Does Austin Need A Market For Air Rights?

Does Austin Need A Market For Air Rights?

I’m not talking fresh air.  I’m talking about the  municipal zoning  God given right to build to the heavens.

The recent plan for 3rd & Colorado – a residential tower that I’m excited to see more of, if not disappointed that it isn’t taller – reminded me of a policy discussion that lost steam a few years back focused on preservation of the Warehouse District.  Back in 2009 influencers with a preservationist slant vocalized concern that the charm of the Warehouse District would eventually lead to its demise unless measures were taken to limit height and density in the district.

Proposed Warehouse District (2009)

Proposed Warehouse District (2009)


Back then, one of the recommended approaches to preservation was facilitating the Transference of Development Rights (TDR), aka. “air rights.”  That seemed like a smart way to handle preservation of low-rise historic-ish buildings sitting on highly desired CBD building sites.  Creating a market for air rights in Austin would, in theory, enable property owners to capture the value of their dirt, without having to build on the site, thus able to preserve historic buildings.

Transferring Development Rights (aka "Air Rights") to facilitate preservation and density.

Transferring Development Rights (aka “Air Rights”) to facilitate preservation and density.  Image via nyc.gov


The topic was dropped in 2011 when the Downtown Austin Plan (DAP) was formally adopted featuring a “density bonus” program.   Recently, I’ve been participating in the DAA’s CodeNEXT task force, and we’re discussing policies that would encourage building tall on small CBD sites, notably sites that are mid-block.  With CodeNext happening, this seems like a good time to rekindle the discussion.

Why would a builder want to buy air rights?

  1. additional density
  2. protect views

Why would a property owner want to sell air rights?

  1. property is too small, oddly shaped, or mid-block thus more difficult to develop
  2. capture value without having to redevelop

Why would a city want to permit air rights to be transferred?

  1. additional density
  2. encourage more development on smaller lots
  3. historic preservation

That last question is the one I can’t reconcile completely.  The City of Austin uses the Density Bonus program to subsidize affordable housing.

Would an air rights market, in its simplest form, circumvent those fees-in-lieu [of building affordable housing] from being collected?   [Read more…]

Niran Babalola is in love with cities

Niran Babalola is in love with cities

[Editor’s note: Very special thanks to Terrence Henry for making this interview happen. TL;DR: Niran Babalola’s message challenges Austin “progressivism” by highlighting systemic discrimination through Austin’s land use laws.  The message relates to modern policies and recent votes from City leaders.]

Niran Babalola is in love with cities.

“They’re amazing things,” he says, “where all these people come together in one place.” Babalola, the head of the housing and land use reform group DesegregateATX, is an Austin native who has spent much of his free time in recent years reading everything he can to understand cities better and what makes them work. And he’s found that the way Austin’s does things — whether it’s transportation, land use or housing affordability — tends to ignore the best practices of others and ends up only serving a select few.

“We’ve decided in this city not to govern for the have-nots,” Babalola says, pointing to land use policies that favor expensive single-family homes over denser, more diverse types that serves a wider range of people.

“We are the most economically segregated city in America, the only city with a declining African-American population.”

Over a long conversation (and a few cups of coffee) this summer downtown, Babalola told me the story of how Austin’s promise for all has been betrayed by its protectionism for the privileged few. A condensed version of our conversation follows:

TH: So how did we get to where we are today?

If you ask economists about how economic segregation occurs in cities, they’ll tell you it’s the policies of a city that makes it happen. They’ll point to studies showing how restrictive zoning laws cause economic segregation. The harder you make it to build homes, the more economic segregation you end up getting, especially in a city with a thriving economy like Austin’s. If you limit the number of homes, all you end up doing is pushing people out.

Niran Babalola

Niran Babalola

If you want to include all kinds of people, you have to include their homes. You have to include them in your neighborhood. Otherwise you’ll be pushing them further and further away from all the public investments we’ve made together.

