An unignorable crisis
More density, more homes
A staunch opposition
Real estate experts now have a much clearer picture regarding the resilience shown in Austin’s housing market. The latest Austin Board of Realtors’ (ABoR) report revealed that July 2022 was when the Austin-Round Rock housing market initially started stabilizing. If current trends continue, ABoR says 2023 will have a “strong finish.”
“We now have a direct year-over-year comparison of when our market began stabilizing, and the big fluctuations we’ve previously seen have started to even out,” said 2023 ABoR president Ashley Jackson in the report. “Potential buyers who have been on the fence about purchasing a home should know interest rates are settling, and now is the time to act.”
Even with interest rates beginning to settle, affordability is still a major limiting factor for potential buyers. According to Dr. Clare Losey, ABoR’s housing economist, the median family income in the Austin-Round Rock metropolitan statistical area (MSA) is $122,300 in 2023, which is not enough to afford many homes for sale in the area.
“This means buyers generally can afford a home priced between $300,000 to $400,000, however, less than 40 percent of homes sold in the Austin-Round Rock MSA in July of this year alone fall into this price range,” Dr. Losey said. “ABoR’s July housing market data stresses not only the strong, ongoing housing demand in our region, but also the critical need for more housing stock at all price points.”
June’s real estate report stressed a need for more housing inventory, which continued to be a limitation in July. Active listings in the MSA increased 13 percent to 9,663 last month, continuing a slow but steady improvement for the year.
Dr. Losey pointed out that Central Texas is becoming less and less likely to experience a recession with every passing month. She predicted Austin’s strong labor market will allow the region to continue exceeding “national expectations” despite rising mortgage rates.
“With a rise in pending sales and closed sales remaining consistent, this further indicates that buyers are becoming more accustomed to the higher interest rate environment and understand that elevated mortgage rates may continue,” she said.
Median prices dropped to $462,000 in the Austin-Round Rock MSA, which is 10 percent decrease year-over-year from July 2022. Homes are spending an average of 59 days on the market, which is 37 more days than this time last year.
More than 1,300 homes were sold in July 2023 in Travis County, with median prices dropping 9.2 percent year-over-year to $545,000. There are 4,697 active listings on the market; about 16 percent more than July 2022.
Fewer than 900 homes were sold in July, with median prices sitting at $428,350. There are more than 1,200 new home listings in Williamson County, with a total 2,788 active home listings.
Exactly 400 homes were sold in July in Hays County, with median prices continuing to fall to $405,243. Pending sales are up by 27.3 percent year-over-year, while active listings have also risen 31.1 percent to 1,493.
Bastrop County has the highest inventory in the MSA at 4.6 months’ worth, which is 1.2 months more than July 2022. 132 homes were sold this past July, and median prices are just under $350,000 (a 15.7 percent decrease). There are 25.6 percent more active listings on the market in Bastrop County, coming out to 545 homes.
Homes in Caldwell County sold for a median of $298,048 in July, which is a massive 20 percent drop year-over-year. 44 homes were sold last month, which is nearly 23 percent less than the year before, and there are 140 active homes on the market.
AUSTIN, Texas – The for sale sign officially went up at the Hobby State Office Building in downtown Austin. The announcement comes with the condition that the new development there will include affordable housing for government employees.
The Hobby State Office Building has been closed off for several months. The state agencies once there were relocated, some into new buildings north of the State Capitol.
Tuesday, Texas Land Commissioner Dawn Buckingham put up a for sale sign.
“This is a premier-mixed use vertical redevelopment site in the heart of downtown Austin,” said Buckingham.
The Hobby State Office Building was built back in 1984. It’s now surrounded by new high-rise development, which has made this one-time landmark between 3rd and 4th Streets easy to miss. Purchasing the entire downtown block comes with conditions.
“I am looking for a visionary proposal to bring substantial workforce housing with childcare to this site,” said Buckingham.
Buckingham made the stipulation for affordable housing with several government employees standing next to her and Austin Mayor Kirk Watson.
