Note: Since these log files are derived from the Closed Captions created during the Channel 6 live cablecasts, there are occasional spelling and grammatical errors. These Closed Caption logs are not official records of Council Meetings and cannot be relied on for official purposes. For official records, please contact the City Clerk at 974-2210.
Good morning. A quorum is present so I'll call this work session of the austin city council to order on tuesday, december 6, 2011 at for the meeting of the board and commission room, austin city hall, 31 west 2nd street, austin, texas. So, council, if there's no objection, we'll go into executive session first. And discuss one item. 07, one of the government codes, the city council will consult with legal council regarding the following item, d-1, discuss issues related to the regulations applicable to one world theatre under section 235. Is there an objection to go to executive session on this item? Hearing none, the council will now go to executive session.
Do we want focus this retreat on budget issues or do we want to focus the retreat on a council priorities for the next year, both individually and collectively? Or or both or something else?
I think first name basis, right? I think that the members and i are were talking about this yesterday. I think he agrees that having two or three items that are big issues will be a bert use of our time than looking at a whole bunch of other stuff. We fritter away our time and we don't accomplish nearly as much.
I guess how do we want to accomplish -- how do we want to -- do we want to submit, have individual councilmembers submit items to the staff or do we want to discuss it again in a subsequent work session? Where we can submit it.
Submitting to staff is someone thing. Its's our retreat more than it is the staff's retreat. We should decide what we want to talk about.
We can bring it at the next council work session and have individual members suggest topics for discussion. But we could go ahead today and talk about location. That seems to be a simple subject. Anyone have any ideas? I'll throw one out and say here.
I would support that. I would support you on the "here" at city hall.
Any other suggestions? We'll plan on having it here?
We put in an argument not sure I'd argue against having it here. We should suggest some place else. If we do it here, it's just another work session that might go on all day not sure how productive that would be even how we get dragging after 12:00. But if we go some place else with a fresh location, a little further away from our usual offices, we might be able to accomplish more stuff if we have the right agenda.
Has to be a posted meeting open to the public. First the issue is going somewhere else which we did last time we had a council retreat, i think about five or six years ago, then the -- you start to have to talk about cost issues.
What does it cost to rent a venue. What does it cost to transport necessary staff and other facilitators, perhaps. Do we want to have a facilitator for this work snegs.
You can do.
Not that you can't come.
Now that you mention it.
Posted as a public meeting. There might be expense issues that come up.
We had a retreat in '97. This is ancient history. It opens the envelope. The conference certainty at bastrop, it was outside of the city of austin. There was a controversy about whether it was appropriate for the councilmembers to have a meeting outside of austin. We had a different kind of a conversation that we would have had had we just done it in city hall or certainly the old city hall or some place else closer to home.
Do you want to say something?
Tovo: I think it would be nice if it's not exorbitant. It would be nice to be outside of city hall. Does it need to be televised?
Mayor Leffingwell: I don't think it needs to be televised. Could be but most likely not televised live but perhaps videotaped. It would have to be audio taped for sure at a minimum.
Tovo: I guess I'm wondering if we can do it in the city facility like like the mack because of parking and I'm not sure what the costs would be if we need to pay to rent that venue.
Mayor Leffingwell: Anyone know the answer to that question?
Tovo: Good shot at a theater.
Mayor Leffingwell: Would we have to pay to use the mack?
Cole: I was thiling of --
Mayor Leffingwell: Speak up, yes or no?
Cole: I'm sorry. I was thinking about the botanical gardens.
Mayor Leffingwell: That's a good suggestion too. That would be a good cost alternative.
Spelman: That's fine. I want to throw out there wherever weland on this we take into consideration things like public transportation so that citizens can still be able to access the meeting if they want to attend. And parking as well.
One comment I would like to make is we think about topics and talk about that again just the fact that one step further and that is just think about for me think about what's the goal of the retreat? And what do we really want to get out of it beyond, you know, the specific topics and I'm not -- I haven't formulated that myself.
Mayor Leffingwell: I think the original goal, and the idea -- the reason I called on you, bill, was because it was your idea as I recall, was it not?
Mayor Leffingwell: And it was to -- it was to begin a discussion about an early discussion about budget issues prior to the time when before as staff is beginning to formulate their proposal for the budget. So that would certainly be one thing. But I remember last time we had this discussion about council priorities, the motivating factor behind that was there seemed to be a lot of council priorities and tried to focus our efforts individually and collectively on certain things in order to respect the ability of staff to follow through on the items that we would propose. And we went through this exercise where we had dots that we placed on a board which didn't work out too well. But we don't have to necessarily do that. But it's certainly -- could be an opportunity to bring up for individual councilmembers to bring up items that they've been working on and plan to bring forward in the coming year.
Cole: I think if I may that if we couch it in some way around the budget, which I think sounds like a good idea since there's so much driven by the budget, we would have the opportunity maybe to fold in discussions as they stand at that point on potential bonds election and what might go to the general obligation bonds election which would fold them together.
Mayor Leffingwell: I think that's certainly a good idea. Mark?
Some good suggestions I've heard and I think mayor's recollection of the council's previous discussions about all of this is accurate. I guess over the years I've seen council retreats occur in a variety of ways, councilmember spelman and I were talking about that a bit yesterday. I've seen them with and without facilitators, I've seen them focused on setting a budget priorities which is obviously a substantive conversation which can be the single subject of an entire retreat. That aside, I've seen it just be, you know, more issue-oriented where council has sometimes in advance decided on a range of a number of issues that they want to talk about in advance of the meeting, the staff might prepare some information for council as a means of getting ready for the discussions that would ensue. At the retreat, they would have those discussions sometimes. That context, the retreat might result in -- in council establishing some priority with respect to those issues or few of those issues. Sometimes it's just the benefit of having the opportunity to dialogue about issues and the benefit of hearing each others' perspective on a range of issues. And that is the outcome and there's value to be found in that. I think councilmember morrison is correct in regard to deciding on purpose up front. I think that's key. If it's going be budget or financially focused, then it's obviously a meaty conversation. We have the issue with respect to rails and all of that is substantive. So that range of financial issues, the subject of an entire retreat. Is it one day, or is it more than one day? That's a part of the conversation that the councilmember spelman and I have had. My experience has included both. Day long and day and a half retreats. Perhaps one of the things that we can do too while you're getting ready for your subsequent conversation is just scan other cities and give information about, you kw, how other cities have fashioned and put together these kinds of things. You can have that information coming in to your next conversation as well.
Mayor Leffingwell: Okay. So we've got two things to work on for the next work session when we discuss this. One is perhaps staff can come back with a list of alternative low or no-cost locations for having the meeting and keeping in mind as councilmember martinez said access to public transportation. And the last one we had we did not have that up on lake travis somewhere.
Just accessibility issues. Botanical garden, there's no bus stop. If they were to get off to the nearest bus stop, no sidewalk to get there. It's hard to get in to the gardens unless someone is dropping yuf. Keep those things in mind.
Mayor Leffingwell: If you come up with your list of possibilities, factor those in. And I think councilmember morrison's suggestions that we focus some attention on content of november 2012 time packages is one that I would support. So I think we should consider that to be on the list and we'll come back at the next session and be prepared to discuss additional item else. Bill?
Spelman: One other item for people to think about. Back in the -- behind the woodwork, we've had hundreds of thousands of people engaged in developing a comprehensive plan, we haven't seen very much comprehensive plan stuff as a council before. So it might be a good opportunity for us to revisit that and jump start our own activities on that. Another thing we might think about.
