Occupancy Limits

[rickyhennessy]

I’d like to point out a real example of old housing becoming more and more unaffordable. When I moved to Austin in 2012, I lived in a 1x1 in Tanglewood North apartments, which were built in 1965, for $715 a month. Fast forward to today and those same apartments are renting for about $1000 (http://www.tanglewoodnorthapartments.com/pricing) and haven’t been upgraded at all.

Yes, new apartments are going to be more expensive than old apartments, but any new apartments will help relieve some demand for our current older stock of housing. I don’t even want to think about how expensive the old places in Hyde Park would be if it weren’t for all of the new housing in West Campus.

[Brennan]

Its all about unintended consequences, @betsy_greenberg . I don’t believe most people “intend” to exclude people with the occupancy ordinance like this, but it does. One of the most worst aspects is that it restricts even duplexes to four unrelated people! You couldn’t have more than two unmarried couples under this, even if you had two 3 bdrm homes side by side!

There are three scenarios for an older rental house without the occupancy limit of 4. Say 1100 sq ft 2bdrm, as is common in the urban core.

1. It remains at current market rate - $1200-1800/mo. Rent is $600-900/bedroom. Value is likely around $300-400K, depending on neighborhood. Affordable to the middle class, although only barely at the high end. There are a few that are cheaper or more expensive, but based on my recent rental search, this is about right.
2. It gets torn down and a big single family house is built and sold. Value is 400-700K, depending on neighborhood. Not affordable
3. It gets torn down and rebuilt as a large single family house in some way optimized for 6 people - four bedrooms, two dens that can be converted to bedrooms. Value is 400-700K, bedrooms rent mostly from $500-800/mo based on my perusal of Craigslist. About the same affordability for renters as option 1, just more people.

In option 1, it may or may not be an eyesore to the neighborhood, and is probably in the eye of the beholder. Unlikely to have too many negative impacts on neighbors in terms of trash. Neutral impact on property taxes, which are generally supposed to be set by sales price. It doesn’t change hand - no impact.
In option 2: Its prettier. Could increase home values, combined with all the others doing the same thing.
Option 3: Potential for negative impacts on neighbors go up - more trash, for example. Drives up home values. But more people getting housed, relatively affordably.

But options 2 and 3 are about equivalent when it comes to home value and increasing property values. When you look at TCAD for the values of so-called “stealth dorms” they’re the same as new single family homes generally. People argue that 3 is not affordable, but I think they just don’t understand today’s housing market.

You’re taking away relatively affordable rentals with the occupancy limits in the service of concerns that mostly revolve around trash, noise, and parking, as far as I can tell. Its a bad idea. Trash, noise, and more on street parking do not trump the need for people to have a place to stay. We need a better code compliance system to deal with trash and noise concerns, perhaps.

If safety were truly the concern, it would be a limit on all people, not just unrelated people, living in a house. There is no magic that means that two families of four generate less waste or are going to have an easier time evacuating a building than six unrelated adults.

Brennan

[Brennan]

Also, just for comparison: I currently rent a small bedroom in a 1967 complex in the Northfield neighborhood area for $950/month. More renovated apartments with a washer/dryer and nicer appliances in the same complex, also one bedroom, rent for $1,250. This was the low-end of what I found in the central city, basically confining my search to north of 45th and south of Anderson Lane, both sides of I-35.

The 2 bedroom, 650 sq ft single family home I rented in East Austin from 2010-2013 now rents for $1,350/mo.

Rent is high, and has been shooting up far more quickly than the property tax burden on homeowners. This is confirmed by census data.

[alyshalynn]

I would also point out that Heritage NA isn’t exactly pulling their weight when saying that they’d rather have official Multi-Family developments in place of other shared housing options. The plot across from Salvation Pizza was at one point, about a year ago going to be 5, two-story town homes/condos along 34th, and 3, one-story single family homes along 33rd, with shared alley/parking access at a curb cut along King. After much run around and bad mouthing that developer’s reputation, he decided to hand the lot off to someone who was then opting for 5 Luxury homes, to what is now a plan for only 3 luxury homes.

We lost out on the opportunity to increase supply and types of housing stock in our small area near CapMetro buses, 1,3,22,& 801 and across from commercial business lots because the fear was instilled in neighbors that the up-zone could result in someone running a business out of one of those condos (despite the developer agreeing to include a clause in the HOA that only 1 type of business could be run if at all, and it was a very implausible option).