“It’s huge. There are people, people who keep trying to move out of town because it’s just not affordable to live in Austin anymore,” said Nancy Sisk, a nurse who works downtown.
For more than a decade, city leaders have promised to make housing more affordable, only to see prices in Austin skyrocket. Sisk believes the idea is still possible.
“It can. Of course, it can. Will it? You know, it’s the last thing to lose is hope. I mean, I don’t know what to say. I mean, I have to hope that it will,” said Sisk.
The Hobby building, over the past few years, has been infested with rats and bugs that fall out of ceiling tiles. Repairs estimates were at almost $50 million which prompted the decision by state lawmakers in 2019 to sell it.
SB 1349 was filed by then State Sen. Kirk Watson. The legislation was sponsored in the House by State Rep. Gina Hinojosa, and after, the passage was quickly signed by Governor Greg Abbott.
As part of the legislation, the property cannot be sold for “less than the property’s fair market value, which is to be established by an independent appraisal obtained by the asset management division of the General Land Office (GLO).”
Offers to buy, and redevelop the site are on the clock. They must be submitted within the next 90 days. The state wants developers to be creative. They don’t want a reflection of what’s already been built here in Austin. That’s why they’re not saying how many affordable units they want or how much they should cost.
“So you can’t jump to conclusions about what actually might come out of it. But the goal is to get workforce housing out of this development, something that would be very unique and something that frankly, most people didn’t think would happen when the Hobby building was redone,” said Mayor Kirk Watson.
The sales pitch from Buckingham did come with a warning.
“Now, some developers may not hear me or think that I am not serious if we do not get a response matching our goals the first time around, we will put it out for solicitation again,” said Buckingham.
Money from the sale is to go to the Permanent School Fund which is managed by the Texas General Land Office. The final decision on any offer will be made by the 5 members of the School Land Board, which includes Commissioner Buckingham.
On June 27, 2023, the firm’s Emerging Companies Practice (ECP) announced that Neuron, its proprietary cloud-based software platform for start-up clients, now has the ability to generate simple commercial non-disclosure agreements (NDAs) within its corporate governance module. Users may now work with Wilson Sonsini attorneys directly through Neuron to complete a single form, and their legal team can quickly generate an NDA tailored to exact specifications.
This latest enhancement follows Neuron’s addition of the corporate governance module in late 2023. At that time, Neuron was expanded to include corporate governance offerings such as employment and consulting agreements, offer letters, and other agreements enforceable in all 50 states. That release allowed clients and their ECP legal teams to manage corporate governance and board management activities through the Neuron platform. In addition, the ECP launched an innovative fixed-fee subscription for Neuron clients, providing emerging company clients with consistent pricing so they can develop reliable budgets while still accessing world-class legal services.
For more information, please visit https://ecp.wsgr.com/neuron.
On May 25, 2023, SaaS-based IT service management software vendor 4me announced a strategic growth investment led by growth equity firm PSG. Wilson Sonsini Goodrich & Rosati advised 4me on the transaction.
Along with the investment, 4me announced that Kevin McGibben was named as CEO and chairman, and that co-founders Cor Winkler Prins, Laurens Pit, and Mathijs Sterk will continue their involvement in the business.
4me is an SaaS-based enterprise service management platform that combines ITSM, ESM, and Service Integration & Management (SIAM) capabilities designed to deploy and manage compared to traditional vendors for mid-market, enterprise, and externally managed service providers. PSG is being joined by other software and technology-enabled services in the investment, which is designed to help 4me’s ongoing product innovation, as well as geographic expansion in EMEA and entry into the U.S. market.
The Wilson Sonsini team that advised 4me includes:
For more information, please see the press release.
Byron Smith was sitting at a Tex-Mex restaurant in Houston when it struck him. Looking out of the window, he could see a church, a school and a strip club: This city doesn’t have zoning laws.
