Austin City Council Work Session Transcript – 9/9/2025 Title: ATXN-1 (24hr) Channel: 1 - ATXN-1 Recorded On: 9/9/2025 6:00:00AM Original Air Date: 9/9/2025 Transcript Generated by SnapStream ================================== Please note that the following transcript is for reference purposes and does not constitute the official record of actions taken during the meeting. For the official record of actions of the meeting, please refer to the Approved Minutes. [9:02:41 AM] Everyone. Good morning. I'm mayor pro tem Vanessa Fuentes and I will be presiding over today's work session. As mayor Watson is traveling on city business. We have a quorum present, and it is 9:02 A.M. At city council chambers, which is located at Austin city hall, 301 west second street. Unfortunately, council member Siegel and councilmember qadri will not be joining us today and joining us online. We have councilmember Velasquez and council member Ellis. We will begin the work session with public comments. Speakers will have two minutes per item. Speakers may donate time, but must coordinate with the city clerk beforehand. All parties must be present in person to be eligible for time donations. Colleagues, just to go over the agenda for today, we'll have public comment. Go first, then we'll have council item that has been pulled. Item number 41, a resolution related to naturally occurring affordable housing, also known as Noah, and changes to the relocation assistance requirements under the density bonus programs. There is no presentation for [9:03:42 AM] There is no presentation for this item, and I will recognize councilmember vela to kick off questions from the dais after we take up the council meeting item, we will go into item b01, which is a briefing from zoning officer joy Hardin on a redevelopment assessment for a proposed pud located at 606 hundred and a half east Riverside drive. After staff presentation, we will then open up to questions from the dais. Although we were posted to head into executive session today to discuss legal matters pertaining to economic development negotiations, this item has been bumped to Thursday's council meeting, so we will not go into executive session today. That item will now be considered during the council meeting on Thursday. Any questions related to today's agenda for our work session? Okay. City clerk, can you please call the speakers? >> There are no speakers today. >> All right. It's going to be a easy breezy work session. [9:04:42 AM] a easy breezy work session. Then. Councilmember vela, you pulled item number 41 for today's work session. I will recognize you for opening remarks. And I believe assistant city manager Johnson will also be recognized to speak on this item. >> Yes. Thank you very much, mayor pro tem. And thanks to council member duchen for for bringing the item. I, I put up a post on the message board with some thoughts about it, but I just wanted to to take this opportunity to explore what this means. Essentially, I'll paraphrase the item that council member duchen is bringing. But you know, in the past we have bought entire properties. I know in particular the project connect money. We use that to to buy currently existing affordable housing along the rail line. The item that councilmember duchen is bringing would be buying down or buying affordability in existing [9:05:45 AM] affordability in existing affordable housing. Privately held private market, affordable housing. It's a new approach for for Austin. And I understand, doctor Johnson, that this is an approach that you used in Dallas at the that the city of Dallas used. And I was just wondering if you could tell us a little bit about the approach and kind of some of the principles behind it. >> Yes. Good morning. Mayor pro tem council members, doctor Eric Anthony Johnson, assistant city manager. Before I do that, council member I'd just like to give a quick, just a quick overview of the state of Noah so we can really understand Noah as defined by costar, which is one of America's leading real estate organizations, represents properties that range from about 1960 to about 1990. They're affordable, which actually covers the bulk of America's affordable housing. Stock is actually Noah properties. So in Austin, we have roughly 28,375 Noah units, which represents about 789 [9:06:46 AM] which represents about 789 buildings. Unit size is about, on average about 36 units. Income for individuals living in those properties is about $73,000, which represents 52% of the population. Ranges between 40 and 55 plus years of age 19. Only 19% of their income goes towards rent, which is roughly about 1395 a month, according to costar. So in 2025, 22 buildings hit the market, which represented about 800 new units. The forecast is showing close to 100% of probability of Noah properties being sold between now and 2030. Forecast heading to 2030 is showing potential demolitions close to 100 units a year, or roughly 5000 units by 2023. So the question is why? Why, why is this happening? In 2016, costar defined Noah properties as [9:07:48 AM] defined Noah properties as investment grade properties, and in doing so, they classified categories from one being the lowest to being sort of above that. That created this sort of issue. And the reason it became an issue is because it's actually cheaper to buy Noah than build new construction. But let me just add this point to a key issue. Why is this happening? Price of acquisition opportunity for rent growth. So when you see numbers where you're currently at about 1395 a month for rent and at 30% Ami, I'm sorry, at 30% of your income, you still are at 18, roughly 1800 a month. That's a 400 plus rent growth a month in terms of rent growth possibilities. So what that says to the market is even if you bought a Noah property, you can go in, put some paint on it, fix a windows and raise the rents right. Secondly, redevelopment possibilities. There's two classes of Noah. So we really understand. One is Noah's that sit in the path of redevelopment activity. Those [9:08:50 AM] redevelopment activity. Those are the ones that are usually obsolescence, a serious level of obsolescence and decay, which presents an opportunity for acquisition, acquisition and redevelopment. The second one is really the universe of Noah properties that are not necessarily in that space. So I just want to give that quick overview so you can quickly understand the state of Noah in Austin. So in Dallas, just to give you quickly, because this is not new only to Dallas, I just don't want to emphasize Dallas also want to give an example. And I'll talk about Dallas because I'm familiar with the other funds as well. So San Francisco, Charlotte, Detroit, Dallas, Cleveland, Washington DC are the cities that have funds operating outside the work I believe in Austin is about getting to scale. I think if you were to talk to the Texas housing conservancy or the community foundation here, we would talk about scale. We need to get to a larger scale. So in Dallas, it really came down to this. We had our traditional sources, [9:09:51 AM] had our traditional sources, which was basically hud, cdbg, home dollars. But be honest, we had roughly 6 million sitting in a trust fund and conversations with the council. We said, wow, we need to figure out a way to get to a greater scale. So we simply leveraged $6 million as part of a foundation building to attract private philanthropic dollars to Dallas. It sounds complicated, but it was really that simple. It was a 380 agreement with performance metrics actually led by the city's attorney's office, because Texas doesn't allow municipal money to be used as first loss reserve. But we figured it out through working with the attorney city attorney's office to do a performance agreement in Dallas. Fund actually started out at started out with a performance metric of reaching 40 million by a certain deadline, which