Condos are more affordable housing options than most others in the Heritage Neighborhood. The original three SF homes on smaller lots would have been more affordable than most others in the neighborhood. This development was on an empty lot and in no way affecting existing housing stock, yet it was still voted to be postponed time and again, requested that plans be redrawn and resubmitted for review, and given a considerable amount flack out of what I personally ascertained was mostly a knee jerk reaction to distrust newcomers - both in the form of developers and buyers who prefer condos and smaller lots.

[Betsy_Greenberg]

Five houses are planned, all using small lot amnesty 4 out of the 5 currently have approved permits and one is still going through the approval process. The neighborhood never postponed or voted at all. There was a great deal of support for the 7 condo/3 house project, al least on the steering committee. It should be noted, however, that the new condos on Grandview are among the most expensive properties in the neighborhood.

The concern was that the developer was requesting GR-MU zoning. When we asked the developer to consider appropriate residential zoning such as SF-6 or MF, he flatly refused. The neighborhood never voted because the applicant cancelled the required neighborhood plan amendment meeting.

Heritage has plenty of room for more residential density. All of Guadalupe, Lamar, and 38th St can be redeveloped as mixed use properties – some of the largest ones have VMU zoning. The concern is about the interior of the neighborhood. The occupancy reduction has helped protect existing housing from demolition. It has no effect on the occupancy of existing housing.

[clay]

Brennan, it’s clear that you are passionate about this issue, but I think you may be misunderstanding the point of view of your neighbors who are in favor of the ordinance.

Yes, one consequence of the stealth dorm ordinance might be that developers have less incentive to build two 3-bedroom houses on one lot. We don’t see that as an absurdity, but rather more humans (almost always between the ages of 19-22) and cars than one lot can reasonably support. It is one variation of the kind of “stealth dorm” arrangement we are trying to discourage. This comes from over 10 years of living with these things and seeing more and more affordable houses sacrificed to their proliferation.

In my neighborhood (North Loop), we have reached a breaking point with the stealth dorms. When occupancy was allowed at more than 4, the investment value ($5 - 6k+ per month, typically) was too much for certain developers to pass up. The steady, unending supply of students looking for giant, party-friendly houses near campus is a true cash cow. Because of that, first-time homebuyers who might want a fixer-upper repeatedly get outbid by big money investors, who scrape the original house and build a Stealth Dorm, designed to be rented out by the room. So now we have a giant, cheaply built house that is not suited to families. We want families to have the opportunity to put down some roots in Central Austin, and help renovate our old but charming housing stock. We don’t necessarily agree that option 2 is prettier. A lot of times it’s big and tacky.

So, it’s kind of a question of affordability for students vs. affordability for families and young couples. We are already one of the most student-filled neighborhoods in Central Austin. It’s not always pleasant. And keep in mind, we’re not trying to get rid of any students, we just want to save the affordable houses that are falling like dominoes to the demand for the stealth dorms.

Yes, in a way option 3 is “affordable.” You know, it would actually be even more affordable if we allowed two adults per bedroom. If we crammed 12 unrelated adults in one house, think of how cheap the rent would be for each person! Actually, why have limits at all? Nobody REALLY needs that much refrigerator space or use of the stove or kitchen sink, right?

I would also add that if you think a better code compliance system is going to make college students living in giant houses stop being a nuisance to their neighbors, well, keep that dream alive, friend.

And yes, safety is definitely a concern. Maybe you should bring that one up with code compliance.

[mdahmus]

It’s clear that North Loop has organized en masse to win the battle via anecdote. It’s also clear that they have no answer for the alternative scenario - in which people buy old houses currently rented to 4 people or less and bulldoze them to build a new house for sale (which happens, a lot, all over town).

Again, this is happening now in many neighborhoods where renting to 6 unrelated adults is not profitable. Houses are getting knocked down anyways, because old crappy houses being rented at below market rates are not going to stay that way for long. Lots of people want to rent nicer housing, but lots of people also want to buy nicer housing.