That’s why, after previously deeming his vision for a chain of what he calls “commercial condos” an unviable concept in Los Angeles or New York City, he decided to launch his second XSpace development in the city. After opening the first XSpace in Austin last year, its second location, at 7022 Old Katy Road inside the 610 loop in northwest Houston, is slated to open in Q1 2024.
Courtesy of XSpace
A rendering of the Houston location of XSpace, where users can drive right up to their units.
“I said ‘Does anyone care that there’s a school right there?’ And they’re like ‘Ah, no. No zoning,’” Byron Smith said. “I was like OK, fair enough. That gave me the idea [that] I think we should be in Texas.”
XSpace is a place for “anyone who’s cool, interesting, successful,” to buy a space to use as an office, a garage, a man cave, or whatever they want, save for a home, he said.
It’s also a relatively rare asset class at the intersection of storage and coworking — so rare that Byron Smith was at a loss for what to call it. Commercial condo might not fully cover it, he said, describing it as similar to coworking space, but with drive-up access to all units and a 4K SF community lounge, almost like a “quasi town center.”
“It’s a commercial building, and we put a condominium regime over it, which is basically just a legal thing,” Byron Smith said. “It’s commercial, but it’s a condo, so you can do everything but sleep in it, basically.”
The concept isn’t totally novel. What’s known as “strata storage” is popular in Australia, where Byron Smith is from. Strata is a model of property ownership that allows individuals to own certain parts of a property or parcels of land, like condominiums in the U.S., only for commercial use.
Units can be used for office space, showrooms, storage for high-end cars or studio space for podcasting or artists. Major League Baseball All-Star pitcher Roger Clemens is one early adopter, buying two units at XSpace Austin to store baseball memorabilia and as office space for his nonprofit, the Roger Clemens Foundation. Former NFL offensive guard Kasey Studdard has also bought an Austin unit for his barbecue restaurant, Whitfield’s.
Courtesy of XSpace
The use of condos is commonplace for residential and garage units, but is not usually a word associated with property zoned for commercial use. But rental rate growth has piqued interest in new solutions for entrepreneurs and others who prefer to own rather than rent an asset.
XSpace’s concept is not entirely new to the U.S. There are car storage sites for sale in Texas, like Garages of America, for example.
Those “very high-end personal garages” and other forms of commercial condos have proliferated in Ohio as well, said Ted Smith, partner at Vorys law firm in Columbus.
Ohio is one state that has seen the commercial condo asset class boom over the past 20 to 25 years, Ted Smith said.
“I’ve been doing condo law since the early 2000s, and I know there are practitioners out there whose practice is still focused primarily on residential condominiums,” he said. “But I would say 90% of new condominium work that I do is all commercial-oriented.”
For tax reasons, among others, many users would prefer to own rather than lease their office space, he said.
“Because of their needs and their desired location, they’re not going to go out and buy an existing office building, or even go out and build their own office building,” Ted Smith said. “They find that it’s easier to just have a portion of an office building. So you can either create a commercial condo from the get-go, or you can subject property to the condominium form of ownership at a later date.”
Courtesy of Ranie Vanarsdall
Ranie Vanarsdall in her XSpace unit in Austin. She customized the unit, including the floors and walls, to accommodate her vinyl wrapping business.
Ranie Vanarsdall wanted to own her office space at XSpace in Austin because she hoped to invest in a space and have the freedom of ownership, she said.
Vanarsdall used to run her certified vinyl vehicle wrap shop, Virtue Wraps, out of a leased space. When her senior dog was recovering from surgery and needed to come to work with her, her landlord was not happy.
That’s when she put a payment down on XSpace and paid for her unit in full by the time construction was completed last year. Now she and many others in the building bring their dogs daily, Vanarsdall said.
“I don’t even have any overhead other than the HOA monthly, which is a really low price,” she said.
The HOA fee averages about $150 a month, Byron Smith said. It pays for cleaning, maintenance and security, he said, which is something important to Vanarsdall.
