Ann Kitchen Has Concerns.

Housing gets added one project at a time. Here's how that goes wrong.

Welcome to The Experiment, where we are choosing not to contribute to the discourse over Dave Chappelle’s incarnation as an unfunny anti-social critic… Shoot. Let’s try that again. Welcome to The Experiment, where we are not contributing to the discourse about the advisability of paternity leave and the domestic utility of menfolk. This week Jack Hughes examines talk of Meghan Markle’s presidential ambitions, and I look at a rezoning issue to show why Austin is having such a hard time adding housing despite record-breaking demand.

As always, we offer things to do (take five-minute vacations), read (this poem that changed my life), and listen to (Danny Brown’s Atrocity Exhibition). Usually, we offer things to watch, but this week I tried watching The Boys on Amazon Prime, and those of you who recommended it are getting coal in your stockings for Christmas.

But first, have you ever wondered why they don’t build enough housing in Austin?

When I worked for the Mayor, the housing department brought us a plan. Housing prices were going up because people kept moving to Austin. Some people wanted us to discourage growth, but we couldn’t figure out a way to make Austin so uncool that people would stop coming here, and we weren’t sure that destroying the village in order to save it was the right policy solution. The housing folks had what for government was a surprisingly apt market solution to increasing demand: increase supply.

The problems with not enough housing starts from opposite directions and crashes in the middle. If there aren’t enough houses for rich people looking for $1 million-dollar houses, they don’t just text their real estate agent a shrug emoji and call it a day. They drop down into the next-lowest price bracket and compete for housing against slightly less-wealthy buyers. They get outbid, which forces them down into the middle class where they buy up the $500,000 houses and so on and so on until people living paycheck to paycheck miss a paycheck and end up in a tent in a freeway underpass.

Meanwhile, those at the bottom of the housing food chain have to spend an increasing portion of their household budgets to stay in housing that is in short supply. If there aren’t enough subsidized apartments (and there are most definitely not enough), they end up spending half their rent on a market-rate apartment. At scale, the working class of Austin overspends on rent, which pushes the compounded effects of rising demand and falling supply into the lower-middle class.

What if, the housing department suggested, Austin built more housing? They estimated that if we added 135,000 more housing units (including 60,000 affordable, subsidized units) in metro Austin all over the city and in every price range, supply might meet demand, and prices could stabilize. After we got done congratulating ourselves on our mastery of basic concepts of economics and a new grasp of the obvious (“More housing, you say? It’s so crazy it just might work!”), we had the lawyers type it up.

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This isn’t a real estate market; it’s surge pricing.

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In 2017, the council took up the Austin Strategic Housing Plan, which included 50 suggestions to increase the housing supply. One of which was “allow[ing] developers to add height to buildings in certain neighborhoods in exchange for providing affordable housing.” And by “certain neighborhoods” it was understood that they were referring to what policymakers call “activity centers and transit corridors.” Basically, we’re talking about busy streets with lots of bus routes and commerce.

Generally, the rest of the council made thoughtful facial expressions while generally agreeing that Economics 101 probably applied to housing supply. Everyone knew Austin would continue to grow, and we needed 135,000 more housing units just to keep pace. (One council member, whom I won’t name because doing so could be considered unkind, suggested that supply and demand didn’t apply to housing because developers earned profits. I wish I were making this up.)

Right before they passed it, though, Council Member Ann Kitchen, who represents the well-to-do Zilker neighborhood just south of the river, raised an objection. If they called it a plan, people might think they were really going to do all these things and then they would be obligated to actually do them. So they changed the name to the Austin Strategic Blueprint, and she voted for it.

Things have shifted since then. Subsequent elections have bolstered the anti-growth votes on the Council. Austin, heedless to political realities, has grown ever more. And then Joe Rogan, Elon Musk, and Oracle moved to town, and things went absolutely ghatdamned bonkers. In the first half of 2021, the average sales price of a house in Austin rose $100,000. In August, the average price of a home in the five-county area rose 34.7 percent from the previous year. Buying a house means trying to out-bid rivals with offers as much as six figures over asking. One friend has lost bids on 53 houses. Meanwhile, rents rose 20% since last year. They say rents have never risen this fast in Austin. This isn’t a real estate market; it’s surge pricing.

With ride sharing, the point of surge pricing is to attract more drivers into service. In real estate, skyrocketing demand should incentivize a corresponding increase in housing supply, especially since the Council set themselves a serious, we’re-not-kidding goal of adding 135,000 housing units by 2028. Unfortunately, so far this whole thing has been a miserable failure. Not a single Council district met its goal for adding affordable housing for 2020. Of the 60,000 affordable housing units promised by 2028, a little more than 7,000 have been built, 588 of them in Kitchen’s District 5. Thank Christ they didn’t call it a plan.

Cities don’t add housing at scale. It’s house-to-house combat. Every plot of land is argued over in a way that disproportionately favors the neighborhood’s interests over that of the city, which represents not just the homeowners but the majority that rents as well. A well-planned city accounts for future residents who will need housing and how they might affect current neighborhoods where residents now evaluate opportunities to add housing by how it will affect their home’s value. Austin doesn’t add housing at scale because thousands of homeowners are sitting on winning lottery tickets, complaining about the windfall property taxes, inveighing against change that has only profited them because they fear the opposite will happen.

Perhaps nowhere is this more true than in the Zilker neighborhood, where a developer wants to turn a corner on a busy street where there is now a 7-11 and a donut-themed restaurant into a mixed-use housing project that would add 450 new housing units, including 46 affordable ones at no cost to the city. That might not seem like a lot of affordable housing, but 46 apartments represents 10 percent of the city’s annual goal for Kitchen’s district in a single project. Also, three of the city’s top 10 bus routes go by that property, which is something that you’d think would be particularly attractive to Kitchen, who also sits on the board of the transit authority.