If you look at the laws in effect in Austin’s central neighborhoods, in the vast majority of them, they say you can only build the most expensive type of housing: a single-family home with a big yard. Mixed-income neighborhoods in the core of the city are essentially illegal. But if you look at the statistics about what kinds of homes people live in, it will show you that the vast majority of white families live in single-family homes in Austin, a minority of black and hispanic families live in single-family homes. It’s not just economic segregation, it’s racial segregation. And we’re surprised we have an affordability problem!

[Read more…]

WTF is Austin’s CodeNext and Why the ‘Eff Should I Care?

WTF is Austin’s CodeNext and Why the ‘Eff Should I Care?

[UPDATE January 30, 2017: Link to first official draft of CodeNEXT]

You’ve likely stumbled across the phrase “CodeNext” somewhere on the interwebs, figured it was another facacta Austin planning scheme, and so you just jumped back to reading Deadspin.

CodeNext (single word) is the multi-year effort to redevelop Austin’s Land Development Code, also called the LDC.  In theory, the LDC codifies what can be built, where it can be built, and how it must be built.

Austin City Limits

The CodeNext project is massive, and not without controversy.  It’s fair to point out the project has drawn fire from the community for getting off track and over budget (a latter point the city flatly refutes).

The planning stages are almost complete, and a draft will be released to the public in January.  God only knows what will come after the release, given the myriad of special interests that have a stake in shaping what parts of the draft would stay or go.  But, we’ll deal with that in 2017.

Monthly CodeNext meetings are held each month through October, with the next being August 22nd.  They are quite lengthy and to that end can be viewed online.  You can also request a presentation from the city here.

Existing Context

Aint nobody got time, Jude, why the ‘eff should I care about CodeNext?

The city has devoted an entire web page to that question, but in very simplistic real estate terms, this effort had the potential to improve the ease, speed, cost and consistency of new development and redevelopment in Austin.

As a result, CodeNext will directly affect your life in three key areas:

  • housing affordability
  • transportation
  • the “look & feel” of the city

In the most literal sense, you will see and feel the results of CodeNext as you go about your future life in Austin.

More subjectively, you should care because one day you may own property.  On that day you will realize you’ve morphed into a gray-haired republican, realize that property taxes are a bitch, you’ll hate that the big government tells you what you can/can’t do with your own damn property, and that Reagan had some not-so-bad ideas about small government.  OR, you’re one of those perpetual renters (media calls you “Millennials”) who can only afford to live 13 gridlocked miles from downtown Austin, and you’re rightfully indignant observing all the undeveloped land in Central Austin where density is blocked by zoning in Dixiecrat fashion.

Zoning word jumble

So, what does the LDC look like?

Well, the city has laid different zoning types here in a fairly simple manner.  They’ve also summarized various zoning classifications in a “simple” to read 100 page pdf here.  If you’re a glutton for punishment you can wade through the current LDC here.

I wanted to try to explain it in the context of why this effort is underway.

  1. The laws passed by City Council are inked in the “Code of Ordinances” also known as “city code.” These are the laws of the land in the city limits. For example, the law that you can’t text and drive is written into the “city code”. (§ 12-1-34 to be exact. The symbol “§” is a character often used to refer to a particular section of the law.)
  2. The city code is organized by 30 “Titles” of which Title 25 is Land Development Code, or LDC, which regulates development within the city’s planning and zoning jurisdiction.

Follow me so far?  Good because here is where it gets messy.

  1. The basic structure of the existing LDC has four major structural levels below Title, which are: Chapter (such as § 25-1);  Article (such as § 25-1-1); and finally Section (such as § 25-1-1(a)).
  2. This organizational structure has been amended over the past 30 years with additional layers added, such as: “Division”, “Sub-chapter”, and “Subpart”. While these new layers have been added, the methodology for numbering the layers for ease of referencing has not been updated, making the numbering system ineffective at allowing a user to understand where in the hierarchy of the LDC the reference exists. Hence the shifting labyrinth depending on who you’re talking to.

Moreover, Austin has 39 base districts described in the Land Development Code that “zone” parts of town for development. For example, they might be zoned “SF-1” for “single family – large lot” or SF-6 for “townhouse or condominium”. However, when you add all the layers that can be overlaid on top of the base zones, you end up with almost 400 possible different combinations!

