20 C20-2024-022 - Density Bonus for Commercial Highway & Industrial Zones Staff Report — original pdf

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C20-2024-017 ORDINANCE AMENDMENT REVIEW SHEET Amendment: C20-2024-017 Planned Development Area 2 (PDA2) & C20-2024-022 Density Bonus for Commercial Highway and Industrial Zones (DB240) Description: Amend City Code Title 25 (Land Development) to create a Planned Development Area 2 (PDA2) combining district and a Density Bonus for Commercial Highway and Industrial Zones (DB240) combining district. The PDA2 combining district is proposed to allow for modification of use and site development standards in certain commercial and industrial base districts. Under the proposal, additional residential uses would not be allowed under the PDA2 combining district. The Density Bonus for Commercial Highway and Industrial Zones (DB240) combining district is proposed to allow additional residential uses and modification of certain site development standards for residential uses in certain commercial and industrial base districts through a voluntary density bonus program. Under the proposal, PDA2 could be added to the IP, MI, LI, and R&D base zoning districts and DB240 could be added to the CH, IP, MI, LI, and R&D base districts. Moving forward, sites would no longer be able to rezone into PDA, but would need to request either PDA2 or the DB240. Background: Initiated by City Council Resolution No. 20240718-091. Planned Development Areas (PDA) were first added to the land development code in 1966 (19660616, City Council Meeting Minutes (austintexas.gov)) for the following purpose: “to provide suitable and conducive environment for the development of modern administrative facilities, research establishments, specialized manufacturing plants, and similar enterprises plus retail and other customer service facilities… and not intrude upon nearby existing or future residential and associated development.” (page 21) The use of a PDA allows for modifications to site development standards, including maximum height and floor-to-area ratio (FAR), as well as modifications to allowed and prohibited uses within a zoning district. On May 23rd, 2023, via Resolution No. 20230323-085, the City Council initiated an amendment to Land Development Code Section 25-2-582 (Commercial Highway (CH) District Regulations) to eliminate all the regulations found in 25-2-582(C) and clarify that a zoning ordinance establishing a CH-PDA controls over any conflicting CH regulations. This allowed for wider use of PDA zoning for Commercial Highway (CH) districts. Based on staff analysis of PDA zoning ordinances over the last ten years, there has been an increase in the number of cases where residential uses have been permitted: since 2014, 45 PDA zoning ordinances have permitted residential uses, with 31 of those cases since 2020. On July 18th, 2024, via Resolution No. 20240718-091, the City Council initiated amendments to the Land Development Code to modify the requirements for future PDAs and to create a new density bonus program that could be combined with industrial and CH zones 1 C20-2024-017 to allow increased height for residential uses in exchange for income-restricted dwelling units or a fee-in-lieu. Summary of Proposed Code Amendment: The proposed code amendments will create both a new Planned Development Area 2 (PDA2) combining district and a Density Bonus for Commercial Highway and Industrial Zones (DB240) combining district to address Council’s resolution. The new PDA2 combining district will function similarly to PDA but will no longer allow residential uses to be added and will not be available to Commercial Highway, since Commercial Highway already has residential uses allowed. Commercial Highway and industrial zones that request residential use can utilize the proposed DB240, which grants residential uses and additional height in exchange for income-restricted dwelling units or a fee-in-lieu. The purpose of DB240 is to allow for modified site development regulations and residential uses in certain existing commercial and industrial base districts in exchange for community benefits. The max height that can be achieved in DB240 is 120 feet taller than the existing maximum height allowed for a parcel, for a total height of up to 240 feet for parcels where 120 feet in height is currently allowed. The proposed Planned Development Area 2 (PDA2) combining district: 1. provides for industrial and commercial uses in certain commercial and industrial base districts; 2. allows certain site development regulations to be modified; and 3. when applicable, incorporates the terms of a planned development area agreement into a zoning ordinance following annexation of a property that is subject to a planned development area agreement. A PDA2 combining district may be combined