Yes, the ‘stealth dorm’ [sic] is a more profitable outcome. But not much more profitable than building new to sell (or building new to rent to merely 4 instead of 6). It’s simply disingenuous to claim that this is a way to preserve affordable housing, when what it’s all about is preventing more people from living in central neighborhoods. While hiding behind the people renting the old houses, which you guys would get rid of too if you could. That’s really sad.

[mdahmus]

GR-MU zoning would be eminently reasonable for that tract. Across the street from a bunch of businesses in houses; down the street from a bunch of medical offices; steps away from Guadalupe.

Unfortunately, winning a zoning change case of that nature when against a reactionary neighborhood association and their pet city council member is not a battle I’d expect to win. Better to give up and build within the bounds of current zoning - and Austin becomes a little more suburban with every cut.

[clay]

Oh, that little [sic] is cute! Because they’re not really stealth dorms, right? They’re just regular single-family houses and the evil exclusionary residents of North Loop are making all of this up!

There is nothing disingenuous about wanting to preserve affordable housing in the neighborhood, Mr. Dahmus. And there is also nothing disingenuous about wanting to encourage families to move in. Frankly I’m offended at the accusation, as well as the tone of your post. What gives you the right to lay those kinds of accusations on people you don’t even know?

[tthomas48]

I’m curious if proponents of the ordinance have addresses that were scraped and built in the year before the ordinance was enacted. From what I can tell from looking at data the ordinance has had no impact at all, although I’d like to find my mistake if I’ve made one.

[clay]

I’d be happy to double-check your data. My firsthand experience is that the stealth dorms that are of concern in our neighborhood, at least, have stopped being built. But I’d also like to find my mistake if I’m wrong.

[tthomas48]

Well the problem is that it’s an absence of data. I need addresses that you would consider stealth dorms.
Probably just one or two would work.

[mdahmus]

Clay,

Read the whole thread. I am under no obligation to pretend to be fooled by you when you are so transparently disingenous.

I remember you being part of the opposition to the VMU at the Endeavor site. Correct me if I’m wrong there.

The [sic] for “stealth dorm” is because I, like many others here, do not agree with the characterization of these buildings in that manner.

It’s dishonest to claim to be in favor of preserving affordable housing when you have obstructed attempts to add more housing supply in the neighborhood.

[noah]

@clay, I don’t mean this pejoratively: “preserve affordable housing” is an economic oxymoron. You don’t reduce demand or increase supply by imposing on occupancy limit. Unless you expect occupancy limits to somehow make Austin so undesirable a place to live that immigration stops and people start leaving town, it must be making the problem worse. The rents in your neighborhood have to increase as more people try to find housing: someone who wants to live in your neighborhood with more available money than the current occupants will come along and, as long as there isn’t any other housing available, will offer more on an older house. There goes your affordability.

That’s my understanding of the situation. Can you explain how an occupancy limit is helping keep housing affordable in your neighborhood?

[clay]

@Noah, I also don’t mean this pejoratively, but I believe I already explained that. But I’ll go again. The income potential of renting a cheaply built house to 6+ college students has proven to be too compelling for developers to pass up. Therefore, when a modest older home (such as the one I live in) goes on the market, those developers outbid all other buyers, tear down the house, and build a stealth dorm. This is not theoretical; I’ve seen it happen dozens of times with my own eyes. That results in the loss of an affordable family home in the neighborhood. The forces that (theoretically) keep student housing prices in this neighborhood a little lower are the same ones that make it more difficult for a young family to buy an old fixer-upper and lay down roots in the neighborhood.

So, if the choice is between a house that’s affordable for a family of 4 to buy and live in, with maybe one or two renters in a garage apartment, versus a never-ending, transient stream of college students, I, and many of my neighbors, would choose the former every time. Instead of the profits from the real estate going to some out of town institutional investor who does the bare minimum to maintain the house, they benefit the family who owns and lives in the house. I know it sounds kind of corny and old-fashioned, but there is still a little hope for middle class homeownership in Central Austin, as long as we don’t give everything away to the investors and developers by letting them build de-facto boarding houses with no restraints.

When the limits were reduced to 4, the stealth dorms stopped being built. Original houses were still demolished or remodeled to the studs, but instead of stealth dorms, developers built projects that both increased density AND encouraged families to live here. A 3-4 bedroom house up front, with a 1-2 br. garage apartment in back is the typical type of project that’s now being built in this neighborhood. Many of them are still an awkward fit with the character of the neighborhood, but at least they aren’t stealth dorms.

