22 C20-2024-018 - Downtown Density Bonus Update Phase I - Engagement and Public Comment V2 — original pdf

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Downtown Density Bonus Update – Phase I Engagement Summary Resolution 20240718-185 directed City Staff to “...engage area stakeholders on proposed changes to the Downtown Density Bonus program, in alignment with existing density bonus recalibration and streamlining efforts,” on proposed changes initiated by the Resolution. To support the community engagement activities, staff launched a Speak Up Austin site in December 2025 to act as a landing page for information on the Resolution action items, the Downtown Density Bonus Program as it exists today, and how to participate in the engagement process. This page was updated in April 2026 to include information on staff’s proposal for Phase I of the update. To date, the site has received nearly 1,500 views by interested community members. Beginning in November 2025 with early engagement and throughout the creation of the draft proposal, staff have connected with interested stakeholder groups. Staff have met on multiple occasions with members of the Downtown Austin Alliance, the Downtown Austin Neighborhood Association, the Real Estate Council of Austin, and The Red River Cultural District to gather feedback on the Resolution and provide updates on the progress toward the action items of the Resolution. Staff have also given presentations on the proposed updates to the Austin Chapter of the American Institute of Architects and the Urban Land Institute Affordability Strategic Council and gathered valuable feedback through these meetings. Additionally, staff have worked closely with the Central City District Plan (CCDP) team to ensure alignment of the CCDP creation and the Downtown Density Bonus update. This included facilitation of activities at CCDP Stakeholder Advisory Group meetings and supporting the April virtual and an in-person CCDP Open Houses to present on the Downtown Density Bonus Program updates and collect community feedback. Stakeholder Meetings held to Date: • Austin Chapter of the American Institute of Architects • Central City District Plan Stakeholder Advisory Group • Downtown Austin Alliance • Downtown Austin Neighborhood Association • Real Estate Council of Austin • The Red River Cultural District • Urban Land Institute Affordability Strategic Council Staff developed a public survey to gather additional feedback from the community on their experiences with the current Downtown Density Bonus Program and what aspects of the program they value the most. The survey was published on December 22nd, 2025, and was provided to over 350 individuals or groups in direct emails or through City newsletters. Staff developed the list of individuals and groups in collaboration with the Central City District Planning team, with representation from neighborhood associations, the development community, advocacy groups, 22 C20-2024-018 - Downtown Density Bonus Update Phase I1 of 25area property managers, and the business community. The survey garnered 51 participants, and their feedback provided beneficial insight that informed staff’s proposal. This feedback can be seen in Appendix A included at the end of this document. Staff also presented to multiple commissions throughout the creation of the draft proposal. These commissions include the Codes and Ordinances Joint Committee, Design Commission, Downtown Commission, Historic Landmark Commission, and Planning Commission. The feedback heard at these meeting helped to inform staff’s proposal. Staff collaborated with the Design Commission and the Design Commission Working Group in the process of developing the Urban Design Standards. These standards went through several iterations to incorporate as much of the updated Design Guidelines proposal as possible. Commissions Engaged to Date: • Codes and Ordinances Joint Committee • Design Commission • Downtown Commission • Historic Landmark Commission • Planning Commission 22 C20-2024-018 - Downtown Density Bonus Update Phase I2 of 25 Appendix A: Downtown Density Bonus Update Survey Results and Feedback22 C20-2024-018 - Downtown Density Bonus Update Phase I3 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I4 of 25This survey does not work!!!! cannot rank my choices 1/7/2026 Hi Ms. Hovis, I'm so sorry to hear that the choice ranking option didn't work! I checked it out to make sure the tabs/options can move to show ranking choices, and it is working on my desktop and mobile (and checked on an unaffiliated mobile device too just to be sure). I apologize I can't be of more help, and we would love to have your feedback - please feel encouraged to try to the survey on another device or to try again! Thank you for your time and comments, we really appreciate it! 1/15/2026 (cid:31) I have grave concerns that a gatekeeper requirement for this is compliance with the Urban Design Guidelines and the Great Streets Master Plan and both of those are very outdated. My understanding is that the Urban Design Guidelines have been re-written but that effort has stalled or paused? The same is true for the Great Streets Master plan; and even more concerning on that front the re-write of those is being done with City Staff with limited public and stakeholder involvement. 