with the following base districts: 1. industrial park (IP); 2. major industry (MI); 3. limited industrial services (LI); and 4. research and development (R&D). Regulations established by a PDA2 combining district may modify: 1. permitted or conditional uses authorized in the base district, except for allowing residential use; 2. site development regulations applicable in the base district, except for Subchapter C, Article 10 (Compatibility Standards); and/or 3. off-street parking design or loading regulations, sign regulations, or landscaping or screening regulations applicable in the base district. Modifications to the base district regulations must be identified in the ordinance zoning or rezoning a property as a PDA2 combining district. Additionally, the proposed code amendment will create a new Density Bonus for Commercial Highway and Industrial Zones (DB240) combining district that: 1. Can be combined with the following base districts: a. commercial highway services (CH); 2 C20-2024-017 b. industrial park (IP); c. major industry (MI); d. limited industrial services (LI); and e. research and development (R&D). 2. Allows for the following uses to be added as permitted uses to sites that opt to participate in the density bonus program: RESIDENTIAL USES a. Bed & Breakfast (Group 1) b. Bed & Breakfast (Group 2) c. Condominium Residential d. Conservation Single Family Residential e. Duplex Residential f. Group Residential g. Mobile Home Residential h. Multifamily Residential i. Retirement Housing (Small Site) j. Retirement Housing (Large Site) k. Single-Family Attached Residential l. Single-Family Residential m. Small Lot Single-Family Residential n. Townhouse Residential o. Two-Family Residential p. Short-Term Rental (Types 1 and 3) COMMERCIAL USES a. Liquor Sales b. Commercial Off-Street Parking c. Consumer Convenience Services d. Consumer Repair Services e. Equipment Repair Services f. Equipment Sales g. Food Sales h. General Retail Sales (Convenience) i. General Retail Sales (General) j. Hotel-Motel k. Kennels l. Laundry Services m. Personal Improvement Services n. Pet Services o. Plant Nursery p. Software Development q. Vehicle Storage r. Veterinary Services CIVIC USES a. College and University Facilities 3 3. Allows for the following uses to be added as conditional uses to sites that opt to participate in the density bonus program: C20-2024-017 b. Counseling Services c. Guidance Services d. Hospital Services (Limited) e. Child Care Services (Commercial) f. Child Care Services (General) g. Child Care Services (Limited) COMMERCIAL USES a. Agricultural Sales and Services b. Alternative Financial Services c. Automotive Rentals d. Automotive Repair Services e. Automotive Sales f. Automotive Washing (of any type) g. Bail Bond Services h. Commercial Blood Plasma Center i. Monument Retail Sales AGRICULTURAL USES a. Indoor Crop Production CIVIC USES a. Community Events b. Hospital Services (General) c. Private Primary Educational Facilities d. Private Secondary Educational Facilities e. Telecommunication Tower f. Public Primary Educational Facilities g. Public Secondary Educational Facilities h. Employee Recreation INDUSTRIAL USES a. Light Manufacturing INDUSTRIAL USES a. Basic Industry b. General Warehousing and Distribution c. Light Manufacturing d. Recycling Center e. Resource Extraction COMMERCIAL USES 4. Prohibits the following uses on sites that opt to participate in the density bonus program: 4 C20-2024-017 a. Drop-Off Recycling Collection Facility b. Electronic Prototype Assembly c. Electronic Testing d. Exterminating Services e. Scrap and Salvage CIVIC USES a. Railroad Facilities 5. Must comply with Article 2 (Density Bonus and Incentive Programs) of Chapter 4-18 a. The Density Bonus for Commercial Highway and Industrial Zones (DB240) combining district defines non-residential uses that qualify as existing non- residential spaces in Chapter 4-18 as: i. Creative Spaces • Art Gallery, Art Workshop, Performance Venue, Theater • All sizes ii. Brewery, Distillery & Cidery • Under 20,000sf, established for 5 years iii. Food Manufacturing • Under 20,000sf, established for 5 years iv. Custom Manufacturing • Under 10,000sf, established for 5 years v. Light Manufacturing • Under 10,000sf, established for 10 years 6. Governs over conflicting provisions of this or other ordinances 7. When requesting residential uses, serves the following households and requires a minimum number of on-site affordable units in exchange for the specified entitlements: a. For rental units: i. 10% of units set-aside affordable to 60% Median Family Income (MFI) or 8% of units set-aside affordable to 50% MFI for: the addition of residential use with no increase in height or the addition of residential use and an increase in height of 30 feet ii. 12% of units set-aside affordable to 60% Median Family