What comes after NEXT?

Last month, the Austin City Council approved a resolution ending a controversial process to rewrite the city’s land use regulations, a project known as CodeNEXT. This week, Strong Towns is examining issues surrounding land development regulations in Austin and the CodeNEXT process. Read Part 1, Part 2, Part 3 and Part 4 of the series here. This piece from our President, Chuck Marohn, rounds it out.

Want to keep talking about this? On October 4 and 5, Strong Towns is hosting a Regional Gathering in Plano, Texas. Space is limited, but, as of today, tickets are still available.

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The city of Austin has an approach to growth and development that is broken. We’ve called it a toxic soup of perverse incentives, the underlying notion of which is an attempt to overcome long-term insolvency by speeding up growth. That trick is becoming more and more difficult to pull off as the side-effects—stifling traffic congestion, unaffordable housing, underfunded government liabilities—continue to accelerate. People are being hurt in ways that increasingly can’t be ignored. Austin’s leadership understands that change is needed.

CodeNEXT was an attempt to address the symptoms of this approach to growth, to harness the key feature of post-World War II development patterns—the efficiency of replication—and direct it towards different ends. It offered a grand bargain: business as usual in some areas, radical change in others—as a way to thread the needle. This was a bargain the public was ultimately unwilling to accept.

So CodeNEXT didn’t work. What comes after next?

That’s going to be up to the people of Austin, but we think any discussion needs to start with a rejection of two of the underlying premises that, up to this point, have been unassailable.

Premise #1: New growth can continue, specifically on the periphery, regardless of the negative long-term financial consequences to taxpayers.

Premise #2: Some neighborhoods can persist indefinitely without experiencing any change.

If the city continues to grow in a way that is financially insolvent, there is no way for them to avoid insolvency and all the hardship that comes along with it. This is Strong Towns 101, and it’s one of the key insights I shared in the Austin city council chambers when I was invited to speak there two years ago (see video).

Austinites also need to reach an understanding of what it means to live in a city. Unlike a suburb, where homeowners are paying for stasis—at least that is what what the marketing materials sell, up until the reality of decline takes hold—in a city, you are ostensibly buying into a dynamic ecosystem, one that must evolve over time if it is to survive and thrive.

A New Grand Bargain

Whatever comes after CodeNEXT, it must include a new grand bargain, one that acknowledges the legitimate concerns of NIMBY and YIMBY, social justice advocate and developer, commuter and transit rider, while also balancing those concerns with our shared responsibilities as a citizens who depend on one another. A Strong Towns grand bargain would start with these understandings:

Premise #1: No neighborhood should be exempted from change.

Premise #2: No neighborhood should experience radical change.

Every neighborhood must be open to a natural evolution over time, an incremental shifting and changing of circumstances to accommodate the needs of the next generation of Austin residents. This is imperative; no neighborhood can be exempt. Yet no neighborhood should undergo a large leap of radical change either. Residents should have some assurance that when they invest in a neighborhood, the future they are buying into is stable. We need to assure them that the degree of change they experience won’t dislocate them overnight, or suddenly make their neighborhood—with all the deep social and cultural bonds that go with it—unrecognizable to them.

Every neighborhood must be allowed to develop to the next level of intensity, by right. This means that someone wanting to turn their single family home into a duplex must be able to acquire a permit, right now, without the need for public hearings, lengthy review processes, or any special approvals. Ideally, someone would be able to walk into city hall at 9:00 AM with a completed set of submissions and walk out by noon with a permit. Very simple.

A neighborhood of duplexes should be able to convert to quad units. A neighborhood of quads to row houses or small apartment buildings. And on and on. Obviously there is nuance here—after all, neighborhoods developing incrementally won’t phase shift all at once—but the basic concept is fairly straightforward. Incremental development, everywhere, continuously.

Some neighborhoods will not accept this. I believe the grand bargain requires them to, but if concessions must be made to certain constituencies, I would tie those concessions to the capital improvements budget. Austin is already having to triage basic maintenance, putting off the routine upkeep and replacement of essential infrastructure—in this way, they’re not all that unlike more visibly struggling cities like Detroit. If a neighborhood doesn’t buy into the grand bargain, they should go to the bottom of that triage list. The taxpayers of Austin should not be diverting their collective wealth from neighborhoods that are increasing in financial productivity to those that refuse to do so. There aren’t enough resources for the city to make such poor investments.

Developers will argue that this is not efficient, that acquisition and redevelopment costs make incremental development impractical. Under the current code, they would be right. But eventually, a new regulatory approach is going to reset the board. Land prices will come down, likely dramatically, to be in line with what is justified by a more incremental development approach. The ratio of improvement value to land value will start to behave in normal ways, meaning that when neighborhoods improve and underlying land prices go up, it prompts a gradual redevelopment to a higher intensity (a.k.a. not demolition and McMansion construction). Getting land prices right will make the market more dynamic and responsive.

Some are going to suggest that an incremental approach won’t scale to the size of the problem Austin faces. I’d argue that as soon as they make that claim, they lose credibility, since it is proven that the current approach also doesn’t scale. Even so, it is a valid criticism in the sense that many of Austin’s current developers are not well-suited to do incremental work. That doesn’t mean the approach is wrong; it means Austin needs a crop of new developers. They are out there, and spending the resources to cultivate them will be time well spent. They will be the lifeblood of the neighborhood ecosystems you are creating.