Revamping the LDC is essential because navigating Austin’s code is like walking through a labyrinth, and depending on who you speak with in which city department and how they interpret one piece of code versus another conflicting piece, the labyrinth is always shifting.  Not good.

Screen Shot 2016-08-15 at 8.41.41 PM

Summary

Austin seems to do more planning than actually doing.  At times, keeping up with all the planning efforts can be demoralizing, when most of us simply want pragmatic and moral leadership at City Hall.  Truthfully, the point of this post was so that I could answer: “why I should care about CodeNext?”  If you live in Austin, then CodeNext will touch something in your life… where you live, where you work, what that building looks like, and how you get there.

Whatever is adopted will certainly be better than the labyrinth of laws and plans that citizens of Austin currently must navigate in order to comply.  Hopefully, the next time you see “CodeNext” it won’t be a nebulous city process, and instead, you’ll understand why people are passionate about it when the draft is released this coming January.

~Jude

Rue de Rainey Market

Rue de Rainey Market

Check out the Rue de Rainey Market on August 14th, from noon to 7pm.

This is the kick-off event for what is planned to be recurring every other Sunday in the Rainey District.  Rue de Rainey Market will feature an array of local artisans, designers, and merchants.

The marketplace will be hosted at 604 Driskill, which is the parking lot to the across from Bar 96.

~Jude

Hitchhiker’s Guide to Lady Bird Lake Water Rentals

Hitchhiker’s Guide to Lady Bird Lake Water Rentals

Lady Bird Lake, formerly known as Town Lake, is one of the Austin’s crown jewels. Year round, save for the scorching 100-plus heat days, the lake is a great place for locals, transplants and visitors to recreate.  One of the best ways to experience the water is by boat – canoe, kayak, pedal boat or  standup paddle board (abbreviated as “SUP”).

Since Aquafest, powered motor boats are forbidden on Lady Bird Lake, with exceptions for small electric motors.

SUP on Lady Bird Lake

SUP on Lady Bird Lake

Here’s a non-exhaustive list of the top spots to rent canoes, kayaks, SUP boards and water bikes (if you’re one of these boathouses and have a special offer, let us know).

Before we get into it, a quick word about what to bring with you if it is your first time out

  • Sunscreen. (Cancer is no joke. Aaaand peeling skin isn’t sexy – take it from a pale red-head who has learned the hard way.)
  • Hat. (If you look like a freak, fly your freak flag proudly. State Troopers wear cowboy hats for a reason.)
  • Sunglasses. (Buy some cheapies that you won’t mind losing if you tip.)
  • Water-bottle. (For the beverage of your choosing if it is opaque and insulated)
  • Ziplock baggie for your phone. (You’ll enjoy yourself more if you’re not freaking about it.)
  • A valid Government Issued Photo ID or Driver license. (Required for rental.)
  • A credit card in the same name as the ID. (Required for rental.)

A word of warning: canoes are way easier to master than kayaks, which go off course really easy in a two-person setup.  If you’re prone to frustration or fights with whomever you’re going out there with, I’d stay away from kayaks.  Seriously, even Maverick and Goose would get frustrated with each other trying to paddle those things straight.

Sup Atx Paddle Board Rentals  (Click for pricing)

  • Hours: Open all daylight hours, seven days a week.
  • Fleet: SUP boards
  • Weekday SUP rate benchmark: $15 per hour.
  • Where: The published address 1541 W Cesar Chavez St, but the actual location is 2100 Stephen F. Austin Dr. (Best bet by car is to get there early and park under the Mopac bridge, or elsewhere along Stephen F Austin Drive and walk there along the lake trail.)
  • Phone: 512-467-7799

EpicSUP Standup Paddle Board & Kayak Rentals (Click for pricing)

  • Hours: 9 a.m to 7 p.m., seven days a week
  • Fleet: Single/Double kayaks, SUP boards
  • Weekday SUP rate benchmark: $15 per hour.
  • Where: 2200 S Lakeshore Blvd. (There location is behind the HI-USA Hostel. Best bet by car is to take advantage of public parking at 505 Barton Springs Road, and walk over.)
  • Phone: 512-423-4885

