Can Trump save light rail in Austin?

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A Project Connect rendering. 

Project Connect is in serious danger. The coronavirus has jeopardized every resource needed to build the two light rail lines and many other transit improvements the project envisions. Notably:

Attention. It’s all devoted to the virus, both at City Hall and among the public. Many of the leaders, activists and donors who are key to a successful transit referendum this fall aren’t thinking in the long-term right now.

Money: Sales tax revenue, which makes up the great majority of Cap Metro’s funding, has plummeted. The federal stimulus bill approved last week provided $25 billion to shore up transit agencies, off which Cap Metro is getting $104 million. According to Cap Metro CEO Randy Clarke, that money is simply to help the agency keep services afloat through the end of the year. We’ll see whether that is enough, but there is certainly the prospect that the severe damage to sales tax revenues will continue into next year and put current services at risk.

People are also going to have much less money. The idea of paying for Project Connect entirely with a tax rate election (rather than general obligation bonds) was politically dubious a month ago. Now asking for property owners, a significant percentage of whom are likely facing foreclosure due to lost jobs/income, to approve even a small tax increase (1¢ or 2¢) may be tough. Especially since the drop in property values may prompt the city, county and school district to ask voters to approve other tax increases just to keep basic services afloat.

The federal government may be our only hope
Project Connect has always been premised on major federal support. The general assumption is that the Federal Transit Administration would pay for 40% of the cost of the rail system. However, in order to qualify for those funds, we’d have to prove we have the ability to not just cover the rest of the capital costs but that we have a permanent revenue stream to support operating costs. Unfortunately, we can’t use GO bonds to pay for operating costs. Hence the tax rate election idea.

If we were to assume that nothing changes in terms of federal support, my recommended approach would be to ask for as small of an immediate tax increase as possible and then to fund whatever you can with GO bonds. Yes, those eventually lead to tax increases too, but not until the city begins selling the bonds and spending money, much of which is years away. It’s essentially the city’s version of deficit-spending.

But perhaps amidst the greatest economic crisis since the Great Depression, the rules will change. Trump has floated the idea of a giant infrastructure bill to further stimulate the economy. The good news is that Congressional Democrats already have a $760 billion infrastructure plan that they introduced in January. It includes $105 billion for local transit agencies.

With that kind of increased funding available for transit, are the feds still going to ask local governments to raise taxes to qualify for it? That’s not very stimulus-y.

In fact, now Trump and Democrats are talking about something even bigger –- maybe $2 trillion. Mitch McConnell isn’t happy about it and Congressional Republicans are sounding the alarms about Democrats using this as an opportunity to accomplish long-term environmental objectives, but as the economic crisis continues, the pressure on them to pump more money into the economy will only increase. Nancy Pelosi knows this.

Trump, of course, couldn’t care less about investing in transit. He couldn’t care less about any of the details of the stimulus package. But that’s the good news. It means he’ll sign anything as long as there’s a big number attached to it.

Austin as we know it wouldn’t exist if not for the largesse of the federal government during the Great Depression. Local leaders, notably former Mayor Tom Miller and a young congressman by the name of Lyndon Johnson, maneuvered to get New Deal funds to realize the decades-long goal of building dams to control the seasonal floods that had been such a big constraint on the city’s growth. The Mansfield and Tom Miller Dams put Austin on an entirely new trajectory, allowing it to grow into the major city it is today. They also created thousands of jobs.

Perhaps 80 years from now we will say something similar about the Great Coronavirus Crisis of 2020. How local leaders seized the opportunity to transform Austin’s dangerous, congested, sprawling infrastructure into the safest, greenest and most equitable transportation system in the Sunbelt.

(We have the New Deal to thank for many of our most treasured local public assets. Here’s a list.)

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Will local media survive COVID?

This article comes from the March 30 edition of my newsletter.

The coronavirus may very likely be the knock-out blow to long-struggling local media outlets that depend on ad revenue.

Let’s start with the paper of record, the Austin American-Statesman. After shedding dozens of positions over the years via buyouts, the Statesman was purchased in early 2018 by GateHouse, the largest newspaper owner in the country, whose profit model is based on gutting local papers. Late last year, GateHouse acquired the second largest chain, Gannett, and is now operating under the Gannett brand.