“[XSpace’s garages] have codes and community hallways. As a single female, that’s a really big relief,” she said. “I don’t have to go on-site to strangers’ garages anymore … I’m fully secure and fully safe. It’s a nice feeling.”
If she decides to sell her business one day, Vanarsdall said she’d keep her XSpace unit and use it as a weight room.
Courtesy of XSpace
Part of a rooftop lounge at XSpace Houston
The Austin XSpace has sold all of its units, though some are in the process of switching hands, Byron Smith said. Some owners bought them with the intent of leasing them out, he said.
Austin units, which range in size from 300 SF to about 3K SF, have sold for between $100K and $300K, though some have sold for as much as $1.3M, per CoStar.
The Houston location, which will have 86 units, is already 20% sold, Byron Smith said.
Terry Dařílek — an entrepreneur and co-owner of a senior home healthcare business and Austin-based car detailing business Authentic Details — has bought four units on the first floor.
Dařílek hasn’t decided what he’ll use the units for, though he’s leaning toward storing his cars. He has two with “one on the way,” and is also interested in turning part of his space into a man cave. He will probably add a mezzanine as well, he said.
His units will have garage doors on either side and the drive-up access is flat, he said, adding the set-up is great for cars that sit low like Lamborghinis and Ferraris.
“They do not go outside, they’re called garage queens, if you will,” Dařílek said.
Commercial condos can satisfy many needs, Ted Smith said: “As people look to redevelop urban areas and satisfy space needs, they’re going to find that commercial condominiums allow them to provide purchasers with buying opportunities that don’t exist outside of the condominium arena.”
XSpace plans to open its next locations in Dallas and East Austin as well as in The Woodlands. It also hopes to expand this year to Las Vegas, Chicago and Miami and find sites in Atlanta, Denver and Salt Lake City by mid-next year, CoStar reported.
Chicago firefighters spent Monday afternoon battling a blaze in the 4700 block of West Lake Street on the city’s West Side, with one person suffering an injury.
There were a larger than normal amount of firefighters on scene for the fire, with a spokesperson for CFD telling NBC 5 that the department had issues getting enough water onto the blaze in its early stages.
The call came into the department just after 2 p.m. Monday, according to authorities. The fire broke out inside a multi-use building, with several businesses inside.
Three individuals who were inside the building were able to escape without injury. One of the men did suffer a dog bite as he helped bring an animal to safety, but no injuries were directly caused by the blaze.
“Fire tends to make animals behave a little erratic and the dog might have been afraid or scared. It might have turned and bit the guy that was trying to bring him out,” explained CFD Chief Mark Ferman.
The building fire occurred near the CTA Green Line stop at Cicero, according to authorities. Trains continued to run in both directions as fire crews remained on scene.
Firefighters battled a warehouse blaze in Chicago’s Austin neighborhood on Monday afternoon, causing street closures and calls for additional resources at the scene. NBC 5’s Evrod Cassimy reports.
“We assessed that the wind was favorable,” Ferman said. “It was blowing away form The El tracks. There was no fire impingement or danger. If there been any danger, if the wind directions had been blowing the other direction we probably would have thought about (shutting down service).”
Services also continued on the UP-W Metra line, which runs just to the north of the building.
Within hours, the Chicago Fire Department had the blaze under control. Part of the domed-roof did collapse, but no one was inside when that occurred.
There is no immediate word on the cause of the fire.
“That’s going to be a process that may take a while,” Ferman said.
The Chicago Fire Department Office of Fire Investigation remains on scene and is looking into the cause of the fire.
AUSTIN — In speaking of the U.S. Constitution, the late, great American statesman Benjamin Franklin once said in a letter, “In this world, nothing is certain but death and taxes.”
Two Republican lawmakers in Austin — Sen. Pete Flores of Pleasanton and Rep. Brad Buckley of Salado — have said they are working on alleviating the effects of the latter during this year’s 88th Legislative Session.