Congress Avenue Kayaks  (Click for pricing)

  • Hours: 9 a.m. to 7 :30 p.m. (last rental goes out at 6:30 p.m.)
  • Fleet: Single/Double kayaks, SUP boards
  • Weekday SUP rate benchmark: $20 per hour.
  • Where: 74 Trinity St, Austin, TX 78701 (Best bet buy car is metered parking at the MACC and walk there the trail.)
  • Phone:  512-809-8916

Live Love Paddle (formerly Paddle Zen)  (Click for pricing)

  • Hours: Thursday to Monday 10 a.m. to 5:30 p.m.; Tuesday: Noon to 5:30 p.m.; closed Wednesday.
  • Fleet: Single/Double kayaks, SUP boards, Canoes, NuCanoes
  • Weekday SUP rate benchmark: $15 per hour.
  • Where: 1610 E Riverside Dr, Austin, TX 78741 (Office is located next to Radio Shack in ground floor of the AMLI Southshore building on Lady Bird Lake. Best bet by car is to use the surface/garage parking there.)
  • Phone: 512-804-2122

Austin Water Bikes  (Click for pricing)

  • Hours: Monday to Thursday, Noon to 6 p.m.; Friday – Sunday 11 a.m. to 6 p.m.
  • Fleet: water bikes
  • Price: $22/hour (check website for tours and other costs)
  • Where: 208 Barton Springs Rd, Austin, TX 78704 (Located behind the Hyatt. Best bet by car is to take advantage of public parking at 505 Barton Springs Road, and walk over.)
  • Phone: 512-200-6555 

Texas Rowing Center (Click for pricing)

  • Hours: 6 a.m. to “dusk”; seven days a week
  • Fleet: Fleet: Single/Double/Triple kayaks, SUP boards, Canoes
  • Price: Weekday SUP rate benchmark: $15 per hour.
  • Where: 1541 W Cesar Chavez St, Austin, TX 78703 (Best bet buy car is metered parking at the MACC and walk there the trail.)
  • Phone: 512-467-7799

Rowing Dock (Click for pricing)

  • Hours: 7:30 a.m. to 8:30 a.m.; seven days a week
  • Fleet: Fleet: Single/Double/kayaks, SUP boards, Canoes
  • Price: Weekday SUP rate benchmark: $15 per hour.
  • Where: 2418 Stratford Dr, Austin, TX 78746 (Apparently, National Treasure 3 stars Nicolas Cage trying to find the place, so here are the company’s tips.)
  • Phone: 512-459-0999

~Amber

kayak

austin lifestyle downtown - lady bird lake

Windfall – Villas on Town Lake is being sold

Windfall – Villas on Town Lake is being sold

Downtown Austin’s Villas on Town Lake condos home owners’ association (HOA) will agree to sell the entire property – comprised of 57 individually owned condos – to The Sutton Company, who beat out a handful of bidders.  More than one source close to the deal has rumored the amount of the offers [plural] were in the ballpark of $50,000,000.

This is exceptionally interesting because we normally expect to see development activity on surface parking lots, or on an assemblage of adjacent parcels.  The Villas is a fully occupied condominium!  This means there are multiple owners, strong personalities, and diverse motivations.  Corralling everyone into agreement is a herculean task.

What’s so special about the Villas?

Villas on Town Lake

Villas on Town Lake

Situated along Waller Creek, the Villas on Town Lake condominium is one of downtown Austin’s older mid-rise residential buildings.  Villas is a modest, courtyard-style, community, built long before the Rainey Street neighborhood became a “district.”

Most importantly, Villas On Town Lake is coveted for its location.

The site is one of downtown Austin’s most desirable.  With only city-owned park land between it and Lady Bird Lake, if Villas were to be razed and rebuilt as a tower, it would deliver views of the lake and hill country, with adjacent access to Waller Creek, Lady Bird Lake, and the hike & bike trail.  The site is not encumbered by Capitol View Corridors and has CBD zoning.

