The Alley Flat Initiative

Topics in Sustainable Development 2008 Report

Editors Steven A. Moore Sergio Palleroni Legend LOT WITH ALLEY FLAT POTENTIAL*

ALLEY

NEIGHBORHOOD PLANNING AREA

SECONDARY APARTMENT INFILL TOOL ADOPTION (BY NPA / SUBDISTRICT)

NO

YES

MAJOR ROAD

MINOR ROAD

STREET

LADY BIRD LAKE

* ALL LOTS WITH ALLEY FLAT POTENTIAL SHOWN ON MAP ARE ZONED SF-3.

csd Center for Sustainable Development i

THE UNIVERSITY OF TEXAS CENTER FOR SUSTAINABLE DEVELOPMENT

1 UNIVERSITY STATION B7500; AUSTIN, TX

DR. ELIZABETH MUELLER, DIRECTOR

WORKING PAPER SERIES

JULY 2008

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CONTENTS

ACKNOWLEDGEMENTS

PREFACE

EXECUTIVE SUMMARY

1. A BRIEF HISTORY OF ALLEY FLATS IN FOUR CITIES

2. CONDITIONS IN AUSTIN: LANDSCAPE OF OPPORTUNITY (ELIZABETH)

2.1 REVIEW OF LOTS WITH ALLEY FLAT POTENTIAL

2.2 REVIEW OF LOTS WITH POTENTIAL FOR SECONDARY UNITS IN GENERAL

2.3 BEGINNING WITH EAST AUSTIN BECAUSE…

3. A BRIEF HISTORY OF THE AUSTIN’S ALLEY FLAT INITIATIVE

4. NEIGHBORHOOD CONTEXT

4.1 THREE CASES OF AUSTIN NEIGHBORHOOD CONTEXT

4.2 REGULATION

5. OWNERSHIP AND FINANCING STRUCTURES

5.1 OWNERSHIP STRUCTURES AND THEIR SUITABILITY

5.2 FUNDING SOURCES AND THEIR SUITABILITY

6. DISTRIBUTED INFRASTRUCTURE

6.1 WATER

6.2 ELECTRICITY

6.3 TECHNOLOGY ANALYSIS

APPENDICES

A. GIS METHODS

B. LIST OF KEY STAKEHOLDERS AND PARTNERSHIPS

C. OWNERSHIP AND FINANCING STRUCTURES

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ACKNOWLEDGEMENTS

This project was initially supported by a generous research grant from the Henry Luce Foundation and has subsequently been supported by the Austin Community Foundation, Perry Lorenz, and anonymous donors. Support for construction of the initial prototype has been received from Autodesk, Lincoln Properties, Wells Fargo Bank, Walter Elcock Family, HG TV, Suzi Sosa, Bercy‐Chen, Alexa Werner, Michael Casias, Meridian Energy, DXS‐Daikin, Z‐Works, Ecocreto, and Pat Flanary.

The format of our investigation has depended upon the generous investment of time by other UT faculty members, community activists and City of Austin employees who participated in our class discussions, answered endless questions, and inspired us. They include:

Susana Almanza People Organized in Defense of Earth and her Resources Ellen Beasley Independent Historic Preservation Scholar Kent Butler UT Community and Regional Planning Program Reynaldo Cantu URS Corporation Michael Gatto Austin Community Design and Development Center John Hennenberger Texas Low Income Housing Information Service Sylvia Herrera People Organized in Defense of Earth and her Resources Matt Hollon City of Austin, Watershed Protection and Development Review Andrew Jamison Aalborg University, Denmark Andy Karvonen UT Community and Regional Planning Program Sonia Lopez City of Austin, Neighborhood Planning and Zoning Department Chris Maxwell‐Gaines Innovative Water Solutions Elizabeth Mueller UT Community and Regional Planning Program

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Michael Oden UT Community and Regional Planning Program Dick Peterson Environmental Program Coordinator, Austin Energy Green Building Program Mark Rogers Guadalupe Neighborhood Development Corporation JT Stewart URS Corporation Dave Sullivan City of Austin Planning Commission Kelly Weiss PeopleTrust, a support organization of PeopleFund

To this list of guest contributors we must, of course, acknowledge the work of students: Christopher Allnatt Law Erin Bernstein Landscape Architecture Julienne Bautista Community and Regional Planning Joanne Crompton Public Policy and Latin American Studies Richard Crum Architecture Lindsay Eriksson Law Jennifer Diamond Public Policy Guy Fimmers Architecture Colleen Flynn Community and Regional Planning Eva Gitzes Public Policy Aziz Hussaini Architectural Engineering Stephanie Perrone Sustainable Design Tiberiu Petricia Business Devon Ponds Business Bennett Powell Community and Regional Planning Meng Qi Community and Regional Planning Christopher Short Sustainable Design Jennifer Todd Community and Regional Planning Elizabeth Walsh Community and Regional Planning

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Katherine Wayland Public Policy In Jang Young Community and Regional Planning

In sum, this transdisciplinary team didn’t always agree about what action to take, but they did agree about the severity of the problem and thus opened up new directions for research that we did not anticipate at the beginning—a sure sign that we learned something through our collaboration across the disciplines.

Dr. Steven Moore, Bartlett Cocke Professor of Architecture and Planning Sergio Palleroni, Adjunct Associate Professor of Architecture.

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PREFACE

What we now call “alley flats” had different names in different places. Some were called “back houses,” others “granny flats,” “mother‐in‐law apartments,” “dependencies,” “secondary suites,” or “laneway houses.” In contemporary zoning ordinances they are typically, and more technically, called “secondary dwelling units” (SDUs) or “accessory dwelling units” (ADUs). In our study of these small houses we have learned that each type emerged from particular conditions in particular cities. The back‐houses of 19th C Galveston, for example, have a very different history than the alley‐flats now popping up in 21st C Austin. Where the small houses of Galveston were initially built as slave‐ dwellings that reflected and enforced the political economy of that time, the small houses of Austin are appearing in response to explosive population growth, decreasing social equity, and degrading environmental conditions. These are very different conditions indeed and, as one would expect, the two things backhouses and alley flats have in common is little more than their relative size and placement.