– Wilson Sonsini’s partner-elect class includes six women and 12 men from the firm’s corporate, litigation, intellectual property, technology transactions, and regulatory departments –
+1 732.239.9710 (Mobile)
PALO ALTO, CA (December 5, 2022) –
Wilson Sonsini Goodrich & Rosati, the premier provider of legal services to technology, life sciences, and growth enterprises worldwide, today announced that the firm has elected 18 new partners from its attorney ranks. The promotions will be effective February 1, 2023.
“Our 2023 class of partners is remarkable in how closely it reflects our values and the strength of our business,” said Doug Clark, Wilson Sonsini’s managing partner. “These attorneys have accomplished much in their careers and showcase not only the deep expertise within our firm, but also our diversity—both of which help define us. We are excited to welcome this group as our newest class of partners and look forward to continuing to work with them to provide clients with the sophisticated legal services we are known for.”
The 2023 partners-elect are:
Lester Ang, Corporate. Based in Palo Alto, Ang represents start-up and late-stage private companies in matters ranging from incorporation and initial capitalization to venture capital, debt financing, and initial public offerings. He also represents public companies in securities offerings, M&A transactions, SEC reporting, and corporate governance matters. In addition, Ang advises investment banks, venture capital firms, and private equity firms. He received his J.D. from UC Davis School of Law.
Haley Bavasi, Privacy and Cybersecurity. Based in Seattle, Bavasi focuses primarily on advising digital health companies across a range of privacy, transactional, research, and healthcare regulatory issues. In particular, she leverages her expertise in the Health Insurance Portability and Accountability Act (HIPAA) to provide early-stage companies with practical day-to-day counseling, as well as to advise in the context of complex commercial transactions, M&A, and go-to-market strategy. She received her J.D. from UC Berkeley School of Law.
Robert Broderick, Corporate. Based in New York, Broderick practices corporate and securities law and focuses on start-ups and venture capital. He regularly works with high-profile technology companies, with an emphasis on capital raising through complex financings. He also provides advice with respect to corporate governance, strategic transactions, and day-to-day corporate matters. Broderick received his J.D. from Columbia Law School.
Jose Campos, Corporate. Based in London, Campos advises U.S. and European technology start-ups and scale-ups through all stages of their life cycles, including incorporation, venture capital financings, mergers and acquisitions, and other strategic transactions. Campos also supports investors that invest in technology companies. He is well-versed in assisting non-U.S. technology companies with their U.S. expansion plans and “flipping” them into U.S. holding companies. He received his J.D. from UC Hastings College of the Law.
Jonathan Chan, Corporate. Based in San Francisco and Palo Alto, Chan works in the emerging companies practice, and represents private technology companies and investors in formation, venture capital financings, and mergers and acquisitions. He focuses on representing companies and investors in the fintech, blockchain, and gaming sectors. Before joining the firm, Chan was a co-founder and COO of a venture-backed investment platform and previously served as a senior director of business development at Electronic Arts. He received his J.D. from Harvard Law School.
Andy Cordo, Litigation. Based in Wilmington, Cordo focuses on corporate governance litigation in the Delaware Court of Chancery. His experience includes representing stockholders, officers, and directors of Delaware corporations and alternative entities in appeals, disputes over corporate and alternative entity control, fiduciary duties and management, corporate appraisal actions, and contract and other commercial disputes. Cordo received his J.D. from the Pennsylvania State University Dickinson School of Law.
Elina Coss, Energy and Climate Solutions. Based in Seattle, Coss represents borrowers and sponsors in project and structured finance, acquisitions, and project development transactions, with a focus on financing cash flow streams from the renewable energy technology sector. Coss advises clients on complex asset-based financings at all levels of the capital stack, including joint ventures, construction, back-leverage and mezzanine financings, tax and cash equity financings, capital market securitizations, and forward flow financings. She also advises lenders, tax equity investors, private equity funds, and other investors in the renewable energy space. She received her J.D. from New York University School of Law.