Others will suggest that there is no place for towers in this vision, and that because towers and condo units are part of Austin’s fabric—and, historically, part of their economic success—the city needs more of them. We agree. There are plenty of neighborhoods that have towers and condos now where towers and condos on the adjacent properties would be the next increment of intensity. Go build them! Just don’t put them in the middle of single family neighborhoods—those should go through a duplex phase first—or any other places where they are not the next level of intensity.

Finally, there will be those that suggest that a duplex in their single-family neighborhood is de-facto not compatible because it’s going to be ugly, bulky, and not scaled right. That’s not true. The thing that CodeNEXT did incredibly well—because it was put together by some genius people—was to shift the regulatory burden from standard bulk and use requirements to form. Said another way: CodeNEXT has some amazing provisions designed to keep new development compatible with existing development. You already put that in there; just keep it.

Stop the Bleeding

Along with allowing all the city’s neighborhoods to breathe and adapt to change, Austin must deal with the other incompatible premise: that it’s okay to add negative-returning new developments to the city’s inventory. This practice has to stop. It’s not a suggestion—it’s an emergency.

While’ we’re cognizant (and respectful) of Texas values and aware of the regulatory environment in Austin, we recommend adapting an approach similar to that of Fate, Texas. There they specify, as part of their development process, a minimum amount of private investment per each dollar of public liability assumed. It is their way of ensuring there will be enough tax base—in perpetuity—to meet the infrastructure maintenance obligations they are assuming when they take on new developments. Not just through the next election cycle, or until the current city planners have moved on to new jobs. Forever.

We would suggest that Austin add to this a real return-on-investment (ROI) analysis every time they approve a new development. For example, annualize the cost of maintaining and replacing the streets the project will need. That’s your cost, a basic engineering math problem the staff there can perform. Now calculate how much tax revenue you are going to get from the development and what percentage of that will go towards that annual road maintenance bill. That final number is your revenue. If revenues don’t exceed expenses, you don’t approve the development. This analysis can be performed in all major categories of expense.

The complaint Austin will get is that this will squash new development, that the city will be destroying the ability for developers to meet the demand for new, single family homes. Here’s how I would respond:

The city, as steward of the public purse, will not make new financial promises for maintenance and upkeep where, in order to keep those promises, they will have to raise taxes and/or cut services for current taxpayers. The CEO and Board of Directors (mayor and city council) of the municipal corporation known as the city of Austin are in a position to only take on new developments that add to the overall prosperity and financial security of the city. That’s a responsibility to shareholders (residents) and it’s not negotiable.

I’ll also note the ridiculousness of suggesting that there is a lack of single-family home inventory in the Austin metropolitan region. There might be a lack of home inventory, but when the market is almost exclusively single-family, it’s not a lack of that particular housing type that is the problem.

Minor Tweaks and Notes

Once we get to a new grand bargain, there is a lot to like about the actual CodeNEXT document that should be adapted to a new approach. There are two really important features to point out.

First, part of dealing with the congestion problem is absorbing trips within neighborhoods. The city has a hierarchical road and street network, which acts like a funnel channeling traffic to congestion points, much like a watershed collects water and brings it to the river. The way we deal with flooding in a river system during a rain event is to retain the water on site, to absorb it before it becomes part of a downstream flood. Traffic works in this same way. Absorbing those trips into the neighborhood is the only way to address Austin’s congestion problems, especially given their budget constraints.

This means creating alternatives for daily needs within neighborhoods. Things such as corner grocers, restaurants and coffee shops, dry cleaners, accountant’s offices, all need to be allowed within our existing neighborhoods as part of an incremental growth strategy. CodeNEXT did a great job of clustering these at nodes and ensuring their design was compatible with the surrounding neighborhood. Adapt that language to a more incremental approach.

Doing this will not only help with congestion. It will help create a positive feedback loop. This is basic economics: congestion creates demand for local alternatives. When the market responds to that demand by creating those alternatives, it improves quality of life in the neighborhood. This, in turn, creates more demand for living in the neighborhood. More people make commercial enterprises more viable. It feeds itself in a positive way, which is what a good neighborhood is supposed to do.

Second: Austin, just abolish your parking requirements already. Everyone who has ever advised the city of Austin on any land use issue has made this recommendation. Pretending you know how much parking should go where is ridiculous, and continuing to persist based on the fear that someone may have a hard time finding parking is retrograde.

Because you know what? Hopefully people do have a hard time finding a place to park because there’s so much amazing building going on that parking is just not the most valuable use of space. Then what? People have to walk, bike or take a bus? Oh, the humanity!

This week I’ve heard people complain that Austin residents can’t walk because it gets hot there. Come visit me here in Minnesota in February and we’ll walk downtown for a coffee. People have been relatively prosperous walking places for tens of thousands of years; I don’t believe we’ve somehow weakened to where this is a burden too difficult to overcome. And if it is, some people will build more parking and other people will pay them what it actually costs to use it, without devoting endless public dollars to a non-productive land use. Problem solved.

Austin, we love you. We have a lot of members and a ton of readers there. So many of you provided some great insights as we’ve prepared for this discussion and many more have contributed throughout the week. We are saddened that you’ve struggled with this next phase of your evolution, but we’re confident you’ll figure it out. Keep working to make a Strong Austin.

Top image from Ed Schipul via Creative Commons.

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