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Judge orders Austin to scrap rules that let developers build more in exchange for affordable housing

A large apartment complex under construction.
Ivy Fowler
Because of a housing policy passed in 2019, more than half of the apartments in this complex under construction in Northwest Austin will be set aside for people earning low incomes. Homeowners challenged the city in court over the policy earlier this year.

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Austin defied state law when it passed three housing policies last year, all of which let developers build more as long as they provide some low-income housing, a Travis County district judge ruled Friday in a legal filing brought by a group of homeowners.

“[W]e hope, going forward, that the City finally learns from this embarrassing experience, does the right thing, and respects the interests and legal rights of Austin homeowners,” Doug Becker, attorney for the homeowners, said in an emailed statement. Becker provided a copy of the judge's ruling Monday.

Judge Jessica Mangrum said the city failed to adequately notify property owners that developers could build more than what is typically allowed near them. As a result, the city has to throw out the policies, although they will not be fined despite the plaintiffs’ request. A fourth housing policy adopted in 2019, which lets developers bypass certain building rules as long as half of what they build is for people earning low incomes, was upheld by the court. The judge said plaintiffs failed to challenge that policy within the legal time frame.

“We are pleased that the judge did not issue the requested sanctions, as the city continues to make efforts to comply with all laws and judicial rulings related to the land development code changes,” Austin City Attorney Anne Morgan wrote in a statement. “City management and city council will follow the judge’s ruling.”

A hearing will be held later to determine if the city is on the hook for paying the homeowners’ legal fees. The city could end up owing at least $150,000.

At the heart of this legal fight is the question of when and how the city has to give written notice to homeowners when changing land use rules. For the past several years, council members have chipped away at a tome of zoning rules that restrict the height, shape and density of homes in Austin. They hope loosening these rules will spur the construction of more homes and subsequently bring down the cost of housing in a city where residents increasingly spend much of their income on rent and mortgages.

But a group of 19 homeowners has deftly used the law to block these changes. In a filing from March, their attorney argued that the city was ignoring a 2020 ruling by a Travis County district judge, which stated the city failed to notify property owners of zoning changes to nearby land and ignored their right to officially protest these changes. The city lost that case a second time in an appeals court.

In the ruling signed Friday, Judge Mangrum said the city again failed to send proper notice to nearby homeowners. The city did mail homeowners to notify them about one of the housing programs, but the plaintiffs’ lawyer argued not all homeowners within a required distance received the notice and that the language of the mailer was not sufficient.

“I’d really like to see the city start following the rule of law. It’s not that difficult,” Allan McMurtry, who owns a home in Austin’s Allandale neighborhood and is one of the plaintiffs, told KUT.

The three housing programs the city must nix let developers build higher along busy roads and build housing on land otherwise reserved for offices and shops. In most cases, the city gives builders this extra leeway in exchange for affordable housing; builders must ensure a percentage of these apartments rent out for affordable rates to people earning less than $65,000 a year. These programs, elected officials and advocates have said, are key to mitigating the city’s affordability crunch.

“I’m disappointed because I’d love to have the ability to move ahead with these programs,” Awais Azhar, an affordable housing advocate that serves on a committee with the nonprofit HousingWorks Austin. “How do we meaningfully address [housing affordability] issues while also creating policies that benefit most Austinites?”

What is not yet clear is what developers who have started the building process under these programs will do. The order requires the city to void these new rules at the time the council passed them.

“The City of Austin created this mess, and now it’s up to the City of Austin to figure out what to do about it,” Becker told KUT.

Becker said he is looking into additional legal action against more recent zoning changes made by the City Council. Last week, council members voted to let people build up to three homes on land where historically only one or two homes have been allowed.

Audrey McGlinchy is KUT's housing reporter. She focuses on affordable housing solutions, renters’ rights and the battles over zoning. Got a tip? Email her at Follow her on Twitter @AKMcGlinchy.
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