they have met. So simply put, 6 million loan loss reserve set the baseline to draw $100 million fund. With the ability to have performance metrics, we set the numbers pretty low [9:10:53 AM] set the numbers pretty low because we wanted to give the team a certain sort of space to do the work, so the team consisted of strategic investment office out of new York, the real estate council in the city, city of Dallas. Now, what's interesting about this, this is just not Dallas, the Cleveland scenario. The city dropped 18 million into their fund, which launched about a month and a half ago. Keybank immediately put 38 million into the fund. So this is not about really reinventing the wheel or doing something new. It's about getting to a greater capacity. And in conversations with the Texas housing conservancy in particular, I believe we have the ability to set that type of foundation here in in Austin. So that's just a quick snapshot I can take. Any questions. Thank you. >> Thank you very much. I appreciate the background. And just for the public and for those that are not deep into the the housing policy weeds, Noah is a naturally occurring affordable housing. And typically as doctor Johnson, [9:11:54 AM] typically as doctor Johnson, just these are complexes that are going to be between, let's say, you know, 30 to 60 years old. They're market rate, but they have a lower rent typically than your kind of average housing. And in when we're talking about buying down the affordability, could you explain what that looks like for an individual property? When we would if we were to strike a deal with an individual property to preserve the the Noah, what what does that look like? What are the metrics? What are the kind of the parameters of the of the agreement? >> Great question. Council member. Let me just say this coming off of close to five years dealing with this issue in particular, the concept basically works like this. If council were to approve going forward with the creation of a fund, we would actually create a trifecta. The trifecta would be grant based source for Noah to help with capital improvements, because the biggest issue in Noah is [9:12:54 AM] biggest issue in Noah is actually ability to take care of the capital improvements. That's why the rents are the way they are. Number two, we would look at a low cost fund to help with new construction and a component around services. So in terms of what it would look like, it would look something like this. First of all, setting a sort of framework around what is doable. You don't want to do every single Noah property. I think we would have to come up with a criteria. I think that would probably focus more on the level two or start start two properties, which are Noah properties that are not so far gone, but in terms of how I would basically work, it's not necessarily buying down the rent. It's saying to an owner without disrupting the market, saying, hey owner, if you are interested in selling your property because the deferred maintenance and capital improvements are so significant, we have a grant source that we could provide to you to do the capital improvements in exchange for a covenant on the [9:13:55 AM] exchange for a covenant on the property to guarantee affordability for a certain percentage of affordability over, over a period of time. That's basically how it works. That's how it works in Dallas, Cleveland, Charlotte, San Francisco. That's basically the baseline. So it's not necessarily buying down the rent. It's saying to a land owner, property owner, hey, should you not want to sell, but you realize there's no money. That is basically how it would work. >> So we would be stepping in to essentially help a private market owner maintain their housing in in relatively good condition in exchange for them keeping the rent, because, again, the private market incentive would be the the again, the the flipper. Right. The lipstick job where they sell the property, someone comes in and does, you know, minimal improvements and the rents go up 40%, you know, 50% something to that effect. With that as kind of a premise, you mentioned the level one and [9:14:57 AM] mentioned the level one and level two properties. Can you can you explain a little bit about what that means, what what the difference is? >> Yeah, I'm going to read directly from the costar analysis. So start start one is basically practically practically uncompetitive with respect to typical multifamily investors may require significant renovation, possibly functionally obsolete. These are level one that is so far gone that you don't have enough money to put into it. You wouldn't want to touch that one. Level two is more properties that may have below average finishes, inefficient use of space, site amenities, but are really in need of, you know, not extraordinary rehabilitation enough per unit that would signal to the potential owner that you don't have to raise your rents to [9:15:59 AM] have to raise your rents to cover the costs for the needed improvements. Right. And that's the definition, purely functional. Two stars, one star, obsolete. >> So from from a overall good perspective, then the level one properties would be properties that in all likelihood need to be torn down. They're not really worth investing in for. Again, for various reasons. Level two are the older kind of worn down properties, but they're they've got good bones. And that that we can preserve is that is that a. >> That is absolutely right. Using the word good bones is a good way to describe it. They're not functionally obsolete, but with some love and tender care, you could preserve the property. >> Yeah. And how how how did how could we leverage private [9:17:02 AM] how could we leverage private funding with, with regard to this type of of program? Because again, just in my, my sense of it is that from, from the public perspective, you know, the city of Austin will come in and say, hey, we will give you X amount of dollars to again, you know, make the necessary repairs, plumbing, electrical, you know, windows, those kinds of things like that to make sure that they're in good shape and that they can continue being used. And then they would give us a covenant for, again, 20 years, 30 years, 40 years, whatever the case may be, of of affordable housing, where does the private funding come in? How do we leverage a private funding in in those kinds of scenarios. >> In that scenario, or to generate the fund? Because in the scenario, it's basically a capital improvement grant from the source that would be raised through philanthropic, community, banking, community, etcetera, that would go to the owner in exchange for the covenant of 20 years or [9:18:04 AM] covenant of 20 years or whatever, with some other performance metrics. Because once you go in and do the work, then you have to have some other mechanisms to ensure that they maintain the property at the new level that it would arrive at after the improvements. >> So this would be we would be going to the the donor community, the philanthropic community and asking them, you know, let's say again, Austin butts going to put in a certain amount, maybe we can raise from private sources a certain amount and then use that fund to make these kinds of investments. >> Yeah, yeah. Councilmember. Absolutely. Right. And it will not I usually don't use the word will not it will not happen without the city's baseline because the message in all of the cities I described, the signal to the private community, philanthropic corporate is that the city is engaged in this. And guess what, guys? It's not a lot of money. It's not like you're taking 50, $100 million to do it, because what you're trying to do is say, hey, we have limited resources. We want to leverage what we have. We want to draw in as many private actors. And in this is not just a local. This [9:19:04 AM] this is not