1/6/2026 Improvements to consider include: Streamlining documentation requirements to reduce redundancy and unnecessary delays. Expanding who can serve as gatekeepers, including trusted community-based organizations, peer navigators, and frontline providers with lived experience. Allowing flexible eligibility pathways that account for non-traditional households, informal income, and evolving family circumstances. Strengthening training for gatekeepers on trauma-informed, culturally responsive, and harm-reduction approaches. Implementing clear timelines and communication standards so clients understand what to expect and are not left without updates. 1/6/2026 na 1/6/2026 An elevated and improved user experience, both users of the building's interior and users that interact with the building's (project's) exterior, should be the ultimate goal of the Density Bonus program. 1/6/2026 Urban Design Guidelines should remain a gatekeeper requirement and should be enforced during construction just as Great Streets and AEGB are. 1/5/2026 22 C20-2024-018 - Downtown Density Bonus Update Phase I5 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I6 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I7 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I8 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I9 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I10 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I11 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I12 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I13 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I14 of 25RECA Comments on the Downtown Density Bonus Update Introduction A successful downtown density program is important for everyone. A successful program is a benefit for the tax base of the City, a thriving downtown environment, and for affordable housing programs across Austin. Any density bonus, especially one as impactful as this one, needs to be carefully considered and calibrated before it is implemented to avoid unintended consequences or the reduced application of the program. The Real Estate Council of Austin, as an organization, represents the users of the downtown density bonus program, as well as other density bonus programs both locally and nationally. Our members are committed to seeing successful density bonus programs in Austin. The below represent collected comments and concerns from the RECA membership who work on downtown projects. Thank you in advance for your time and consideration of these comments. Issue 1: Incomplete and Inaccurate Calibration of the Downtown Density Bonus Program Recommended Action: Conduct a full assessment of the downtown density bonus program calibration with downtown developers and property owners to ensure a complete and accurate financial modeling of the program, as the existing calibration is incomplete and inaccurate. It is essential to have a calibration conducted for feasibility, but equally important to ensure that it is accurate and complete. Stakeholders were not given the opportunity to review and make recommendations on the calibration as part of this process, and thus it is unclear whether the fees-in-lieu are actually feasible. The downtown density bonus program must balance the community benefits and additional entitlements carefully to ensure Austin benefits from the program while also incentivizing growth in the downtown area. It is important that the calibration includes all of the new regulations, fees, and other requirements that have been implemented since the last calibration in addition to a market feasibility study. The downtown density bonus calibration conducted by EPS did not incorporate market inputs from stakeholders who build and operate in downtown Austin. A brief overview of inaccuracies or missing elements from the calibration can be found in Appendix A below. This overview is not holistic, because many of the underlying calculations within the calibration were not revealed in the report. 22 C20-2024-018 - Downtown Density Bonus Update Phase I15 of 25 While new program requirements or regulations may appear manageable in isolation, their cumulative effect, without thorough and transparent financial modeling informed by commercial development stakeholders, risks making the downtown density bonus program cost-prohibitive relative to other Austin-area submarkets or peer cities, undermining the density and development the City is seeking as part of its economic growth objectives. Stakeholder feedback on the calibration will ensure that it is correctly calculated and incorporates all costs accurately. Issue 2: Chapter 4-18 Commercial Redevelopment Requirements Recommended Action: The Chapter 4-18 commercial redevelopment requirements should be removed from Phase I of the downtown density bonus program proposal, and should not be added to the program until a full stakeholder process takes place. The commercial redevelopment requirements, initially formulated in 2024 as part of the equitable transit-oriented development program, have never been applied to a development and lack adequate testing and research necessary to be incorporated into an otherwise proven and successful downtown density bonus program. The program’s redevelopment requirements introduce significant financial obligations: six months of rent payments, 1:1 replacement of non-residential space, and a first right of refusal, without any accompanying analysis of their cumulative cost impact on project feasibility. Unlike residential displacement protections, which have established precedent and cost modeling in peer cities, these requirements have not been tested against the pro forma realities of downtown Austin development. In practice, the replacement requirement alone could render development economically unviable, which is a significant policy risk. The redevelopment requirements also lack a waiver