Jake Gatof, Corporate. Based in Boston, Gatof represents life sciences and technology companies, as well as their sponsors, through all stages of growth and investment. He represents companies with respect to venture capital financings, corporate governance, mergers and acquisitions, and other complex strategic transactions. He also advises leading growth equity, venture capital, and other institutional sponsors. Gatof received his J.D. from the University of Michigan Law School.
Broderick Henry, Corporate. Based in Palo Alto, Henry focuses on mergers and acquisitions, divestitures, equity investments, and other strategic matters involving public and private companies. He primarily represents clients in the technology industry, but he has represented clients in a wide range of sectors, including aviation, financial services, consumer products, energy and infrastructure, security, and manufacturing. Henry received his J.D. from New York University School of Law.
Jocqui Kaup, Corporate. Working virtually in Washington, Kaup focuses on corporate and securities matters for emerging growth companies and venture capital and private equity firms in both equity and debt financing transactions and mergers and acquisitions. She also advises on strategic alliances, spinouts, recapitalizations, and other corporate reorganizations. Kaup represents private technology growth companies ranging from start-ups to late-stage enterprises, with an emphasis on larger private companies. She received her J.D. from the Benjamin N. Cardozo School of Law.
Megan Kayo, Privacy and Cybersecurity. Based in San Francisco, Kayo advises clients on information security and privacy issues under various laws and regulations, specializing in data breach response and mitigation. She has worked on hundreds of security incidents and acted as the lead counsel, directing the investigation, notifications, and responses to regulators and consumers in connection with global data breaches. Kayo received her J.D. from the University of Virginia School of Law.
Brendan Mahan, Mergers and Acquisitions. Based in Seattle, Mahan advises public and private companies on mergers and acquisitions, divestitures, minority and controlling investments, and other strategic transactions. His experience includes public and private mergers, tender offers, asset and stock purchases, and spin-off transactions, as well as financings and structured finance transactions, across North America, Asia, and Europe. He received his J.D. from Cornell Law School.
Chris McAndrew, Patents and Innovations. Based in Boston, Dr. McAndrew advises early-stage life sciences companies on intellectual property issues and helps clients develop and build a meaningful IP portfolio from inception through their exits. He specializes in representing companies within the complex life science biologics space, including antibodies and cell therapies. Dr. McAndrew was a patent agent at the firm before becoming an attorney. He received his J.D. from the George Washington University Law School.
Victor Nilsson, Corporate. Based in Seattle, Nilsson practices corporate and securities law with a focus on representing issuers, investment banks, and strategic investors on a broad range of capital markets transactions. These include IPOs and follow-on offerings, ADS offerings, ATMs, PIPEs, private placements, and convertible note offerings, as well as high-yield and investment-grade debt offerings. He also advises public companies on SEC reporting, securities law compliance, and corporate governance matters. Nilsson received his J.D. from the University of Arizona College of Law.
David Pirko, Technology Transactions. Based in Palo Alto, Pirko represents leading life sciences companies and venture capital investors in strategic transactional and corporate matters, including partnering and collaboration agreements, licensing agreements, services agreements, clinical trial agreements, manufacturing and supply agreements, and other complex matters. His practice extends from start-ups to public companies operating in all sectors of the life sciences industry. Pirko received his J.D. from Harvard Law School.
Deborah Smith, Patents and Innovations. Based in San Diego, Dr. Smith advises companies on IP strategy beginning from early platform development through commercialization. This includes venture capital, capital markets, and M&A transactions in the fields of chemistry, pharmaceuticals, and biotechnology. Dr. Smith specializes in advising clients that use platform technologies to bring new therapeutics to market. She received her J.D. from the University of San Diego School of Law.
Stephen Strain, Litigation. Based in Palo Alto, Strain is part of the firm’s complex litigation and investigations group. He focuses on representing clients in government and internal investigations, including matters involving allegations of insider trading, complex financial reporting and accounting fraud, violations of the FCPA, and disclosure violations, among others. Strain also frequently represents companies, as well as their officers and directors, in securities class actions, shareholder derivative suits, and related litigation matters. He received his J.D. from New York University School of Law.