just a local. This is a national sort of play, if you will, in terms of raising the dollars. >> Great. Well, and so what we have done, for example, when we passed the the project connect TRE back in 2020 that had a $300 million in it for affordable housing along the light rail lines. And we have acquired a number of properties along the line. And again, I've talked to the housing staff about it, and they mentioned that same thing. They they didn't want that level one property. They were looking for those level two properties where they were doing their due diligence. They wanted to make sure that they weren't buying a money pit, that it just, you know, things falling apart. I completely understand that strategy. I support that strategy. And the the other kind of aspect of the program that I think is very valuable is that we now own that land. And again, maybe we can extend the life of those units for 30 years. But we're kind of land banking also. You know, we're [9:20:06 AM] banking also. You know, we're acquiring actual real estate close to future light rail lines that a future city council can then decide, you know, what they want to do on that when the how how does that how does in terms of like, you know, getting the most affordable housing for our dollar, how does that ownership model compare to the, the the program that that we're talking about today? >> You mean in terms of land banking? >> Well, in terms of I guess like getting, you know, more affordable housing per dollar, like like in other words, my sense would be that actually purchasing and holding the property and keeping it affordable would be a more expensive, potentially more benefits down the road. But whereas this seems to be a less expensive but again, you don't have the ownership and obviously the covenant in, how would you kind of weigh those two approaches. >> Great question. There's sort of two paradigms here. So the first affordable housing is preserved. What you have, whatever you can do to preserve [9:21:07 AM] whatever you can do to preserve what you have, you preserve that this type of fund in the trifecta with a Noah element allows us to preserve what we have. Secondly, if you have a land bank scenario, I would argue anywhere, any time that unless you're running financial models that are below market, it's going to be very difficult to get affordability at the level you need. So I would even argue for our acquisitions of sites land banking. We should look at under market approaches to do it. Because if you run analysis based on traditional real estate, it's going to be tough. Or if you're just saying we're going to do a tax credit, which is hugely expensive. So to your question, I think we need to have an arsenal of tools available, including land banking, looking at our assets, looking at Noah, how do we draw in low cost funds to support the work? So it's a combination of of everything. I just don't think it's like a11 source [9:22:07 AM] think it's like a11 source approach. >> Great, great. Well, that's I just wanted to to kind of put that out there and understand the program myself a little bit more. I think this is a new approach, at least for Austin, but it is helpful to know that it has been tried in other cities and successfully. >> Let me let me draw one last distinction, because I think it's important to know the difference, the challenge in the Noah space without disrupting the real estate market are the properties that come online for sale, and you have to match the speed of the market to respond. That is the biggest challenge with Noah, not just the sort of collective of properties sitting out there. And you notice I use the word without disrupting the real estate market. So the big challenge, because you don't have the time to necessarily do the required inspections at a level that you would uncover [9:23:07 AM] level that you would uncover all of the issues that may be prevalent. So if the council is council chooses to do so, I think we have to have a conversation about what that criteria looks like, because the real issue is the speed. In Noah, when a private is going to buy. But there's an entity capable of buying with no support without disrupting the market. That's the biggest challenge. >> All right. >> Well, thank you very much, doctor Johnson, for the questions. I have nothing further. >> Thank you, councilmember alter. >> Thank you very much. I have some questions backing up to your just opening remarks. I got a little bit lost. And so I just want to make sure I understand at the opening you were talking about, I think the either the reduction, you had a figure of 100 per something and 5000 per, I think year. But I, I lost you there and what you were saying. So can you just rewind to that moment for a second and. >> Yes, councilmember, what I [9:24:08 AM] >> Yes, councilmember, what I was describing, based on the information and research provided by costar, which is really the noaa experts they're showing in their forecast the likelihood of noaa property selling is pretty significant between now and 2030. And then when you do a calculation at roughly 100 units per year over the period of time, it's it's calculating close to 5000. But that doesn't mean let me back up the 5000, according to costar, is showing forecasted demolition. That's saying something is active in the market in terms of noaa properties that as investment grade properties, again, it's cheaper to buy these things, knock them down and build new. So I believe that context is out there. So the noaa of the noaa research, according to costar, is showing that forecasts of that happening is pretty significant. [9:25:10 AM] pretty significant. >> And that was 5000 by 2030. Yes. Okay. And then you were talking about when it comes to the financial piece, the the city bringing money in and then is that leveraged against just philanthropic dollars or you, you said something about banking like, are we getting loans that are leveraged against against this. >> Yeah. Great. Great question. So the city's participation in every city I described is critical to sending the message to the philanthropic, financial, corporate world that we are going to establish a loss reserve that gives you the ability to now invest into the fund. And you do that through two different ways. And what's interesting about Austin, the capacity is already here with the Texas housing conservancy. So what usually happens is loan loss reserve signals. It's okay [9:26:11 AM] loss reserve signals. It's okay to put some money in a bank will say, okay, we can match the terms. We'll put this real scenario. We'll put 38 million in at 30% debt and equity over 20 years, whatever. Also, we're going to match that with a $5 million grant to support noaa capital improvements, or will match that with another 2.5 million to support services. But the baseline in every single city is about the city setting the foundation through the loan loss reserve. That's why I described the 380 agreement in Dallas was a performance agreement that described how it was going to move forward. >> And so the the actual dollars doing the rehabilitation is not, let's say that $6 million, it's the loan from the bank. >> It is the collective of the growing fund. Right. What normally happens is you get a sort of idea of what's in the [9:27:13 AM] sort of idea of what's in the pipeline on two fronts. One new construction. What is the pipeline showing? What is potential for deals coming forward over the course of X? On the noaa side, you look at what is the possibility for owners participating in a program like this to secure funding for capital improvements, and what is the possibility for acquisitions to preserve that becomes like the baseline now that the collective team, sort of that would be the loan fund that would market to the region, to the state, to the world and internationally to draw money into the fund