Income (MFI) or 10% of units set-aside affordable to 50% MFI for: the addition of residential use and an increase in height of 60 feet iii. 15% of units set-aside affordable to 60% Median Family Income (MFI) or 12% of units set-aside affordable to 50% MFI for: the addition of residential use and an increase in height of 120 feet • • • b. For ownership units: i. 10% of units set-aside affordable to 80% MFI for: 5 C20-2024-017 • • • the addition of residential use with no increase in height or the addition of residential use and an increase in height of 30 feet ii. 12% of units set-aside affordable to 80% MFI for: the addition of residential use and an increase in height of 60 feet iii. 15% of units set-aside affordable to 80% MFI for: the addition of residential use and an increase in height of 120 feet iv. Requirements for ownership units may be satisfied by a fee-in-lieu of on-site units 8. Does not allow residential use to be below a performance venue 9. Requires a 10-foot building step-back after the first 90 feet of height 10. Must meet requirements from Article 10 (Compatibility Standards), Subchapter C of City Code Chapter 25-2 Proposed Text Amendment(s): See draft ordinance. Staff Recommendation: Staff supports the creation of the new Planned Development Area 2 and Density Bonus for Commercial Highway and Industrial Zones combining districts. Density bonuses are a tool to encourage the development of affordable housing and achieve the City’s housing goals. The creation of PDA2 and DB240 will help the city achieve: 1. Increased Housing Supply: The Density Bonus for Commercial Highway and Industrial Zones will continue to allow developments in certain industrial base zones to add residential uses. This will allow for more housing units to be built on industrial base zones and increase the housing supply. 2. Affordable Housing Supply: In addition to increasing housing supply generally, the Density Bonus for Commercial Highway and Industrial Zones will help address the shortage of affordable housing in the city by requiring new developments to provide a set-aside percentage of units as affordable. 3. Mixed-Income Communities: Density bonuses contribute to the creation of mixed- income neighborhoods by encouraging the integration of affordable housing within market rate developments. Based on staff analysis of PDA zoning ordinances over the last ten years, there has been an increase in the number of cases where residential uses have been permitted. Since 2014, there have been 45 PDA zoning ordinances in which residential uses have been added as a permitted use, with 31 of those cases since 2020. This trend has taken place despite the original stated intent of the PDA provision being to create the “environment for the development of modern administrative facilities, research establishments, specialized manufacturing plants, and similar enterprises” and not to create mixed-use residential districts. 6 C20-2024-017 In addition to the cases identified above, at the time of this reporting, there are 17 PDA zoning cases currently in review. Each of these cases requested residential uses be added as a permitted use. Since 2014, 23 PDA-zoned parcels across 86 acres have been developed with 2,250 residential units. Ten PDA cases have approved site plans but have not completed construction and six site plan applications are currently in review. 23 PDA cases since 2014 requested 90ft or below in height, six requested between 90ft and 120ft, and 26 requested over 120ft in height. Assuming similar affordability requirements to those in place for DB90 and DBETOD, residential development on PDA-zoned parcels would have produced between 225 and 338 income-restricted affordable units since 2014 with the potential for more units currently in the pipeline. The proposed DB240 would allow a maximum building height of 120 feet taller than the existing maximum height allowed for a parcel, for a total height of up to 240 feet for parcels where 120 feet in height is currently allowed. If developments are requesting heights greater than 240ft, staff recommends applicants consider the Planned Unit Development (PUD) process to obtain the requested heights, residential use, and other site development requests. Applicants requesting PUD zoning or a future density bonus program to obtain building heights exceeding 240ft would allow for a more robust review process for more intense development and could increase the number of affordable housing units the city could create, supporting Strategic Housing Blueprint Goals of producing 60,000 affordable housing units and 135,000 total housing units in 10 years. 