Watson Wire: Bye, Bye ‘24 & Hello ‘25

The past two years have felt like we were operating on a burning platform – it seemed there was a new fire to put out every week and tremendous effort required for us to stabilize things. As we close out 2024, there's little question that we’re on firmer ground. I’m optimistic, excited, and energized for the challenges we know are coming.

This year has certainly seemed to move fast, but the Austin City Council — as a team — did some big things that stick out for me:

• Provided a strong public process, as promised, and considered the candidates with community priorities in mind when we hired an experienced City Manager. T.C. Broadnax has brought in some new faces and made some changes. And we’re all committed to working in partnership for Austin.
• Created broader economic opportunity through the Austin Infrastructure Academy, starting with a $5 million investment from the City of Austin and a home base at the?new Austin Community College?campus near the airport. This initiative will help Austinites afford to live here by creating training for family-supporting careers.
• Invested in the full continuum of homelessness response, including keeping the Marshalling Yard homeless shelter open until an alternative emergency shelter site is operational. We also filled funding gaps to provide services for permanent supportive housing and our two emergency bridge shelters.?
• Approved a five-year contract with our police that includes the robust police oversight approved by voters last year while also providing the long-term protections and assurances needed to address our staffing challenges and help officers afford to live in the city they serve. I see this contract as a major Austin win because it gives all of us – as a community – the opportunity to move forward from a contentious stalemate and start making progress on a whole lot of other public safety issues that affect the lives of Austinites.?

A More Affordable Austin

One of the biggest things we did this year?aimed at making sure everyone can make a home in Austin. And, while Austin?had been pretty stagnated on?this issue for?years, we did A LOT.

We targeted some property tax relief to senior citizen and disabled homeowners by increasing the additional homestead exemption to $154,000, up from $124,000, to hold flat the annual City tax bill for these homeowners who are living on a fixed income.

We also acted to get what I call “Big-A Affordable?Housing” as well as housing?that is simply more attainable. We did this by continuing to move decisively on things like new incentives and public subsidies to secure income-restricted housing especially near transit. We also updated pieces of our old code and streamlined processes to give homeowners more options on their properties.?

We’re finally seeing housing costs come down after the wild spike in values during the pandemic. Apartment rents fell steadily for the first time in years as more supply went up. Experts credit our housing construction boom, and the fact that Austin led the country in getting more housing units on the ground. This year, Austin saw a whopping 12.6% rent decrease year over year, the biggest drop for any city in the country.

Right now, Austin is the vanguard of a national policy debate around housing affordability. Other cities from around the country are reaching out to learn from us. Even the Texas Comptroller cited Austin’s work to increase housing supply, including allowing more units per lot and lowering the minimum lot-size for a single-family home.

The land use policy changes adopted by the Austin City Council aimed not only at getting more Big-A Affordable Housing, but also at getting more housing that is broadly affordable. The first phase of HOME which the Council passed last December, gave homeowners the option to put an additional house or two on their lots. In May, HOME Phase 2 was approved to allow smaller lots which means lower cost since the price of land is typically the biggest driver in the cost of a home. That’s a boon for homebuyers.

Some of the first new homes built under HOME Phase 1 have now been completed.?

Cody Carr, whose company used HOME Phase 1 to develop three homes on one lot in South Austin, said the policy changes have “made it considerably easier to build missing middle projects that are 3-4 units in size. These changes are a great start to helping the market address affordability issues and produce more housing.”

He added that the City has reduced unnecessary regulations and increased incentives to build smaller, more affordable homes in Austin.

We’re keeping a close eye on how the policies are playing out on the ground (we built in a process for assessing how it's?going). A very early look at the City’s permitting data on the?first phase of HOME?shows:

• Smaller homes: The average home size was 1,719 square feet on permit applications under HOME, smaller than the 2,331 square-foot average, according to 2023 real estate data.?
• Fewer demolitions: There’s been a decrease in demolitions, a welcome indication the policies are used as an alternative to scraping a lot.
• Manageable growth: Since February, 264 applications have been filed under HOME and 197 are approved. So far, it's a modest, incremental increase.
• Citywide use: If you map the applications, HOME is adding a few homes to every area of town, from East Austin to Oak Hill, and William Cannon to Rundberg. That’s as intended.

This is just an early look, and a bigger report is coming in early 2025 so we can make sure HOME is working well and identify any needed improvements or adjustments.

Meanwhile, we continue to see steady improvement in our development review process, which was notoriously inefficient and one factor in the affordability equation that is 100 percent the City’s responsibility.

The latest figures on the streamlining of the site plan process show that, on key metrics, we’re very close to the target goals and overall, tracking better than we have in six years:

• Completeness check review time reduced to less than 30 days. Target was 40 days.
• Initial review completion time reduced to 30 days, down from 100 days when we started the work. Target is 28 days.
• Update review completion time reduced to 15 days, down from approximately 50 days. Target is 14 days.

Stakeholder feedback remains positive, and we continue to engage on a continual basis.

Reliable, affordable, and environmentally sustainable

Another big thing that happened this year was the recent adoption of Austin Energy’s Resource, Generation, and Climate Protection Plan to 2035 that for the first time really focused on reliability and affordability for customers in addition to reducing emissions and maintaining the goal to be carbon free by 2035.

We have the greenest municipal utility in Texas that also happens to lead the industry in innovation and customer programs. That’s something to be proud of. But Austin Energy also faces powerful reliability challenges due to extreme weather events and bigger demand as we electrify more vehicles, homes, and power new industry.?

We needed a plan for more reliable and affordable energy that is also in alignment with our carbon free goals.

Austin Energy’s approved 2035 Plan:

• Creates more local energy generation options – we keep the lights on and avoid paying peak prices to outside sources during times of high demand.
• Plans for new gas-powered peaker units to handle peak load and displace use of old, inefficient ones.
• Sets a cap on local CO2 emissions to improve air quality.
• Boosts customer programs for roof solar and energy efficiency and includes a pathway to renter participation.
• Strengthens utility labor protections.
• Moves forward on utility-scale and customer-side batteries to handle demand response.
• Allows exploration of cleaner, innovative methods like geothermal and modular nuclear units.
• Builds a pathway to successfully exit use of the coal-powered Fayette plant by 2029.

Sounds like a plan.