What we have come to call The Alley Flat Initiative (AFI) has developed over the past five years and is today a collaboration of the University of Texas Center for Sustainable Development (UTCSD), the Guadalupe Neighborhood Development Corporation (GNDC), and the Austin Community Design and Development Center (ACDDC). This team emerged from a conversation between faculty and students at the University of Texas School of Architecture that engaged local housing and environmental activists. We are all very aware of the uneven history that university/community relations have experienced. None‐the‐less, our conversation has been educational on both sides and has catalyzed an immediate and a long‐term goal:

The immediate goal has been to build two prototype alley flats – one for each of two very different families in East Austin – that will showcase both the innovative design and environmental sustainability features of the alley flat homes. These prototypes will demonstrate how sustainable housing can support growing communities by being

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affordable and adaptable. The first prototype was completed in May 2008 and the second will begin construction in October 2008. These prototypes will be tested over the next two years to compare their operation to conventional suburban houses which are the primary alternative.

The long‐term objective of the Alley Flat Initiative is to create a flexible and self‐ perpetuating delivery system for sustainable and affordable housing in Austin. The “delivery system” will include not only efficient housing designs constructed with sustainable technologies, but also innovative methods of financing and home ownership that equitably benefit all neighborhoods in Austin.

Having (almost) satisfied our short‐term goal, the purpose of this report is two‐ fold: First, to assess how we are doing in satisfying long‐term goals. And second, to broaden community participation in the project and thereby improve the flow of information required for success. Building two modest homes that demonstrate the economic and environmental benefits of sustainable design is an achievement of which students and our partners are understandably proud. But even this achievement pales in the face of the larger project. Creating a self‐perpetuating housing delivery system that is efficient, equitable, and sustainable requires that we think about housing, not only as units of consumption (which is the conventional understanding of housing development), but also as units of production. In making this distinction we hope to demonstrate that conventional affordable housing is too often conceived as a place to warehouse members of society who have modest incomes and are therefore characterized by some as being unproductive. Seen through such lenses it is not hard to understand why governments are reluctant to invest scarce resources in “solving the housing problem.” If, however, we frame the problem somewhat differently, we might find new and more successful solutions.

All new housing, be it suburban, high‐rise or infill, puts demands on urban infrastructure—the roads, wires, and pipes that enable the comforts of modern life.

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Suburban housing requires the city to extend infrastructure into new, previously undeveloped territory at great economic and environmental cost. High‐rise apartment or condominium housing generally requires utility upgrades because of its single‐point density. In contrast, urban infill housing is less costly, but it too runs the risk of over‐ burdening antiquated or under‐sized infrastructure systems. If however, new infill housing is designed to increase rather than decrease the capacity of existing electrical and water infrastructures, for example, it can be understood as contributing to the economic viability of existing neighborhoods, to the viability of aging infrastructure, and to the ecological health of the city as a whole. This kind of affordable housing is not a warehouse for unproductive people, but the improvement of several urban problems at the same time. In coming to understand affordable housing as productive infrastructure we can also benefit taxpaying citizens like teachers, police and firemen, who are being pushed to the urban edge by escalating land costs and taxes, and who in turn reluctantly contribute to deteriorating air and water quality by having to commute long distances to serve the rest of us.

Alley Flats are not, however, a silver bullet. They are one of many strategies that must be used to meet the dramatic need for affordable housing and environmental health in Austin. Alley Flats will not replace more traditional and dense forms of affordable housing, but as readers will see in what follows, they are a surprisingly effective and attractive alternative.

We must also make clear at the outset that not all alley flats are equal. This is to say that constructing a small house on the alley side of an existing house lot will not in itself have the consequences we desire. Alley flats as a building type might be used by for‐profit developers in a manner that will only increase demand on infrastructure, drive up rents and taxes thus contributing to the forces of gentrification that haunt many Austin neighborhoods. To be both affordable and environmentally responsible, alley flats, like any other building type, must be designed as an integral part of their ecological, cultural, and political context. Design in this sense includes not only that of 3

buildings, but also sites linked to a vision of the city as a whole, mortgages, insurance policies, and innovative technologies all rolled into one package. A sustainable housing delivery system would enable local nonprofit institutions to build a network of perpetually affordable, energy‐efficient units. It would also enable homeowners throughout the city to develop modest, green flats to help absorb housing demand more evenly across town. This, then, is the long‐term goal of the Alley Flat Initiative—an affordable and sustainable housing delivery system.

What follows this preface is the findings and recommendations of faculty, students, City of Austin officials and community activists working collaboratively in two graduate seminars held at UT in the Spring semester of 2008. The first, taught by Prof. Sergio Palleroni, investigated how alley flats have recently grown up in other cities with problems like those found in Austin. The four cases studied by architecture students provide valuable insights from which Austinites might learn in Chapter 1. The second seminar, taught by Prof. Steven Moore, included graduate students from architecture, planning, business, law, public policy, and engineering. This interdisciplinary group investigated five inter‐related topics: In Chapter 2 we employed Geographic Information Systems (GIS) to estimate the number of alley flats that might be inserted into existing neighborhoods without disrupting established cultural patters. In Chapter 3, we provide a brief history of what the AFI has accomplished through prior workshops and in the three previous architecture studios mentioned above. In Chapter 4, in order to assess their “fit” and viability, we have studied three Austin neighborhoods in which alley flats have been endorsed by Neighborhood Plans. In Chapter 5 we studied alternative forms of ownership and financing that might contribute to the goal of perpetual affordability. And lastly, in Chapter 6 we have studied how the proliferation of alley flats might constitute a significant part of a distributed water and solar infrastructure. Such a systems approach to housing might contribute to affordable operation for residents and reduced environmental impact to the city as a whole.

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Our findings and recommendations are provided first as an Executive Summary and then in greater detail as sequential chapters. Our hope is that readers of this report will have recommendations that will refine the strategies proposed and thus contribute to the long‐term goals articulated above. We also welcome new collaborations that will take the project in unforeseen and successful new directions.

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Executive Summary

In an effort to make this report as accessible as possible we have provided this summary, which we hope will encourage readers to continue into the itemized chapters and appendices where the background data and reasoning behind our recommendations is provided. This Executive Summary concludes with some thoughts about what steps might be taken next.