Mayor Leffingwell: Let me say, I think we ought to kind of have a manageable list of things. I have personally would prefer a one-day retreat. There could be a lot of things, could take two or maybe even three days. But I don't think we have the luxury of that. So let's focus on trying to -- if there's no objection, focus on trying to keep it to one day.
Tovo: If I could add in terms of the comprehensive plans, we're not clear how far along it will be. That's one of the channels we have. Later this week when we look at the city briefing on the bond package. How do we line up the comprehensive plan with the bond package when we're not finished with the comprehensive plan. Then the vision is adopted and can form the bond discussion.
Mayor Leffingwell: Okay. So I think we've got enough to get started and prepare us for next week when we discuss a little further. So if there's no objection, we'll go on to the next item which is b-2 in discussion of council meeting procedures. Laura?
Morrison: Thank you, mayor. You might remember we tossed around a few ideas about how we might clarify, augment our meeting procedures. And bill and I took some of the ideas and sat down with our city clerk and our legal department to try to come up, formulate a plan and this -- so this is a predraft resolution that we have. We haven't posted it for consideration, formal consideration on a council meeting. We did post it -- I have copies for folks here -- we did post it, however, in a little bit of a cumbersome way on the media information page for today's work session. So the public can find it there. We have asked the city manager to think about expanding our agenda system for work session so that we can have backup for work sessions just like we do for -- for regular meetings. And that way it would have been a little less cumbersome. There are extra copies if anyone in the audience would like to take a look at one. Thank you. I appreciate that. It seemed like it should be perhaps a simple adjustment to the system since we have it. So we have included some whereases, but just address the fact that we want to foster public participation and make sure that our meetings move smoothly. But they get -- they get down to the meat of it. And the "be it resolved," I'll walk you through what we have there. Under 1-a, basically, basically what we're talking about is taking a snapshot of the signups at 15 minutes until the meeting start time so that the city clerk can start processing who's going to be speaking, what gets pulled off the consent agenda, etc. So she'll work on that on a snapshot that's taken 15 minutes before, which does -- the meeting starts -- which does mean if you want to sign up to speak on a consent item and have it pulled off of consent, that needs to be done 15 minutes before the meeting. That's what 1-a says. 1-B says that, so what we're going to be talking about, some items will be pulled off of consent if two people are signed up. 1-B says if you signed up for a consent item and it didn't get pulled off consent because you're the only one that signed up for it, that basically before we consider the final consent agenda, you will have three minutes, no matter how many of the items you signed up for, you'll have three minutes to address the consent agenda as an item. We had that discussion before. I know that you had tried to get us to clarify, was that a reasonable thing to do. So we included that in here. 1-C says that if you sign up to speak on a consent item as donating time to somebody else, that counts as signing up to speak. And then b gets to the meet of it and says you can only participate in removing three items from the consent agenda and clarify the fact that, you know, if you sign up -- if you sign up for four consent items, and other people sign up for those also, your signup doesn't count for the fourth item. You're limited to being one of the pullers off consent to three items which lines up with and helps to clarify the statement in the code right now that says you may only participate in removing three items from consent. And it specifies it's the first three -- you know, your name sort of counts on the first three numerically listed items for which you signed up. It also under d-3, it says that you must be present in the council chambers when the item is pulled off of consent. And this is not really intended to have us go through a process where you have to raise your hands and all of that. It's just intended to put in a safeguard in case we get into a situation where there are names pulling -- signed up to pull items a you have of consent and those names repeatedly show up and may or may not be real people. May -- you know, may -- so it's just the deal with the safeguards situation. So basically, the fundamental is, you know, for folks who are signing up on consent items, if -- if only one person is signed up on the consent item, it will not be pulled off consent. But that person will have the opportunity to speak on -- on the consent item all together. One item that got inadvertently removed here when we were doing some editing at the end. That was to clarify that once we have the items pulled off of consent that are going to be discussed for whatever reason, council or they were pulled off by the people signing up, that there's not a limit in terms of being able to sign up to speak on those items. So even if you signed up -- even if you are part of pulling three items off of consent, and then there are other items that have been signed up that have been pulled off of consent, you can still go ahead and sign up to be part of the discussion there. So that clarifies that that limit is not there. That is the meat of it. We also added a clarification right now if you sign up to speak, it's one of the options is that you can sign up not wishing to speak or only in case of questions. This suggests that we remove the only in case of questions that's causing some controversial counting time and all of that. And anybody can always ask questions. Any council member can ask questions. And bottom of page three, the second "be it resolved" asks the city manager to also look at the other procedures we've adopted through resolutions or like our work session rules to -- to gather those all up and to codify them so that we don't have to go searching around and putting them all in one place. So, bill, I don't know if you have some additions there, but basically we've said, okay, we're going to remove item from consent if two people have signed up. You can speak on the consensus agenda first, you know, in and of itself if you're left as only one person signing up. And you will only be an individual -- an individual will only be participating -- be part of pulling three items from the consent agenda that will limit in some way the number of items to hopefully a number of discussion items that will keep us moving in a timely manner for our meeting.
Mayor Leffingwell: Chris?
Riley: First of all, I want to thank you on your work on this. And bill. This is an issue we needed to clarify and it's been helpful. This is a good start. I do have one question that I -- on just one practical aspect of how this would work. And I think you addressed it verbally, but I'm not sure I see how it's addressed in writing. Suppose you have a situation where someone signs up on items 1, 2, and 3. Two particular people sign up on 1, 2, 3. Pull them off of the agenda. Now on item 10, half a dozen other people have signed up to speak on that and so it's beyond consent. But the same people who sign up for 1, 2, and 3, they would like to speak on item 10 as well. That's an issue -- I'm not sure it's clearly addressed currently. Do you feel it is addressed in --
Morrison: That's not. That's the one that inadvertently came out. I would like to suggest we would add a number 2. We're lacking a number 2 under 1 anyway. That says items pulled from consent which a person may speak are not limited. So you're not limited in any way on the signing up to speak on any items that are pulled from consent. So those persons -- persons a and b or 1 and 2 can go ahead and speak.
Riley: Speak as many times as they want on other items that other people have pulled off of consent and there's no limit on how many times they can speak.
Riley: Good, to you'll be adding that?
Morrison: Adding that number two that says specifically that.
Riley: Are you going to circulate that by thursday -- this is on the agenda?
Morrison: No, in fact, this is not on the agenda. We wanted to put it on the AGENDA FOR THE 15th, BUT BECAUSE There's been -- is that -- yeah, it's not on the agenda this week. The reason we wanted to just get it out here before even posting it is because there's been so much discussion about it and we wanted to get input and it's complicated to write this stuff that we thought it would make sense to just really try to get a discussion before we even get as far as posting it on the agenda. And I do want to thank the city attorney deborah and the city clerk for sitting down and hashing through I think for over an hour some --
Spelman: Way over an hour.
Morrison: Way over an hour. Bill and his staff -- to work on whether it could be pragmatic, whether it would work from the city clerk's point of view.
Mayor Leffingwell: So let me try to understand how it works. So you've got two people that sign up on 20 items on the consent agenda, all of the items are pulled off on consent and the speaker would speak on those items.
Morrison: No, the first three would be pulled. Items 4 through 20, those two people would get three minutes just on before we vote on the consent agenda per se. So they get three minutes just for all of the rest of the items together. So they would have the opportunity to --
Mayor Leffingwell: Even though there's more than two?
Morrison: If there are more than two and they're pulled off for other reasons, then, yes, those folks could still speak on 4 through 20.
Mayor Leffingwell: It says two or more, actually. 1, Ip tell -- item number 1?
Morrison: On which two or more people are signed up. If there are other people signed up on the follow line, yes, they would be pulled because there were persons three and four would count for pulling them off.