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Austin doesn’t add housing at scale because thousands of homeowners are sitting on winning lottery tickets, complaining about the windfall property taxes, inveighing against change that has only profited them because they fear the opposite will happen.

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There’s just one problem: To build this project, they need to go 90 feet into the sky, and current zoning only allows them to go up 60 feet. That’s a tough pill for the neighborhood to swallow. The Zilker Neighborhood Association “considers [the 60-foot limit] vital to the preservation of the quality of life and residential character of the entire area.” That’s why they added the affordable housing, to give the Council an incentive to approve the necessary rezoning. And to make sure no one backs out of the deal, all parties have entered into restrictive covenants that would legally enforce the affordable housing provisions, and they’ve hired a subsidiary of Habitat for Humanity to audit them.

That, says Kitchen, concerns her. If they abided by current zoning (and the 60-foot limit), they would run the deal through the city, which would audit the affordable housing in the project. She is less inclined to look favorably upon legally binding agreements between private parties, which I’m sure is her real reason for not being super excited about allowing a housing project to build 30 more feet into the sky so 46 new affordable housing units can be created literally out of thin air (and, one assumes, some two-by-fours).

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New affordable housing units can be created literally out of thin air.

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Still, one thing is puzzling: Kitchen didn’t raise a peep for a deal on the exact same terms to turn The Local Post Pub into a 360-unit apartment building with 36 affordable units. Same private restrictive covenants, same 90 feet into the sky, same lobbyist, even. And it’s on a busy transit corridor, but this one is in north Austin. Not in her backyard, as it were, so the Council passed it this summer. It was so uncontroversial that they didn’t even bother to take a separate roll call vote.

The Council advanced the zoning change in Kitchen’s district, and in November it comes up for Second Reading. If it passes, the zoning change goes to Third Reading. But if Kitchen is very concerned and wants the matter sent back in search of a mythical better deal (as she’s done before), enough of her colleagues might go along with her. She’s term-limited and will only be on the Council for another year, but she’s likely to be replaced by someone else whose political base profits by limiting housing supply.

Housing does not get added in a city at scale, but scarcity does. When prices rise, they don’t just rise for one house but for a whole market. And when a deal like this one gets stuck, it’s not just 46 families who don’t get rent relief but an entire city that continues to spend too much on rent. The political incentives to make progress for people against a horrifying housing market always trip up over the concerns of the people who have already won. I have, as you might expect, concerns.

This is Item 56 on the November 4 agenda for the Austin City Council. I have no dog in this fight other than wanting our city councilors to aggressively add more housing like it’s their job, because it is. I haven’t talked to the Mayor about this, for the record, nor any of my friends who still work at City Hall. If you would like to contact them, however, you should. There is even a website where you can do just that.

Jason Stanford is the co-author of NYT-best selling Forget the Alamo: The Rise and Fall of an American Myth. His bylines have appeared in the Washington Post, Time, and Texas Monthly, among others. He works at the Austin Independent School District as Chief of Communications and Community Engagement, though he would want to point out that these are his personal opinions and his alone, but you already knew that. Follow him on Twitter @JasStanford.

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Más

Sussexion Redux

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How we’re getting through this

Learning about “key art”

Taking 5-minute vacations

Quantifying managerial stress

Learning about the “truth effect”

Forgetting the Alamo on Kudzu Vine

Forgetting the Alamo in The Times of London

Forgetting the Alamo in the Wall Street Journal

Forgetting the Alamo at the Texas Book Festival

Talking about Ted Lasso’s “Mature Pixie Dream Boy”

Forgetting the Alamo with expats in San Miguel de Allende

Forgetting the Alamo with the San Miguel Literary Sala (password: LSALA)

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What I’m reading

Rebecca Alter: “I Can Confirm Megan Thee Stallion’s Popeyes Hottie Sauce Is Elite Brand Synergy” - Smart take on a dumb subject.

When Popeyes announced that they were collaborating with Megan Thee Stallion on a new Hottie Sauce and Hottie Meals, it made perfect sense and the hotties rejoiced. Two heavyweights of the American South, beloved in their respective domains, combining forces. And unlike some celebrity fast-food collaborations that feel haphazard or tossed off, the announcement included an unprecedented detail: Meg would also become a franchise owner of five Popeyes establishments. That’s commitment.

Glen Bensinger: “The Rideshare Bubble Bursts” - I told you so.

The researchers at Carnegie Mellon estimated that driving without a passenger leads to a roughly 20 percent overall increase in fuel consumption and greenhouse gas emissions compared with trips made by personal vehicles.

Jack Gilbert: “Failing and Flying” - The first line of this poem changed my life.

Everyone forgets that Icarus also flew.

Glen Weldon: “Superman's son comes out as bisexual in a new comic. It's a big deal — sort of” - In which Weldon introduces a taxonomy of gay superheroes.

The obvious question, then: Which major DC hero is gonna be the next one to get an off-shoot queer version of themselves?

If the question is obvious, the answer is even moreso: Wonder Woman.

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What I’m listening to

Got some sad news at work this week. A dear colleague is moving on, and I didn’t feel right until I played this album while driving into work. Ladies and gentlemen, the healing properties of Ted Hawkins.

Thanks to James Acaster’s podcast Perfect Sounds for turning me onto Danny Brown’s Atrocity Exhibition. Pitchfork gave it an 8.5. I’m adding “Ain’t It Funny” to the songlist.

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