to achieve the objectives as defined by what is happening in the market. >> And is it all philanthropic or is there is there a return on the investment. >> The philanthropic or banking or corporate matches the requirements set by the fund? So, for example, if the fund says we're going to set a low [9:28:13 AM] says we're going to set a low cost fund, I'm making it up at 3%, then you're not coming into the fund at five, you're not coming into the fund at six. We need you to come in at three to match what the fund performance is going to be. And then on the grant side, speaking as it relates to noaa, what usually happens is in those same conversations, you're also saying, look, you could have access to acquisition of noaa property at 3%, 20, 30 year debt and equity. But we also have a grant source for you to deal with aging, deferred maintenance, capital improvements to ensure that the property is stable and long term affordability is put in place. >> So if I'm clear and forgive me if I'm just missing it here, but there's kind of like a master fund and then you're talking about different tools within the fund being the grant for the restrictive covenant. [9:29:14 AM] for the restrictive covenant. But separately, you might have a acquisition portfolio that has kind of like the Texas housing conservancy model and potentially something else. Is that. >> That is correct. We I believe we have I call it the trifecta, which is noaa services and new construction. Okay. So it's really the trifecta. >> So in these other cities, what kind of returns are they offering and what kind of capital have they attracted? >> Yep. Good question. And what's interesting about this, the Dallas fund started out at 2%. Now market change Dallas is now up to 5% right. So Dallas has done about 40 something million as part of a $100 million as described in the agreement. San Francisco, of course, is just totally 500 million, with the likes of Facebook and everyone else contributing to the fund. But I'll give you some quick numbers right quick. I'll just read them off of the the sheets. The bay fund size was 239 million. Charlotte started out [9:30:15 AM] million. Charlotte started out at 43 million, but they're on their second fund of close to 200 million. Detroit started out at 58 million. Dallas is currently at 41.5 of $100 million fund. Because the performance requirements in the 380 agreement require Dallas to reach a certain threshold, which is 40 million, by a certain period of time, Cleveland started out at 38 million. Funny thing about Cleveland. Cleveland came straight out of the Gates in day one with 38 million, because the city put in 18 and keybank put in the remainder to to launch pretty much out of the Gates. >> Okay. >> All right. Well, now I better understand. Thank you. >> Very much, >> Very good. Councilmember duchen. >> Thank you, mayor pro tem. And first, thank you, doctor Johnson, for helping us tremendously with your expertise in the space. It couldn't have been better timing that you joined the city at a time where we were trying to think about what other tools we could add to our toolbox for [9:31:16 AM] we could add to our toolbox for how to address this issue. I want to start by just building on the context that you laid at the beginning. Can you help us? Can you expand on perhaps the general state of noaa in the city, and what you see in terms of the opportunities and risks as far as displacement, gentrification, if we, you know, let's say we don't do this or we don't pursue noaa solutions going forward, what what's what's our future look like? >> Thank you, council member, for the question. Let me first say that every American city should have a noaa strategy. If they do not, I don't believe they are functioning appropriately in the space of affordable housing. So number number two, to that point, I mentioned the rents for a reason. Because if the properties are listed as investment grade properties and I can acquire something at a lower price point and I can get rent growth, that tells me I [9:32:16 AM] rent growth, that tells me I can buy the property and have the ability to raise rents. So we're facing two potential dynamics as a city that is moving faster and faster towards a redevelopment standard, which means you're going to look more at possibilities to redevelop older properties. Number two. Number three, because of rent growth, possibility at the properties will be facing, I believe, expedited rent growth increase. According to costar, they're looking at 910% rent growth in their properties by 20 by 2030. So we can't solve every for every scenario. But what we could do is establish a baseline program to help when we can, to be honest with you. And that's probably the best we can do. It would be a gargantuan effort of resources to try and step in and buy every single property. But I think it would be incumbent upon us if we if the council chooses to do this, to look at, [9:33:17 AM] chooses to do this, to look at, you know, alignment and strategies that would help us do the best we could. >> Thank you. Can you speak a little bit to, you know, part of what we're trying to accomplish with this is just to have a better sense of the properties that are out there, per councilmember Taylor's point, understanding the distinction between the star one and star two properties, for instance, figuring out where these properties are clustered, figuring out what the you know, can you expand on or speak to how that information is going to help us potentially? I mean, you and I have even talked about using a tiff or other tools when we find those clusters of properties to to find other ways to extend the life or work with owners. So can you speak to that a little bit? >> Great question, council member. When putting together funds of this nature, you're going to have to have an understanding of the pipeline. You can't market and generate [9:34:17 AM] You can't market and generate resources without clarity on the pipeline of the pipeline. So what what happened is that we would look to get an understanding of the location of nowruz. But here's a tricky here's a tricky point. You can understand the locations, but if you don't understand where the development patterns are, where the growth possibilities are going, that's the magic in trying to understand that. And that's almost a flip of a coin, to be honest with you, we can try our best to try and figure out where that trajectory is going and figure out where the clusters are. But as part of the process, we would have to. Understand what the potential pipeline exists. So we would have to do it as fundamental work to establish such a fund. >> Thank you. Next question would be to help me figure out, or perhaps just explain to me and the others here on the dais. One of the things and you touched on this earlier, I know, and in fact, I think I see miss [9:35:18 AM] and in fact, I think I see miss Medina out there from the Texas housing conservancy. Thank you for coming and acknowledging the great work that they've done for, what, a decade plus in this space, starting with the strike fund under mayor Adler and doing a tremendous amount of work, particularly at the, I think, 60% enough mfi space to create housing for working families here in Austin. How does this build on them and other partners that are already doing work in this space, this fund? >> Yes, that's a great question. Again, it actually helps to build the capacity to build, to give us greater, greater capacity because the experiences are already here. The way these funds usually work, you have to have a bona fide local partner with experience. So the Texas housing conservancy, they've been doing this work. It's something that I believe we can build upon in terms of how we structure the funds, the grants to do the work. But this is about getting to scale. I [9:36:20 AM] about getting to scale. I remember