive communities” that are at-risk of or undergoing gentrification. It is important to ensure that these neighborhoods with displacement pressure have time to plan for and implement anti-displacement strategies. A new geographic lens is needed to define the sensitive community geography using a dedicated stakeholder engagement and research process. First policy goals must be clearly established. Using those parameters, researchers can then determine a methodology to identify sensitive communities in ways that align with those goals. 

Note that other cities like Seattle in upzoning found that the displacement of low-income households correlated more strongly with high-opportunity areas than it did with high risk displacement areas. This correlation between areas should be examined that areas have grown more in terms of adding housing units with an increase in the percentage of low-income households. In Seattle, areas that have grown the most have retained the most low-income households. 

  • Implement a formal Equitable Development program similar to Seattle that analyzes impacts on displacement and opportunity related to their growth strategy. There is no single path to equitable growth; rather, multiple intersecting and complementary strategies needed to protect against displacement, preserve existing affordability, and produce new affordable housing. The equitable development framework that they have developed recognizes that market forces alone will not be able to produce equitable growth. While stabilizing housing affordability and ensuring appropriate amenities are crucial components of neighborhood planning, income and asset creation are critical to ensuring resident well-being as the neighborhood economy improves. Providing needed resident services – childcare, transportation, a basic retail sector and access to health care- is a precondition for success. Tying public investment to local-hire and living-wage provisions or otherwise connecting land use decisions to local asset creation can significantly mitigate negative displacement pressures by bringing some of the of benefits of the new investment to existing residents. 
    • Create an ordinance and/or new Chapter in the LDC that does the following:
      • Require the city to study whether neighborhood wide rezonings have spurred indirect displacement for existing area residents. The City lacks data on whether plans to reshape communities into denser development hubs has pushed out existing tenants. This information gap would require the City to evaluate if new development and socioeconomic changes brought on by rezonings have contributed to indirect displacement impacts. This ordinance will give the City a fuller picture on how rezonings affect residential displacement and will inform policy decisions around land use moving forward. 
      • Review whether the City will create enough affordable housing onsite because developers can pay an in-lieu fee rather than building affordable housing on-site which may lead to low-income residents being displaced. 
      •  Allocate financial capacity as a priority for the City to target funds for gentrification and displacement similarly to the “laser focus” communicated by City Manager Cronk for homelessness.  
      • Identify “sensitive communities” that can choose to delay implementation of rezoning for a period of five years to allow time for community planning. The goals of the community plans are to identify zoning and other policies that encourage multifamily housing development at a range of income levels to meet unmet needs, protect vulnerable residents from displacement, and address other locally identified priorities. Sensitive area factors would include income, unemployment, poverty, segregation and other factors. 
    • Support for small area plans for neighborhoods. The City’s adopted neighborhood planning areas are a guide for the City’s LDC infill plans. When Seattle considered changing the rules for development in neighborhoods throughout the city, they began this process neighborhood by neighborhood rather than proposing a single piece of legislation to upzone 27 neighborhoods at once. Analyzing so many changes at once began an impossible task resulting in meaningless generalities, omissions, misleading statements and outright inaccuracies. Prior to this Seattle engaged in an extensive bottom-up, neighborhood specific planning process. The goal was to allow higher density in a way that would protect the quality of each neighborhood. Roughly 30,000 citizens of Seattle worked on these neighborhood plans. But in 2015, the Mayor entered into a “Grand Bargain” with developers and affordable housing advocates. The so-called “grand” bargain was consummated only by omitting a key constituency from the agreement – impacted residents. The neighborhood plans were sidelined. The City did not do a localized assessment of key issues affecting neighborhoods including displacement and the overall loss of livability in each neighborhood. To get this right for Austin, the ordinance/chapter should order neighborhood-specific environmental, social, and economic impact and bottom-up citizen input. 
  • Gentrification, Displacement, and Role of Public Investment
  1. Changing economics, demographics, and physical forms of metro areas have fostered opportunity for some and hardship for others.
    1. Definitions and impacts of gentrification have been debated for 50 years. Central to these debates are who bears the burden and who reaps the benefits of change. 
    1. Displacement is a pressing concern. Anxieties about residential, cultural, and job displacement reflect the lived experiences of neighborhood change and social memories of displacements past.
    1. Changes stem not just from private sector but government intervention. These investments put government at risk of becoming an agent of gentrification and displacement. The extent of which public investment catalyze residential and small business displacement is not well-defined or quantified in the research. 
    1. Public investment encompasses a wide array of direct activities and indirect policy actions. 
  • Will Rezoning Cause or Resist Displacement?
  1. Some city officials stand by the idea that rezonings tied to a variety of community improvements will not only revitalize communities that have long suffered from disinvestment but will in fact alleviate the affordability crisis. They argue that boosting the housing supply through growth will ease demand pressures on the rental market and that mandatory or voluntary inclusionary housing policy which requires developers benefitting from an upzoning to rent a portion of units at below-market rates, will ensure the creation of low-income housing; that additional investments will preserve existing affordable housing.
    1. Community members note the disappearance of Latino and Black community members abetted by public policy is already occurring with affordable housing being tore down to build luxury housing. Upzoning becomes gentrification on steroids. 