process for existing businesses that do not wish to return or prefer to negotiate an alternative arrangement directly with the developer. Without this flexibility, the program steps in where a private agreement between the business and developer could otherwise suffice and potentially yield a better outcome. As written, the policy sets a ceiling rather than a floor. Additionally, the proposed operating period outlined in the program does not, in itself, constitute a meaningful measure of a truly historic business. Longevity alone is an insufficient proxy, as it fails to account for other critical factors that define historic significance. As written, the threshold is overly-broad and imprecise, and was created without meaningful consultation with small businesses or the development community. While the program's intent to protect displaced businesses is understandable, the requirements as written contain significant gaps. Six months of rent assistance and a right to return assume that a displaced business can reestablish and sustain itself through a downtown construction timeline that typically spans 18 to 24 months. The right to return is further complicated by the reality that the replacement space, while similar in size, will be a fundamentally different commercial product at market rents that may be unattainable for the very businesses the policy seeks to protect. 22 C20-2024-018 - Downtown Density Bonus Update Phase I16 of 25 Perhaps most counterproductive, applying these requirements to downtown sites may discourage landlords from entering into long-term leases with tenants altogether, in order to avoid triggering burdensome redevelopment obligations. In this way, the policy intended to protect businesses may inadvertently reduce the stability and tenure of the commercial tenancies it seeks to preserve. The requirements as proposed are not flexible and do not consider the unique characteristics of downtown properties. Without adequate testing, calibration, or stakeholder input, they risk having a dampening effect on redevelopment and even create a perverse incentive to keep storefronts vacant rather than assume the obligations that come with long-term commercial tenancies. The City's goal of protecting legacy businesses is a worthy one, but policy that has not been stress-tested against market realities is unlikely to achieve it. Issue 3: Absence of Fee-in-Lieu Indexing Mechanism and Economic Cycle Responsiveness Recommended Action: A transparent and predictable methodology for setting and adjusting fee- in-lieu rates should be established, including a defined indexing mechanism tied to current market conditions and economic cycles. Fee-in-lieu rates are a critical component of the downtown density bonus program and must reflect real-time economic conditions to ensure continued feasibility. Static fee structures can quickly become misaligned in periods of market volatility, particularly in environments with fluctuating construction costs, interest rates, and rental performance. To maintain alignment with market conditions, the City should implement a clearly defined indexing framework that allows for periodic updates to fee-in-lieu rates based on measurable inputs such as construction cost indices or changes in median family income. Additionally, establishing a predictable schedule for thorough recalibration will provide certainty to project sponsors and improve underwriting accuracy. The City should also consider implementing defined triggers or thresholds, such as sustained increases in interest rates, declines in rental rates, or significant increases in construction costs, that would allow for temporary adjustments to program requirements. These adjustments could include modifications to fee-in-lieu rates, deferral of certain obligations, or alternative compliance options. Consideration should also be given to payment structure flexibility, including the potential for phased or deferred payment options, to better align with project cash flows and reduce capital constraints. Without a predictable and responsive fee structure, there is a risk that the program will become economically infeasible over time, reducing participation and limiting the delivery of community benefits. Issue 4: Lack of Benchmarking for Regional and National Competitiveness 22 C20-2024-018 - Downtown Density Bonus Update Phase I17 of 25 Recommended Action: The downtown density bonus program should be benchmarked against peer cities to ensure that Austin remains competitive in attracting development capital and delivering new projects. As capital for real estate development is allocated across multiple markets, Austin must remain competitive with peer cities such as Dallas, Denver, and Nashville. If program requirements are materially more burdensome or less predictable than those in comparable markets, there is a risk that investment will shift to jurisdictions with more favorable development environments. A comparative analysis of density bonus programs in peer cities should be conducted periodically to evaluate relative fee structures, entitlement processes, flexibility, and overall feasibility. This benchmarking will help ensure that Austin’s program is calibrated not only to local policy goals but also to the realities of a competitive national marketplace. Maintaining competitiveness is essential to achieving the City’s broader objectives related to economic growth, tax base expansion, and the delivery of affordable housing and other community benefits. Conclusion Recommended Action 1: RECA is requesting a full assessment of the conducted calibration