Panelists express cautious optimism about HOME and other urban land use changes

Panelists express cautious optimism about HOME and other urban land use changes
Panelists express cautious optimism about HOME and other urban land use changes

Thursday, June 27, 2024 by Chad Swiatecki

On Wednesday, local real estate and construction experts weighed in on the potential impact of the city’s numerous recent zoning policy changes, aimed at increasing housing stock and addressing the affordability problem that has plagued the area for about a decade.

At the Urban Land Institute Austin’s monthly breakfast forum, discussion focused on policy plans aimed at reducing minimum lot sizes and building more single-family homes, reducing compatibility requirements for developments around single-family homes, and designing transit-oriented developments to maximize affordability and encourage the use of public transit. Panelists supported the work the City Council and staff have been doing to make these changes since late last year and expressed cautious optimism about the success of each policy initiative.

Josh Lickteig, chief executive of construction company Endeavor, said high interest rates and other financial issues have slowed construction projects in general. The slow pace of construction and sales volume will likely make builders hesitant to start new projects in areas where they were previously not permitted.

“We’re in capital markets where even your five-story perimeter projects along the corridors aren’t (that feasible). This was a long-term vision of how we can increase density and ridership, and then you combine that with the fact that one of the key tenets for people moving here over the last few decades has been relative affordability compared to other markets,” he said. “As we enter a new capital market cycle, we’ll really see if the calibration is such that developers like Endeavor will take advantage of the program.”

According to Lickteig, the changes in compatibility requirements have not attracted the attention they deserve because buildings with three or more stories can now be built much closer to residential areas than was previously permitted.

“(Compatibility) has been a really limiting factor on our corridors for decades. … I think that will be the first thing that gets leveraged,” he said.

Cody Carr, founder and CEO of Carr Residential, said his company has already built three new homes under the new guidelines and more are expected as markets continue to adjust.

“The robust changes that council and staff have presented, I think, are exceeding our expectations. Now we can build much more sensible homes on these lots. So we can actually spread the square footage across all the lots,” he said. “You’ll see back houses and front houses. Maybe the front houses will be smaller, the back houses a little bigger, and they’ll be three- or two-family homes. You’ll see a much more conducive environment for what we’re doing in the area of ​​vacant lot building.”

Carr was cautious about how significant HOME 2’s changes to minimum lot sizes might be, particularly in the context of parceling out a property to allow for multiple new single-family homes where previously only one was allowed.

“You still have to go through the subdivision process. The big hurdle or obstacle is that the subdivision process in the city of Austin is comparatively arduous. It’s complex and takes up to a year, a year and a half. Even for small projects, it costs $100,000 to $300,000,” he said.

“Compare that to a city like Houston, where the same process could take six weeks. … Without that calibration, HOME 2 is really going to struggle.”

Referring to the ETOD considerations recently approved by the City Council, Annick Beaudet, mobility officer for Project Connect, said the planned density and access for potential riders helps provide “a hedge on our ridership projections,” which is needed as federal funds are sought to further fund the transit plan.

“Austin Light-Rail is anticipating 50 percent of the funding for phase one and the priority extensions that go from 38th Street north to Crestview to connect to the Red Line and other options further north and then to the airport, which was very important to our stakeholders,” she said. “This work is relevant to Project Connect in that the grant application, the 50 percent we’re anticipating, is over $2.5 billion, with a B, for the light-rail portion of the program.”

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