In Chapter 1, A Brief History of Alley Flats in Four Cities, we discovered that Vancouver, Seattle, Boulder, and Santa Cruz are cities that have many demographic characteristics that are similar to those found in Austin. All five cities tend to have thriving economies, young populations of creative people that are attracted to a high quality of life, and a dramatic shortage affordable housing. Each of these cities has also fostered alley flat development as one strategy to satisfy pent up demand. Although all five cities share similar economic and social characteristics, the regulatory climate of Austin is dramatically different from its peers. Where three regulatory strategies (urban growth boundaries, inclusionary zoning, and vigorous public sector housing development) are common in Vancouver, Seattle, Boulder and Santa Cruz, two out of these three strategies are actually illegal in Texas. In spite of the regulatory differences, however, there are five lessons to be learned from experience with alley flat development in these peer cities:

1. To be successful, the alley flat application process must be simple, transparent, and incentive‐based. In sum, there must be a specific alley flat code that is coordinated across city departments.

2. Open public dialogue is an essential foundation for code‐making.

3. To be affordable, alley flat development must be integrated with innovative forms of ownership and financing. 6

4. Because of their small scale, alley flats open up development opportunity to an underutilized segment of the private sector.

5. Alley flats are not the sole solution to affordable housing, but one among many.

In Chapter 2, Conditions in Austin: Landscape of Opportunity …………………….

In Chapter 3, A Brief History of Austin’s Alley Flat Initiative, we describe the four phases through which the current partnership between the UT Center for Sustainable Development (UTCSD), the Guadalupe Neighborhood Development Corporation (GNDC), and the Austin Community Design and Development Center (ACDDC) has evolved. We have learned two things from this bit of reflection:

1. Learning‐by‐doing may not provide a quick fix, but

2. learning‐by‐doing is the best way to test possibilities and engage the broad collaboration of partners required to succeed.

In Chapter 4, Neighborhood Context, we first examine the tax implications of alley flat development to families of modest means, and second, how alley flats might influence the development patterns of the city as a whole. To do so we examine three representative neighborhoods: North Loop, East Cesar Chavez and Holly. By observing existing SDUs in these neighborhoods, evaluating their impact on property value, and examining various neighborhood perceptions, it becomes evident that one size does not fit all‐‐different neighborhoods present varied contexts to achieve affordability through Alley Flat development.

Although it is possible for individuals to develop alley flats in the North Loop and Holly neighborhoods that meet the minimum criteria of affordability (80% MFI), it is clear that there is little incentive for homeowners to do so. In the East Cezar Chavez neighborhood, however, land costs have already risen to a level where affordable development may be out of reach without innovative financing mechanisms. In this changing context we also found that the construction of an alley flat in one 7

neighborhood may have no impact on the tax rates of adjacent properties, but the reverse may be true where real estate pressure is greater.

Although Austin City Code § 25‐2‐511 applies tacitly to secondary dwelling units, most of its provisions are related to duplexes and not alley flat style construction. Put a different way, alley flats are not a type of development that is anticipated by the current amalgamation of city codes. Without a comprehensive plan, the City’s regulation system has become muddled as individual neighborhoods opt in and out of provisions and request variance and overlay zones. In the conclusion to this chapter we do present an alley flat code designed to stimulate conversation, but we recognize that this suggestion is only a beginning. In sum, the chapter specifies the following four recommendations:

1. Develop a flexible code with economic incentives that will promote Alley Flat construction throughout the city. 2. Plan secondary unit infill collaboratively with neighborhood groups and city officials. 3. Employ creative financing and/or alternative ownership formats to preserve affordability, and 4. Focus on emerging neighborhoods.

In Chapter 5, Ownership and Financing Structures, we argue that determining the appropriate ownership structure and funding sources for the development of affordable secondary dwelling units is a critical task facing the Alley Flat Initiative. Recognizing that potential alley flat homeowners face varied financial and social conditions, this chapter seeks to introduce a range of funding sources and alternative ownership structures available for alley flat construction.

Funding sources discussed in the chapter range from federally funded sources and City of Austin programs to community‐based initiatives. Among the potential federal funding sources discussed are programs headed by United States Department of 8

Housing (HUD), Fannie Mae and Freddie Mac, Community Development Financial Institution Fund (US Department of Treasury), and Federal Home Loan Banks. The City of Austin’s SMART Housing Program, General Obligation Bond funds, and several non‐ profit driven initiatives are also presented as possible sources of alley flat funding.

Potential ownership structures for the development of alley flats explored in the chapter are of five types: individual homeowners, non‐profit developers, private developers, neighborhood development blocks, and community land trusts. The preferences, decision‐making levers, underlying motivations and financial landscape (specifically in regards to affordability) for each of these types are discussed to determine the viability of alley flat construction under these ownership schemes.

The chapter concludes with the following recommendations for the selection of financing and ownership structures:

1. Take advantage of all applicable federal, city and community programs,

2. Leverage economies of scale where possible,

3. Employ the resources and social capital of existing organizations, and

4. Test alternative ownership structures.

In Chapter 6, Distributed Infrastructure, we examine the broad urban impacts that could derive from developing up to 7,000 alley flats in the city. The chapter begins with a brief analysis of the conditions under which large centralized infrastructure systems were developed in the US and argues that changing conditions favor a shift toward distributed infrastructure—methods of producing electricity, capturing and treating water that are close to the site of use. Such a distributed system of production and consumption can avoid most of the negative environmental consequences associated with large centralized systems and help to strengthen existing neighborhoods at the

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same time. In this context, alley flats can be understood, not only as units of consumption, but also as units of infrastructure production.

The chapter is divided into three sections, water, power, and technology analysis. In section one, water, we conclude that a distributed infrastructure approach that employs such technologies as rainwater harvesting, grey water re‐use, bioswales, rain‐gardens, naturalized stormwater retention, and porous pavement could reduce water consumption, electrical use related to pumping water, and CO2 emissions by 50‐ 60%. This reduction assumes only standard appliances and water fixtures will be used in the house itself. To accomplish this goal we arrive at seven recommendations:

1. It is in the City’s economic and environmental interest to develop a homeowner reimbursement program that will provide incentive to install rainwater harvesting systems (RWHS).

2. A grey‐water reuse system (GWRS) rebate program, similar to the RWHS, would also reduce net costs to the city.

3. The COA should amend the new residential design and compatibility standards, so that buried or above ground cisterns do not count against the pervious cover requirement.

4. Building codes dealing with the installation of RWHS and GWRS should be adopted. The COA should educate contractors about these codes, so that installed systems meet the intention.

5. The Austin Water Utlity (AWU) should set up a webpage for approved RWHS and GWRS installers similar to the web page set up by Austin Energy for approved Solar Installers.

6. COA should encourage, and eventually require, best management practices (BMPs) and low‐impact development (LID) practices.