with downtown stakeholders to ensure the calibration is complete and accurate. Recommended Action 2: RECA is requesting that the 4-18 commercial redevelopment requirements be removed from the downtown density bonus program proposal until they are fully evaluated for its impacts. Recommended Action 3: RECA is requesting that the City establish a transparent and predictable fee-in-lieu methodology, including an indexing mechanism tied to market conditions and a defined schedule for periodic updates. Recommended Action 4: RECA is requesting that the City benchmark the downtown density bonus program against peer cities, including Dallas, Denver, and Nashville, to ensure Austin remains competitive in attracting development capital. Thank you for your consideration of these comments. Alina Carnahan Vice President of Advocacy Real Estate Council of Austin 22 C20-2024-018 - Downtown Density Bonus Update Phase I18 of 25 Appendix A: Additional Comments on Calibration Memorandum The below comments represent feedback provided on the calibration memorandum submitted to the City by EPS. These comments should not be considered exhaustive because the calculations and assumptions are not laid out in the calibration memo from EPS. Commenter 1: The calibration should make sure to address: • Current market conditions in Austin, including o Interest rates, o Construction costs, o Current rental rates and concessions, o Median family income, o Return requirements of lenders and equity partners, • The comprehensive costs of all of the elements of the program, including the gatekeeper requirements, o fee-in-lieu rates, o o design requirements, and o redevelopment requirements • The cumulative impact of any new regulations that have been implemented since the last calibration of the downtown density bonus program, including o new parking regulations, o Water Forward requirements, and o new solar and EV requirements. Commenter 2: • Cost Assumptions: o It is unclear if the cost per square foot numbers are per gross square foot or per net rentable square foot. This should be clarified, and depending upon the answer to the question, may be an issued that needs to be flagged. o Parking garages in high rise projects rarely if ever can achieve a 350 gsf/space ratio. More typical would be 400 gsf/space, and on smaller, less efficient sites, it often exceeds 400 sf/gsf. o The $28K/ above-grade parking space is not realistic. When taking into consideration the garage skin and the above ratio (400 vs 350 gsf/space), the costs for an above grade podium parking space will typically be more in the range of $34K/space. o Developer’s profit margins, which are Net Profit as a % of Total Project Budget, need to be 25% (or greater if larger buildings/more risk). If a developer cannot achieve these margins, they will not raise the capital and the project will not get built. • Revenue and Valuation Assumptions 22 C20-2024-018 - Downtown Density Bonus Update Phase I19 of 25 o MF Rents. While I take no issue with the idea that Penthouse units in high rise multifamily can command premium rents, I strongly disagree with the 21-71% of the units assumed to achieve these premium rents. I would suggest these premium rents should be assigned to no more than 3-4% of the NRSF of a building. o MF OpEx as a % of Gross Revenue. It appears that the definition of operating expenses includes real estate taxes (RET). Historically, when a MF asset sells, buyers will “gross-up” real estate taxes based upon a fully assessed valuation. A more accurate assumption would be that multifamily operating expenses (including grossed-up RET) should be ~45% of gross residential revenue (vs 35% as modeled). • Surplus Value Methodology o Many of the remaining development sites in downtown Austin are impacted by the Capitol View Corridor. These sites often have no choice but to locate much of their parking below grade. I think it is an aggressive assumption to assume in Table 2 that so many of the scenarios have 0% below grade parking. o Office Parking. A 2.1/1000 RSF ratio is aggressive. A more realistic ratio would be 2.25/1,000. • Surplus Value Results o The 500,000 SF buildings, at least in the next 5+ years, appear to be a thing of the past. Equity partners, lenders, and buyers are heavily focused on depth of buyer pool and liquidity of exit, and there are very few groups looking to buy $300M+ assets. I believe an assumption of a 500,000 sf building is too aggressive, and would recommend a recalibration to a 350-400,000 sf prototype. Commenter 3: Overall, the calibration: • Overstates the feasibility at extreme heights, • misallocates value between land and developer, • and doesn’t reflect how capital actually makes decisions. Developers don’t build based on surplus. They build off of internal rate of return, equity multiples, and risk-adjusted returns. The “Developer Profit” sections in the models are static and not tied to timing or risk. At a minimum, the calibration would need to include internal rate of return thresholds and time-to-completion sensitivity to make them more realistic. Additionally, floor-to-floor heights that are being used to calculate height and density in Table 2 are too small. The calibration says 12 feet floor to floor, but in the CBD, it’s typically 13.5 feet floor to floor with a 15- or 16-foot top floor. The calibration’s base assumption is that the downtown density bonus fee is correct because market conditions will improve, but the way the calibration is done implies that the market will turn up quickly. In reality, market conditions will improve, but it will be a gradual improvement over the next 3-5 years. Downtown developers shouldn’t be paying a downtown density bonus fee in lieu that reflects the peak market while in a cycle that’s underperforming. The market cycle needs to be linked to these fees. Lower fees should apply in poor cycles, and higher fees can apply in hot cycles. 