Austin’s Density Bonus is Popular With Residential Developers

Austin gave developers the chance to go higher in an effort to add affordability to the city, and it’s proving to be a popular tactic.

The city’s Density Bonus 90 zoning program allows residential buildings to reach heights of up to 90 feet — 30 feet taller than previously permitted — if developers commit to including affordable housing in their projects, the Austin Business Journal reported.

The response from developers has been enthusiastic since the program took effect in February, with 56 applications submitted as of mid-October and 29 approvals covering 125 acres.

“It’s unlocking additional properties that couldn’t previously achieve the necessary density,” said Chris Affinito, managing partner at Notional Development Partners, which specializes in urban workforce housing. “It’s taking some of those properties and incentivizing development of mixed-use over just pure commercial use.”

Under the guidelines, developers of for-sale residential projects must set aside 12 percent of units as affordable for households earning 80 percent or less of the median family income, or pay a fee instead. For rental projects, the requirements shift to 12 percent for households earning 60 percent of the median income, or 10 percent for those at 50 percent MFI. The guidelines replaced an earlier initiative, which faced legal challenges and was ultimately invalidated.

The program is especially appealing in submarkets near downtown where developers can command higher prices, said William Sayers, vice president of real estate development for Intracorp. Intracorp took the density deal for Leland South Congress, a 270-unit condominium project at 2105 South Congress Avenue, set to include 23,000 square feet of retail space.

Austin Planning Commission member Greg Anderson, cautioned that rezoning for the bonus could delay housing delivery.

“It takes six months to a year, and however much investment from every applicant, to get the rezoning,” said Anderson, who also serves as director of community affairs for Austin Habitat for Humanity.

Some city officials express reservations about its implications for the community, particularly concerning building heights in less dense neighborhoods.

“In some areas, 90 feet is just too much,” said council member Mackenzie Kelly, who has said she intends to recuse herself from voting on requests for the zoning.

Instead, she advocates for the creation of zoning options that would offer developers flexibility without overwhelming existing neighborhoods.

— Andrew Terrell