7. COA should further study naturalized detention systems and incorporate many of the methods into the overall stormwater system improvements.

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In section two, electricity, and section 3 technology analysis, we found that the City of Austin is already committed to the production of an additional 100 mega watts of solar energy production by the year 2020. We propose that that Alley Flat Initiative could be integrated with that effort in a way that would distribute electrical production around the city and thus optimize efficiency for Austin Energy by reducing transmission line losses. Assuming that 7,000 alley flats were equipped with 2.4 KW solar arrays, the AFI would offset 148,000 tons of carbon dioxide now emitted by coal‐fired generators which is the equivalent of taking 3,246 cars off the road in Central Texas or planting 25,000 acres of trees. Although these are impressive numbers, we recognize that implementation is a complex process. Infrastructure is far more than solar collectors and wires. Rather, infrastructure includes not only technological hardware but the engineers and managers who design and operate such systems as well as the citizens who turn valves and flip switches. Infrastructure is a sociotechnical system that requires the redesign and negotiation on both sides of that system. It is in this context that we make the following 10 recommendations:

In sum, ten recommendations are made regarding solar energy:

1. Aim to provide every alley flat with solar energy. 2. Employ flexibility in regards to PV placement. 3. Pre‐pipe every newly constructed alley flat house for future solar thermal use. 4. All profits from Renewable Energy Credits generated by the Alley Flat Initiative should be reinvested into the communities where alley flats are prevalent. 5. Leverage all existing Austin Energy rebates and federal tax credits. 6. Be open‐minded to new technologies. Thin film technologies, as being developed by Nanosolar and Heliovolt, are cheaper and more efficient. 7. Form a co‐operative between the Alley Flat Initiative, Heliovolt and Austin Energy. 8. If installing in separate years, focus on solar thermal first, then proceed with the photovoltaic system. 9. Organize a solar buyers’ cooperative for Alley Flat owners. 10. Pilot a strategic partnership with Rays of Hope. 11

Next Steps: In summary form the above findings and list of recommendations must sound highly rational and formidable. We have bitten off a big chunk. Yet, if we have learned anything in the past five years it is that a project like this one is anything but linear—there have been many steps to the side, and backward, for every one forward. This is not to say, however, that rational planning is useless. As John Dewey once said, “it is foolish to imagine that one can plan anything so complex as a city, but we should always be planning cities.” Dewey’s suggestion, then, is that our plans should be flexible and built to imagine the short term so we can quickly test possibilities for the future and revise them again and again. Good plans are provisional. In this spirit we see four necessary, yet small steps that might get us closer to the larger goal of crafting a delivery system for sustainable/affordable housing in Austin: First, we intend to distribute this interim report to any and all stakeholders. Once interested parties have had an opportunity to ‘kick the tires’ we will sit down with them individually to listen. Neighborhood residents, not‐for‐profit developers, for‐profit developers, city staff members and others will quickly see from their own perspective, we are sure, which of our recommendations are likely to succeed and which will not. From this series of informal conversations, and in the interest of success, we will adjust the goals stated herein. This phase might also include working with the City and selected neighborhood groups to craft an alley flat code that would enable the next step. Second, we need to test the energy efficiency and livability of the completed prototype. Potential alley flat builders will want to know if our predictions are accurate before making a commitment to build something similar. Plans and funding are already in hand to complete this task and the results will be available in the early fall of 2009. This data will be extremely helpful in improving prototype designs to be made available via the ACDDC website. Third, we need a tool kit—a how‐to, step‐by‐step guide that tells homeowners how to get from “a” to “b” in pursuit of building an alley flat. And, as in the previous phases, the tool kit needs to be tested and revised before it is ready for public use. From experience with the neighborhood planning process we recognize that the details of, and personalities involved in plan implementation can radically transform original intentions. Sometimes this is good, sometimes not, but the experience of crafting a tool kit will prepare us for the final step.

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We imagine community outreach to be fourth in this process. At this moment in time, AFI is quite a distance from having a system that is ready for general use. Yes, we have built a successful prototype, but there remain too many questions about financing, regulation, and operation that any rational homeowner would want answered. When that time comes it will be the Austin Community Design and Development Center (ACDDC) that will lead the community outreach process and again modify the system. In sum, the Alley Flat Initiative has taken the first of many steps in an open‐ended process that will be influenced by your reaction to this report.

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1.0 A BRIEF HISTORY OF ALLEY FLATS IN FOUR CITIES

The movement toward cities and away from both suburb and outlying areas is an international trend. As urban areas become more populated, the need for housing that is increasingly dense, affordable, and consistent with the character of existing neighborhoods has become a prominent policy issue. One proposed solution to this increasing demand for affordable housing is to build infill housing in the form of accessory dwelling units (ADUs). ADUs, secondary buildings built on excess lot space, can be denser, cheaper, and more environmentally friendly than the primary dwellings on the same lot. This section analyzes the development of ADUs in four cities across Canada and the United States: Vancouver, British Columbia; Seattle, Washington; Boulder, Colorado; and Santa Cruz, California. Like Austin, all of these cities are attractive, rapidly growing cities that face the difficult challenge of developing sustainable affordable housing delivery systems. All value diverse, mixed‐income neighborhoods and recognize growing demand for smaller, more efficient homes with convenient access to urban amenities. However, unlike Austin, each of the case study cities all are subject to regulated or physical growth boundaries, and enjoy state regulatory frameworks that generally support their efforts to increase affordable housing and reduce urban sprawl. While each city’s political, demographic, economic and environmental context differs from one another and from Austin, a critical, comparative review introduces additional strategies and provides insight about the potential of the general ADU strategy to respond to different circumstances.

VANCOUVER, B.C.