having a conversation with community foundation and the question was, we're big city. We got to get to scale. We need larger numbers. So if the opportunity exists to get to a larger scale, that's where the relationships currently in place could help us get to a larger scale. So it's not about reinventing the wheel or duplicating. It's about getting to a scale that would be appropriate to the size of the city of Austin. >> Okay. Thank you for clarifying that. Last question, I think, is when we started this process and drafting what we thought might be an improvement and expanding our tool set, we had talked about. A lot of different options, but among them was we had a lot of very specific ideas about everything from like the tifs or the tenant benefits. We wound up working with you and legal to try and actually broaden and give you more latitude, knowing that this was a space that felt like we could place a lot of trust in you to [9:37:23 AM] place a lot of trust in you to to deliver us a product or a series of recommendations at the very least. One thing I want to be really cautious about is returning to that place that we started with, which is being too prescriptive. Can you just touch on the the value of not constraining what the current options are at this, at this space and relying on your implementation of this program in Dallas and elsewhere? The research, the comparative research we've done in other cities to hopefully deliver us recommendations and what the timeline on that might look like. >> Yes. Council member, what I would say to that question is having the ability to explore all creative and innovative solutions, I think is something that in this space of affordable housing in general, we have to do. I give you an example. The reason why I say this. There's a concept called zombie zombie properties. Those [9:38:23 AM] zombie zombie properties. Those are properties that they are not functioning enough to attract the market. They are in such a scenario where the capital improvements and the deferred maintenance is so tremendous. They sit there and they just kind of become like zombie properties. What I've seen from other cities, in terms of thinking about this issue in particular and knowing, I keep in mind, everybody, the bulk of America's affordable housing is actually in our space. It's not tax credits, it's not public housing. It is actually in the noaa space. So to that question, I would say we should explore all possibilities. And if the council so chooses and it makes sense, maybe we explore it. But I think we leave no stone unturned in terms of thinking about different ways to do it. That's what I would say. >> And the timeline. How long did it take in Dallas to get this started? >> Well, I'm not going to say, because I don't know if it's going to be this timeline in [9:39:23 AM] going to be this timeline in Austin, but in Dallas we moved at rocket speed. I want to say anywhere from four months, maybe, if that. Yeah, it was pretty quick. But that's not that's not necessarily the case for every city example. Now, Cleveland moved so fast because the environment was just ripe. Keybank was ready to drop, I want to say 28 or $30 million or something out of the gate. And it made it simple for the city of Cleveland just to come up with 18 million out of their trust fund in that scenario. So it just really depends on what we have to do. Example, understanding the pipeline is going to be important, projecting what we see coming online for new construction, because I think this fund, if council so chooses, is a trifecta with the three components. Understanding the noaa baseline, the pipeline of potential new will actually dictate the time. The faster we [9:40:25 AM] dictate the time. The faster we get to that, the faster I believe we can put something together. Bring some recommendations forward, I should say. >> Okay, thank you for clarifying that. So just to end with a comment, you know, my one, I want to thank councilmember vela for raising the concern. And I think we've got at least a explanation for doctor Johnson about how we're classifying these different properties and the acknowledgment that and I think we can all agree it's, you know, financially and for other practical reasons, imprudent to focus on every single property. That's just unrealistic. Nor do we have the resources. But for what I'm hearing, given the scale and scope of the newer properties and the challenge before us, or perhaps opportunity before us. Given that some are going to be vulnerable to redevelopment or demolition and some of the statistics you've even raised this morning, you know, I want to be really careful about limiting our area of concern. I don't think I suspect nobody here really has the appetite [9:41:26 AM] here really has the appetite for, you know, bankrupting the fund, pursuing properties that would be totally unsuitable for this kind of effort. And I think we could hopefully rely on doctor Johnson's judgment in this space to get us to a place and give us recommendations and give us guardrails to ensure that that wouldn't happen. I've also got some language that the mayor has shared with us that I think will be incorporating as a friendly amendment that I want to share with you all that I think will also help address the concern that you've raised, too, in terms of being really specific, that what's realistic and what's not. So with that, I want to thank again, doctor Johnson for clarifying this stuff this morning and obviously address any concerns that you or others have going forward for how to make sure that we can get this working soon. >> Thank you. We have a few more questions from the dais. We'll recognize councilmember Ellis first and then councilmember Laine. [9:42:27 AM] councilmember Laine. >> Thank you. I wanted to ask a couple of questions about utilities, and this comes from having an experience living in an aging apartment where a lot of the the cost, I think that was on the owners was about water utilities having to dig up parking lots and replace old water lines. Is there a conversation about the balance between what is, you know, the building itself versus some of the other hard costs that landlords are dealing with right now? Can you speak to your experience and any anecdotes you can tell us today? >> Yes, councilmember, I'm laughing. But because the issue in the noaa properties, because of the age, the infrastructure in new construction, you have sort of a separation between like, say, pipes and utilities, things of that nature. But in noaa buildings you have like, for example, one giant water main running through the one complex. And if that water main that runs through the entire [9:43:29 AM] that runs through the entire complex all of a sudden cracks and breaks, it's a problem, right? If you think about hvac systems in older noaa buildings, those elements after the last four and a half years working in this space as president and CEO of a large affordable housing company, know that was a challenge. What I would say is we would have to look at criteria in selection. And let me tell you what I mean by that, because Minneapolis struggles heavily with this. If you're in a race against time to try and buy another property, when a private investor and you're matching their performance criteria in terms of the sale, you will not know the extent to which the utilities, the infrastructure is present. You will not know what's really behind the wall. You can do some testing in a few buildings here and there, but you really won't know. That is something that we would have to try and figure out a way to deal with. [9:44:30 AM] figure out a way to deal with. If that scenario presented itself, because it it it will be a problem. >> Thank you for that. I know Austin energy also has a great weatherization program. Being able to offer incentives and assistance and evaluations for properties