city council

Why Are Prices Surging At The Railyard Condos?

Jude Galligan | January 25, 2013 |

The Railyard condos are unique. The two low-rise buildings sit on two of the best sites in downtown Austin, and have usually been more affordable than the newer, sexier high-rises. Part of the appeal is location: situated across from the Austin Convention Center, 100 feet from the MetroRail, one block from Congress Avenue, three blocks from competing luxury towers, the Austonian and Four Seasons. The Railyard has enviable proximity to most anything in downtown Austin.

Remember last year’s NIMBY fury over Austin’s Short Term Rental ordinance (pdf)?

You would be in good company if you assumed that all of downtown Austin’s condos and apartments were making money on STRs.

You would be wrong, though.

Downtown condos have home owners associations (HOAs). HOAs have rules, and in downtown Austin those rules are usually antagonistic to short term rentals. Breaking those rules could result in a $1000 per day fine by the HOAs. Despite the fact that the STR ordinance does not regulate apartments and condominiums, last year’s fight with the City of Austin to regulate STRs wasn’t going to impact most of us living in downtown because of these HOA rules. [UPDATE: rules have been revised to cap STR permits in CBD multi-family buildings at 25%]

The Railyard condos are very, very unique.

This past November, just a month after Austin’s new Short Term Rental ordinance took effect, an enterprising Railyard owner recognized the Railyard’s bylaws did not forbid short term rentals and put together a fund to purchase several units.

The investment rationale is simple: opening up your condo as a vacation-rental-by-owner (aka. VRBO) during SXSW, ACL, F1 (just to name just the big opportunities, not to mention conventions) can yield more rent during those events than the total rent from a typical 12 month lease! Same for Railyard owner-occupants who can lease their place out for a few nights, take a vacation, and make a couple thousand bucks.

The economics of Railyard ownership shifted overnight. Word quickly spread to the owners and a handful of Austin Realtors. In the previous year (Nov 2011 – Nov 2012), 1bd/1ba units at the Railyard condos were trading at an average of $285/foot, and units with at least 2bd/2ba units were trading at an average of $275/foot. [UPDATE: one year after posting this article, the last recorded MLS sale at Railyard was a building record $415/foot]

Going forward, expect sale prices at the Railyard condos to be 20-25% more than last year, reflecting the new economics of embracing downtown short term rentals. Owner-occupants are getting in on the action, too.

Offering the flexibility to lease your condo on a short term basis is a privilege that makes the Railyard unique among downtown condos. This privilege has significant value.

STRs can be a win-win for owners and associations. The key is balance and monitoring the impact on residents.

The Railyard HOA is smart to approach STRs with reasonableness and attach fees to the process. These extra fees will help fund their operations, building improvements, and keep HOA dues low for homeowners. Homeowners, who are also able to capitalize on their property.

I’ll stop short of advocating that all downtown buildings should permit STRs – I don’t agree with that. However, there are several buildings that should be paying attention to what the Railyard is doing. It seems reasonable for more HOAs to experiment with loosening their STR rules, monitor the process, use the money for building improvements, and course correct as needed.

-Jude

[updated 06/01/2014: It has been discovered that Brazos Place Condos at 8th Street & Brazos Street is doing something similar by permitting one-month minimum lease terms.]

Austin Bike Share Enters the Homestretch

Jude Galligan | January 15, 2013 |

It’s been almost two and a half years since I started advocating for Austin Bike Share in the state capital. It became the highest rated of any SpeakUpAustin initiative, ever. Because of incredible grassroots support, generous financial support by several local businesses, and hard work by City staff, Austin Bike Share is finally happening for Austin.

Austin City Council this week is expected to approve an important step in the process, which will allow the city to form a partnership with nonprofit Bike Share of Austin to operate the bike share program.

The City and Bike Share of Austin are aiming to have the bike share program up and running by spring 2013. A separate contract with a bike share vendor for the purchase of bicycles, kiosks, and the bike share system network is scheduled to come to City Council for approval at the next scheduled council meeting, which would be Jan. 31.