Vancouver has developed a reputation as one of Canada’s top cities in terms of population growth, quality of life, and cost of living. With over 578,000 residents within the city limits and over 2 million in the metropolitan region, this attractive city has been fully developed for years. The city must, however, accommodate approximately 6,000

14 additional people per year in a tight housing market with vacancy rates less than 2%. Affordable housing has become a serious issue as many city residents cannot afford to purchase a home and, of those who rent, many allocate more than 30% of their income toward housing. For years, the private sector has responded to the demand for affordable housing with “Secondary Suites,” rental apartments that can be either within or detached from primary dwellings. More recently, the government has become more involved with the development of these secondary suites. So far, the City of Vancouver does not offer any incentives or resources. Instead, its focus has been on creating a new set of regulations and fees intended to legalize and regulate Secondary Suites. Unfortunately, the high cost of fees and bureaucratic demands of secondary suite regulations appear to have dissuaded many developers from registering their secondary suites. Of an estimated 25,000 suites within the city (and 54,000‐69,000 in the metro area), only approximately 4,500 have been registered with the city.1 Given the challenges of registering and regulating secondary suites, the new legalization process might actually be a hindrance to future development of the Secondary Suites program. Yet, despite these challenges, some new companies demonstrate that registering and building small, efficient, “green” secondary suites can yield substantial profits. Most recently, efforts to make the construction and practical use of secondary suites easier have come to the forefront of public discussion through the city’s EcoDensity Initiative. Through this program, Vancouver is facilitating many public conversations and workshops about quality of life, density, environmental issues, and affordable housing as the city plans for its future. According to residents, secondary suites and laneway houses (secondary suites on alleys) are an important source of green, affordable, and denser housing that naturally blends into the current housing structure. Recommendations form the EcoDensity Initiative’s public conversations

1 Policy and Regional Planning Department, i. 15

include expanding opportunities for secondary suites through revised regulations and financial incentives in the future. The Vancouver case study emphasizes the contributions that the private sector can make to affordable housing and underscores the importance of public discourse about density and sustainability.

SEATTLE, WASHINGTON

Affordable housing shortages in Seattle have long been a significant problem for the city. As property values rise and space to expand decreases, more people have been forced to live further out of Seattle. The Washington State Growth Management Act of 1994 set up mandates for the major cities in the state to specify a plan for accommodation of projected population growth, guidelines for increasing the overall housing stock, and a plan for providing for the housing needs of all economic groups in the city. As a result of these market and regulatory pressures and a desire to provide alternative housing choices for its community, in 1996 the Seattle Planning Department passed an ordinance to legalize ADU’s in single‐family residential areas. This ordinance also established strict criteria for ADU construction. The ordinance was well received by the city at large both because Seattle has a disproportionate number of small households that could make use of ADU rentals, and because ADU’s were already being illegally constructed by many Seattle citizens. However, Seattle’s regulatory program still involves many fees and no incentives. Many of Seattle’s ADUs remain unregistered, even though the number of permits granted each year consistently increases. DADU’s (detached ADUs) have been a far more controversial housing type. Due to concerns about noise, traffic and overcrowded neighborhoods, only Seattle’s Southeast neighborhoods has allowed them so far. In 2006, 25 neighborhood organizations of this ethnically diverse area banded together as the Southeast District Council and unanimously adopted DADUs as a means to provide affordable housing and allow existing homeowners to stay in their neighborhoods as property taxes continued

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to rise. There are stricter guidelines for DADU construction, including providing extra space for parking as well as size limits of the actual detached building. . The history of DADUs reflects the controversy that tends to surround increases in residential density. Although the state of Washington is far more supportive of growth management efforts than Texas, Seattle still has a great deal in common with Austin. Besides being vibrant, high‐growth cities with strong economies, a high population of young adults and singles, both cities also have a neighborhood planning process that influences zoning regulations. The challenges Seattle has faced in getting DADUs adopted throughout the city are similar to those of Austin.

BOULDER, COLORADO

Boulder is a relatively small city, by U.S. standards, with a population of 91,500 in 2007. Growing development pressure in this college town coupled with strong growth controls on rural land in Boulder led inevitably to increases in housing prices. Responding to its affordable housing shortage and driven by a desire to develop sustainably, Boulder developed some innovative affordable housing programs. The city‐mandated inclusionary zoning policy (which requires a minimum percentage of affordable units in new developments) has had the largest impact on increasing the supply of affordable housing. Contrary to the concerns of many pro‐development advocates about the burden such a policy places on the private developers, Boulder’s housing market has continued to thrive. Although inclusionary zoning is illegal in most of Texas, it appears to be possible in East Austin’s Homestead Preservation district. This policy would significantly benefit efforts to promote more equitable growth in this high growth area. For the rest of Austin, the merit‐based permitting process that preceded the inclusionary zoning ordinance could be useful. This program awarded points to developers based on the amount of affordable and energy‐efficient homes to be constructed. However, such a system may introduce too much bureaucracy to the development process and could be subject to legal challenge in Texas. Another model program is Boulder’s HomeWorks

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program, which preserves the long‐term affordability of publicly‐subsidized homes and helps lower‐income residents rent and purchase these affordable homes. While Boulder’s affordable housing strategies are nationally recognized, its ADU policies could be significantly improved. The current regulations are confusing, difficult to enforce, and unlikely to significantly contribute to affordable housing goals. Although ADUs are popular among many residents, some are concerned that they will turn quiet neighborhoods into student‐dominated areas with excessive noise, late night parties, high traffic levels, and parking shortages. Examples from the other case studies demonstrate how its program could be improved. Although Boulder does not offer many lessons for ADU program development, the success of its other affordable housing policies clearly demonstrate the potential of city to achieve a growth pattern that supports neighborhood diversity through affordable housing policies “with teeth.” Additionally, Boulder’s encouragement of a wide variety of ownership models such as cooperative housing and land trusts and its partnerships with non‐profits also offers lessons for other cities.

SANTA CRUZ, CALIFORNIA

An attractive and rapidly growing city confined to small geographic area, Santa Cruz has faced significant affordable housing challenges and has responded with innovative housing programs. Throughout its history, Santa Cruz has had a steady influx of people attracted to quality jobs in industries such as tourism, education, agriculture (organic in particular) and high technology. While these economic opportunities have improved wages, most Santa Cruz residents still struggle to secure affordable housing. In 2001, the median price of a house in the City of Santa Cruz was $480,000 and in just five years time, that median cost had risen to $720,709. Although the 2007 median family income ($81,300) in Santa Cruz is higher than the national average, most families still could not afford to purchase a home in the community. In 2002, after years of rapidly increasing costs of living, the City began to look for options and solutions for their impending housing crisis. The City’s Planning Department