From the New York Times today:

You could, this Sunday, purchase Gannett, the biggest newspaper chain in the country, for a mere $261 million — about a quarter of what Michael R. Bloomberg spent on his presidential campaign.

And (Elizabeth) Green, a founder of the nonprofit education news organization Chalkbeat, is one of the few people who may be able to raise the money to pull off a deal like that.

But she quickly realized that Gannett wasn’t worth it: Buying it would mean signing up to pay off a high-interest loan from a giant New York private equity firm and relying on an advertising business model that may be in its death throes because of the coronavirus.

Indeed, I had already begun writing this article when it was reported that Gannett will require any employee making over $38,000/year (that likely includes every Statesman reporter) to take three weeks of unpaid furlough over the next three months.

The ad-based revenue model that used to prop up local papers has been eroding for 20 years. The reason they succeeded for decades was simple: there was no competition. Where else would a local car dealer advertise other than local media? Where else but the classifieds section of the local paper would a landlord place an ad for a vacant apartment?

Craigslist completely destroyed the once-profitable classifieds business and the broader internet opened up new advertising opportunities that local media couldn’t compete with. Sure, local papers sell online ads, but they don’t get anywhere near the money they used to get for ads in print.

Many of the local businesses that continued to advertise in local print –– local retailers, local bars and restaurants –– were just dealt a potentially fatal blow by the coronavirus. Whatever margin local media was operating on before will likely evaporate.

It’s well-established, for instance, that the Austin Chronicle, which has remained a much thicker paper than many of its peers in the alt-weekly world, has stayed alive in recent years due to the largesse of its founders, Nick Barbaro and Louis Black. Both men were made rich by SXSW, and have used their fortune to keep the lights on at an unprofitable enterprise. The Chronicle has also asked readers for donations, an unusual step for a for-profit publication.

I don’t know what the implications of SXSW’s cancellation in particular has on Barbaro or the Chronicle, but it’s likely that the closure of local retailers and eateries will prove devastating to the paper.  The first paper where my work was ever published, Isthmus, an alt-weekly in Madison, Wis., announced that it would “go dark for an undetermined period of time due to a dramatic drop in advertising.

The death of the advertising model does NOT have to be the death of local news. At least not in Austin. Strong news reporting –– in many cases better than what the ad-based model provided –– can be supported through philanthropy and/or subscriptions.

The philanthropic model is best-exemplified by the Texas Tribune, which raises money from donors large and small and makes money by hosting events. KUT, like other public radio stations, is also funded mostly through donations as well as some public funding.

The Austin Monitor and the Texas Observer feature a blend. Both are nonprofits but they also sell subscriptions.

And then, of course, there’s this newsletter, which is funded entirely through subscriptions.

I’m fairly optimistic about the long-term future of local media in Austin. Not only is it a large and growing city, but it has a large population of highly-engaged people who have both the interest and the mean$ to support nonprofit or subscription-based media. I am much less hopeful that quality media will survive in poorer communities, including some large cities. 

(To be clear, I don’t expect any of this to serve as much consolation for the many journalists who are looking ahead at pay cuts and layoffs. I don’t want to see any current publications fail and I very much encourage employees of local media outlets to unionize so that they have a seat at the table during the tough times ahead)

In this context, my own contribution to local news is limited by the fact that one person only has so many hours in the day to work, especially when I’m trying to take care of a 1-year-old.

However, my hope is that in the coming months the subscriptions will continue to grow and I will be able to devote myself to this project full-time. I’ve also begun to consider ways that I can offer the product at free or reduced rates to those for whom $10/month or $100/year is a significant burden. One idea that a reader shared is allowing subscribers to pay a little extra for their own subscription (perhaps $1/month or $10/year) to subsidize subscriptions for others. If you have other ideas, feel free to share.

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The timeline of COVID in Austin

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The mayor convenes a 6 a.m. press conference on March 13 to announce the first two confirmed COVID-19 cases.

The breakneck pace at which this crisis has unfolded is astonishing. Here’s a timeline.