    1. How we did end up here- with everyone professing the same goal of affordability and such radically divergent opinions of the strategy? Upzoning advocates blame the community’s misunderstanding of what causes displacement, while the community contend that city officials are beholden to real estate interest. 
    1. Increasing density may help ease the housing shortage but without including measures to reduce segregation, increase equity, and lift up disadvantaged communities is it likely to replicate existing disparities. 
    1. Drilling down – Central disagreement – whether upzoning can have a destabilizing effect on the existing housing in a neighborhood. The upzoning and actual development that follows can transform a neighborhood into a destination, increasing housing in that neighborhood and prompting landlords to raise rents. 
      1. Low-income renters who cannot easily adjust to increases in housing prices would thus be at risk of eviction. 
      1. Public officials refute the assertion that market-rate housing could itself be a cause of displacement. Data shows dramatic neighborhood demographic change following rezonings, but scholars disagree whether this data proves a causal relation between the rezonings and displacement. 
      1. What doe experts say about the impact of adding market-rate housing? City officials argue that that city has limited tools at its disposal to address the affordability crisis, which means harnessing the private market to create both market-rate and affordable housing. They say, they could never subsidize their way out and need a certain amount of private-market activity- with new ground rules, with new stipulations – to put up the maximum number of apartments. In other words: tackle the crisis by boosting supply across the board., which will reduce competition for older housing and ease demand pressure, while also using subsidies to ensure some units go to low-income families. 
      1. Community advocates say that the City’s choice to encourage a mix of market-rate construction rather than focusing on subsidizing housing for the lowest income is one that comes with grave risks. Living in an upzoned neighborhood the narratives goes: the affordable housing created might not be actually affordable to you and the majority is so expensive that its unaffordable to everyone in the neighborhood. Wealthier newcomers move in, with the disposable income to support new expensive amenities. As the neighborhood becomes increasingly popular, landlords begin harassing rent-stabilized tenants and real-estate brokers hound long-term homeowners will all-cash offers. Soon your landlord is giving you the ultimatum: agree to a whooping rent increase or move out. 
      1. Are these risks real, and if so, is there any justification for trying to boost market-rate supply? 
        1. Scholars acknowledge that introduction of market-rate development could raise prices but have different opinions on whether supply is still an important goal, and on how much to worry about displacement. 
        1. NYU Furman Center – adding new market-rate housing to a neighborhood doesn’t always translate into lower-prices nearby and could channel demand into that neighborhood raising rents in the short terms. 
        1. From Hunter College – the real problem driving the affordability crisis is keeping the lid on housing prices and that all neighborhoods benefit in the long-run if they allow for the production of new units. 
        1. Another from Hunter College – the real problem driving affordability crisis is the soaring costs of land, in great part as a result of city zoning actions. Not convinced that the City needs to construct more housing. 
        1. Zoned Out! Race, Displacement, and City Planning in New York City – low income neighborhoods in central locations, allowing market-rate development poses a massive displacement threat. 
        1. MIT – Just saying no supply, no new growth is definitely a mistake, but you have to be careful about what kind of growth you promote. The solution is a more substantial portion of subsidized, low-income housing stock, but also unsubsidized construction in neighborhoods where market-rate units would not be price-prohibitive to low-income families, and in neighborhoods where there might be less risk that the new housing would induce displacement of low-income residents. 
        1. Are there stats to prove upzonings cause displacement?
          1. Few cities have undertaken studies of the overall effects of rezonings and many cities do not collect data about the reasons residents leave their neighborhoods. What we do know is neighborhoods demographics looked before and after rezonings. 
          1. There are three categorized or rezoning:
            1. Upzonings
            1. Hybrid rezonings that limit the redevelopment of residential areas while allowing growth on major commercial corridor
            1. Downzonings which reduce density and preserve neighborhood character
            1. An MIT researcher found that all three experienced greater increases in rent, median income, and proportions of white residents than the city as a whole. The reduced presence of Latino, Black and poor residents was particularly extreme in hybrid neighborhoods., possibly suggesting those rezonings may have been the worst recipe for residential displacement. 
        1. A study of zoning changes in Chicago (Urban Affairs Review) by MIT finds that they led to higher, not lower local home prices, while having no discernable impact on local housing supply. The comparison was of a set of zoning reforms to encourage development around transit stops with an expanded upzoned area and increased incentives for more building intensity. There were two conclusions:
          1. There was no effect from zoning changes on housing supply
          1. Instead of falling prices, as the conventional wisdom predicts, the study found the opposite. Housing prices rose on the parcels and in projects that were upzoning, notably those where building sizes increased. The study doesn’t invalidate the idea that increases in the number of housing units won’t eventually lead to lower prices overall, but what the study does show is what happens on specific lots and areas that are upzoned. “Even if upzonings – in the medium or longer term- increases in number of housing units (though I do not find evidence for or against this in the study), we still will have to contend with the potential that the short-term impacts of the changes are higher home prices and likely higher rents for those directly affected by the change, especially new development, as everyone knows, takes many years to get underway. The speculation will come first.” Simply liberalizing zoning for denser development will not address the critical need to provide affordable housing for less advantaged people. Upzoning isn’t a sufficient affordability program in of itself. 

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.