[clay]

Even though it pains me to respond to this kind of ugliness, I will. Yes, I opposed granting a variance for an apartment complex, along with a majority of my neighborhood association. As designed, it was a bad proposition for the site, and we wanted to developers to make some changes. The developers would not work with us, so the project failed. You’ll be happy to know that another, almost-as-large, apartment complex has risen there anyway. I didn’t oppose that one at all, because it was built within the limits.

With all due respect, your logic is dubious. Would you say that it’s dishonest to, say, be in favor of providing meals to the homeless even though the past you tried to stop an unscrupulous vendor from feeding them rotten meat?

[rickyhennessy]

@clay Many neighborhood activists claim to be in favor of affordable housing and additional density within their neighborhoods, but then when it comes down to it they always fight it for one reason or another. It’s either too big, or doesn’t fit the character of the area, or isn’t affordable enough, or the developer stands to make too much profit (the horror!), or will somehow cause massive amounts of traffic and flooding. So what happens is the developers just build what’s already permitted. And you don’t get credit for not opposing a development that was already allowed under current zoning.

What really needs to happen is a change in zoning that allows small multifamily and other types of missing middle housing to be a permitted WITHIN our neighborhoods. That way developers can just build the housing that we need with out having to spend $10s of thousands fighting the neighborhood.

[cevangill]

I am not sure if I agree with the “preserve existing affordable housing” rhetoric. According to this recent AISD demographics report, 92% of two bedroom housing options in Austin are unaffordable for a family making $58,000 (which, last time I checked, is a solidly middle-class salary.) We are not gonna bring middle class families back into our central neighborhoods by freezing the housing stock as is. Of course, older, smaller homes will be less expensive than newer, larger homes in the same neighborhood, but this doesn’t make them affordable for most people. Additionally, if we remove the option for developers to build (relatively cheap) homes designed to house multiple young adults, developers are likely to replace older homes with ultra high-end single-family homes. This is hardly an ideal outcome either.

Given that the “affordability” argument, I think, is a bit spurious, I am worried that we are trying to reign in bad behavior by taking away housing options from young adults. It’s like a teacher punishing the whole class because of misbehavior by two or three students. Better enforcement seems like a better solution. Fine people for leaving their garbage out or parking illegally or public intoxication. Don’t treat a broken finger by chopping off the whole arm. I’ve lived in various housing arrangements with multiple other young adults to save money, and I have always striven to be a good neighbor.

Of course occupancy limits are not the real driver of our housing crunch. The lack of true neighborhood-scale multifamily options, such as fourplexes, rowhouses, and small-lot cottages - which tend to be more affordable than single-family options, even for new-builds, is what we should be addressing. The occupancy limit debate is a bit of a distraction in my opinion.

http://www.austinisd.org/sites/default/files/dept/default/docs/AISD_Demographic_Study_Dec_16_2015.pdf

[clay]

@rickyhennessy Yes, and many friends of developers like to try to shame people for caring about the details of how their neighborhoods develop. If you are so worried about the high cost to developers of “fighting the neighborhood,” then how can you in good conscience call this group “Friends of Austin Neighborhoods”? So far, all I’m seeing is a ton of passionate anti-neighborhood sentiment. Not exactly what I was expecting.

Do you have anything to say in response to my arguments about stealth dorms, or would you prefer to just keep making sideways attacks on my character?

And I can tell you exactly why neighborhood activists always fight bad projects: because they are Neighborhood Activists. They act on behalf of neighborhoods. Why should this be surprising? Why should neighborhoods ignore traffic and flooding concerns? Why should we sell out the character of the area without some debate? As for developer profits, I haven’t seen any sane person using that as a reason to oppose a project. But it does help to clarify the economics at play. Developers are motivated by profit. That’s not a dig, just the reality of capitalism. It doesn’t hurt to remind people of this fact every once in a while.

[clay]

@cevangill Just to clarify, nobody is trying to “freeze the housing stock as is.” The goal is to discourage a specific type of housing stock from being built: stealth dorms. That’s it. How is replacing a relatively affordable (even if not affordable to a $58,000 household) single family home with student housing helping families? It’s just pushing them out into the suburbs.