Backup - Item #4 20260528-067, Agenda Backup_ Planning Commission Amendments and Staff Reponses — original pdf

Backup

Citywide Density Bonus Program – Planning Commission Amendments and Staff Responses Staff Recommendation Not recommended Planning Commission Amendment 1 Allow fee in lieu payments as an option for rental housing developments. Fee in lieu funds generated shall be a) restricted for use as RDHA or OHDA funding, and b) geographically prioritized to affordable developments within 1.5 miles of the originating density bonus development. If no eligible Rental Housing Development Assistance (RHDA) or Ownership Housing Development Assistance (OHDA)-funded projects exist to accept the funds within 3 years of fee-in-lieu payment, fee-in-lieu funds shall revert to general RHDA/OHDA funding for any citywide project receiving this funding. Staff Response Staff’s proposal is for on-site units only for rental developments, consistent with our longstanding policy for density bonuses. The City’s density bonus programs have resulted in nearly 6,000 affordable units (or beds, in the case of some properties in the University Neighborhood Overlay), which would cost up to $600M to subsidize, making density bonus programs the main tool for generating affordable housing without the need for subsidy. However, staff is happy to provide information about the pros and cons of any proposed fee-in-lieu option for rental. If Council decides to include a fee-in-lieu option, staff wants to ensure that it continues to promote geographic dispersion, and avoids concentration of poverty. Planning Commission’s proposed geographic restrictions would not be administratively feasible, as staff would not feasibly be able to maintain, track, and communicate fee availability to prospective RHDA/OHDA applicants for funding if each fee-in-lieu payment had its own geographic restriction and shot clock for spending. If Council chooses to include a fee-in-lieu option, staff recommends that Austin Housing limit the use of fee-in-lieu revenues to High Opportunity Areas as defined by Austin Housing, which would advance the policy intent while remaining administratively workable. Staff also want to ensure that fee-in-lieu does not negate or supersede any requirements for on-site units in cases of redevelopment of existing multifamily buildings. We would therefore recommend that if a fee-in-lieu is adopted for rental developments, it should only be available for developments that do not trigger City Code § 4-18-32 which sets out redevelopment requirements for existing multifamily structures. C20-2024-004 Text Changes No changes were made to the staff version of the ordinance. Aspects of this amendment that are able to be included were included in the Planning Commission version of the ordinance. 1 City of Austin Council Meeting Backup: May 28, 2026File ID: 26-1745Planning Commission Amendment 2 Exempt projects with 16 or fewer dwelling units, or lots zoned MF-3 or more restrictive, from compatibility standards. Staff Recommendation Neutral 3 Use a scale factor of +25ft, +50ft, +75ft. Not recommended Staff Response Staff does not support applying the Citywide Density Bonus Program to residentially zoned properties; see the detailed response in amendment #8 below. However, should Council want to apply the Citywide Density Bonus Program to residential base zones, it should be noted that lots zoned MF-3 or more restrictive are already exempt from compatibility under Article 10 compatibility standards that apply outside of bonus programs, so it would be a logical component of a bonus program in the event it did apply to residential zones. Staff would generally be supportive of reducing compatibility standards for developments with a small number of dwelling units, like those with 16 or fewer dwelling units as proposed by Planning Commission. However, it should be noted that the Planning Commission amendment as written would fully exempt those smaller developments from every aspect of compatibility, including things such as mechanical equipment and screening requirements, as well as all compatibility buffer requirements (meaning 0' side yard setbacks would be permissible). Staff therefore would recommend a more nuanced modification of compatibility standards for smaller developments rather than full exemption. The staff proposal that uses 15' increments reflects the transition from wood to steel construction that typically happens around 75' tall, or 5 stories. For example, a 15' bonus on a base zone with 60' of allowable height would achieve a total of 75' without changing to the more intense construction category. The Planning Commission's recommendation to instead have the lowest height tier grant an additional 25' of bonus height combined with a base zone that allows for 60' would result in a total of 85'. This does not achieve Council's direction to staff to align or update programs such as Density Bonus 90 (DB90) because as amended there would not be a tier that could achieve 90’ total height. Council direction was interpreted by staff to create a replacement for DB90 and to create a viable option below DB90 that still increases height beyond base height, which this amendment fails to do. C20-2024-004 Text Changes No changes were made to the staff version of the ordinance. The Planning Commission version of the ordinance includes this change. No changes were made to the staff version of the ordinance. Aspects of this amendment that are able to be included were included in the Planning Commission version of the ordinance. 