7 C20-2024-017 Finally, the new DB240 will create redevelopment requirements for certain industrial uses to help protect certain industrial and commercial businesses and limit the loss of industrial uses, which are important for job creation. In the last 10 years, there have been 54 zoning ordinances which have restricted industrial uses. Although these developments still contain industrial zoning, the uses are restricted resulting in a loss of approximately 18.50 acres of industrial use. By adding the redevelopment requirement for certain industrial uses, the City can help protect legacy industrial businesses and help preserve those jobs. Board and Commission Action: September 18 – Recommended as amended by the Codes and Ordinances Joint Committee on a 4-1-1 vote with Commissioner Greenberg voting nay, Commissioner Stern abstaining, and Commissioner Maxwell off the dais. October 8 – Postponed by the Planning Commission to October 22. October 22 – To be reviewed by the Planning Commission. Council Action: October 24 – To be considered by City Council. Sponsor Department: Planning Department City Staff: Alan Pani, Principal Planner, Planning Department, alan.pani@austintexas.gov, (512) 974- 8084 8  Affordability Impact Statement Planned Development Area 2 and Density Bonus for Commercial Highway and Industrial Zones Case number: C20-2024-017 Initiated by: Resolution No. 20240718-091 Date: 9/26/2024 Proposed Regulation The proposed amendment introduces the Planned Development Area 2 (PDA2) combining district and a Density Bonus for Commercial Highway and Industrial Zones. These changes aim to modify use and site development standards for commercial and industrial zones, with an emphasis on increasing affordable housing through a voluntary density bonus program. Residential uses would not be permitted in the PDA2 combining district but would be allowed in commercial highway and some industrial base districts that opt into the density bonus. The Density Bonus for Commercial Highway and Industrial Zones includes requirements to provide income-restricted dwelling units or a fee-in-lieu with a maximum height that can be achieved of 240 feet. Land Use/Zoning Impacts on Housing Costs The proposed changes are expected to have a neutral impact on housing costs in terms of land use and zoning. Over the past decade, PDA zoning ordinances have increasingly permitted residential uses, even though they were originally intended to support industrial and commercial development and do not include any affordable housing requirements. The proposed changes introduce an option to allow residential uses and increased building heights within certain industrial base zones in exchange for a set-aside of affordable units, thereby expanding the housing supply in these areas while prohibiting incompatible uses. A significant portion—77%—of the commercial highway and industrial zoned parcels bonus are located in displacement risk areas. While adding affordable housing in these areas helps meet the critical demand for affordable units, it is equally important to continue to balance this with strategies that promote increased heights and density in high-opportunity, historically exclusive neighborhoods, as well as areas near planned transit hubs. A balanced approach will more equitably distribute affordable housing across the city, mitigating displacement risks and creating greater access to opportunity. Impact on Development Cost The proposed changes would have a neutral impact on development cost. There are no direct impacts to development cost anticipated as a result of these amendments. The PDA2 combining district, and the Density Bonus for Commercial Highway and Industrial Zones will provide modified development standards, potentially increasing flexibility and developable site area. Impact on Affordable Housing The proposed changes would have a positive impact on affordable housing. The proposal would allow a pathway for Commercial Highway and some Industrial Zones to transition to residential uses if circumstances are appropriate and may help create an additional pathway to increasing subsidized affordable rental supply at 60% MFI and ownership supply at 80% MFI or fee-in-lieu for ownership without direct public subsidies. The proposal also requires compliance with Article 2 of Chapter 4-18, which includes protections for existing tenants and existing affordable housing units. Other Policy Considerations It is important to note the health implications of locating residential housing directly adjacent to major corridors. The U.S. Centers for Disease Control and Prevention (CDC) recommends limiting development alongside highways and heavily trafficked roads.1 A growing body of research indicates a link between residential proximity to highways and childhood asthma, cardiovascular disease, and premature death.2,3,4 Many of these diseases have more pronounced negative effects in communities of color, particularly Black communities.5,6 Manager’s Signature _____ _______________________________