Spelman: Everybody gets three votes. You can cast votes for pulling three things off on consent. Once you use the three votes, you no longer count to pull things off of consent. You have to rely on other people. If somehow people who have votes left over pull something off of the agenda is no longer in consent, you want to speak on it, you can speak on it too because everyone else can. But you can only participate to pull three things off on consent. Your participation can only count for the first three.
Mayor Leffingwell: I understand what you're saying. It would be difficult for the clerk to work her way through the procedure and --
Spelman: That's why this took so long. We wanted to talk about that.
Morrison: Yeah, the city clerk, you want to make some comments about how pragmatic you think this is?
We spent a lot of time talking about the practicality of all of this. And I think at this point, we've tried to print off some of the previous speaker lists and tried to work our way through it. I think we're going to probably find the scenario or two that we haven't anticipated. But at this point, I would say that the rules cover the most basic of the scenarios that we could identify. So, you know, it's sort of let's try it. See how it works. If we need to alter it at some point, we could do that. But I think that we've -- we've tried deals with those things that are most often have happened in the past three months.
Mayor Leffingwell: And all of this would have to be done 15 minutes prior to the start of the meeting. All of this formulation.
And that pertains just to the consent agenda. Once an item comes off the consent agenda, it's still open for people to sign up for. But -- and the councilmember indicated. We would take a snapshot in time and say if you're not on this list, you're not going to speak on the consent agenda at all.
Mayor Leffingwell: And the signup period opens several days prior so the person doesn't necessarily have to get there in 45 that morning. They could have signed up for previous --
open by noon on monday. So they can do that if they want to. We just didn't want to delay the council meeting 15 minutes while we were trying to figure it out.
Martinez: That's what I was going to ask. Do you think 15 minutes is enough when we have 100 items that you have go through and move folks? Because this contemplates you moving them from wishing to speak to not wishing to speak if -- they've used up their three tries and no one else has assisted them, I guess, from removing something from consent. Would that give you enough time?
I don't really know. But I'm hoping. I'm optimistic that we can do that.
Morrison: If I could just clarify. If we get to the fourth item and other people -- you know, so a person is participating in the first three items, they're on the fourth item but other people are causing that item to be pulled for discussion, the original person can still speak, they don't actually have to be changed from wishing to speak to not wishing to speak. So that -- that mechanic doesn't have to happen. It might p might be interesting, shirley, to do some trial runs as the code is being written and might help us see if we're running into some --
Martinez: Can we adopt this as a potential, I don't know, 60-day pilot? If we adopt it, codify it and we find out that 15 minutes isn't enough or three isn't the magic number, we have to come back and amend it. Maybe we do a dry run for a few meetings and then adopt something after we --
Mayor Leffingwell: I don't think we can do a dry run without council approval?
Martinez: Ordinance change?
Mayor Leffingwell: Yeah, it can be done by resolution. I think, sheryl?
Cole: Have you looked at our computer system and how you can track it on the upgrades if you're able to do it?
Some happen already. When there are two people signed up to speak, the system automatically removesis -- removes it from the consent agenda. We get an e-mail, it's removed. Some of that is built in. We wanted to experiment to see if other alternatives. Saying I want to speak -- there's questions, we get that option off of there, that makes it cleaner and defining some of the terms that donating is the same as signing up to speak for the purposes that we're doing here. I think it will help us too. But we -- we're constantly looking at the system to see if it can assist us in some ways. So any of those that have five, six speakers signed up are going to be automatically pulled.
Cole: Okay, because I tend to agree with mike that the 15 minutes may not be enough and that the kinks potentially in the system, especially with regard to our computer ability, our software ability. So maybe we need to think about having at least, like if you're saying we can't have a trial run of this.
Mayor Leffingwell: We're going to have to have some way to formalize it, whether it's a resolution or an ordinance. I don't know which is appropriate.
We would do an ordinance, we would include the 60-daytime frame for the pilot. See how it runs and then council could then instruct us to go ahead and codify.
Mayor Leffingwell: Why does it have to be done by ordinance? Couldn't we do it by by-law or rule or something?
My concern is you are conferring rights on citizens. When the council does resolution, we're not affecting other people, we're affecting ourselves. So it would be simple enough to do an ordinance. But it wouldn't change the code at this point. It would just say, we're going do this for 60 days and this is what you have the right to do.
Mayor Leffingwell: We'd have to be -- we require three readings of record.
Well, like --
Mayor Leffingwell: Like any other ordinance.
Mayor Leffingwell: We could do that with something that would expire in 60 days and replaced by something else.
Mayor Leffingwell: Still one person could participate in the process of removing things from the agenda. I understand there's limitations on that. But then, after an item is pulled by other people, there's no limit. You could say go back and sign up on everything. So that --
Morrison: That's correct.
Mayor Leffingwell: Conceivably, one person could sign up to speak on 50 items.
Morrison: If 50 items were pulled by other people. If there's interest from other folk, yeah, they can sign in and participate on that. I think looking at some records of who's spoken when and for how long and on what different items, my sense is that we might be able to find an equilibrium here with that approach.
Mayor Leffingwell: We may be able to, but we still have a problem that we've noticed in the past too of people participating, signing up to participate -- to have items removed from the consent agenda and either not being there or being fictitious persons.
Morrison: That's why we have the item under 1-d-3, a person who is registered to speak must be present in the chambers when the item is pulled off of the consent agenda. So if there's fictitious names, that will --
Mayor Leffingwell: How do we determine that?
Morrison: Well, I think if there's a flag raised, which generally there have been in the past, then we can ask specifically on that item, are both of these people here? And if only one person raises their hand, which I presume they were -- if they are -- if it is a fictitious person, only one hand will go up at that time. So the idea is let's try to use this judiciously when we think it's a safeguard when we're running into a problem.
Mayor Leffingwell: I think it creates a little bit of a problem for me in trying to administer this, but, you know, if we want to try it for a while, it's definitely going to add time to the consent agenda. I don't think there's any question about that. My personal preference, I'll just say right now, would be to -- I mean, I like most of this. I really do. I just don't like the part where you can go back after an item is pulled off consent strictly because the speaker is in that one. Because I think that kind of creates a loophole that is -- some people might be able to drive a truck through.
Morrison: Well, I -- you know, from my perspective, I'd like to give this a try because for a long time we didn't really have issues with it. And then to try and craft a new approach so that we're not just putting in strict rules purely because we had one specific situation come up, my hope is that we can sort of get beyond that one specific information and be cognizant of other people's rights and doing it right. But there's sort of a balance that I hope we can find. Just one last thing, deborah, will you be able to help us recraft this language to make it to an ordinance and -- I think it's a great idea to just do it for 60 days before we go to the trouble of changing the code.
Martinez: Thanks. I just wanted to ask shirley, you -- have we looked at other peer cities and determined what potential best practices there are? Because the point that the mayor made, I think, is well taken in that I can guarantee you if a certain person is there, I know that another person is going to be signed up and never -- has never been there. And that -- that will -- that without affirming whether or not they're present in a formal fashion, that would put you in a position of having to move them off of consent, would it not, under the current draft?
Morrison: Well, it assumes that the mayor -- we would talk about red flags when we see them and the mayor would ask, are these people in the chambers? in which you call joe iseman or some name for which you have good reason to believe is fictitious, that practice will probably stop. And it doesn't seem to be terribly time consuming, you do it all the time on the donated time issue. My guess is again that we blast on through that issue after one or two meetings.
By 15 minutes prior to the meeting, surely it's just going to have to gone through there, wherever there are two or more persons, two or more names on an item signed up to speak, that item is going to be pulled off the consent. So we have no way of knowing at that time if that's a real or fictitious person.