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created a mandate to maintain an economically diverse community by developing a broader range of housing opportunities that would be compatible with the unique character of the community. The City convened a task force and a series of public workshops to evaluate the feasibility and desirability of different strategies to meet the city’s housing needs. Given neighborhoods’ preferences for lower density development and the infrastructure challenges presented by high density development, small scale infill development such as accessory dwelling units (ADUs) emerged as a strong community preference. With the support of state funding for anti‐sprawl programs and strong leadership from city officials, Santa Cruz soon began its nationally renowned ADU Program. Santa Cruz’s ADU Program has been tremendously successful, both in its positive reception by community members who were often wary of higher density in their neighborhoods, and in its success in significantly increasing the number of permitted ADUs. In its first year, the ADU program led to the creation of 35 rental units, which was an impressive accomplishment for a city of 56,000 residents.2 Since 2006, 50 permits a year have been issued. These accomplishments are the result of well‐designed policies, programs that account for community concerns, help homeowners and neighborhoods envision how ADUs could enhance their properties and communities, and make it easy for homeowners or developers to go through the whole development process. Notably, the ADU Program’s Technical Assistance Program provides a set of pre‐approved prototype plans and a manual to guide homeowners from design, to permitting and construction. The public workshops held early in the program’s development also helped Santa Cruz refine its programs to the needs of community members. From its beginning, one of the primary goals of the ADU Program was to increase the supply of affordable housing. Accordingly, it includes financial incentives for

2 American Planning Association website. News/News Releases, January 7, 2005. Retrieved April 2008. Santa Cruz Housing Program Recognized With National Planning Award 19

building ADUs to be rented at affordable rates. To date, no one has taken advantage for these incentives. However, most units appear to be rented at relatively affordable rates. The supply of perpetually affordable housing has been more directly increased by Santa Cruz’s inclusionary zoning ordinance and other strong affordable housing programs.

SUMMARY

It is clear that effective ADU policies and programs can significantly contribute to the housing needs of high‐growth cities, especially those with significant numbers of young adults, small families, first time homebuyers, and seniors. However, even the most successful ADU program is unlikely to independently stave off an affordable housing crisis. Cities that are serious about creating affordable housing while reducing urban sprawl and maintaining the character of existing neighborhoods should develop an ADU program tailored to its own needs AND adopt other affordable housing policies. Inclusionary zoning, while illegal in almost all of Texas, appears to be one of the most effective affordable housing policies. The case studies show that a well‐designed ADU program helps improve the diversity and social stability of existing urban neighborhoods. An ADU can be an effective way of offsetting the mortgage payments, thereby allowing a homeowner to remain in his/her neighborhood. Even though the market generally determines the rate for rental ADU units, these rents tend to be lower since the houses are more modestly sized. Also, when adopted on a large scale, an increase in supply usually leads to a decrease in price. With a thoughtful set of design regulations and effective enforcement, cities can ensure that the ADUs fit naturally into the fabric of neighborhoods with minimal problems. Although all of the cities studied left ADU rents to the market, other cities like Austin might want to consider stronger measures to keep rents affordable. For instance, cities could create stronger incentive programs which are properly enforced by regular reporting of both rents charged and the socio‐economic profile of renters. Even

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though Santa Cruz’s fee waivers have not been used, the city could consider a property tax freeze for homeowners who make their ADU's affordable to low‐income tenants (those at or below 50% MFI). In addition, fee waivers may still be a good method to try for other cities with different housing market characteristics. Similarly, cities may also be well‐served to better integrate their ADU policies with their other affordable housing policies. For instance, development of accessory dwelling units might be included as an option for developers to fulfill their inclusionary zoning affordable housing requirements. Even if they did not construct the unit themselves, perhaps they could fund a nonprofit to build it. In both Boulder and Santa Cruz, ADUs created through inclusionary zoning would be perpetually affordable. Also, for the most part, all of the cities reviewed considered ADUs as exclusively rental units. Yet, Boulder and Santa Cruz have both considered a wide range of ownership models in their efforts to expand housing opportunities. Community land trust and limited equity cooperative models could also work with ADUs. Overall, these case studies identify the strengths and opportunities of ADU policies and other affordable housing initiatives, as well as common pitfalls. Through a contextualized approach to the case studies, we have come to understand the similarities and differences of several attractive, high‐growth cities that are all striving to meet significant affordable housing challenges. While there is no singular answer and none of the cities have fully met their goals, their experiences offer valuable lessons for each other and for other similarly situated cities like Austin. They all testify to the value of using a number of different strategies to achieve affordable housing goals, involving the public in conversations about density and design of regulations, and making it easier for people do develop housing in the manner preferred by the community by adjusting regulations, procedures, and fees and offering tools and resources to help guide them through the process.

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2.0 CONDITIONS IN AUSTIN: LANDSCAPE OF OPPORTUNITY

Like the other fast‐growing, young, dynamic, and environmentally progressive towns highlighted in the previous section, Austin could benefit from greater adoption of accessory dwelling units (ADUs). In theory, strong ADU policies and programs could help Austin respond to growing demands for affordable infill housing and curb sprawl by giving families the option to enjoy high quality neighborhoods in the urban core. However, to understand the actual potential of ADUs in Austin it is important to first consider several questions. What regulations restrict or augment ADU development and where do they apply? How many ADUs have already been built in Austin and its various neighborhoods? How many ADUs could actually be added to Austin’s diverse neighborhoods? And, of great interest to the Alley Flat Initiative, how many existing and potential ADUs are directly adjacent to Austin’s abandoned alley ways? Which neighborhoods have the greatest potential and need for alley flats/ADUs? This chapter addresses each of these questions, providing a brief ADU regulatory overview and presenting estimates of the presence and potential of ADUs resulting from GIS analyses.

2.1 OVERVIEW OF ADU REGULATIONS

The City of Austin (CoA) already supports ADUs (which it calls “secondary apartments”) as a tool to support vibrant urban communities and thousands of ADUs have already been built throughout the city. Current zoning regulations allow secondary apartments to be built by right on all parcels of at least 7000 square feet zoned “SF‐3” (Family Residence), and SF‐5 through MF‐6 districts.1 However, neighborhood planning associations (or their subdistricts) may elect to further allow secondary apartments on residential lots that are at least 5,750 square feet by adopting the “secondary apartment infill tool” in their neighborhood plans.2 In both cases, secondary units are limited to 850 square feet. Other setback and design requirements also apply (see Chapter Four).