March 4: In response to concerns about SXSW, Mark Escott, interim director of Austin Public Health, says there is “no evidence that closing SXSW is going to make the community safer” and said “the threat of community spread is low” in Austin

March 6: Mayor Steve Adler declares an emergency that cancels SXSW

March 7: Adler, Travis County Judge Sarah Eckhardt and Kirk Watson urge Austinites to support businesses impacted by SXSW’s cancellation by going out to bars, restaurants and live music venues. (The video has since been taken down from all of their Twitter feeds)

March 10: Escott announces that events over 2,500 people will be subject to closure if they cannot present satisfactory plans on how to mitigate the risk of infection. However, he tells City Council members that there was no reason to discourage people without symptoms of going out to bars and restaurants since there was “no local spread.”

March 11: Escott announces new measures aimed at protecting infection at nursing homes and emphasized that those under 50 have very low risk of dying of the disease.

March 13: Austin has its first two confirmed cases of COVID-19. Escott says Travis County is now at Phase 3 of the COVID plan, which describes confirmed cases but no person-to-person spread.

March 14: Adler and Eckhardt announce ban on gatherings of more than 250 people.

March 17: Adler announces closure of bars and dine-in restaurants and bans gatherings of more than 10 people. Austin Public Health says the area is now at Phase 5, indicating “sustained community spread”

March 19: Travis County up to 41 positive cases. Far more are likely out there but haven’t been tested.

March 21: Up to 61 confirmed cases.

Most of us are not yet in a position to judge the actions that public officials took in recent weeks based on the information they had at the time. However, this sequence of events, which mirrors the rapidly changing response at the national level, illustrates just how hopeless we may be at predicting the full impact of this virus on our health care system and economy. As hungry as we may be for reassurance from experts that this crisis will soon pass, I would be wary of anybody who expresses confidence about what will happen next.

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Is it time to stop going to bars?

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A photo I took of people waiting at Franklin’s a few years ago. Is this really the type of gathering we want to encourage now?

Austin schools are closed. UT and ACC have moved online. NYC has shut down Broadway. So are our local leaders going to back off their previous plea for residents to go out and party?

“Now is the time to go to restaurants, go to clubs,” said Mayor Steve Adler in a joint video with Travis County Judge Sarah Eckhardt and Kirk Watson six days ago in an attempt to mitigate the economic damage done by the cancellation of SXSW.

On March 10, Austin Public Health Interim Medical Director Mark Escott assured Adler that his reasoning was correct. “Absolutely,” he said, when Adler asked him if it is true that the virus is not a reason for people to go out to enjoy the local nightlife. Events that are not drawing out-of-town visitors are not a major concern, said Escott, “because we don’t have a local spread.”

These were my thoughts last night:

And yet, as recently as yesterday local media and public officials repeatedly stated that there were no confirmed cases in Austin as if the city might be spared. But we of course won’t be spared. It’s a global pandemic.

Indeed, at the 6 a.m. news conference organized this morning in response to the first two confirmed cases in Austin, the mayor stated that everybody expected there to be local cases; that it was only a matter of time. However, nobody who spoke –– Escott, Eckhardt, Adler –– described any new precautions people should take beyond what they had already advised about hand-washing and staying home if you feel sick. They did not walk back their comments from six days ago urging people to go out to bars and restaurants.

The predictable fuss from the media about the two cases this morning misses the point: there are almost certainly far more cases already in the community because a) that’s how pandemics work and b) WE DON’T HAVE ANY TESTS!!!!

I’ll defer to Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases. From the WaPo reporting on his remarks to Congress Wednesday:

“We must be much more serious as a country about what we might expect,” Fauci said. Even places that have little or no known community transmission at the moment need to take action to try to limit infections, he said: “A couple of cases today are going to be many, many cases tomorrow.”

While everybody agrees that “social distancing,” both mandated and voluntary, is the most effective way to slow the spread of the disease, there are definitely different opinions about what degree of isolation people should adopt (or be forced to adopt). The Atlantic interviewed three public health experts, all of whom offered slightly different answers about what activities one should avoid.

So is it right for our city leaders, justifiably concerned about the wellbeing of the economy, to tell people to go out and enjoy restaurants and bars? Or for the Austin Justice Coalition to hold a pub crawl to support local business? Meanwhile, Belgium just shut down bars and restaurants

I don’t envy the position of local leaders at this moment. There couldn’t have been a worse time for a pandemic than mid-March. The loss of SXSW is economically disastrous and it’s understandable that local leaders are worried about further damage to the local economy.

