City Council Ponders Fate of East Austin Development

City Council is considering two proposals today, each of which will substantially impact the future development of East Austin. One is a proposal, which we discussed last month, to tighten the McMansion restrictions on the smallest lots in East Austin (items 45 and 46 on the agenda). That proposal has run into opposition from the owners of those lots, including East Austin native, former Dallas Cowboy and lottery winner Thomas"Hollywood" Henderson.

The other proposal before the dais today would revise the zoning regulations on East 12th Street along the lines of the recent revisions to the zoning regulations on East 11th Street (item 44 on the agenda). The new regulations would apply between I-35 an Poquito St. and would generally allow for mid-rise construction along 12th Street. If you've been paying attention, you may remember that mid-rise construction is one of the things ROMA recommended in the recently released initial draft Downtown Plan as a method to create affordable housing. This part of East 12th is just outside of the area covered by the Downtown Plan, but similar considerations apply regarding the lower construction costs of mid-rise buildings. Local business owners, the Austin Revitalization Authority, the Urban Renewal Board and the city Planning Commission have all endorsed the plan, but it is running into opposition from OCEAN and the Guadalupe Neighborhood Development Corp. (the same groups pushing the proposal to tighten the McMansion restrictions), who appear to be primarily concerned with restricting development in order to maximize existing property values.

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By Shawn Shillington in News on January 17, 2008 10:53 AM 0 Comments

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heyzeus

It also makes the renovation of houses on these small lots and the addition of living space, including garage apartments, far less likely.

AC

Right. Put differently, large lots won't see any change in their entitlements while small lots will.

That theoretically could increase the value of large lots in absolute terms, not just relative to the small lots. For example, if the typical buyer wants a 2300 sq ft house, she'll have fewer lots to choose from, and might bid up the price of a larger lot. This is pretty speculative since there are other options in nearby neighborhoods, and the reduction in supply might not be enough to affect prices.

But this change absolutely will make small lots less valuable, both in absolute terms and relative to large lots.

Shawn Shillington

Kenneth, the McMansion ordinance already applies to all of the houses in this area. The proposal is to modify the McMansion ordinance so that owners of lots under 5,750 square feet would be more restricted about what they could build on their lots than they are now. They can currently build up to 2,300 square feet. The proposal would limit them to 40% of their lot size.

kenneth1

No, the McMansion ordinance makes lot size directly relevant to lot value.

Well, yes large lots will always be more valuable than small lots in the same block. But it's self-contradictory to say a McMansion ordinance will increase large-lot values & decrease small-lot ones. The relative impact would be the same within a given neighborhood.

As I stated before, smaller houses would increase in value if everyone else on the block tears theirs down to build McMansions. You always want to have the smallest house on the block.

AC

I should add that we're talking about SF-zoned lots. You can't tear down the houses and put up apartments without a zoning change.

AC

No, the McMansion ordinance makes lot size directly relevant to lot value. A lot with an entitlement to a 2300 sq ft house is a whole lot more valuable than a lot with an entitlement to a 1600 sq ft house. OCEAN's asking the council to reduce the entitlements on hundreds of small lots in Central East Austin. That will reduce their value. It may or may not increase the value of larger lots, depending on substitutes in other neighborhoods, etc.

I agree that without the McMansion ordinance, lot prices would not vary "significantly" by size within the same neighborhood, all else being equal. (I guess that's vague enough to automatically be true.)

kenneth1

They don't directly address the impact on housing prices, but I think it is reasonably clear in this case - it increases the values of large lots and decreases the values of small lots.

Lot size is irrelevant in rezoning. Anytime you lower the restrictions on development (e.g. from single-family to multi-family or residential to commercial) it increases property values within that block. That's because you're allowing for more development options, which real-estate folks love.

In the case of small lots, they just buy up three or four within a block, knock down the little 2-BR frame houses and build apartments. Hence, the lots are still worth more. You're right that restricting McMansions will decrease property values (like "Hollywood's") because of the adage you always want to be the smallest house in the neighborhood.

Shawn Shillington

Regarding the 12th Street proposal, the Statesman indicated that OCEAN said "waiving compatibility standards means less protection for surrounding single-family property owners", which I took to mean that his concerns were similar to those of Mark Rogers, who said he was concerned that the proposals would "make it a less desirable place to live." I understand both of these to mean that they are concerned that this development would reduce nearby single-family property values, although they are not saying it directly. I'm also not sure they would be right - I think the impacts on property values are complicated. OCEAN did mention affordable housing, but I think he meant government-sponsored, artificially sub-market housing, as opposed to a market driven reduction in housing prices created by increased supply.

On the lot-size ordinance, the stated goal is to "preserve the existing character" and "housing stock" of the neighborhood. They don't directly address the impact on housing prices, but I think it is reasonably clear in this case - it increases the values of large lots and decreases the values of small lots.

I agree that these are interesting proposals, and probably signal whether East Austin will move towards becoming a high-end single family neighborhood (like West Austin and South Austin) or a dense and diverse neighborhood (unlike anywhere else in Austin). I think it is pretty clear that East Austin is not going back to the way it was 10 years ago.

heyzeus

Isn't OCEAN claiming that its position (on both the lot size ordinance and the 12th street district) is to minimize increases in property values, which it claims forces out long time residents?

Two proposals to city council - one will increase the likelihood of redevelopment and added density, one will decrease it. We'll see where they go.