1 For a basic description of Austin zoning districts, see http://www.ci.austin.tx.us/development/zoning.htm. 2 If the neighborhood adopts the secondary infill tool, it allows secondary units to be built on lots of 5750 square feet in districts zoned SF‐1 through SF‐3, SF‐5, SF‐6 and MF‐1 through MF‐ 6, and in the mixed use (MU) combining district. (Special Use Infill Options and Design Tools Available Through the Neighborhood Plan Combining District (NPCD)) 22

As Chapter Four discusses, the decision to adopt or reject the secondary apartment tool (as well as other infill tools) is often a contentious one. In fact, some Neighborhood Planning Areas (NPAs) actually broke into subdistricts over these debates. So far, seventeen neighborhood planning associations have adopted secondary apartments, with five of these neighborhoods only adopting secondary apartments in a single subdistrict, and one adopting them in five subdistricts.3 Map 1, “Austin’s Neighborhood Planning Areas” is a reference map that shows the location of all Austin NPAs. Map 2, “Secondary Apartment Infill Tool Adoption” provides a closer look at the 20 NPAs/subdistricts that have adopted the secondary apartment infill tool. Map 3, “Austin’s Alley Network” provides a closer view of Austin’s alleys. Understanding where alleys are and where secondary apartments are (and are not) permitted is essential to understanding the potential of alley flats. In addition to basic zoning restrictions, secondary units are also subject to overarching Floor to Area Ratio (FAR) limits imposed by the McMansion Ordinance and impervious cover limits set by the CoA’s Comprehensive Watersheds Ordinance. The McMansion Ordinance stipulates that for a given lot, the ratio of all of the floor area of the lot’s building(s) (square footage of all main areas) to the area of the lot can be no more than .4 (4:10). The Comprehensive Watersheds Ordinance limits the percentage of a lot that can be covered by building footprints. In areas of West Austin with highly sensitive watersheds, impervious cover (generally building footprints) can occupy no more than 15%. In less restrictive urban areas in the desired development zone, impervious cover is allowed up to 45%.4 Together, these two restrictions limit the overall size and building footprint of secondary units. Although the CoA promotes infill through its SMART Growth policies and the infill tools it provides to neighborhood planning teams, there are few incentives or supports in place for secondary apartment development. To some extent, the city’s neighborhood planning staff is constrained in its ability to advocate for urban infill since neighborhood residents often perceive

3 Map 2 lists all of the neighborhoods and subdistricts that have adopted secondary apartments as an infill tool: Brentwood, Central East Austin’s Subdistrict 1, Chestnut, Dawson, East Cesar Chavez, Highland, Holly, MLK‐183’s Ed Bluestein Subdistrict, Montopolis, North Loop, Old West Austin, Pecan Springs – Springdale’s Oriens Park Subdistrict, Rosewood, Sweetbriar’s North Bluff Subdistrict, Upper Boggy Creek’s Cherrywood Subdistrict, Wooten’s Fireside Loop Subdistrict, and five of West Congress’s subdistricts: Lareina, Alamo Heights, Normandy‐Clarke, and Pleasant Hill. 4 For a full description of the limits established by the Comprehensive Watersheds Ordinance, see http://www.ci.austin.tx.us/watershed/ordinance_table.htm. 23

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26 staff as pushing density on them. In any case, it is difficult to determine how successful or unsuccessful efforts to promote secondary apartments have been since there is not an official secondary unit tracking system. For many years, permits for secondary apartments could be filed with many different descriptions, making the identification of secondary apartments through reviews of permit records difficult. Furthermore, many secondary apartments have been built illegally, without any building permits. As a result, Austin – like nearly all of the case study cities in Chapter 1 – has a difficult time reliably quantifying the number of active secondary apartments and tracking their development.

2.2 ESTIMATING THE TOTAL NUMBER OF ADUS IN AUSTIN THROUGH GIS ANALYSIS

In light of the regulatory restrictions described above and detailed property information from the 2008 Travis County Appraisal District (TCAD) Appraisal Roll, a rough estimation of the number of existing and potential ADUs could be derived through GIS analysis. The results of this analysis are summarized in Map 4, “Austin’s Existing Secondary Apartments (By NPA);” Table 2.2.1, “SF‐3 Lots with Existing Accessory Dwelling Units By Neighborhood Planning Area: Estimated total units and property valuation statistics;” and Table 2.2.2, “SF‐3 Lots with Existing Accessory Dwelling Units By Neighborhood Planning Area: Estimated total units and property valuation statistics.” A full description of the spatial data and processes used to perform this analysis is provided in Appendix A.5 A brief summary of the approach and the results is provided below. Estimates of the number of ADUs could be derived from several sources such as building permit records and utility service accounts, but the most reliable source in Austin appears to be TCAD’s tax appraisal roll. Although many active secondary apartments could escape notice by county appraisers, most legitimate dwelling units should appear in this system. Here, secondary units are either classified as a “garage apartment” (code 21), where a dwelling is built directly above a garage, or as a “single family home” (code 01), which is the code for all detached single family homes. TCAD’s database includes a record for every single building/improvement

5 In order to complete this GIS analysis, the attribute table of TCAD’s 2008 parcel shapefile had to be significantly enriched. Through a series of different GIS steps, important parcel information such as zoning district, neighborhood planning area, relevant impervious cover limit, number of building footprints, area of building footprints, square footage of all main areas of improvements, improvement value, land value, market value, adjacency to alleys, and number of single family homes was all added to the attribute table. 27

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30 recorded on the lot, recorded on which in turn includes the type of improvement (for instance 21 or 01), and other detailed information about its value and size. Generally, parcels that have two “01” homes on them have a main house and a secondary dwelling unit. This is typology is the most common and is also the one that the Alley Flat Initiative promotes most widely (a duplex with a secondary unit in the back is less common). Parcels with a “21” home clearly have a secondary unit. For the purposes of this analysis, it is assumed that SF‐3 lots that have 2 or more single family homes on them or a garage apartment are lots that already have an ADU. This is probably also true of lots in other zoning districts, but those lots (such as multi‐family) may often be larger and less likely to have the close building orientation typical between primary and secondary dwelling units. GIS queries suggest that there are 1,889 secondary apartments located on SF‐3 lots, and potentially 278 secondary apartments on lots with other zoning (SF‐1 to SF2, SF5‐multi‐ family, PUD, etc), for a total across the board of over 2,100 secondary apartments.6 As Map 4 shows, Austin’s existing ADUs are concentrated in centrally located neighborhoods, following a typical urban density patter. Of the 1,889 ADUs on SF‐3 lots, 638 appear to be located on alleys (see Table 2.2.1). Of the 278 ADUs identified on non‐SF‐3 lots, 71 appear to be located on alleys (see Table 2.2.2). Considering that many secondary apartments may not be officially registered and that single family houses that share a lot with duplexes could also be considered secondary apartments, there may be even more than these estimates suggest. The prevalence of ADUs range considerably between different neighborhoods, as Map 4 and Tables 2.2.1 and 2.2.2 suggest. Table 2.2.1 provides a neighborhood by neighborhood summary of SF‐3 lots with ADUs on them. It shows that some neighborhoods such as Johnston Terrace appear to have only 1 SF‐3 lot with an ADU on it, while others such as Hyde Park have well over 100. The top ten neighborhoods in terms of the number of existing SF‐3 lots with alley flats are: Hyde Park (69), North Loop (68), Central East Austin (65), Chestnut (57), East Cesar Chavez (50), Holly (44), Hancock (43), Bouldin Creek (43), Old West Austin (36), and West University (33). In this table, neighborhoods are sorted by the number of SF‐3 lots that already have alley flats (from most to least), then by the total number of SF‐3 lot that already have ADUs of all types (including alley flats and garage apartments), and finally by Neighborhood Planning