that, you know, windows create a draft. Doors are have cracks at the bottom. And so you're ending up with high utility bills through Austin energy or other providers, simply because the the units themselves are not holding on to the heat or the ac, whichever one is necessary. And so I'm very curious about this, because I think there is a big interest in this city to preserve, you know, the the affordable housing that just that we're talking about today, but at the same time trying to understand what what is weatherization, what is replacing walls or buildings themselves, what is underground utilities. And so, you know, as someone who's not in real estate, I'm trying to unpack, you know, what that looks like and what other programs might be helpful in this conversation. [9:45:32 AM] be helpful in this conversation. Let's say there's a building that's already been refurbished, but the underground utilities are really the cost driver at that point. So I'm curious about that to see what we can do to possibly help in that that regard. And. I just want to say I appreciate, you know, some of the questions I had have already been answered. And so continuing to work with the conservancies that are already in this space is really important to me. You know, when we looked at the anti-displacement dollars with project connect and decided to front load those payouts to make sure that the the housing that's existing along those corridors could be preserved? That was a really intense conversation, understanding, you know, what our community is going to go through as we build light rail to to look at how we prevent displacement on the front end. So I'm curious about the geography of where anti- displacement dollars through project connect are necessary, and how you might look at the geography of what other units are are prime that don't qualify for those dollars. [9:46:33 AM] don't qualify for those dollars. >> Yes, councilmember, I think that is part of an exercise we would do in terms of defining what we believe the pipeline will be, as crazy as it seems when you build tod, you actually create a scenario to further displacement. That's urban land institute, that's the research. But what we want to do this is sort of like it's really tricky because I don't necessarily have a definite answer, because we'd have to do the research and analysis to see what we're really dealing with, and then to start to formulate what we think would be a realistic displacement strategy as part of Noah, given the context. >> Thank you. That's all I have. Thanks, mayor pro tem. >> Thank you, councilmember Laine. >> Thank you. Thank you, councilmember, councilmember vela, for the work you've already done on this. And doctor Johnson as well. I had a [9:47:33 AM] doctor Johnson as well. I had a question about the definition of Noah properties. You had defined them in terms of age, 1960 to 1990 years of construction. But but percent of mfi of rents is also an important part of this affordable housing. You know, dynamic. So how would that how would you consider rents in your definition? Or would you. >> The costar definition? Actually, in 2016, Noah became a term in 2016 after costar, one of America's leading real estate analytic groups, defined the term in that definition became investment grade. But they didn't do it based on rents. They did it based on age of property and conditions in the properties. So it was never really designed around rent as the defining. But by chance, because the buildings are older, [9:48:33 AM] because the buildings are older, right? The rents tend to be lower and they lower because of deferred maintenance and capital improvements. Right. So the definition was really based on status of properties. But by chance, because of the conditions, you had people at lower incomes 50, 55, 60, in the newer properties. >> Okay. That makes sense. Thank you. I see how that investment grade ties in with the quality of construction that you were using. So let's see when we were thinking about the restrictive covenant that we would put on the property, is that an area where we would consider percent mfi in terms of what we would require? >> Yes. Council member example. And I'm giving you a real life example, 800 unit Noah property. 20% at. 20%, 25%. Up to 50% of Ami. But we also recognize too, [9:49:40 AM] Ami. But we also recognize too, that if the owner is going to be able to maintain the property, this is sort of weird. You just can't keep everything at 50, 50, 55, because now they're going to need resources in terms of some sort of rents to keep the investment. So I would argue even even if the city did this, you got to be mindful that you can't take like everything at a low income, put in the building and expect that building to perform. The real estate mechanics just don't work. So it's really arriving at a percentage that is comfortable enough. But to also allow the owner to say, I've reset now I have the ability with some rent growth at, you know, 60% and above a little bit to give you some flexibility to draw in resources to continue the work. The mistake we usually make is just everything low packed in and it just doesn't function that way. [9:50:41 AM] that way. >> So I think you mentioned also that there would be an expiration date on the restriction, like 20 years out or. >> 20, 30 years, whatever the criteria I think would be in exchange for in exchange for the support for the upgrades, a covenant on the property in exchange for example, percentage of affordability over X period of time, 20, 30 years, whatever. The council sets forth something like that. >> And have you thought about I mean, I know you have thought about, but do you have anything that might relate to, I don't know, like first right of refusal, any kind of conditions at the end of that period or it just fully. >> Well, having done this in various cities, to me the best route is an open, engaged conversation with the multifamily community in the noaa space. You have to have that conversation so they know, because the key to this is not [9:51:44 AM] because the key to this is not disrupting the real estate market. You're going to get in trouble if you do that. So what we've done in other cities is constant communication with the multifamily Noah community to let them know where we stand. And you know what? Hey, if you decide you want to sell, give us a call. Maybe we can partner you with a developer that specializes in affordable acquisition or something along those lines without really inserting ourselves into that process. >> Okay, this is this is really interesting and I appreciate all this information to be able to think about how it fits together. I it sounds like from what you just said, that it could also make sense to do kind of a step up of the percent rent requirement. >> In particular. In particular, council member, if the community the council is concerned about ongoing upkeep of the property because you [9:52:44 AM] of the property because you don't want to say, hey landlord, here's money, we got covenants, we got everything, now you're back to square one three years later, because the biggest issue is because of the capital improvements, deferred maintenance. They do not. If they raise the rents, everybody would have to go to get to the level needed. What we want to say is strike a balance that allows them to get some growth, to build their reserves in order to upgrade continuously. It's sort of like a reset. >> Okay. And I building on what council member Ellis was asking about with utilities and weatherization and some of those other issues. I'm also wondering about. Requiring, as a condition of the grant, some retrofitting, for example, improving sidewalks, adding bike storage, things that are that help to improve the connectivity with the neighborhood and the transit that older properties often don't have to the same extent [9:53:45 