It would be permissible to read off names to verify if people are there, particularly since people can sign up to speak of an item as early as monday, they may have changed their minds. I think it would be perly okay to ask these two people in the council chambers, doesn't make any sense to pull the item at all.
Well, yeah, and in effect what I would respectfully suggest is what this is going to at least partially accomplish, maybe in large part accomplish is going back to the old way of going through every single item on the consent agenda as we read it off, and ask if these people are here to speak.
Well, mayor, are you -- i guess why can't you just en masse at ten o'clock, since everybody is supposed to be signed up fifteen minutes early, read off the people that are signed up to speak on consent agenda much like we do boards and commissions and see if they're there, and if they're not there, is there a requirement that you do that in conjunction --
I would have to do that before we address the consent agenda. Okay. We've got these items pulled off for speakers, and I could call out the names of every -- every item that has more than -- more than one person signed up to speak.
So there's no requirement
some times what is happening now, we have one name pulling an item off consent, the item doesn't come up until, you know, six hours later and staff has been sitting there for six hours waiting for it to come up, and then it comes up and the person is not there. And so I think it's going to help us avoid so it's a tradeoff, you know, if it takes a little bit more time to read out a set of names on the items that are being pulled for discussion, it's going to keep us from pulling a bunch of items for discussion that perhaps
I think that's good.
And if there's 20 people signed up on an item, seems like it might not be necessary to read through all 20 names, seems like we're talking about the ones --
just read through the first two. Read until you get two people that are there.
Or even you could skip over this one, and just focus on the ones where there's, say, less than five people or some threshold, so to minimize the disruption. We're only focusing on the ones that are really marginal.
Well, I think I would prefer to do it, at least assure that there are two people there.
No matter how many people signed up.
Just -- just to -- for my own comfort level.
Okay. Anything further? So we'll go on to our next item which is the density bonus program briefing. Pardon me, mayor, council, this -- I'm sue edwards, assistant city manager. One of the things that we wanted to talk about this morning is the density bonus, I think as all of you are aware, this has been a discussion that has gone on for a number of years, and in discussing density bonus, one of the things that we have found is that for the most part it does not work, particularly when it is -- relates to affordable housing. So one of the things that we wanted to do was to perhaps look at it from the perspective that we can make it success as opposed to not working, and in doing so, we took out some of the emotion that oftentimes comes with homeless and housing, and I asked john and jim and the rest of the staff to begin looking at this from a data-driven basis as opposed to anmotional basis, so we could get some sense of what the foundation is for the success of density bonus, as opposed to trying to guess what is best when we begin looking at where density bonuses should apply. And the other reason that we're bringing this to you today is because you're going to be asked to look at a number of different areas where density bonus applies. You'll have the downtown plan. You'll have riverside. And we'll be looking at a number of other areas in the future, so hopefully this is a discussion that will help you to begin to frame how we look at density bonus in order to make it a very successful process that provides a lot of affordable housing.
I'm jim robertson, head of the urban design division and the planning department. And as sue said, our goal is to bring to you, to you as council, recommendations on density bonus programs that will allow those programs to be successful, and i think sue has already underscored that. How do we measure success? Well, one measure of a successful density bonus program is one that gets utilized. And when utilized, programs that will allow us as a city to put density where we have identified it to be appropriate, and of value to the community, and also another measure of success is does it produce community benefits. The desire to come before you and talk about this this morning, in addition to that broad goal, was triggered by several specific actions that some of which are still on going. The council directed staff to take a look at the university neighborhood overlay, the in lieu program, and that is a process that is on going right now, and that will be -- that presentation will be coming to you in the next couple of months. We will be coming back to you on this thursday with the downtown plan, but council has already indicated that it would like us in conjunction with developing any code amendments related to downtown density bonus program, council has directed staff to recalibrate, to go back and look at the numbers that would support the recommendations and we will be talking very much this morning about the notion of calibration, what does that mean, what do you look at when you calibrate a density bonus program. In at least one of the zoning CASES IN ONE OF THE TODs, THE Transit oriented districts, there was some expression by council that perhaps those programs were not producing the results as expected or were producing unintended results, so there may be a need to take a look at those program as well, and then the final sort of specific thing that you will see the issues come up this is the east riverside corridor regulating plan which is in the process of being developed right now which will include a density bonus program, so those are some of the specifics that this presentation this morning will address. Just to sort of give you a foreshadowing of how we're going to navigate through this, I'm going to talk for a few minutes just about some of the basics of density bonus programs and i recognize in some ways here, I'm talking to the choir, my discussions will be rather basic, I realize some times in addressing council at a public session I'm addressing a broader audience, so I'm going to go THROUGH SOME OF THE ABCs OF Density bonus programs. John will then pick up and say now with that understanding of what a density bonus program is, and what are goals are within the program, let's begin to put that in the context of the austin economy, the current economic conditions especially within the realm of development. I'll then talk a little bit about specific programs, what are the pr we've adopted in austin. Take a look at them, see what the participation has been. See what the results have been. Then we'll get a little more micro in our examination and actually start looking at the economics in a specific area. We'll use a hypothetical set of proformas with regard to east riverside. Just sort of walk through some of these things we've talked about, and then we'll wrap up. So first, what are density bonus programs? It's essentially a tool, it's an incentive based tool, that is a common characteristic of all of them, to tie the granting of additional entitlement, which is of course within the power of city government to do, to community benefits that the project can produce in conjunction with that additional entitlement. The entitlements typically are things like high or density, typically expressed as far, floor area ratio, there are additional entitlements sometimes are used in conjunction with density bonus programs. Now, why do we have them? Well, first of all, it's an ability to tie the achievement of community benefits to additional density. Sometimes additional density comes with a burden or a burden that it places upon the community where it will be located and it's a way of addressing that burden through the achievement of community benefits. In texas we're working within a state law environment in which we can't mandate, we can't use so-called inclusion nair zoning to mandate affordable housing and in fact state law specifically says that requirements relate with respect to affordable housing have to be achieved through a density, through a bonus program, like a density bonus program. Let's not forget that density bonus programs are a tool we can use as a city to achieve getting additional density in places where we have -- where we've identified that that density is appropriate. And that is, as often comes up, that can be a community benefit in and of itself. It's very much part and parcel with a lot of division that we have for our city, whether it's a city that is transit supportive, whether it's a city that is sustainable, because density often times produces sustainability benefits in terms minimizes resource consumption, density also in some ways makes austin a competitive city in the sense that dense, mixed use urban environments are oftentimes environments that are highly productive and economic competitively. How do these programs work? This is how I get a little basic, but I think it will reference back these basic ideas when we start talking about the economics. I've developed a series of sort of charts here. What this slide does, the dash -- the horizontal dashed line represents the zoning entitlement that a project has just through its base zoning. This is the entitlement. This is the project that can be built without having to ask for any additional density. Now, the way a density bonus program works is when a project comes forward that seeks additional entitlements beyond that base level of entitlement, height, far. Other types of additional entitlements, then that's the density -- that's the density bonus area. In this hypothetical I have here, I've taken a downtown cdb type project, demonstrated where that baseline is far, seeking 1 16:1far. The first case you have to ask in these programs is does that additional density produced a additional value to the project? In other words, additional return to the investors? Sometimes counter intuitively the answer to that is no. So one way you can design a program that won't work is to try to extract community benefits from a project for which the additional density does not generate additional value. If there's no additional value, the project will not happen if you try to extract community benefits from that project. Now, if that additional density produces value, in other words produce incrementally enough return to the investors that the investors are interested in doing that, then a -- what a density bonus program does is in essence inequitably distribute that value between the investors in the project and the community. Now, that's where the notion of calibration comes in. The calibration is the process by which you design a program whereby you leave enough value to the investors in the project that they still have the economic incentive to move forward with that larger project even though they -- one of the costs of their project will be the community benefit. Now, if you -- if you calibrate a program improperly, and this slide I have zero dollars for this developer, then no project will seek the additional density, because you have removed the economic incentive for them to do so. In fact you don't have to render the value at zero, even minimal deminimus values will not be enough to take on the additional risk. One additional scenario that is relevant for within our density programs in austin is sometimes the additional entitlements that are at stake are very minimal, in other words, the project -- the density bonus program only allows a relatively small increase in entitlements for the project, that's sort of the case IN SOME OF OUR TODs, WHERE THE Difference between the base zoning and the amount that can be achieved through a density bonus program is fairly small. Now that doesn't -- you may produce value there, and that program may work, but it argues especially in favor of a very careful calibration, because the additional value may be minimal, therefore you have to be very careful about how you calibrate the community benefits there. Now I'm going to let john talk. Put those concepts in the context of some economic specifics.