It has long been rumored around town that Austin is going to pick B Cycle, the same bike share operator as San Antonio, to supply the bike share system for Austin. San Antonio’s system is a phenomenal success and expanding.

According to the City, the bike share will bring about 40 bike share kiosks, with as many as 400 bikes, to Central Austin area. That’s a good start.

It was around 2009, when traveling in Montreal, that I was first introduced to a robust bike share system. That system was called BIXI, but it was the same bike design used in Minneapolis. The system works impressively well. You can become a member, or pay-as-you-go. The three-geared bikes are comfortable and well maintained.

That Austin’s Bike Share initiative seems to be heading for the final stretch is superb news, and I’d like to thank all of our City Council members and all the folks at the city who are working to make this happen.

We can expect a draft map of the locations within the next couple of months.

I’ve learned that City staff’s process of identifying possible sites for bike share kiosks is based on several criteria:

Proximity of bike infrastructure such as bike lanes or cycle tracks
High employment density
Nearby parks, recreation facilities, tourist attractions, or other destination
Favorable topography
Public transit services

Get it out there.

For the sake of getting bike share off the ground, I really hope the City doesn’t let perfection get in the way of progress. I, myself, would be in favor of a phased launch and the City says, “we are putting half the stations in these spots. Deal with it. However, we would like to hear from the public about where we get the other stations set up at.”

That would get Austin Bike Share rolling, with kiosks being put into the ground, instead of letting all the zealots debate the minutia and delaying having something the public can actually use.

-Jude

Mayor’s Chief of Staff Exits And Why You Should Care

dab | July 14, 2011 |

Casual observers of city hall, at first glance, might take little notice that Mark Nathan, Mayor Lee Leffingwell’s chief of staff, has announced his departure.

But it is a noteworthy event whenever an executive politician’s chief of staff exits. A chief of staff is the one who gets stuff done, while their boss is smiling for the camera. The office of chief of staff and the person holding it become synonymous.

To that point, the mayor said on his own website “Mark has been a driving force behind almost every major initiative we’ve undertaken.”

As a nerdish observer of City Hall, which is one level above casual, I can read into that a few ways, but the simplest is just to look at three things the mayor’s office has pushed in the past 12-16 months: A new downtown hotel, an urban rail system and the United States Grand Prix F1 race. (As for the F1 race, one could say Lee isn’t a “pusher” maybe just an adamant supporter. He was the only council member who wanted to approve the contract about 60 days ago, when his six other colleagues — including Randi Shade on her last day — voted to postpone the vote under threats it could blow the entire deal. That’s telling.) [Read more…] about Mayor’s Chief of Staff Exits And Why You Should Care

A Tale Of Two Hotels

dab | June 28, 2011 |

Anyone listening in at City Hall might have heard city staff remind city council not to call the new hotel hotels being pitched downtown a “convention hotel.”

If you are wondering why, check out this story I wrote while at the Austin Business Journal in December. It is curious why this point has been overlooked or ignored by other media outlets.

To plagiarize, well, myself: “The city barred itself nine years ago from designating any other hotel as one of the city’s ‘convention center hotels’ when it agreed to a contract that called for issuing more than $250 million in bonds to build the downtown Austin Hilton, according to public records filed with the Municipal Securities Rulemaking Board, or MSRP. The city reaffirmed that pledge when it refinanced the bonds in 2006.”

The second hotel developers are quick to point out they are not asking for subsidies, like the Marriott project planned on 2nd Street and Congress Avenue is.

But they can’t, according to the contract.

Interestingly, the Statesman reported on June 23 that the second hotel, planned by Austin developers Perry Lorenz and Robert Knight, could be a Hilton.

But according to the same contract I sourced above, the Hilton can’t build another hotel unless they cut through some red tape.

Just goes to show, I guess, a contract with the city is only as good as the litigators you want to enforce it.