Item 3-SB840_Impacts_Density_Bonuses_CDC_Housing_Working_Group.pdf — original pdf

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SB 840 and Austin Density Bonus Programs Alan Pani & Warner Cook Austin Planning | 11/18/2025 Agenda • • SB 840 Overview Impacts of SB 840 • Next Steps | 2 SB 840 Overview SB 840 Summary ▪ Allows by-right mixed-use or multifamily in all zoning districts that allow non-residential uses (excluding zones with heavy industrial). ▪ Sets minimum standards for height, density, and maximum setbacks for multifamily and multifamily and mixed-use developments in commercial zones. ▪ Exempts residential conversions of existing commercial or office buildings from impact fees and other city requirements. ▪ Effective Date: September 1, 2025 4 SB 840 Applicability: Residential by Right ▪ Allows residential by-right on any property where mixed-use, office, commercial, retail, or warehouse uses are currently allowed in the zoning district. ▪ Does not apply to: ▪ Zones that allow a heavy industrial use ▪ Properties within 1,000 ft of a heavy industrial use or development site or within 3,000 ft. of an airport or military base ▪ An area designated by a city as “a clear zone or accident potential zone” 5 SB 840 Applicability: Residential by Right (cont’d) ▪ Residential is allowed by right in the following zoning districts in Austin: ▪ All office base zones: ▪ Neighborhood Office (NO), Limited Office (LO), General Office (GO) ▪ All commercial base zones: ▪ Community Recreation (CR), Neighborhood Commercial (LR), Community Commercial (GR), Lake Commercial (L), Central Business District (CBD), Downtown Mixed-Use (DMU), Warehouse/Limited Office (W/LO), Commercial Services (CS), Commercial Highway (CH) ▪ Special purpose base zones: ▪ Agriculture (AG), Planned Unit Development (PUDs)* ▪ Industrial base zones: ▪ Research & Development (R&D)* ▪ Regulating plans: ▪ Lamar/Justin, Plaza Saltillo, MLK, East Riverside Corridor, North Burnet/Gateway Regulating Plans *Applicable to properties with PUD and R&D zoning that allow commercial uses & prohibit heavy industrial uses 6 SB 840 Applicability: New Minimum Entitlements ▪ Bill sets new minimum entitlements for “mixed-use residential” and “multifamily residential” development, for sites where SB 840 applies. ▪ Mixed-Use Residential = any site in which the residential uses are at least 65% of the development’s total square footage. ▪ Multifamily Residential = any site for 3 or more dwelling units within one or more buildings. 7 New Minimum Entitlements Under SB 840 ▪ Density: ▪ Cities must allow the greater of 36 units per acre or the highest residential density currently allowed in the city. This is 54 units per acre in Austin. ▪ Cannot restrict floor-area-ratio (FAR) ▪ Height: ▪ Cities must allow the greater of 45 feet or the height that currently applies to a non-residential use on the same site. ▪ Setbacks: ▪ Cities must allow the lesser of 25 feet or the setback that currently applies to a non-residential use on the same site. 8 Impacts of SB 840 General Impacts to Density Bonus Programs ▪ Density bonuses that do not allow additional height, such as VMU, are likely no longer viable. ▪ Density bonuses that allow additional height, such as DB90, DBETOD, ERC, TOD, and NBG, may be less attractive than what’s available by right for developments, post-SB 840 ▪ Viability likely varies by location or other factors, such as higher construction cost per sq. ft. for podium construction. ▪ Affordability Unlocked projects may have to compete with market-rate developers on more properties, potentially leading to higher land costs for subsidized affordable housing developments. ▪ Downtown Sites zoned Central Business District (CBD) were unlikely to participate in the Downtown Density Bonus as CBD zoning did not have a height limit & SB840 granted unlimited FAR ▪ In response, Council approved the creation of a new maximum by-right height of 350’ for CBD ▪ Developers can participate in DDB to exceed new maximum height with Council approval 10 Additional Impacts of SB 840 ▪ Impacts on legacy commercial districts and regulation of active uses ▪ Airport Overlay impacts ▪ FLUMs and Neighborhood Plan Amendments ▪ Waterfront Overlay For updates, an information sheet, and information on potential amendments, visit SpeakUpAustin.org/LDCUpdates 11 ETOD Overlay Phase 2 / Tiered Density Bonuses Density Bonus Programs in Austin ▪ Austin’s 13 distinct Density Bonus (DB) programs provide additional entitlements in exchange for community benefits, while still providing some residual bonus value to the developer. ▪ Staff estimates that DB programs have generated a little over 20% of total built and planned income- restricted units since adoption of the Strategic Housing Blueprint in 2017. 13 Density Bonus Direction from Council Resolution No. 20250605-080 directs update of DB programs citywide: ▪ Create variety of density bonus combining districts in a new tiered structure that considers: ▪ Bonus height entitlements more or less than 30 feet, ▪ Calibrated affordability requirements, ▪ Additional community benefits beyond affordable housing, ▪ Modified compatibility regulations, and ▪ Redevelopment requirements, including considering one to one unit replacement. ▪ Amend DB90 and VMU to align with new DB programs. ▪ Align new DB combining districts with additional phases of ETOD Overlay. 14 Impacts for Tiered Citywide DBs/DBETOD ▪ Council initiated changes on June 5 to create new tiered density bonus programs and revise the existing VMU and DB90. ▪ Goals from the resolution included direction to: ▪ Look at additional types of community benefits ▪ Analyze requirement for partial or full replacement of existing affordable units ▪ Staff will analyze the new development reality post-SB 840 to understand whether bonus programs could “pencil” with the same, fewer, or more benefits than are required today. 15 Next Steps Next Steps for Density Bonus Programs ▪ Citywide Density Bonuses: Develop staff proposals for new citywide tiered density bonus system that accounts for SB 840 impacts ▪ Council consideration tentatively anticipated in May 2026 ▪ Evaluate other types of incentives for affordable housing, beyond density bonus programs ▪ Identify additional changes and amend Land Development Code as needed 17 Current Project Timeline June – September March – May - Analyze SB 840 Impacts - Community Engagement - Additional Market Calibration with Consultants - Planning Commission Consideration - Council Consideration - Interdepartmental Discussions - Finalize Staff Proposal October – February *Timeline subject to change 18 Thank you!