Do you want questions throughout or at the end?
I'll defer to you. I think if it's a question you think -- I'd say let's take them during, especially if it may clarify something that needs to be clear as we move forward.
I think that would be -- if you need clarification, rather than getting into a discussion of the item itself, go ahead and ask the question. Otherwise wait until you get to a break point.
I have a couple and then --
make sure as we move forward into the specifics that all of these basic concepts are well understood and shared.
Well, thanks. I guess I'll ask one and then I'll save my comments for later, but as far as the point that you made about density being in and of itself a community benefit, i guess I'm wondering if there's any incentive programs in other cities that recognize entitlements that increase density or that provide for entitlements that increase density and recognize the density in and of itself as a community benefit? That is a circle to me. I mean there are no problems that set out a plan by which density is in and of itself the community benefits that you're incentivizing through increased entitlement that lead to more density. I mean I think that you're just saying that it's -- some people might argue that the density itself is of value and thus there is no need to provide a community benefit.
I think, if I understand your question, and what jim said is you're not incenting density. Density occurs where it is appropriate, but it's not an incentive. It's the community's benefit as downtown has used that as an example. A benefit to having density downtown is -- is what we're really talking about here. It's not incentive. So you're not incenting the density, right?
I guess that is an argument against having a density bonus program, because you're recognizing -- or you're claiming that density is in and of itself a community value, so there is no reason to have other community benefits.
No. And I think it's only in appropriate places. If we could maybe move through the presentation, we may get to --
And again, that's why I said, really, it's better if we just ask questions of clarification rather than get into discussion on the merits.
Well, I hadn't actually offered my opinion about the merits of that point. I was just trying to get at what the underlying argument was there.
One of my colleagues informed me that for example, in portland density program there are examples of types of project that can operate within that program where they in essence are invited the additional density without sort of concurrent obligation to provide community benefits, because that specific type of project or because of the location, the density is perceived as a community value in and of itself. one of the things that I think is going to be sort of an important theme in this overall conversation really is the market context in which we were talking about these programs. I mean there was obviously in revent past, you know, it was kind of theoretical since there was no development going on whatsoever in the last several -- in the height of the real estate recession. We really are seeing some signs of life in the private sector job base. We've got a little less than 15,000 net new jobs in the 12 months coming through the third quarter of ten, through the third quarter of 11. That's a positive thing. I talked at some length with concerns associated with the state budget crisis and the impact on public sector employment throughout the region. So far so good. It's not been as negative as we initially feared it was going to be. I have some concerns about what might happen in the wake of the next legislative session, but maybe I'm the economist who predicts 8 out of the last two recessions. Overall I think the economy has definitely picked up in 2011. We're not booming by any stretch of the imagination. We're doing reasonably well. You see some of that not only in the job base but also in consumer spending, the very best proxy we have for consumer spending in the city of austin is the sales tax revenue. Leslie told me the other day the fairly negative less than great number I'm going to show you in the second quarter reflected in part an audit adjustment. Overall the things are going well in the consumer spending side. People are aren't spending but they're doing relatively well. One of the things that really has happened is that the sort of underwriting process has shifted fund menially around housing in this country. The notion of having 20% equity in your home when you go to get a mortgage now suddenly not such a bad idea after all, a lot of folks have looked up, you know what, everybody doesn't necessarily need to live in a single family home. Maybe everybody doesn't necessarily need to be a homeowner. What you've seen in combination with that kind of restructuring fairly positive household formation in austin, multifamily coming out of the real estate recession, rents have increased and occupancy is really pretty good. So some pictures to kind of illustrate all of this, that is msa employment job growth across the five county msa which austin is the center. The orange and a slight nod to the victory on thanksgiving night, the orange is a private sector and the line graph is the public sector. Pretty positive. Pretty positive trend this is again city of austin sales tax growth, not a great number on the second quarter, reflecting the audit adjustment, pretty solid in the four to 5% range which I think realistically is about as good as we're going to do in the near term, and then this is a measure -- and i pulled this data actually from ryan, the city of austin multifamily unit the orange are collective units that are approved or under review. The black part of the bar is actually under construction, and it's a pretty nice demonstration of the development cycle there, you see the boom obviously in the last part of '07 carries forward a little bit in '08 even as the economy was going down. You see obviously the downturn and then you see things beginning to pick up a little bit here as well. And so on historical and current occupancy, this is data that charles pulled together, capital market research, his most revent data is is june of 11. Strong occupancies of course across the entire city, that's very strong occupancy, would suggest that it's time to invest, and then on the rental rate side, you also see relatively strong numbers particularly as you see there in the central part of town. You see of course the premium associated, that is largely downtown, we would expect these numbers to increase just a little bit, go forward, a dollar a square foot city wide is pretty positive stuff. So the context in the overall market is right now it's pretty conducive to multifamily real estate development, and that's important as you were thinking about some of the characteristics from an economist point of view of what a successful bonus program might look like. You need pretty strong mrkt demand but one of the things you also need in part of this equation is strong market demand in the areas in which you're targeting. If demand is strong all over the city as a whole, I may be comfortable, unless I'm really confident, I may by comfortable building outside of the density bonus area because my risk is less there, than taking on all the additional entitlements and all the additional risks associated with it. The developer thinks about this as an additional cost, yes, it's also an opportunity, but it's a cost, so one of the things that the strong market demand helps facilitate is the developer in theory is goings to make more profit in a strong market environment. He's going to be more comfortable. Part of the thinking process is if you were taking on an additional entitlement, you're going to build a bigger project, you're inherently building a larger project, which means you have to capture essentially a little bit larger share of the market, and there's more risk associated with that. So again, think about all that stuff. Any cost has to be properly priced and I put priced obviously in quotations there, but it really is true. It has to be low enough that it allows the developer to run the numbers through their pro forma, still justifies the commitment of capital which sometimes isn't the developer's capital, sometimes it's the developer's financing source, as I said it's especially true, it's an up front cost, one of the final things to sort of think about, these are principles really as you're thinking about density bonus, on the one hand, be fairly stable, which means if we cut a deal to do this, it has to stay through the life of the project and somewhat predictable. But it also really does have to be market responsive. I mean a density bonus in downtown austin in 1992 would have made absolutely no sense. A density bonus in downtown austin in 2011 probably makes a lot of sense. Who knows where it will make sense five years, ten years on down the road, so that you have to not only think about the bonus itself, you also have to think about the price associated with the bonus and you have to be market responsive to that price, and so what the market actually will bear. So with that, let me kick it back to jim.