22 C20-2024-018 - Downtown Density Bonus Update Phase I20 of 25 The parking ratios in Table 2 are incredibly low. There is not a 450,000 square foot building with 564 spaces—it would be severely underparked and considered a bad investment. For reference, 300 Colorado is 350,000 square feet with 720 spaces and is considered on the low end of parking. Recommendations: Fix the Structure of the Analysis: • Replace static pro forma models with dynamic internal rate of return-based models • Make land value endogenous (residual land value-based) • Add cycle timing and lease up modeling • Need to add absorption constraints to the cost/revenue • Calibrate based on participation rate 22 C20-2024-018 - Downtown Density Bonus Update Phase I21 of 25 May 7, 2026 Via Email Alan Pani, Principal Planner City of Austin Planning Department Re: Proposed Downtown Density Bonus Program Phase I Updates Dear Mr. Pani, On behalf of the Downtown Austin Alliance Board of Directors, I am writing to share recommendations from our Board on the proposed Downtown Density Bonus Program, Phase I Updates. The Downtown Austin Alliance supports the City’s goals of increasing housing production, advancing affordability goals, and shaping high-quality urban development through the Downtown Density Bonus Program. Downtown policy should also be structured to promote long-term growth, strengthen the public realm, and continually grow a tax base that supports the City. DAA recommends adopting a downtown bonus framework that is ambitious in its vision but practical in its implementation. To succeed, the program must create a realistic pathway for participation, meaningfully support density, allow for design excellence, and avoid requirements that are unlikely to deliver their intended policy outcomes. DAA recommends refining the Phase I proposal to better align policy goals with market realities and the long-term needs of downtown Austin in the following ways: 1. Protect feasibility and reduce compounding project risk The proposed framework layers additional affordability expectations, new Ch. 4-18 compliance obligations, and an uncertain approval pathway onto already challenging development conditions. The cumulative cost impact of the proposal must be further considered and refined to ensure a structure that is clear, predictable, and feasible enough to support actual participation. 2. Make increasing density a central objective of any Downtown policy Any downtown policy should actively encourage density - not meter it out – through substantial base zoning and further enhanced by incentive programs. Density through increased heights 1.) increases public space potential at ground level, 2.) mitigates sprawl beyond the downtown core, 3.) and supports the City’s broader sustainability goals. However, the current proposal will disproportionately burden taller projects, undermining long-term growth at a time when downtown should be planning for the next 20 to 25 years, not just current market averages. Meaningful height and The Downtown Austin Alliance mission: To create, preserve and enhance the vibe, vitality and value of downtown Austin for everyone. 22 C20-2024-018 - Downtown Density Bonus Update Phase I22 of 25 density should be achieved through base entitlements and administrative review, not council approval. The goal should be to ambitiously position downtown to attract and harness future growth rather than artificially limiting it. DAA recommends more clearly centering increasing density as a core downtown policy objective by: • • increasing base entitlements in the Phase II update, increasing the height limits in the tiered bonus structure, and • eliminating the “cliff” effect between DDB400 and DDB850 in-lieu fees, which disincentivizes additional density. 3. Remove Chapter 4-18 Requirements in the Downtown Density Bonus Program Introducing Chapter 4-18 requirements to the program may not effectively protect affordable tenants or legacy businesses and will increase project cost burden. DAA recommends removing Chapter 4-18 requirements in order to preserve project feasibility and encourage program participation. 4. Delay Design Review Updates to Phase II of the Downtown Density Bonus Update Removal of Design Commission review improves efficiency while introducing the risk of “checkbox urbanism.” DAA recommends exploring replacing the prescriptive Design Standards menu with performance-based standards focused on the quality and impact of the first 40 feet of the building face, during the Phase II updates to the Downtown Density Bonus Program. This approach would better support strong urban design outcomes while allowing flexibility for site-specific solutions. Any design requirements should be coordinated with Great Streets to ensure alignment and avoid overlap or conflict. Thank you for your consideration, your service to the city of Austin, and your continued support of Downtown Austin. If you have any questions, please contact Matt Geske, VP of Public Affairs at mgeske@downtownaustin.com. Sincerely, Hannah Rangel Vice President, Built Environment Downtown Austin Alliance 22 C20-2024-018 - Downtown Density Bonus Update Phase I23 of 25 22 C20-2024-018 - Downtown Density Bonus Update Phase I24 of 2522 C20-2024-018 - Downtown Density Bonus Update Phase I25 of 25