Eva Yin, Regulatory. Based in Seattle, Dr. Yin is part of the firm’s FDA regulatory, healthcare, and consumer products practice. She focuses on conducting FDA and healthcare regulatory due diligence for corporate transactions; providing legal counsel to manufacturers regarding FDA approval/clearance for various products, including medical devices, mobile apps, and drugs; FDA compliance; regulation of promotional materials and labeling; and manufacturer compliance. Dr. Yin received her J.D. from UC Hastings College of the Law.
About Wilson Sonsini Goodrich & Rosati
For more than 60 years, Wilson Sonsini’s services and legal disciplines have focused on serving the principal challenges faced by the management and boards of directors of business enterprises. The firm is nationally recognized as a leading provider to growing and established clients seeking legal counsel to complete sophisticated corporate and technology transactions; manage governance and enterprise-scale matters; assist with intellectual property development, protection, and IP-driven transactions; represent them in contested disputes; and/or advise them on antitrust or other regulatory matters. With deep roots in Silicon Valley, Wilson Sonsini has 19 offices in technology and business hubs worldwide. For more information, please visit www.wsgr.com.
A push to completely revamp the city’s intricate and decades-old land development code, governing how and where building takes place in Austin, has extended through the terms of current council members—and ended without any broad changes in place after a resident lawsuit successfully halted the city’s process. Late last year when that legal outcome was still in question, city leaders announced a renewed attempt to tackle Austin’s housing crisis and rising cost of living by considering only more specific ideas that could pass through City Hall with consensus support.
On Dec. 2, officials approved two of those items geared toward expanding housing options across Austin’s transportation corridors and in areas where the city hopes to encourage more residential construction. One unlocks commercially zoned areas for housing development, a practice generally restricted in the code, while the other cuts down on some development limits along transit networks.
Mayor Pro Tem Alison Alter said the changes—while not perfect—represented progress built on compromise between several council members and constituents.
“I believe the mayor and I have demonstrated that a broad and diverse caucus representing multiple corners of the city can work together to achieve results,” Alter said. “It may not be what any one of us would have crafted on our own, but rather than lamenting that whether this proposal is only half a loaf, we should remember that half a loaf is still a lot of bread. And we can always continue to work to make our city more livable and more affordable.”
Compatibility, commercial updates
The first update approved by council allows residences on properties now zoned under a commercial category. The change applies to thousands of parcels, including a majority near both existing transit and future Project Connect routes.
The affordable incentive program requires that anyone interested in bringing housing to land that is now reserved for offices, shops or other commercial uses must include a portion of income-restricted housing. Ten percent of units in a participating rental development must be available at 60% of the median family income, or MFI, while the same amount of spaces in an ownership project must be available at 80% MFI or below. The Austin metropolitan area’s MFI is $110,300 for a family of four.
Council also addressed a limit on new construction that officials and developers have long pointed to as one of the more significant constraints on housing locally. Austin’s compatibility standards, or rules designed to keep development in line with existing homes and neighborhoods, are believed to be among the strictest in Texas and comparable cities nationwide.
The December code update reduces certain compatibility effects, such as a cap on building height, along corridors where council generally agreed larger development should be placed. New construction with more affordable housing will see even greater compatibility reductions allowing for taller and denser buildings closer to existing residences.
Corridors include stretches of Congress Avenue, Braker Lane, Lamar Boulevard, Slaughter Lane and dozens more roadways as well as major highways.
The concepts ended up earning majority support on the council dais, with some reservations. Community feedback was generally split between more pro-housing voices encouraged by the potential for new development and those concerned the changes could infringe on existing properties and further contribute to displacement, especially in gentrification-prone areas, such as East Austin.