Villas vitals:

  • Located at 80 Red River Street, Austin, TX 78701
  • Built in 1982
  • Number of units = 57
  • Total Square Feet (private, conditioned) = 65,791
  • Total Square Feet (including Common) = 99,770
  • Average unit size = 1,154 ft
  • 80% of air-conditioned area = 52,631.2 ft (appox: 46 units)
  • 80% of Total Area = 79,816 ft

How does this happen?

Property rights in Texas are such that a condominium association can dissolve itself.  When this happens ownership reverts to a single parcel with tenancy in common, and proceeds from a hypothetical sale are distributed based on percentage of ownership.  The HOA can sign deeds of units that have not volunteered to sell.

(I welcome comments from real estate attorneys who can shed light on the mechanics of this.)

Years ago the Villas HOA had the foresight to realize the market would eventually grow to a point where the modest condo community was no longer the best use of the land.  In 2006, the Villas HOA revised their bylaws to allow 80 percent of the Villas ownership could vote to dissolve the entire HOA.  This change paved the way for a deep pocketed buyer to buy the whole shebang with only 80% of the owners needing to agree.

In September of last year, the Villas HOA issued a Request for Proposals from development groups.  Groups like World Class Capital are rumored to have been among the bidders.  The winning bidder, The Sutton Company, is one of Austin’s most prolific developers, responsible for several downtown Austin condo projects, including: Plaza Lofts, Avenue Lofts, Brazos Lofts, and the 5 Fifty Five.  They also assembled the land for the Millennium Rainey, and are developing the land adjacent to the Villas as Waller Park Place.

Is it a good deal?  

Yes, it is, for both buyer and seller.

If the rumored $50,000,000 is close to the purchase price, then the average price per foot of “saleable” space is $759/ft!!  Based on the average unit size, were someone to try and accumulate control of 46 units – the number I estimate required to gain 80% control of the Villas – would take approximately 14 years to do based on historic sales velocity.

Accelerating 14 years of effort requires offering a premium to market right now; however, the winning bidder also owns the adjacent property and can reasonably expect to recoup that premium.

Villas on Town Lake - History of Sales

Villas on Town Lake – History of Sales

 

Per the MLS, 63 units have sold at the Villas since the summer of 1997.  In 1997, market price for a typical condo at Villas on Town Lake was ~$100 per foot.  Now, imagine for a minute that you’re an owner at Villas back in 1997 and a someone approached you saying, “I will pay you double the market rate, $200 per foot!”  Most reasonable people would agree to less than double the market rate from an unsolicited offer.  If anyone wants to pay me twice market value for my place… I’m ready to talk!

The most recent sales record we have for a one bedroom at Villas was from March 2015, when a 675 sf condo sold for $279,000.  So, if the rumored amount of the winning bid – $50,000,000 – is close to accurate and proceeds are distributed by square foot, then that same built-in-1982 Villas one-bedroom may be closing for $512,325.  That’s a windfall.

Kudos to the Villas for getting it.

~ Jude

A Drive Through Austin – June 1996

A Drive Through Austin – June 1996

This is an amazing time capsule of a video.

Twenty years ago this video was shot by Pete Reid and his buddy, Brian.  Pete was a visiting student from Scotland at UT.

The video takes us from UT, down the Drag, along Guadalupe into downtown Austin.  The video quality isn’t great, but it is good enough for some good nostalgia to kick in. From Pete’s Youtube description:

“We drove down the Drag passing the Hole in the Wall, Tower Records, some drag rats, and Miami Subs. Then down Guadalupe passed the Dog and Duck, Liberty Lunch, an empty Austin skyline, and hardly any traffic. “

It starts off with shots of the Drag.  For me the most interesting part is about five minutes in when you can catch glimpses of how downtown Austin has evolved. Notably:

0:44 – Tower Records on the Drag

5:24 – on the left, Guadalupe @ 5th, that parking lot is where Plaza Lofts is now.

5:52 – on the left, Guadalupe @ 2nd, that white building is now where Austin City Hall is located.  The camera pans to the right to show Liberty Lunch.

