Design Commission Downtown Density Bonus Resolution — original pdf

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RESOLUTION ON DOWNTOWN DENSITY BONUS ONSITE AFFORDABILITY ASSESSMENT WHEREAS, the calibration report by EcoNorthwest did not include feedback from the developers responsible for providing on-site affordable housing and financing the Downtown Density Bonus fees-in-lieu; and WHEREAS, on-site affordable housing can be problematic to implement and it has not been assessed as part of the Downtown Density Bonus program; and WHEREAS, increasing costs through city fees causes developers to charge higher rent or sell at a higher cost per square foot to cover the minimum required Debt Service Coverage Ratio (DSCR); and WHEREAS, when a condo project has hotel financing which requires all condo owners to use the units as a second residence, providing on-site affordable units to an income-restricted group that also owns a second home is very unlikely; and WHEREAS, the Residual Land Value (RLV) methodology used in the EcoNorthwest study assumed certain inputs that were compared to a leading provider of CRE data, however with Texas being a non-disclosure state, these reports often contain incorrect prices and ownership, and WHEREAS, this methodology excludes land contributed as equity, which is also a common real estate practice, and WHEREAS, developers will not disclose project costs due to potential exposure and therefore, this is not likely an accurate costs basis analysis; and WHEREAS, the Downtown Density Bonus program incents land owners to sell to developers that are bringing maximum Floor-to-Area Ratio (FAR) for whole city blocks because they can offer sellers the most money for the land, BE IT RESOLVED BY THE DESIGN COMMISSION OF THE CITY OF AUSTIN: We recommend that Council directs the City Manager to analyze the barriers to providing affordable housing on site, the efficacy of “best efforts” affordable housing on-site implementation, the challenges in operating on- site affordable units, and the affects the fees-in-lieu have on land acquisition. BE IT FURTHER RESOLVED: That the results of this affordability assessment should be used to inform the required community benefits and calibration of fees-in-lieu for the Downtown Density Bonus Program. ADOPTED: ___________________________________ ATTEST: _________________________________ David Carroll Chair, Design Commission