While council passed the code updates in supermajority votes, some residents opposed to the changes may again challenge the city’s land-use action in court. Community Not Commodity, which advocates for homeowner and neighborhood perspectives in housing debates, said it is “seriously considering” legal action over the city’s handling of the December votes and related public hearings.
“Council chose to rush to approve in a lame duck period two unvetted land-use ordinances that will greatly undermine the current communities in neighborhoods. The burden will fall on current Austin residents, but the gain will go to real estate speculators and investors. Little to no ‘affordable’ housing will be built for middle-class and working families, and these amendments will result in even more displacement of nonaffluent Austinites,” the group said in a statement.
Equity in focus
The residential in commercial code update opens new housing possibilities on almost 3,000 properties in “high-opportunity” areas, or places where residents have better socioeconomic outcomes and chances at upward mobility. In Austin, those areas are generally concentrated on the west side where affordable housing is largely absent.
The change also applies to more than 4,200 properties in places the city has found to be more prone to displacement, largely on the east side.
The proposal was recommended by city staff, with positive reviews of its affordability effects raised alongside concerns about future negative effects for residents who may be bunched around highways, where health outcomes can be worse.
“Given the city of Austin’s history of implementing racist policy with respect to industrial zoning and communities of color, special care must be taken to engage with communities who the city has harmed in the past, so that harm is not repeated,” staff wrote in their analysis.
Conversely, the compatibility measure was not recommended by staff in its current form. Their report on the program raised issues with an additional layer of code complexity and questioned whether it will effectively bring more housing for low- and middle-income Austinites to market. Erica Leak, a representative of the city’s housing department, also told council Dec. 2 that the corridor policy is not designed to be equitable across town.
Aside from highways such as MoPac and FM 620, almost none of the heavily trafficked corridors featuring reduced compatibility limits are located in West Austin. The policy’s disparity between the more affluent west side and Central and East Austin, which have seen more rapid redevelopment and displacement in recent years, led District 1 Council Member Natasha Harper-Madison to cast her vote in favor “very hesitantly.” She also shared commentary on the city’s continued east-west split in housing production and affordability, and asked officials to better prioritize the concept of equity in future housing policy debates.
“This item as it is currently designed is designed as inequitable. The exclusion of corridors in high-income areas was purposeful and by council direction, and we are left with no option to address these inequities today,” Harper-Madison said. “The fact that a well-intentioned and necessary reform to our really desperately outdated land development code has been warped to once again exclude West Austin and other high-income areas from this much-needed housing conversation is sadly not at all surprising.”
Other council members echoed her view that the city was putting a less equitable policy into place, and she and District 4 Council Member Chito Vela both said they plan to review how relevant policies could become more balanced citywide next year.
Alter, who represents West Austin’s District 10 and helped draft the list of corridors this spring, said she hopes to work on ways to increase affordable housing on her side of town alongside other officials. Alter also said council’s action on housing in commercial areas could end up being the more effective policy, and that compatibility tweaks may not be the best way to make a dent in the west side market.
“Every tool that we use is not going to solve all of the problems at once, which is why we have to look at all of the different tools. And I think that we have made a lot of progress on a lot of different fronts, and so I’m glad that we’re able to conclude this council with passing these two items,” she said.
Locating the ‘missing middle’
On top of those two final votes, council also kicked off consideration of a new development process to ease more “missing middle” housing into Austin.
A proposal from District 8 Council Member Paige Ellis requests city management to waive often expensive and time-consuming development planning requirements for three- and four-unit projects, moving them in line with single-family and two-unit homes. Ellis’ resolution also calls for the creation of a “site plan lite” for five- to 16-unit complexes aimed at speeding up their production. Both items could now move forward as soon as next spring.
“We’ve got units that are getting stuck in the permitting process that’s designed for much larger projects,” Ellis said. “When you have missing middle housing as small as five units having to undergo a very, very lengthy process and costly process, that’s why we’re not seeing housing coming onto the market. People can’t live in the pipeline, and so we need to make sure that these units are coming online, that people are able to buy homes, that people are able to have units to rent.”