CodeNEXT: Replace Impervious Cover Limits with a Tax?

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FANs interested in CodeNEXT met Saturday, August 12 to discuss recommendations that FAN could make to City Council, Planning Commission, Zoning and Platting Commission (ZAP), staff, and consultants. In the near future, FAN members will have an opportunity to vote on whether to support each possible recommendation. In keeping with FAN’s openness, transparency, and use of technology to include more people in the conversation, we are inviting discussion here on the forum about each recommendation before it is put to a vote.

1. What do you think of this recommendation?
2. What would you change, if anything?
3. What do you think of the rationale?
4. Do you have specific examples from staff’s existing CodeNEXT proposals that you believe must change to satisfy this recommendation?

RECOMMENDATION 6

Replace impervious cover limits with a tax, applied uniformly throughout the city, on impervious cover (or, if feasible, on likely run-off). Detention ponds, green roofs, and other measures could lower the tax liability based on likely runoff reduction.

Rationale

  • Limits on impervious cover are arbitrary and a “blunt instrument” that ultimately constrains housing supply and diversity.
  • A uniform tax on impervious cover or likely run-off is a more effective way of reducing the amount of run-off and the cumulative effects on flooding and water quality.
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There is already an item on our CoA bills addressing this. Impervious cover affects all of us downstream and especially in the floodplains. The city does not require detention anymore does it? Also rain does not care about this tax. It rains in the amounts it wants to. Heavy rains will cause more flooding. It already does in my neighborhood. Allowing development to do what it wants to will lead to more Onion Creeks, city buyouts, and FEMA involvement.
And then where do the collected funds go? And what about green spaces, trees and their climate affects?

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A uniform tax throughout the city would either be too high to allow development on the outskirts or too low to matter in the central city.

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Any kind of impervious cover limits applied only in the City of Austin and not uniformly across the Austin region will cause sprawl and thus might actually cause more flooding and impervious cover overall than if we did not have the law.

So, I think I agree that a tax instrument would be more effective at achieving the desired goal, but it should be done through a 5 county agreement, not just in the City alone.

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Fee in lieu density bonus to increase impervious cover \ building coverage

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Less development in the outskirts would be better

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Impervious cover limitations, beyond helping to ensure minimum on site infiltration and reduce reliance on gray infrastructure, help to encourage more dense, multi-story development instead of horizontal, single-story development.

A tax would not be an equivalent substitute for either of these benefits and should not be pursued.

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It seems people have some very different expectations about what the consequences of an impervious cover tax would be.

@martinharris (welcome to the forum!) and @ssimpson both implied that taxes on impervious cover would not be as effective in reducing impervious cover and its negative consequences as simply capping impervious cover.

Yet @dkesh contended that taxes on impervious cover could be effective, and that, depending on how high and uniformly applied the tax is, the effect could be so large that it would halt development on the outskirts entirely.

@Shawn_Shillington and @jcrossley implied that they, too, believe a uniformly-applied tax would affect development patterns (and potentially in a desirable way).

Economists have been studying the effects of taxes versus somewhat arbitrary limits for many years. When you arbitrarily cap something (such as impervious cover), there is no incentive for economic actors to create less of it unless they are bumping up against the cap. With a tax, however, you have the opportunity to discourage it across the board, and in proportion to the harm it causes. It’s called a Pigovian tax.

EDIT: Here is the City of Austin page on the drainage charge to which @martinharris referred. The fee does, indeed, already exist. I suspect it would need to be much higher to offset the negative externalities of impervious cover, and I’m not sure it’s structured properly.

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I have long been a fan of having a very significant results based drainage fee. The current COA model needs work, but at least provides a framework for the concept and path of execution, analytics are rapidly improving… Yes, it will push development more into the urban core vs. spread, and that’s good. It would also tax a property near me that looks like a waterfall dumping over the curb, and some will not like that as it has more of an affordablility impact on longer term residents than new construction. It also provides new construction a cost benefit to eliminate runoff. So choice between what seems like it would be best practice and politically expedient.

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A uniform (but HIGH) tax per square foot of impervious cover is a good idea even if it applies only to the city of Austin and its ETJ (but more likely we would want to apply this to all water utility customers instead, which is somewhat different population).

In the urban core, where land is very valuable, people would be willing to pay even a high impervious cover tax because they have more useful uses for the land than as stormwater sinks.

In the fringes, where land is NOT very valuable, we would expect to see much more ‘sink’. This is a good outcome, a natural outcome, and what we should seek as a “nudge the market” solution that improves the environment while also supporting urbanism.

I don’t care what Round Rock and Pflugerville do in this scenario. It’s still good for Austin to do it.

But given that we have a lot of unmet needs in current infrastructure, I would argue that the tax must be HIGH. Not trivial. The effort should be to construct a tax that in its first year roughly equates to an increase over any fees that support drainage infrastructure for even a low-impervious-cover house. I’m fine if this results in a tenfold increase in “fees paid to support drainage” for a property in the core that exists today, as long as it provides correct incentives for future development.

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Increasing the drainage fee 10X, as a start, is fine with me. We need to have a change of mindset and not look to property taxes as the only game in town, that hand has been way over played for too long.

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That’s exactly right. If you made it high enough to be effective downtown it would utterly stifle development.

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Kind of the whole point in some sense – a square meter of impervious cover has about the same negative effects almost wherever it is (at least compared to the extreme differences in the effective costs of lot-based percentage limits).

We’d use less impervious cover overall (and be better off) if we concentrated that impervious cover in places where each additional acre of IC gets us more built square feet, more dwelling units, more retail office/space, etc – and stifled development in places where we don’t get much out of extra impervious cover.

So I don’t want it to be quite high enough to reduce IC in or near downtown; in fact, I want it to reduce the effective cost of IC in the central core. I do want it high enough to utterly stifle new suburb growth.