The problem is, the economic damage will be far worse if we fail to take the necessary measures to slow the spread of the virus. We are heading into a recession. It is unavoidable that the global, national and local economy will suffer as communities grapple with the disease. The extent of the economic damage will depend on the extent to which we are able to slow the spread of the disease.

The preventative measures are going to hurt. There’s no doubt. But we may be hurting much worse if we fail to take them.

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What land development reform?

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A single-family home twice the size of the bungalow that used to sit on this property in South Austin. This is the type of development the current code encourages.

The narrative about the code playing out in the local media is that City Council is poised to approve dramatic reforms to land development rules that will have urbanists and developers dancing in the streets as older homeowners mourn the imminent demise of single-family neighborhoods.

Much of that narrative is due to the fact that if you watch Council debates, it appears clear that supporters of reform are getting what they want and reform opponents are getting crushed. But the votes don’t tell the whole story.

Behind-the-scenes many of those who work in development are despairing over a proposed code that they say will hardly make things better than the status quo.

“At this juncture, I’m not convinced it is better for Austin as a whole,” says one longtime land use pro.

“It’s choosing between bad and bad,” said another builder, referring to the current code to the proposed code.

“It’s a piece of shit,”  a leading urbanist activist told me last week.

Subpar zoning
Despite consuming the great majority of the attention in the media and on the dais, zoning may be the least important problem with the new code. But it’s still a disappointment.

For starters, there is the “Equity Overlay,” a policy pushed by Delia Garza and Greg Casar that reduces missing middle zoning in certain gentrifying areas of the city. The equity overlay adopts the flawed reasoning that reform opponents use to defend single-family zoning on the west side and applies it to the east side. If we want to retain and expand housing opportunities for low and middle-income people to the east side, we need to allow a diversity of housing supply. The more properties that are zoned single-family, the more likely it is that the future residents will be elites who can afford single-family homes. The Equity Overlay will not slow displacement, it will accelerate it.

Things are a little better West of I-35, but not much better. In the second draft of the code, staff pared back transition areas behind corridors that were deemed “primarily residential.” That was in response to a request by Alison Alter that was embraced by the mayor in an attempt at compromise.

The affordable housing bonus is a mess
Experts say the affordable housing bonus is not properly calibrated, meaning that developers are unlikely to participate in the bonus and provide income-restricted housing.

This is not just a case of developers trying to pressure the city into providing more generous entitlements. Sources say that the consultants in charge of crafting the bonus, EcoNorthwest, initially calibrated the bonuses in a way that would make it more attractive for developers to participate in it and provide the affordable housing. However, city staff, under pressure from various City Council members has in some cases replaced the carefully calibrated affordability requirements with arbitrary ones that likely don’t make financial sense.

For instance, one of the things everybody on Council agreed to was that residential uses should be allowed just about anywhere (unless there’s a public health concern). So staff was told to rezone existing commercial properties to allow mixed-use. However, many of these properties on corridors can only include residential if 10% of the units are income-restricted. That sounds great, but at least one developer I talked to said it’s unlikely that that bonus will prove more attractive than simply building commercial. The developer explains:

“We did some basic financial modeling on a typical podium and typical wrap deal on a corridor site and found that for both types of projects the yield was higher in the base case scenario than their revised bonus scenario, meaning you would make less return for every dollar invested in the bonus scenario (even while taking more risk) than in the base, so there would be no reason to ever build beyond the base scenario.”

The Equity Overlay also arbitrarily did away with the carefully-calibrated affordability requirements proposed by the experts and imposes a 10% requirement. This goes in precisely the opposite direction of what the consultants proposed. They calculated that higher affordability requirements would be feasible in more expensive parts of town; they proposed requirements as high as 15% for some zones in Central/West Austin. In general, they proposed a 5% requirement on the east side.

If the density bonuses aren’t attractive to developers, the city has little hope of achieving its housing goals, which are largely premised on the bonuses. Not only does this shut the door on the opportunity to get more income-restricted housing on the ground, but it will mean far less market-rate housing being built! Remember, the bulk of the “bonus” is the additional market-rate housing the developer gets to build in exchange for providing the affordable units.