2 City of Austin Council Meeting Backup: May 28, 2026File ID: 26-1745 Planning Commission Amendment 4 Add +120 and +190 tiers, with a Staff Recommendation Neutral request for staff to develop criteria related to these taller tiers that require a higher barrier to entry that could include the adjacency to certain class of roadways, adjacency to transit, parcel size, and proximity to Imagine Austin corridors. Policy/ Programmatic/ Future Action 5 General Recommendation: create a “ground floor menu,” based on the structure of the updated urban design standards being produced by the Design Commission, to offset the 75% ground-floor street frontage requirement and add flexibility for projects without having to pursue a site-specific waiver. Ensure that requirements are right-sized for projects with varying levels of street frontage. Staff Response Staff welcomes a discussion with policymakers on whether additional tiers beyond +60' are appropriate to create at this time, and we are happy to respond to any amendments related to this topic area. The structure of the Citywide Density Bonus Program is such that additional taller heights could be created in the future without disruption to other tiers. Planning Commission intended to create tiers to allow for total heights of either 180’ or 250’ with this amendment. It should be noted that, as written, the amendment would actually allow for tiers that resulted in total heights of either 240' or 310' when applied to Commercial Highway Services (CH), because CH as a base zone allows for up to 120' tall buildings by right.These heights may not be appropriate in every location throughout Austin. Additionally, allowing much taller tiers that are likely only appropriate and even viable in limited locations throughout the city could generate more effort and disagreement during rezoning cases; in instances where an applicant requests the highest tier regardless of site context, staff, Planning Commissioners, and Council may see more contention in such cases. If higher tiers are of interest to and adopted by Council, there would need to be criteria related to which sites are and are not appropriate. The staff proposal for the Downtown Density Bonus Program update would require developments to meet a number of items from a menu of design standards in addition to the ground floor active use requirements. This approach is appropriate for intense high-rise development, but less appropriate for the variety of intensities of development and context that are eligible for the proposed Citywide Density Bonus Program. Design standards such as those proposed in the Downtown Density Bonus Program update are more complex to administer and add cost to development that likely will not be feasible in mid- rise or lower intensity high-rise construction outside of downtown. The staff proposal streamlines the program by mirroring the requirements of DBETOD, which also allows for a waiver or modification of the ground floor active use requirements through the zoning process. It is possible that a menu with a few alternatives for active ground floors could be administered without too much additional complexity. Doing so could better meet the needs of sites with differing amounts of street frontage. However, design standards are not feasible in staff's opinion. C20-2024-004 Text Changes No changes were made to the staff version of the ordinance. The Planning Commission version of the ordinance includes this change. This general recommendation is not in the scope of this code amendment. 3 City of Austin Council Meeting Backup: May 28, 2026File ID: 26-1745 Planning Commission Amendment 6 For onsite affordable units, allow developers to round down a fractional amount under 1/2, rather than rounding up. Anything 1/2 or above should continue to be rounded up. Staff Recommendation Not recommended 7 General Recommendation: consider a height bonus increase within a specific distance of Project Connect, the Imagine Austin corridor network, and CapMetro high frequency bus network with flexibility regarding the various bonus tiers as appropriate. 8 Allow the Citywide Density Bonus on MF-1, MF-2, MF-3, and MF-4 lots under a half-acre, with the following additional requirements waived: ground floor mixed-use requirements, Subchapter E, and minimum lot size. Policy/ Programmatic/ Future Action Not recommended Staff Response Staff does not support rounding down. Density bonus programs set a minimum percentage of on-site units that applicants must achieve, and rounding up in each case is necessary for applicants to meet that threshold. Allowing rounding down would allow for the creation of developments where the number of on-site units is less than 10% of total units. To promote affordability, we continue to support rounding up to ensure the minimum thresholds in Code are met or exceeded. Additionally, if Council would want to consider changing the calculation of affordable units to in some cases round down, staff would recommend that change apply to all density bonus programs rather than only the Citywide Density Bonus Program, in order to ensure consistent administration across programs. Incorporating this amendment would require amending Chapter 4-18-23 (B) rather than Chapter 25-2. Staff does not recommend the creation of a mechanism like this that would essentially create a "bonus on top of a bonus" in particular cases. Not only is this more difficult to administer and more difficult for community members to understand what may be built on individual sites, but it also may not be a legally feasible approach to bonus programs. If taller heights beyond staff's recommended +60' tier are created, staff recommends those be created using the existing structure of tiers, such as would be done via Planning Commission amendment #4, rather than through this sort of bonus on top of a bonus structure. Staff continues to recommend that the Citywide Density Bonus Program should only be applied to certain commercial base zones. Many of our existing naturally occurring affordable housing units are located on small sites, and roughly 2/3 of them are on property zoned Multifamily. This amendment could incentivize redevelopment of these smaller sites. This could also incentivize the redevelopment of the limited missing middle development that exists today. Finally, differentiating eligibility for the Citywide Density Bonus Program based on site acreage would be more complex to administer. C20-2024-004 Text Changes No changes were made to the staff version of the ordinance. No changes were made to the Planning Commission version of the ordinance. This general recommendation is not in the scope of these code amendments. No changes were made to the staff version of the ordinance. The Planning Commission version of the ordinance includes this change. 