6:27 – approaching and crossing Cesar Chavez

7:01 – shots of downtown Austin from 1st Street Bridge

Thanks to Pete Reid for sharing this on Youtube, and to Chris James putting it on my radar.

~ Jude

New downtown Austin train station making room for pedestrian plaza

New downtown Austin train station making room for pedestrian plaza

The downtown Austin “Red Line” train station is about to undergo a significant makeover, that will add room for two more trains at the station.  The capacity upgrade is expected to double the people (from >400 to 800) to commute to downtown from north Austin during rush hour.

However, the final design seems to be departure from any of the proposed concepts.

[Read more…]

Downtown Thriving as a Live-Work-Play Community

Downtown Thriving as a Live-Work-Play Community

greenofficebuilding2

Artist’s rendering of the office tower now going up at the site of the former Thomas C. Green Water Treatment Plant in downtown Austin where Google will take more than 200,000-sf. CREDIT: Gensler Austin

Nice story in The Statesman about the vibrant community that continues to grow downtown – not just in terms of nightlife, but also new economy jobs and associated residents:  Austin’s Tech Scene Heats Up Downtown.

It’s worth pointing out however that all this has not “just happened” by itself.

It has been 15+ years in the making with great purpose by the likes of the Downtown Austin Alliance (DAA), the Downtown Austin Neighborhood Association (DANA), Mayors Kirk Watson, Will Wynn, Lee Leffingwell and their City Councils, the Downtown Austin Plan, and many more driving forces.

Except for weekday lunchtime and weekend nights on East 6th, it was a veritable ghost town when my team first opened an expanded Wild About Music down here in 1995, then started living here in 1999.

There’s still a ton of work to be done around issues of homelessness and vagrancy (two different matters), affordability (having only $50/ft rents and million dollar condos is not sustainable), traffic (a car-free zone?), and that IH-35 east-west barrier.

Dave Sullivan, longtime Austin civic leader during this big growth period, also just told me: “When I joined the City Planning Commission in 1994, software development was a prohibited use Downtown. I remember voting to change that in the late 90s. Seems incredible.

Incredible indeed, Dave.


And a worthy update:  After this story published I received a note from a longtime steward of Downtown Austin’s evolution, Michael Knox, of the City’s Economic Development Department.  He filled in another 10 years of preparation that went into the creation of today’s Downtown before my timeline even picks up.  Mike says:

“I started working on downtown in 1988, when it was part of AustinPlan’s Sector 1.  Of course AustinPlan, the comprehensive plan update to replace Austin Tomorrow, was never adopted.

“In 1989 we (Jose Martinez and I) started working with the Downtown Commission, actively promoting a thing called R/UDAT.  The 1990 R/UDAT application we co-wrote was accepted, and in 1991 we got the R/UDAT team visit and report, followed in 1992 by “A Call to Action: R/UDAT Implementation” that, in 1993 gave birth to the Downtown Austin Alliance and the Austin Downton PID.  These efforts involved hundreds of dedicated Austinites.

“Downtown initiatives were kicked up a notch in 1997 when Kirk Watson became Mayor, and Assistant City Manager Jim Smith (now Aviation Director) and I put together Kirk’s first six downtown initiatives, including the Waller Creek tunnel, Downtown Design Guidelines and the Poleyard and AMLI developments.”

So there you go…another of Downtown Austin’s many unsung heroes.  We thank you, Michael Knox.

~Fred

Chill Out

Chill Out

Leave no stone unturned. Check out how Austin Energy wants to use a sliver of downtown land, next to Gables Park Tower, for a new chilling station.

The site dimensions make the site pretty much unusable for intense development, so it is great to see a municipal use.  AE has engaged Cotera Reed to handle the design.  The project is being presented to the City of Austin Design Commission on the 25th.

Many downtown buildings are connected to the the City’s “chilled water loop”.  One of the existing chilling stations is at 5th & Sabine (that blue tile “box” connected to the ACVB parking garage).

-Jude

potential "skin" of the station

potential “skin” of the station

Chilling Station design by Cotera Reed

Chilling Station design by Cotera Reed

Chilling Station design by Cotera Reed

Chilling Station design by Cotera Reed

[Read more…]