Making office buildings pay for parks

This is a free sample of the Austin Politics Newsletter from July 13, 2022. To get DAILY insights on city politics, click here to subscribe to the newsletter.

In the past two years, parkland dedication fees on residential developments have doubled –– twice. An apartment developer who would have paid $1,538 per unit in 2020 now owes the city a whopping $6,428 per unit they build in a city that is desperate for housing.

City Council believes this is a problem, but not for the obvious reason. The problem, according to a resolution it approved in April and which the Parks Department is now developing into a new ordinance, is that the city isn’t squeezing enough out of developers.

Yesterday the Parks Department presented a proposed ordinance to the Planning Commission that would extend parkland dedication fees to commercial developments.

Traditionally, the rationale for requiring housing projects to dedicate parkland (either through land donations or fees-in-lieu) is that they are helping to mitigate the new demand on the parks system created by their residents. The city, according to Texas Supreme Court precedent, must establish an “essential nexus” between the impact of the project and the fee being charged.

In imposing similar requirements on commercial projects, the city is arguing there is an essential nexus between employees and demand on the park system. For instance, those who commute downtown for work are more likely to use parks downtown –– on lunch breaks, after work etc. Likewise, hotel guests are likely to use parks during their stays.

If the idea is that imposing these fees on commercial developments would allow the city to reduce fees on residential projects, that would be great. But that’s not what the Parks Department is proposing. Nor was there any talk of that in the resolution authored by Alison Alter that prompted the ordinance. None of the 33 whereas clauses in the resolution mentioned housing or affordability.

Here’s what they’re proposing to charge for commercial developments:

The fee-in-lieu is supposed to be used for acquiring new parkland within 2 miles of the project, while the development fee can be used to improve infrastructure in existing parks.

Commissioner Claire Hempel noted that a disproportionate of new commercial development is downtown –– does the city really expect to use all of the dedication fees to acquire new land in an area of town where there is very little vacant land and the land is obscenely expensive?

Alas, Parks staff explained that if they can’t identify an appropriate parcel within a year of collecting the fees, they can instead use the money to make improvements to existing parks in the area. Maybe repairing the slope failure on the Shoal Creek Trail, for instance?

Zilker Park. Credit: City of Austin

A couple commissioners voiced varying levels of skepticism about the formula, most notably Greg Anderson, who described the proposal as “borrowing a lot from the very broken residential formula.”

“I don’t believe the formula is broken,” responded Parks Planner Randy Scott. “I believe it is now beginning to reflect the actual cost that it costs the Parks and Recreation Department to provide land and park facilities for new residents that are coming to Austin.”

Scott argued that fees on new development only pay for about half of the cost of new parks. The rest, he said, is “subsidized by existing residents” through voter-approved bonds.

Hmm. Except the “new residents” (if we accept the false premise that all residents of new developments are newcomers) are also taxpayers who will be paying for the cost of those bonds.

In its analysis justifying the new commercial fee, the Parks Dept estimated that 58% of Austin’s workforce commutes from outside the city. But Commissioner Jeffrey Thompson noted that his wife, for instance, is an Austin resident who works for the Bastrop School District. The same is true of many of her colleagues. Did the formula account for people like her? No, said staff.

This is an important point that could undermine the city’s “essential nexus” argument. City data from 2017 indicates that 34% of Austin residents work outside the city.

Anderson warned that the city was on shaky legal ground and suggested it would prompt the state to take away its parkland dedication powers entirely.

“We know this is going to happen if we go down this route of not thinking this through well enough and coming up with this half-baked formula that’s already broken on one side,” he said. “We’re so good at adding fees, we’re still really bad at making responsible development easy to achieve in this city.”

Commissioner Grayson Cox, Alter’s appointee, was unsympathetic, saying he was concerned “that we’re underfunding our parks.”

“I think that the quickest way to make Austin cheaper to live is by dramatically reducing our quality of life, so that nobody wants to live here. So similar to our street network, our transit network, everything else is struggling to catch up to the growth that we’ve seen.”

Well, yeah. That’s a point I often make when people oppose investments –– private or public –– that they say will prompt gentrification. But the counter in this case is pretty simple: there’s a limit to how much we should make people pay for amenities if we’re charging so much for them that they can’t afford to use them.

Unwilling to act on the proposal yet, the Planning Commission ultimately voted to postpone until their Aug. 9 meeting. That may complicate things a bit for Council; according to Parks staff Council had wanted to have a recommendation by the time it starts taking up the annual budget on July 28.

The bottom line is that we need to consider the unintended consequences of these fees, whether they’re applied to commercial or residential developments. Driving up the cost of housing is obviously bad, but so is any fee or regulation that may encourage developers to build outside of the city, thus depriving us of desperately-needed new tax revenue and facilitating sprawl.

This is a free sample of the Austin Politics Newsletter from July 13, 2022. To get DAILY insights on city politics, click here to subscribe to the newsletter.

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