This commentary was originally featured in the Austin American-Statesman on April 22, 2018.
Paying more for housing? Blame City Hall.
In spite of paying regular lip service to affordability, city officials continue to push big government policies that make it more expensive to live in Austin. In fact, officials are exploring a new one now.
Earlier this month, Austin’s Code Department began seeking public input on a proposal requiring certain homes and apartments to install insect screens on their doors and windows. Exactly which property owners will be affected is not clear, though recent comments suggest it could be almost anyone.
“It will depend on the feedback. So, if the community members suggest this should only be for new homes, we will take that into consideration. If community members suggest this should only be for apartments but not for private residential homes, we will take that into consideration,” said the Code Department’s Isis Lopez.
Because the details are still being fleshed out, it’s hard to say how much this might cost a homeowner in the end; but at $35 per insect screen per opening plus the cost of inspection, you can bet that it won’t be cheap.
Requiring the installation of insect screens is just the tip of the iceberg, too. There are numerous other council edicts driving up costs, like a $1,500 solar-ready requirement, a $2,000 visitability ordinance and a tree-preservation policy that is hard to quantify but often amounts to a princely sum. For low- and middle-income Austinites, stacking these ordinances on top of each other amounts to death by a thousand cuts.
Overreaching ordinances aren’t the only thing the City Council is doing to exacerbate the affordability crisis. There’s also the issue of property taxes.
In 2007-08, the average Austin-area home was valued at $175,000 — and the city portion of the tax bill due was $705. Today, the average home value stands at more than $305,000, and the city tax bill due for it is $1,251. That means the council has grown the property tax by almost 80 percent over the last 10 years. During the same period, the number of people calling Austin home only grew by 29 percent.
And while it’s true that the city doesn’t control property value increases, it does adopt a tax rate every year, which, arguably, is set much higher than it should be, as evidenced by big and growing tax bills.
Skyrocketing property tax bills present a challenge not only for homeowners trying to make ends meet but also for prospective homeowners for whom excessive taxation represents a barrier to entry.
On top of all this is, perhaps, the city’s most unhelpful act: its fee schedule.
Imagine that you’re a developer trying to decide whether to build an apartment complex in either Austin or Dallas. Picking the right spot might seem like a tough call at first, but the choice is soon obvious after reviewing each city’s development fees.
The cost to construct a four-story, 322-unit apartment complex is radically different depending on location. As detailed last year by PolitiFact Texas, total development fees for a project like that undertaken in Austin could amount to more than $1 million. In Dallas, the cost for a similar project could be $120,000.
The reasons for the Austin-Dallas discrepancy are many — but one major difference has to do with the fact that Austin charges a Commercial Building Plan Review fee costing the developer “$655.20, plus $1.30 for every $1,000 in labor-materials.” That’s a large burden to bear, which, of course, ultimately gets passed down to consumers in the form of higher prices.
The evidence makes clear that the City Council is making Austin’s affordability crisis worse. Any comprehensive solution to the problem must involve reining in bad policy decisions across the spectrum — but especially with regard to targeted ordinances, tax policy and development fees. Only with Austin city government out of the way can the market truly operate as it should and demand be satisfied.
It’s times like these Ronald Reagan’s old adage seems particularly appropriate: “Government is not the solution to our problem; government is the problem.” This is a lesson that Austinites must take to heart if we’re ever to tackle housing in a meaningful way.