Rules, fees and other headaches
Many insiders voice deep concerns about other rules that will continue to make getting housing built a costly hassle, particularly in the urban core, where we most desperately need more housing.

“All the new non-zoning stuff adds lots of dollars to every site,” says one lobbyist. “Lots of dollars.”

Examples include tree planting requirements and new water detention rules. I’ll get into the details of the latter in the coming days.

Another big disappointment is the lack of reform on site plans and the lack of clarity about what a “site plan light” process for smaller projects will entail. The proposed code exempts projects of three units or less from getting a site plan, which could amount to 8-12 months of extra time and tens of thousands of dollars of extra cost.

One infill builder predicted that few builders would bother going for four units on R4 sites because of the site plan. Instead, they’ll go for two or three. The site plan + the poorly calibrated density bonus means it’s unlikely that many builders will actually build eight units (one income-restricted) that is envisioned under the density bonus.

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The new code is not anti-tree

Trees. If you don’t love them already (most people do), you should learn to love them. They’re not only a key part of fighting climate change, but they’ll play a crucial role in mitigating the worst impacts of climate change, particularly in urban environments where increased temperatures are made all the more miserable by urban heat island effect.

So it’s a good thing that there are people in Austin who are vigilant about tree protection. And it’s a good thing that our current and future code seek to preserve our biggest trees, otherwise known as Heritage Trees. The bigger the tree, the more valuable it is environmentally. It absorbs more carbon dioxide and its sprawling roots absorb more water, which helps to prevent flooding.

And yet, the hard truth is that there are legitimate reasons to take down a tree. Even a healthy one. Tree preservation should not come at the expense of housing. First, because that obviously aggravates the housing shortage that hits low-income people the hardest. Denying housing in central neighborhoods simply leads to more sprawl, which leads to more car use and more CO2 emissions, thereby counteracting whatever environmental benefit was achieved by preserving the tree.

Currently any tree is “protected” if it is at least 19 inches in diameter. To remove it, you need a permit from the city. Staff must determine that it meets one of seven criteria for removal, including that it’s dead, diseased or “prevents a reasonable use of the property.”

tree is a Heritage Tree if it’s one of nine species native to Central Texas and is at least 24 inches. To remove one of those, you need to get a variance from the city Environmental Commission. If the Heritage Tree is at least 30 inches, you need to get approval from either the Zoning & Platting Commission or the Planning Commission, depending where the property is.

In addition to preserving old trees, the code often requires builders to plant new ones. For instance, currently residential builders are generally required to plant 2-3 trees per lot based on the size of the lot. However, this requirement is enforced through the site plan process, which 1-2 unit projects are exempt from. So single-family or duplex infill projects are functionally exempt from the planting requirement.

What the new code does
As far as I can see, there are only two meaningful changes to tree rules in the new code:

1. Small infill projects will be subject to planting requirements
2. Certain Projects located on the transit priority network will be able to more easily to take down heritage trees

The first change has infill builders very worried. Again, the planting requirement didn’t technically change, but it was moved out of site plan to another part of the code that infill projects will be subject to. You may already have 15 trees on the lot but you’re required to plant three more, which may render the project impossible. I’m less concerned about the impact on 1-2 unit projects and more concerned about the impact on larger missing-middle developments. I don’t want anything that encourages builders to do a big single-family house instead of 3-4 units.

As for #2, the new code does not give builders a blank check to remove any trees just because they’re located on the TPN. It simply allows them to get a permit to remove a heritage tree administratively, rather than going to the Environmental Commission. But ONLY if the project is 50% residential and 10% of the units are affordable. That’s an extremely narrow exception.

The black lines below, btw, make up the TPN. You can zoom in closer here.

 

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An amendment added by Paige Ellis seeks to encourage builders to preserve trees even if they have the right to take them down.

Her proposal will allow builders some additional flexibility (perhaps height, setback etc) in development rules if they opt to preserve a heritage tree instead of getting a variance to cut it down. The idea is that the city could relax some rules to allow them to achieve the same project size (in terms of units or square footage) that they would be able to get if they removed the tree.

In sum, the new code may very well end up mandating more tree planting than currently and the changes to tree preservation are pretty modest tweaks in service of important economic and environmental goals.

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