So now we're going to transition from sort of a abstract general level of discussion of density bonuses and I'm going to just sort of inventory the programs that we have in place in the city right now. In terms of existing programs, we have the so called interim downtown density program which has been on the books for about three years. The uno, university neighborhood overlay program. There's a density bonus program in place there. We have a density bonus program in place at each of the three TODs. There is one in the north burnett gateway project. There's a form of a density program embedded in the verbal mixed use, sub chapter e, the commercial design standards. And there's a program in place in rain any street. We have as I mentioned in the introduction a couple sort of coming down the pike, the downtown austin plan density bonus program including the recalibration that we will be doing at your direction. And also a density bonus program as part of the east riverside corridor, the regulating plan for that. So what we did, then, is we took a look at these same programs that I just inventoried and tried to evaluates what been the level of participation. What kinds of results have they produced? There's been no participation in the north burnett gateway program to date. The same is true with regard to the tod programs as they relate to additional density. The third row down here is the tod density bonus program as it relates to additional height entitlements. Now, I did put an asterisk next to what I show there as 27 affordable units. All 27 of those units came in one project which is the m station project at the mlk tod. And of course, that project was an affordable housing project, so I note that with an asterisk, some ways density bonus programs you would seek to achieve after foshed d fordable -- affordable this was a project that was already an affordable housing project. Now, granted, though, that it was available to achieve by way of the height bonus to provide 27 additional units beyond what it would otherwise have provided. In terms of vertical -- wellings excuse me, the downtown, the interim downtown density bonus program, as I think you're well aware, there have been no takers for that program since that was put in place three years ago. With regard to vmu, there is one project that apparently is just into construction right now that took advantage of that program, we don't have the details in terms of this project did commit to provide the affordable housing benefits, as identified vertical mixed use ordinance. They did agree to provide the affordable housing benefits as a consequence of getting a waiver of some of the so called dimensional standards such as the minimum site area, setbacks and so forth.
Just a quick question. Can you share with us which project that is?
It's south first street, just south of oltorf, and if I --
okay, that's fine.
I can maybe give you a name for the project.
That's fine. Thank you.
With regard in the rainy district, there is a project in place there, there have been nine affordable units created. Then you get to the university neighborhood overlay, there's quite a bit of information there. This is an outliar compared to other programs and I do want to dwell on that for a second. As a consequence of the program in place in the university neighborhood overlay. 25 Buildings have been constructed that had street scape improvements that we would not have but for the density bonus program. Those buildings have been constru in accordance of one star austin energy green building rating and that program has created 399 affordable housing site -- on site affordable housing units and through participation in the fee in lieu portion of that program, the program has also created 3 million in funding for affordable housing. I'm dwelling on this for a second beca in some ways it illustrates some of the concepts that john mentioned in his. One, you had a strong market demand in that area. Obviously, when you're next to a university with 50,000 students, and you have a relatively confined area within which that program applies, you have a pretty strong demand in relation to the amount of supply you can provide. Second of all, it indicates that the calibration of that program was such that the people involved in putting projects together retained sufficient incentive to be able to take part in that program and make their projects work. Now we're going to transition to sort of looking at a sort of specific set of examples and we're doing this in the context of the east riverside area. As john said, you have to look at the economics not only of the region but of the specific area in which the program works. Now, in east riverside, via the east riverside corridor plan, weave identified certain areas that we believe density programs are appropriate, and that additional density beyond the baseline entitlement would be an asset to the community. You have a base level of height, for example, there of 50 to 60 feet, and the density bonus program could aword densities up to 65 feet for some of the lower heights. 120 Feet or even 160 feet. The high priorities, as have been expressed by the community in that terms of the community benefits that would be achieved through the program are affordable housing and open space, but there's been some statement of will also associated with benefits such as incentivizing commercial or office space, flood or water quality benefits, bicycle amenities and so forth. This map shows the areas where the community identified areas that the community was agreeable and in fact was interested in having additional density beyond what would be within the baseline, and I'm going to move on to this next slide which this was a little bit more clearly identifies the area we've identified as potential bonus areas, and the additional height entitlement that could be provided through the program. Obviously there's a one to one correlation between the areas where the community has valued the additional height, and the location of potential rail stops for an urban rail system. But you see the four t's on here, that corresponds to projected locations for urban rail station. Now, john is going to walk you through looking at the economics of this specific area in the context of how a density bonus program might work there.
The fun things about being an economist, you get to spend some time in theory, occasionally you get let out and talk to people in the real world and see how it actually works, theory says that bigger is better, marginal costs go down, marginal costs to produce are lower, et cetera, et cetera, the truth is in the construction world what is not necessarily true, because you transition from code requirements and a construction style at 60 feet, you go from -- when you go up above 60 feet, your construction costs essentially increase on a per square foot basis because you go from construction to a much greater reliance on steel and concrete and that is typically part of a code process and so what ends up happening as you're going up above a five story buildinger you're going to spend more on a per square foot basis on a story five floors or less, your parking garage will go up because you have the actual occupied space up above as opposed to a less than five story building where often times you will see rat parking or the dallas doughnut or what have you where the actual occupied space wraps around the parking facility. What ends up happening is unit costs go up rather than down which is contrary to what we think about in the abstract. Now, the truth is if you have the penthouse, you can charge a little bit more for that, no question about it, particularly if it's perceived to be fairly rare and unique. But one of the things that we've seen is, as you think about this, you probably can't raise enough in the top floors on these larger buildings amortized over the cost of the entire building to compensate for the increased costs, at least at this point, associated with this higher level o construction. And so right now, and aisle walk you through the numbers on this, buildings five stories and under probably make more financial sense in east riverside than buildings up above five stories. Certainly may not be true in every location. It may not be true downtown, but as we sit here today, that's what the numbers more or less look like. We'll show you again, i apologize a little bit for the eye strain here. What we tried to do was do some apples to apples here, take about a thousand square foot unit and compare it across a five story building, ten story building and fifteen story building so you could again get a feel for it. Land costs per unit actually go down, but, again, the current construction comforts, the direct construction costs for gross square foot go up, and this is information gathered from the development community here locally. I sort of looked at some data from rs mean who is a big sort of construction information provider, and this is actually a little cheaper than means thinks it is which tells me that the current market is a little bit better than it would have been say six months ago. Mean's data is a little bit out of date. But again, making the point, these costs are actually lower than they might have been and still the numbers are a little bit challenging. Your parking construction cost per space do up. That all rolls up into the direct cost. Indirect costs are of course the cost of your architect, the cost of your engineer, to some degree all of that stuff, and those are done on a fairly standardized ratio basis. It's interesting, they're talking about base rents there that are pretty consistent with some of what you're finding in the central city at least according to capital market research data. This is in contrast to what i showed you earlier, talking about a dollar a square foot, east riverside is close enough to downtown that the market is saying, hey, you can charge a little more, a buck seventy to a buck ninety is pretty good. You roll all that through and again we think the cost of money, that's a blend of numbers, some people have a little bit lower, some people have a little bit higher. The developer procht at 12 and a half percent of cost, that's probably a real number that's required on a risk adjusted basis to attract capital. Do you think it's a little low? I think it might be a little low too, but I would rather err on the low side to make the point, as opposed to suggesting that all developers are going to get 25, 30%, maybe having a different conversation about the appropriateness of that. Anyway, long story short, you can get to the bottom line. What you see is on a per unit basis here. Really the numbers look very good to do four to five story construction, not so good to do ten, fifteen. And then again we did it with a couple of other examples here. This does not include developer profit. This is simply comparing cost and value. Value being essentially what it's worth based on current rent and you see the differential going on there. And so I think it's an illustration that leads us to overall conclusions as you all are thinking about calibrating these programs. I do think that incentive programs make a lot of sense, and I think particularly it makes a lot of sense even if they aren't taken advantage of immediately and sending a signal to a market about what the city wants, what the city is trying to achieve. But I think one of the couple of things that jump out about that, one is one size doesn't fit all. Different parts of town are going to have different market environments, different demand drivers that you saw in the uno area that are going to require individual prices as you're doing this. If you're going to make a mistake, make a mistake in charging too little rather than charging too much. If you charge too much, nobody will take advantage of it. If you charge too little you may get a flood and then recalibrate after that, the recalibration notion is crucial, this is essentially an incentive trying to respond to where the market is going. The one thing we know about markets is they change and sometimes could change fairly quickly.