AM] don't have to the same extent as these redevelopment properties. >> On that point. Council member a couple of things. I believe through this process, we would have the opportunity to define what those elements are in exchange for the grant. For example, we lead with the interest of the residents. The residents will tell you, my windows are leaking. It's either hot or cold. They will say, my appliances are outdated. They will say things like, my carpets are just old. I have all of these different issues. So I think we build the criteria based on, you know, more likely what we're going to hear from residents, but in alignment with the landlord. The other piece related to the sidewalk improvements and things of that nature. I'm not sure how we I haven't seen that before related to like a fund necessarily, but I wouldn't put anything off the table. Maybe something we can explore depending on the size of the property, because what you want [9:54:46 AM] property, because what you want is curb appeal as well. When someone lives in the property, you want them to feel good about where they live. >> So I think I like what you're saying a lot about building based on resident input of what's problematic for them. Multifamily investment, community owner operators, that kind of thing. And I also hope that whatever framework comes also reflects the city of Austin and its values. As the third leg of that stool. And in that we see lots of examples of already developed areas that don't have the same. They have all these gaps in sidewalks or they don't connect to transit and that kind of thing. So and storage of things like bikes. So that's why I'm raising it as a separate concern that I hope will be worked in. >> Okay. >> Thank you. I think I'm going to stop there. And this has been very helpful for me to figure out how it all fits [9:55:46 AM] figure out how it all fits together. I really appreciate the work on it. Thanks. >> Thank you. Colleagues. Any further questions comments on this item. Wonderful. Thank you. Thank you. Great conversation. Okay, colleagues, we're moving on to our next item, which is a briefing from staff on a redevelopment assessment for a proposed pud located at 606 hundred and a half east Riverside drive. I will recognize zoning officer joy harden for the presentation. Welcome. >> I'm shorter, I feel off. Good morning, mayor pro tem and council. I'm joy harden with the planning department. I am here to present this development assessment item. Case number kd 2025 0001. This is a pud briefing on the proposed plan unit development, or pud, located at 606 hundred and half east Riverside drive. And just as a quick reminder to [9:56:47 AM] And just as a quick reminder to council, the city's land development code requires that prior to an applicant submitting a pud application, the applicant is required to do what we call a development assessment, which is essentially a dry run of what they're proposing to submit. Staff offers, comments, and the comments come from numerous city departments, and we give them back to the applicant. And then we give a briefing to the council on some of the overall big picture items, in reference to what the applicant is going to submit in their future pud application. Excuse me. So this is why I'm here and this is the time where you provide feedback to this proposal. As I stated, the site is located at 606 hundred and a half east Riverside drive. The site is 1.75 acres in size and is currently developed with a single story commercial structure and surface parking. Right now you will know it's site arcadis there. You may know it as Joe's crab shack and for long term residents, the magic time machine. I remember that. So I wanted to add. So [9:57:48 AM] that. So I wanted to add. So this is zoned LV and Erp and cs1 V inp is designated as mixed use on the future land use map. The forlorn and in the greater south river city neighborhood plan that was adopted in September. On September 29th, 2005. The property is located within the lady bird lake watershed, which is classified as urban watershed and is part of the south central waterfront district. The property is located within the boundaries of the south central waterfront vision framework plan. At the. Again, the applicant is proposing putting zoning. The proposed project will consist of a mixed use development of approximately 200 retail units, 208,000ft S of retail restaurant use. As the majority of the site is zoned L lake commercial district, which allows for 200ft in height. The waterfront overlay limits the height to 45ft. The zoning district would be the baseline zoning district [9:58:48 AM] be the baseline zoning district for the pud, while the zoning district has an far of 8 to 1. The applicant proposing the applicant is proposing that any development that exceeds an fa over 2 to 1 will have to comply with the development bonus, which is the affordable housing provision of the pud ordinance that outlines the affordability requirement. The applicant is requesting 22 code modification, which is outlined in exhibit B, exhibit D, and of note, the applicant is requesting a maximum building height of 510ft in exchange for receiving the increased entitlement of height, height, and the other modifications. The applicant is seeking some of the applicant's proposed superiority items are as follows. Clustering the impervious cover towards east Riverside drive, which preserves most which preserves the most environmentally sensitive areas of the site, restoring approximately 6000ft S to 10,000ft S within the critical water quality zone into the [9:59:50 AM] water quality zone into the floodplain forest compromised of wetland planting, wetland fringe, woodland, forest and vegetation, providing water quality treatment for the for the site. The site currently has none and will also convey the treat, convey and treat a portion of impervious cover runoff from approximately 0.5 acres of Riverside drive that currently drains directly into blunn creek, without treatment and using green water quality controls to treat 100% of the water quality volume. Other superiority items are listed on page two of the staff report and in exhibit E in the backup. Also to note, the property is located adjacent to Austin light rail phase one. So I'll just note that once this briefing is complete, the applicant may submit their actual pud application. It will go through the usual process review by multiple city departments, review by at a minimum, environmental commission, planning commission, [10:00:50 AM] commission, planning commission, and finally back to council. That concludes my presentation. Please feel free to relay any comments at this time. I will note them and the applicant is here to note any feedback you may have as well. Thank you. >> Thank you colleagues. Any questions or comments on this item? Yes, councilmember vela. >> Just a brief question. This may be the first pud assessment. I'm just curious about the process, because I think this may be the first time that since I've been on the dais where I've seen this process, could you tell me a little bit about it? >> Yeah. So every new pud application, not a pud amendment, but every new pud application requires a development assessment. It is outlined in our code. I think it was more used at the at large system. I would say normally now the applicant works very closely with the [10:01:50 AM] works very closely with the council member which the district. I know council member qadri is unavailable attending to his bundle of joy. Rightfully so, but but now. But the process was developed. I cannot remember what year to make sure that prior to someone sitting submitting a pud, which typically takes a long process, that they are receiving what council direction? So. So staff doesn't work on a pud for two years and it comes in front of council and they haven't heard from the council. So