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The problem with that is, the runoff won’t stay in downtown.

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Neither will runoff in the 'burbs stay out there. That’s the point – extra IC near downtown means much less IC on the periphery and less runoff over the whole watershed.

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Maybe, but runoff in the burbs might only flow onto vacant land. Runoff from downtown might flood people’s homes and businesses.

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We plan on putting these recommendations to a vote starting sometime tomorrow. If you have any further specific recommendations for wording changes or examples that can be used in the “rationale” section such as links to specific research or articles, please let post here sometime today! I’ve included what I believe to be the latest wording for this recommendation below based on what everyone has said here, but if I missed something, please let us know.

@Phil_Wiley I think the following would include increasing the drainage fee since the resolution just says “tax” and the city or someone could figure out later what that tax looks like or how high it should be?

@Shawn_Shillington are you suggesting to add language about “fee in lieu density bonus to increase impervious cover \ building coverage” somewhere in the resolution?

RECOMMENDATION 6

Replace impervious cover limits with a tax, applied uniformly throughout the city, on impervious cover (or, if feasible, on likely run-off). Detention ponds, green roofs, and other measures could lower the tax liability based on likely runoff reduction.

Rationale

  • Limits on impervious cover are arbitrary and a “blunt instrument” that ultimately constrains housing supply and diversity.
  • A uniform tax on impervious cover or likely run-off is a more effective way of reducing the amount of run-off and the cumulative effects on flooding and water quality.
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Just a different way to phrase it - I think the language you have now is fine

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The relevant issue here is “what tax”.

Environmental preservation specifically of Barton Springs has been misunderstood since it’s inception when in 1980’s the science was not well understood. Subsequent ACADEMIC studies state that limiting impervious cover has the practical impact of increasing sprawl. This may to be counter intuitive.

Studies show that impervious cover in UNREGULATED development of the Barton Springs Zone is about 22.5%. That is actually LESS THAN the 25% limit in the contributing zone of the SOS ordinance. Other studies show that impervious cover of 20% can still mitigate flooding impacts. This is the finding of studies by the City and other academic studies. Water scientist Dr’ Michael Barrett shared studies with me that were reaffirmed by civil engineers working in Austin that the real threat to Barton Springs is PET WASTE.

A study in 2008 to 2011 during periods of drought and floods showed that the source of pollution during rain events was surface runoff. The filamentous algae that boys throw at girls in Barton Springs comes from nutrients coming from PET WASTE - surface runoff - in suburban neighborhoods. The study showed that the greatest threat was from Travis County near Loop 1 and SW Parkway. (a bunch of elderly folks maybe?) Who knows?

Measuring environmental impact of development using impervious cover PER ACRE actually defeats the goal of limiting the impact of development on environmentally sensitive land. The Urban Land Institute suggests the better metric - the more useful way to measure environmental impact - is impervious cover PER CAPITA. The latter metric implies that greater density - more people per acre - reduces overall impact of population growth on environmentally sensitive land.

If we project population growth of 250,000 people in 50 years (as is the case in the Barton Springs Zone), is it better put build 100,000 homes over 100,000 acres (sprawl) or 10,000 acres (urban norms) or less like 7 homes per acre that support mass transit?

Which form of development is more likely to provide tax revenue to protect environmental water quality protection land? Sprawl - that does not support public safety services, road infrastructure or schools? Density that has significantly less impact PER CAPITA and provides ten times the tax revenue compared to sprawl?

The policies Austin has adopted to protect it’s environmental resources since the 1980’s has been misinformed and misguided. And I too have made misguided assumptions about sprawl. The latest studies show that the environmental impact of septic systems is not significant, as I had assumed. During periods of drought, the background contribution of Nitrogen, Phosphorus and Potassium were not significant. That would have been from septic systems. It was surface runoff that was the significant contributor to the pollution that affects us at Barton Springs and that came from pet waste.

That does not let farming activities off the hook. Recent studies by scientists working with Walmart and others on environmental impacts of commercial activities show that fertilizer as modified by bacterial activity create nitrous oxide that significantly contribute to green house gasses and global warming. Reducing the carbon footprint could NOT be limited to green roofs and natural gas powered trucks. Efforts had to go back further into the supply chain - the farms and the chemical companies that guide how they grow crops.

Opinions and feelings really do not have a role in this discussion. Yet here we are. People suggesting what policies we ought to pursue. I suggest that those who want to contribute to this conversation ground their comments in science.

The proof is that in 1985 there was no algae in Barton Springs. As late as 2006 a comment in the Austin Chronicle notes that Barton Springs was ruined for that person. My grand daughters saw a video of Dee McCandless’ Aquafest water dance I participated in in 1985. No algae. Barton Springs has been ruined in my lifetime and I am sorry to witness it’s demise.

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As it’s more to promote a new approach and change in direction than a detailed/specific policy, I am fine with the wording and leaving wiggle room for improvement @Pete_Gilcrease.

Believe it would be consistent with the proposal and comments to make a very minor edit if you choose to.

Replace impervious cover limits with a tax/fee, applied uniformly throughout the city, on impervious cover, or better yet, on likely run-off. Detention ponds, green roofs, and other measures could lower the tax liability based on likely runoff reduction.

@kimberly, most of Downtown is already zoned at or approaching 100% impervious cover. The proposal would make it more attractive to build near Downtown’s borders, which could affect the watersheds. The model should be to make the fee high enough that there is a clear incentive to retain on site where feasible, for either existing or new construction.

@ted knows a lot more about this stuff than most, I believe that cover near the lake has much less impact on the watershed than cover further upstream. Heavy rains near the lake make it into the lake pretty quickly, it’s the stuff upstream that comes in later like a tidal wave that causes damage.

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