4 City of Austin Council Meeting Backup: May 28, 2026File ID: 26-1745 Planning Commission Amendment 9 General Recommendation: include superior compatibility/design requirements with this program similar to those proposed in the revised Downtown Density Bonus per Planning Commission recommendations. Staff Recommendation Policy/ Programmatic/ Future Action Policy/ Programmatic/ Future Action 10 General Recommendation: consider allowing uses that offer significant community benefits to offset or replace other requirements similar to the proposed language in the Downtown Density Bonus Program with the addition of transit- supportive amenities including shelters, micromobility hubs, and transit plazas. 11 General Recommendation: consider including parking limitations like those in the [Downtown Density Bonus Program] proposal with a focus ultimately on creating right- sized parking allowances and incentivizing/requiring non-car- centric transportation options (bike parking, bike charging, ride/car share, decoupled parking, etc.) Staff Response The staff proposal for the Downtown Density Bonus Program update would require developments to meet a number of items from a menu of design standards. This approach is appropriate for intense high-rise development, but less appropriate for the variety of intensities of development and context that are eligible for the proposed Citywide Density Bonus Program. Design standards such as those proposed in the Downtown Density Bonus Program update are more complex to administer and add cost to development that likely will not be feasible in mid-rise or lower intensity high-rise construction outside of downtown. The staff proposal streamlines the program by mirroring the requirements of DBETOD, which also allows for a waiver or modification of the ground floor active use requirements through the zoning process. Additional requirements beyond those proposed by staff would likely require a reduction in the amount of affordable housing being required in order to offset the additional cost to a developer if the program is to remain an attractive voluntary program. On the other hand, if Council does adopt taller tiers (such as recommended by Planning Commission amendment #4) staff would recommend including some sort of design standards for these much taller developments. Additional types of community benefits such as those proposed here by the Planning Commission are more complex to administer and add cost to development that likely will not be feasible in mid-rise or lower intensity high-rise construction in most parts of Austin. Additional requirements beyond those proposed by staff would likely require a reduction in the amount of affordable housing being required in order to offset the additional cost to a developer if the Citywide Density Bonus Program is to remain an attractive voluntary program. C20-2024-004 Text Changes This general recommendation is not in the scope of these code amendments. This general recommendation is not in the scope of these code amendments. Policy/ Programmatic/ Future Action Council directed staff at its March 26, 2026, meeting to study both the concepts of unbundling parking from residential leases and creating soft parking maximums that could be exceeded in certain instances by developers that meet other defined requirements. Work is beginning on these two parking-related items with the goal of presenting findings and recommendations to Council by the end of 2026. Staff will consider this general recommendation as we undertake this related work. This general recommendation is not in the scope of these code amendments. 5 City of Austin Council Meeting Backup: May 28, 2026File ID: 26-1745 Planning Commission Amendment 12 General Recommendation: consult the development community to calibrate affordability requirements of the program's lower tiers (+30ft and under) to ensure smaller developments are financially feasible. 13 General Recommendation: calculate fee-in-lieu payment based on some $/square foot of bonus area beyond base zoning, regardless of the use of the bonus area. Staff Recommendation Policy/ Programmatic/ Future Action Policy/ Programmatic/ Future Action 14 General Recommendation: create a mechanism to buy out additional square footage for a limited selection of commercial uses beyond the 35% cap. Policy/ Programmatic/ Future Action Staff Response Staff has conducted market analysis and understands that not every project will pencil on every site under the proposal. However, generally, smaller, wood- frame developments are more feasible than taller developments in more areas of the city. Therefore, the staff-proposed affordability requirements are most likely feasible for developments utilizing lower tiers such as +30', +15', or no additional height. Lastly, having a single requirement across tiers is less complex to administer and increases transparency. Staff does not recommend that developments be able to utilize bonus area for non-residential space in excess of 35% of the total development area as is allowed in staff's proposal. Fee-in-lieu must be a fee-in-lieu of affordable housing, and the policy goal for the Citywide Density Bonus Program relates strongly to increasing both total housing supply and incentivizing development of income-restricted affordable housing. Additionally, administering bonus area on a square foot basis has proved more complex than calculating requirements based on a set percentage of total units (as is the current approach in most more recent bonus programs). Staff does not recommend such a mechanism for non-residential space in excess of 35% of the total development area. Fee-in-lieu must be a fee-in-lieu of affordable housing. A primary goal for the proposal is increasing both total housing supply and incentivizing development of income-restricted affordable housing. Additionally, administering bonus area on a square foot basis has proved more complex than calculating requirements based on a percentage of total units as (is the approach in more recent bonus programs). Other efforts may be able to address this recommendation, such as the Transfer of Development Rights study, creating new mixed-use base zones, and/or updating the Planned Unit Developments or Planned Development Areas. Some of these efforts are already underway with anticipated milestones in 2026. C20-2024-004 Text Changes This general recommendation is not in the scope of these code amendments. This general recommendation is not in the scope of these code amendments. This general recommendation is not in the scope of these code amendments. 6 City of Austin Council Meeting Backup: May 28, 2026File ID: 26-1745