So in terms ofen the relevance o we've talked about this morning, things that will be appearing on your agendas, as I mentioned, the council did direct staff to take a look at the uno program and look at the economics of that, and that will be coming back to you in the coming months, and so you will be seeing a lot of the same issues that we're talking about right now when that comes back to you, and so we wanted to give you this background today. As I mentioned, council has already directed that if in the event we are directed to move forward and develop a downtown density bonus program, we will be alongside that process going through a calibration process to ensure that we create the kind of program that we can recommend as a program that will be successful. And then of course east riverside, the regulating plan is in the process of being developed and that will be coming to you as well for your consideration including a density bonus program, and the basis for that program, for those recommendations in that plan. So just closing with some final thoughts to try to wrap up what I've talked about and what john has talked about. Density bonus programs can work. There's evidence of that around the country. And sort of but how do you -- it's in some ways no different from a recipe. What's the are recipe for creating a density bonus program? Calibration is essential. You have to look at the economics of a specific area, you know, the economics of the city as a whole are not relevant to the -- necessarily, to the economics of a program in a specific area of the city. You have to look at, you know, if the additional entitlement granted through the program is relatively minimal, it demands careful calibration because there may be minimal value associated with that increase in entitlement. And we'll be reiterating the if you set -- if you calibrate a program so that the cost that is imposed upon the project through the community benefits is too great, you will have no participation. You won't get community benefits. You won't get the density. You'll just at most get a project built under the entitlement which is inconsistent with some of our values where in fact we want density and we want the community benefits. So with that, we're happy to entertain discussion and questions and so forth.
Yeah. Well, I think for me has been a very enlighting discussion. I can't speak for anyone else, but I think the two points that I got out of it primarily, the ones that stand out, are that density bonus, the calibration of it is dependent on a place where it is, but also the time that you're talking about. So you have to be able to have that kind of flexibility to perhaps change -- change the calibration for a certain place depending on the times. And so I don't know -- I don't know how that's going to work out. But I'm sure that will be part of the plan you bring back is how that -- what is the adjustment mechanism, what is the frequency, and how the process is actually going to work. But I guess more practical and immediate terms is I think we have coming back very soon the downtown plan which has the density bonus component, and how is this going to work immediately assuming that this month the downtown plan is adopted and assuming that it's adopted with a density bonus component, how is it going to work? I mean we don't have a calibration plan yet, right, so how does it work now?
Well, we -- the structure of the proposed downtown plan density bonus program accommodates what we are talking about here in terms of the basic structure of assessing the value and so forth, and in fact back in 2009, when we were developing that structure, we did a calibration then. Our team -- I think we have about 75 pages of proformas as the backups to that density --
so you're saying you would go on a site specific and time specific --
Yes. And our mechanism in 2009 was very similar to what john just summarized in the little examples we just provided. So we have the structure in place, but what we recognize, going to your point about the specifics of geography and time, obviously 2009 is a different environment than 2011 or 2012 where we're about to be, and that's why it makes sense to go back and recalibrate, but we have the sort of raw materials. We have the hypothetical proformas, essentially in place that we can -- we can use, and bring back to you a recommendation that we believe will create a successful program.
It could even -- I think you're suggesting use it as an stimulus, to -- right?
Thanks, lee. A couple of questions. Thanks. I appreciate you sort of stepping back and giving us the big picture and I certainly get it that it has to be done right or it's not going to be successful. One of the things that I haven't been able to get an answer to, and I think that as we go forward, especially as we sort of institutionalize recalibrating and different -- different programs around the city is what is the -- do we have a standard approach to determining what an acceptable bonus density in lieu kind of thing is? How do we determine the number? Because the reason it's -- it was flagged for me is we had a situation where we had a recommendation on an area on one side of the street 50, and on the other side of the street because it was a different area, had undergone a different process, was 5 or $10. Now, clearly we know that times could have made that difference, but my question is do we take a different approach, because we had different consultants on those projects, and, yeah, the structure is different, but i feel like we need to come to terms with what is the right approach, make sure it's transparent, and if there's a difference between how we approach determining, say, the fee in lieu or what would be reasonable in one area from another, density bonus program, we need to know why that difference, and I was just concerned because I wasn't able to get those questions answered. Before. And I think going forward it would be good to make sure we can get that laid out.
I can take a shot at answering that from the point of view of sort of the mechanics of the program. I'll let john chime in on any of the economics. In all of these programs, our goal is to create programs that are administrative in nature. In other words, where an applicant understands going in these are the things I need to do in order to achieve the additional amount of entitlement that I want. We are not proposing a program like some programs elsewhere, i believe vancouver british columbia uses a program where essentially every project comes in, is a stand alone project, they look at the pro forma for that project. We're not proposing that. We're proposing an administrative program where the rules are laid out in advance. Inherent in creating an administrative program is some aggregating of areas. For example, we in the downtown plan use that as an example in 2009. We identified certain places in downtown where a fee in lieu for affordable housing could be set at $5 a square foot and the project would have an economic percentage to move forward, and the other areas of downtown where the fee could be set at $10. Obviously if you broke it down to the block level or the sub block level, you might, if you looked at the economics of any particular project, arrive at a slightly different number. You might arrive at 5 do I 27, or 11.02. We tried to aggregate those --
I know our time is limited so I just want to -- I think that -- let me make the point one more time, yeah, that is clearly it's going to be, we're going to have those divisions and all of that, but in determining the 5 or 10 or 1 or whatever, it's my understanding that we have taken different approaches in different areas in terms of -- it's not just a straightforward aggregate pro forma, blah, blah, blah, it's been different approaches in different areas, not just -- so, you know, different models, and I think that it's important that if we are using different models, different areas, we understand why, and I know we have to end at noon, so I don't know if you have a quick comment, but I want to make sure my colleagues have other opportunities.
I understand your problem. We will definitely take that to heart to make sure that when we come back to you, we talk about the same language and the same process for each one, I think that's our goal to do that.
Councilmember, one of the things that we are trying to do here is to reach a methodology that we can use across the board.
And so everybody understands going in what that is, what the rules are, and for every area, even though the costs may be different, the approach will be the same.
The approach to figuring out what that cost is will be the same or at least transparent and with --
Okay. I think that is really important, because that's been some of the trouble that weave run into over the past, and then just briefly, I just want to comment that on slide 21, where we were listing the density bonus successes or products that we have, in terms of the vmu, i am familiar with some others, maybe they weren't technically under vmu, but we do have affordable housing on the ground for things that maybe they were projects that were approved when vmu was in process that are affordable and they modeled it after the vmu that was about to be -- that was about to be adopted, so we do have other successes besides that, and i think it's important to be clear about that, and just while we have it on the table in terms of -- it's not only density bonuses, but we have other opportunities to discuss affordable housing like the whisper valley pit, you'll remember that we had a commitment in that negotiation, and I think we have muds coming out, it's important again to have a consistency in all of that. So I just wanted to make those comments.