it was really creating an at large system to hear from different council members about their priorities. Again. Now the applicant is definitely working very closely with the council member, the mayor's office, but that's where the process stemmed from. And so this is to hear feedback from staff. So when the application comes in, we can make sure we council member alter council member vela wanted to see this. So let's make sure we're incorporating this applicant is [10:02:51 AM] incorporating this applicant is listening as well. >> Got it. And so it's kind of a pre. >> It's a pre. >> Application process that you know again folks go through. So this is I guess this but hasn't been submitted yet or really kind of this is just kind of what they're thinking about doing. >> You're absolutely correct. >> And they're not allowed to submit until after this process. You're absolutely correct. >> Okay. And what does and I'm looking through the document right now. But what is the is it similar to the pud process. Is it kind. >> Of like it. >> Really is similar. They are required to go to the environmental commission, which they did, and receive feedback from the environmental commission. It really is. They're submitting their pud, but it's not a pud because they can't submit it, but they're submitting what they plan on submitting getting feedback from the environmental commission, getting feedback from the different staff departments. You can see in the backup some of the feedback that the staff has provided. So then when they submit their application, they can make any tweaks if they so choose to do so. [10:03:51 AM] so. >> So this is like again, in the spirit of football being on TV, this is kind of like the preseason pud. Yeah. >> It's a preseason pud. Exactly. Thank you, thank you. >> Thank you. Yes, councilmember alter. >> And I wasn't I don't have any questions about the the applicant application itself, but this has inspired me. I'm just curious when. So I saw like they went through the comment, you know, submission and get their commenters when when they reapply. Will they keep the same staff or does the staff change? >> Most likely they keep the same staff because they're familiar and they made those comments if someone left or something? Of course not. But typically the same staff does that made comments on the development assessment, makes comments to the is submitted. >> And what what is the timeline for this pre-approval or pre not pre-approval pre pre-application? >> I'm not quite sure what they [10:04:54 AM] >> I'm not quite sure what they submitted and I don't want to ask, but typically. It is months. It does take months and they are required to go to the environmental commission. So the scheduling for that and they are required to come here. So there's definitely scheduling for that. And it's it's months of getting comments and it's an iterative process. >> You're talking about months just for the pre- application. >> Just for the yes for the development assessment, the pre-application. It is months of time. >> Well, the reason I'm I'm kind of curious about this. I know the pud process itself is lengthy. You know, we're under a new world here around senate bill 840. And we have to be very conscious of what type of incentives or disincentives we have to come to council to do something or to just go do it under a different, you know, basically how they want. And I it gives me a little bit of [10:05:56 AM] it gives me a little bit of concern hearing this process to go through months of this process to get to here where we haven't even applied. And then I know we probably won't see this pud for at least 12. I mean, that would be pretty quick if we were here at this point next year seeing this pud. You know, the development process is is too long for everybody. But now that there's a new set of rules, I would love to kind of get your honest assessment of, is this the right way to go? Or, you know, should council be updated? Maybe after the the first round of comments or just somewhere in the process where we can give that input and say, hey, basically what we're doing today, but they're already in the process of obtaining their pud zoning instead of kind of two separate pre and then do it again process. And you've done this many, many times. I'm curious just truly what you think about this process. If it could be improved or if. [10:06:57 AM] could be improved or if. >> Yeah. So thank you for the question. Of course I clearly know it's a policy decision, but you're you're asking my opinion. I would say it would probably be better to maybe not have the development assessment process, but have once the applicant is in in the pod process. And they're also under reviews that we could do an assessment of what they have submitted. And staff and the applicant staff, all staff could hear the comments early in the process, but they're still going through the process and not starting with the development assessment. As you stated, it's costly, it's time consuming, and these fees are you know, there have been said, go to the future, buyers of these fees add up. And so I think maybe a development assessment may not be needed, but maybe an early review in the process as they're still [10:07:58 AM] the process as they're still being iterations of comments. So all the staff can hear the applicant applicant can hear during the process. >> Okay, that's really helpful and I appreciate you giving us your honest assessment. You're the the one in the trenches doing this day in and day out. So, you know, maybe we can talk about that as a council to figure out how we can make this process better for everybody. So thank you very much. >> Thank you. >> Councilmember followed by councilmember duchen. >> I have just a quick question. I see on the map there's a boardwalk entrance and a photo spot. Are those outside of this footprint? It appears they might be on. >> The boardwalk is outside now they in your backup? You can see the comments from Pritchard. They are with the trail and the boardwalk. They are working very closely with those departments to make this a very cohesive development. So they are working with the appropriate staff. I'm not sure. Is it outside? It is outside. >> It looks like it's on the other side. >> Of the. Yeah. Okay. Yes. [10:08:58 AM] >> Of the. Yeah. Okay. Yes. >> That's all I had. Thank you. >> Councilmember duchen. >> Thank you, mayor pro tem. I just had one question about you. You touched on a number of items regarding superiority, water quality treatment, green water quality control, restoring the critical water quality zone. Probably some ones I didn't capture. And yet in a lot of the it sounds like feedback that we've gotten from the public on this, a lot of concerns about flooding, how much do those superiority items or maybe the better question to ask, is just simply, what is the applicant doing to address the flooding concerns on this property? >> I will say this they are working very closely with the watershed department. Again, this has gone to the environmental commission, and they've noted some things that they wanted to see, and they're working very closely with watershed to address those concerns. So they are hearing [10:09:59 AM] concerns. So they are hearing those concerns. This will go to the environmental commission twice when it before prior to it comes. Coming back to you, I know that they do have I can't speak specifically because I'm not the environmental person, but they are working with that staff to address those. >> Okay. Then we'll look for whatever those updates are from commission going forward. Thank you. >> Colleagues, any further questions or comments on this item. Good deal. >> Thank you. >> Thank you, miss harden. This briefing is the last item on today's agenda. If there are no further comments and without objections, we will end our work session at 10:10 A.M.