Council Recap: Not Many Tools in the Toolbox

Photo by Photo by John Anderson

City Council approved a new vision for the $15 million in relief funding they approved two weeks ago: leverage the money to help businesses survive through the pandemic, resulting recession, and beyond it.

In response to Council approval of the Save Austin’s Vital Economic Sectors, staff created guidelines for the three programs within the SAVES fund that would primarily help with short-term relief. But Mayor Steve Adler suggested the money, which will be split evenly across three funds, should be geared toward long-term sustainability for businesses.

Instead of just helping a music venue pay rent for the next few months, Adler said, maybe a venue owner could be connected with an attorney or a certified public accountant – paid for with money from one of the SAVES funds – to work out a new lease agreement with their landlord for a longer period of time. A CPA could help reorganize the business’s structure, helping to reduce costs and make surviving the pandemic more likely.

“If we give money to somebody and help them make it the next four months, but they close in eight months or 12 months, we will have failed,” Adler explained. He added later, “The goal is here to not kind of spread the peanut butter thin and wantonly. It is to marshall the resources toward true survivability of the industry. We’re not going to save the whole music industry, but if we can save the core of it and help them going forward, that’s the win.”

All of Council ultimately agreed this was the best approach, although some were hesitant that finding the right balance of meeting immediate, short-term needs and longer-term sustainability might result in some businesses to close.

But Council also approved a resolution from CM Kathie Tovo that establishes a $2.3 million Business Preservation Fund with money pulled from the Austin Transportation Department. While the guidelines for the SAVES funding are refined, staff can begin doling out financial relief needed immediately while they continue to work on program criteria that will outline how the funding can be used to help businesses through the pandemic and beyond.

The SAVES resolution created three different funds: one for childcare centers, one for live music venues, and one for businesses that have operated within Austin for at least 20 years. Under the guidelines approved by Council, staff estimates grants ranging between $2,500 and $60,000 could be awarded to the 357 child care centers that operate within the city limits; up to $160,000 each to the live music venues (estimated to be between 70 and 110 businesses, per staff); and grants between $40,000 and $60,000 for the 327 businesses that meet meet the legacy fund criteria.

At a future meeting, Council will approve guidelines for how businesses should be selected, while CMs again stressed that the need will far outweigh resources the city has available to help. An amendment from Adler allows the criteria for the selection process set up for the live music venue fund to narrow if the city receives more than 50 applications.

A developer is proposing to rezone 508 Kemp Street in Montopolis to allow for townhomes on the site; Council postponed the case at its Oct. 15 meeting when it couldn’t reach the nine votes necessary to grant the rezoning. (Image via Google Maps)

In zoning, two cases on the Eastside demonstrated the limits on Council’s ability to approve new affordable housing in rapidly gentrifying areas – even with a majority willing to make the compromises necessary to do that.

As we reported earlier this week, Council was set to take the second and third votes on a request to rezone 508 Kemp Street in the Montopolis neighborhood from SF-3 to SF-6. The developer, Drenner Group, proposed building 33 townhomes on the lot, 17 of which would be income-restricted housing. But homeowners neighboring the property filed a valid petition against the zoning request, so Council needed nine votes to grant the rezoning. They couldn’t get there, so instead, CMs voted to postpone the case to the Oct. 29 meeting, with the intention that Drenner Group will continue working with the neighborhood to produce a proposal everyone can agree on.

Opposition organized by Community Not Commodity and Communities of Color United claimed the “luxury condos” at the site would be unaffordable for people living in Montopolis who are vulnerable to displacement. The current proposal includes 16 market-rate for-sale townhomes, but also 17 townhomes for income-restricted families, priced at $140,000 for those at 60% Austin’s median income ($58,550 a year for four people) and $234,000 to families at 80% MFI ($78,100). The current median home value in the 78741 ZIP code is $335,209. Drenner Group has negotiated a restrictive covenant with Habitat for Humanity to build and market the affordable units.

While gentrifying neighborhoods like Montopolis need more rental units at deeper rates of affordability, Texas cities cannot mandate income-restricted housing on private property in exchange for entitlements. All they can do is offer incentives or subsidies to offset the cost and foregone profit to private developers of below-market-rate housing, and developers have no obligation to participate. Indeed, in this case Drenner Group first sought a rezoning to build a 100% market rate development, but after discovering there would not be any support for that on Council, they developed a proposal with majority income-restricted housing.

“This is one of those rubber-meets-the-road moments where we have to ask ourselves if we really mean it when we say we want to build affordable housing.” Council Member Jimmy Flannigan

If that proposal fails, they could easily give up the lengthy and costly rezoning efforts and build the 10 homes currently allowed at Kemp Street. That may well happen if a compromise isn’t agreed to on Oct. 29, Drenner Group’s Leah Bojo told Council. “If we are able to postpone until Oct. 29, I think we can keep this proposal on track to work with neighbors,” Bojo said. “After that it would be too late for us to change course and it would most likely be a SF-3 project.” According to Redfin, a duplex built at 503 Kemp Street in 2016 is valued at $408,013 – well above the value of surrounding homes and the affordable units proposed by Drenner Group at 508 Kemp. Newly constructed units could cost more than $600,000 or more.

Mayor Pro Tem Delia Garza attempted to emphasize this reality and the difficult choices Council has to make in attempting to slow displacement. “[The developer] needs no approval from Council to build 10 units that would probably sell for $800,000,” Garza said. “They can build $800,000 homes right now without any approval from Council … or they can build affordable units. I would have preferred affordable units.”

In a similar SF-3 to SF-6 case at 3500 Pecan Springs, Council ultimately gave approval for Thrower Design to build 21 townhomes, with one affordable unit, on a 1.5-acre lot with one existing home. But first, Council rejected a motion from CM Jimmy Flannigan that would have allowed 25 townhomes, with 2 income-restricted. Unlike the Kemp case, the developer did not have a restrictive covenant in place to ensure the affordable unit would be built. But speaking for his firm, Ron Thrower guaranteed Council it would get built – even if he had to buy it himself.

Neighbors also had a valid petition filed, and Council was again unable to muster the nine votes needed to overcome the petition. After Flannigan’s motion failed, CM Leslie Pool asked for a vote on 18 townhomes with no affordable units – which is what the neighbors preferred. In defending her support for a plan that would not include any affordable housing, Pool said she would advocate at the Capitol during the 87th Texas Legislature for inclusionary zoning – an uphill battle even if Democrats control the House.

“We can either zone this for 18 units with no affordability requirement,” Flannigan responded, “or we can zone it for 25 units and get two affordable housing units without having to spend any of our affordable housing bonds or any other money,’ he said. “These are always hard choices, but this is one of those rubber-meets-the-road moments where we have to ask ourselves if we really mean it when we say we want to build affordable housing.” Flannigan was the sole vote against the final compromise proposed by CM Leslie Pool.

An earlier version of this story incorrectly attributed the final motion for 3500 Pecan Springs to CM Kathie Tovo. CM Leslie Pool made that motion. The story has been updated to reflect this correction.