And I think if I could just with one sentence follow on to that, sometimes one thing that gets lost in the discussion of density bonus programs is we talk a lot about affordable housing in those programs, but the density bonus program as it relates to affordability is only really one tool in the tool kit when it comes to our overall strategy on affordable housing. We by no means should put all of our eggs in the density bonus program, that was more than one sentence, sorry.
I'm going add one more sentence. On slide 21, the other important thing to look at is the density bonuses that added entitlements that have been approved under cure that, you know, may or may not have come with any affordable housing and there was a lot of density built under cure, so we sort of do know if it's free, it will be both and now how do we back off from there and find a fair balance.
Just real quickly, I'm a little bit confused because earlier said you're talking about a site specific calibration and a time specific calibration, now with this last discussion I get the idea you're talking about an area designating certain administrative rules and criteria for certain area, so which is it?
I think it's more a district that you're look at, and that district aggregates the market for that district such that --
so in the downtown plan you would have sub districts, is that what you're talking about.
And would you be flexible enough to change the boundaries and recalibrate within the boundaries for changing conditions and times?
Yes. And I think that's one of the points that john makes is that we have to be able to do that in order to make this work.
Well, makes perfect sense to me. Kathy?
I have, you know, we have five minutes and we have about a 22 page agenda with -- I have lots of questions about other issues and I think we're beyond the time. I don't think we have any existing time for me to raise questions and concerns about the materials in front of us. Since this does link to our downtown plan on thursday, i guess I wanted to ask my colleagues last time it was my understanding we were considering the second and third reading of the downtown planand we had quite a few people come down to council to talk about that and weigh in on it, it was proposed on the consent agenda without any discussion or rationale, so I just throw out to all of you is anybody planning on making a motion to postpone it on thursday because I have heard from citizens who want to know whether or not they should come down to participate in that discussion and I would like to be able to give them some guidance on that.
Mayor, I --
I have no interest in postponing it.
I do have a question, especially since john is still here, I will not be here on thursday. He is here on thursday, we will be paying for his time and I'm a cheap skate.
Not you personally.
It's not my money, particularly.
To your knowledge, any of you, has any of the cities that has adopted a density bonus program ever tried to gear the bonus levels to the cost associated with the additional development?
I understand what you're asking. I'm thinking I don't know off the top of my head, but I'm not the expert on what other cities have done.
Wouldn't that be included in the vancouver method, the pro forma.
You're talking about the cost of the project, the cost of the community?
I've got a 60-foot building. Aisle entitled to 60 feet. I think I might want to go to 120 feet t justification, we go 120 feet that is going to be a good thing to some extent, that's going to be community cost, we'll only get you to 120 feet if you recome pebs the community for the cost that you are causing it to incur by virtue of going to 120 feet t benefits of density, we also have the cost of traffic, congestion, having to do our wastewater lines, things like that.
You know, it's interesting, there's actually a fair amount of literature that says the community on a net basis is better off from a public sector cost perspective of sticking that density on top because presumably that growth is going to go somewhere else in the city and robert, and I can't remember his first name at brookings, have done some quantityification on that, and it's somewhere -- it's all over the map, it's situational, you're talking substantial public sector cost savings over time associated with density according to their work.
So in that sense, we hear this from developers all the time, you shouldn't be offering a density bonus program, you should just be giving me the 120 feet or the 180 feet or whatever it is I'm asking for, because the benefits to the community are much greater than any cost I'm asking you to incur at all.
I think that is probably a simplified version of it. But I do think if you go through their stuff and think about it, I do think there is a point to the notion that increased density does promote a benefit in terms of the costs associated wit on a net basis, traffic obviously can be a part of the equation, but in terms of physical infrastructure it's going to be more efficient in a smaller space as well as frankly public safety, something you know more about than I do.
Right. Remarkably easy to provide public safety in a vertical building in part because it's so difficult to get there and burglarize anything. If you are -- what you're basically endorsing the idea, though, you're basically saying 120 feet is going to be so much better for a community than 60 feet, and the costs are going to be relatively minimal, that maybe we should just let you go to a 120 feet, and what is the economic case for putting a tax on that last 60 feet.
You know, this as well as i do, you have to go through the costs and the benefits and really quantify all of it and see if it's -- if the benefits are sufficient that you want to not put a tax on it, or if in fact the market will bear, you will get all the benefits plus you can actually did extract a little tax from it to help create other benefits.
Let me ask you that question. Think of it this is almost a gingrich kind of a thing to label this this way, but my apologies. The easiest way for me to think about it. A density bonus is essentially a tax on density. So what tax rate are we incurring? We're doing a pro forma, figuring out a certain increase in density, produce another 1 hub thousand dollars for -- are we gearing our density bonus program to recapture, do we have a standard for that?
I'm a little reluctant, since I'm the noneconomist at the table, I think the way you do it, you essentially have to run proformas, there's a point at which the investors to a project, the return, their return on investment drops below a point that they're unwilling to accept the risk to engage in the project.
That's how you determine.
it's -- that's how you determine the maximum possible amount, right? 90% Tax rate, that lets 10%, nobody is going to go to the project, we drop it down, there might be enough left over for the developer to say, yeah, i wish you weren't taking most of my value, but I'll live with the rest of it, but it's -- that's the way we're thinking about it.
What you do is you say, your dead level best, you talk to people, you run your number, you come forward, if you're going to miss, miss on the low side, get a bunch of people running in north, the introductory price is over, we're going to ratchet it up, we're going to see the market which we did our best to assess before we jumped into this, actually says, no, you can extract a higher level. To some degree you do all the analysis you can do, you do your best guess, you see what happens, then you recalibrate.
And if on balance we agree with the general proposition you offered earlier, density is good, there are costs, we want to be recompensed for that. Offering a relative low tax rate is going to get us most of the benefit.
Maximize the chance of getting --
I guess, you know, I would say I heard other arguments for community benefit agreements beyond just what does it cost a municipality to provide, you know, what does it cost a municipality when a building goes up 20 feet from 60, there's also an argument to be made when you have -- I'm repeating myself because I think I said it many meetings ago, when you have a developer who has purchased a building or a lot with an entitlement to go 60 feet and they suddenly can double that, there is an increasing financial benefit to that developer, and it is, I think, I believe, appropriate to say some of that benefit, some of that economic benefit could be returned to the community in the form of a community priority, a priority that we've identified in our community is of value, and so, you know, often when I read about density bonus programs, especially those benefiting affordable housing, there are discussions about the need in a community for housing, and community priorities. I mean that is sort of absent from our discussion today, but i think it's a critical component to this discussion.
If I could very briefly play devil's advocate, I guess. Other parts of the city, they benefit from that, all over the city, the benefit from the additional density in downtown as well, and so I think some way -- in some way the calibration formula that you come up with should at least address that part of a community benefit, the fact that density inherently isn't in itself a benefit in certain places.
If I may defend myself for a moment.
I was agreeing with you. (One moment, please, for change ..) and a density bonus program notwithstanding the pure economic benefits of density in and of itself.
Can I just have one line on what you said. I that you knows we want to encourage density and an awful that, but based on the slides that we saw, the slide that has the double dollar signs on them. The fact of the matter is it's not going to be built unless there's a financial benefit to the developer and all we're saying is let's share the and we're talking about the fair share.
Being agreeable today, i agree with that too. But all I'm saying is somehow the benefit of the community of the density of itself should be a part of that calibration. That's all I'm saying.
Morrison: I'm saying split the dollar signs. And can we adjourn?
Mayor Leffingwell: I think we're going to lose our quorum. So unfortunately we're not going be able to to get to other items in the general agenda. I will say council, without objection, we're adjourned at 12:05.