6 These estimates consider only SF3 lots within recognized CoA NPAs. There may be an additional 42 secondary units on SF3 lots outside of these areas, and an additional 120 secondary units on non‐SF3 lots outside of these areas. 31

Area. The top twenty neighborhoods in terms of SF‐3 lots with ADUs are highlighted. This shading pattern shows that for the most part, the neighborhoods that have the most ADUs in total also have the most alley flats. Interestingly Tables 2.2.1 and 2.2.2 also show how land value relates to ADU presence. In both SF3 lots and non‐SF3 lots, the neighborhoods with the twenty highest average land values included 70% (14) of the 20 neighborhoods with the greatest number of existing ADUs. This suggests that rising land values are driving the need to use the land more productively, or perhaps that more productive/dense use of the land through ADU development is driving the cost of the land up. In either case, the higher concentration of ADUs in central Austin neighborhoods (Map 4) and the positive relationship between ADUs and land values suggest that they are responding to demand for centrally located, efficient housing. Future chapters explore the potential of ADUs to help existing homeowners in central neighborhoods contend with rising property taxes driven by appreciating land values. Table 2.2.2 provides a neighborhood by neighborhood summary of lots with zoning other than SF‐3 that also have ADUs on them (or more precisely, have either two single family homes on them, or at least a garage apartment).7 Lots zoned SF‐1 to SF‐2 represent 24% of these ADU lots, and lots zoned SF‐5 through Multifamily represent 32%. Of these non‐SF3 lots, the ten neighborhoods with the most number of alley flats are: North University (11), Old West Austin (10), Pleasant Valley (9), Central East Austin (8), East Cesar Chavez (7), West University (7), Holly (4), North Loop (3), Bouldin Creek (3) and Hancock (3), although Hyde Park, and Rosewood are also tied at 3. Comparing this table to table 2.2.1, it is clear that SF‐3 lots account for the vast majority of ADUs in Austin: there appear to be 1,889 ADUs in SF‐3 areas, and only 278 in non‐SF3 areas. Comparison of the tables also shows that in both traditional SF‐3 and other zoning categories, North Loop, Central East Austin, East Cesar Chavez, Holly, Hancock, Bouldin Creek, and Old West Austin are in the top ten in terms of number of alley flats in both SF‐3 and other zoning categories. Of these neighborhoods, all but Hancock and Bouldin Creek have adopted the secondary apartment infill tool, suggesting that the decision of the other neighborhoods to permit this type of development may have significantly helped development of legitimate ADUs on lots with and without SF‐3 zoning. Furthermore, 16 out of 17 neighborhoods that have

7 This analysis does not consider the ADUs that were built outside of Neighborhood Planning Areas recognized by the City of Austin. 32 adopted the secondary apartment option have at least 2 and as many as 33 ADUs on non‐SF‐3 lots (the exception is Wooten), and another 16 out of 17 of these neighborhoods have at least one and as many as 111 ADUs on SF‐3 lots (the exception is Pleasant Valley). Still, it is difficult to draw conclusions from these tables about the influence neighborhood policies have had on implementation. Hyde Park has 152 ADUs (including 69 alley flats) on SF‐3 lots, and the West Austin Neighborhood Group has 150 ADUs (including 17 alley flats), yet neither of these neighborhoods have adopted the secondary apartment tool, nor have 12 other of the neighborhoods ranking in the top 20 for ADU prevalence on SF‐3 lots.

Table 2.2.3 Non‐SF‐3 Lots with ADUs: Zoning Distribution & Regulatory Compliance NUMBER OF % BUILT WHERE % BUILT IN GENERAL ADUS ON NON‐ NPA HAS ADOPTED COMPLIANCE SHARE OF NON‐ ZONING TYPE SF3 LOTS BY SECONDARY W/CURRENT SF3 LOTS BY ZONING TYPE APARTMENTS ZONING ZONING TYPE SF‐1 TO SF‐2 66 0% 0% 24% SF‐5 THROUGH MF‐6 89 49% 91% 32% MIXED USE 55 64% 64% 20% OTHER 68 24% 24% 24% TOTAL/OVERALL 278 34% 47% 100%

Similarly, of the top twenty neighborhoods in terms of ADUs on non‐SF‐3 lots, only 5 have adopted the secondary apartment tool. Considering that most lots where secondary apartments allowed by right are zoned SF‐3, this is a somewhat surprising finding. This could mean that two single family homes are frequently placed on the same multi‐family of SF‐6 lot, or that ADUs are not in compliance with current zoning. That data suggest that the case is more of the latter. As Table 2.2.3 shows, it appears that only 47% of these ADUs on non‐SF3 sites are currently in compliance with zoning regulations. Of non‐SF3 sites with ADUs, 189 (68%) are located in zones where secondary apartments may only be built when Neighborhood Planning Areas (NPAs) adopt the secondary apartment infill tool. However, none of the 66 lots with SF‐1 to SF‐2 zoning are in areas where NPAs have adopted secondary units. Mixed Use districts are also allowed to build secondary units with NPA approval, and 64% of the 55 ADUs built in Mixed Use zones are in areas where secondary apartments have been adopted. Zoning compliance for ADUs in non‐SF3 areas appears to be much higher for the SF‐5 through MF‐6 categories, where ADUs are permitted by right (even without NPA approval) on lots that are greater than 7000 square feet (SF‐5, SF‐6, and Multifamily). Of the 89 lots in these 33 zoning categories, 74 are located on properties over 7,000 square feet, and of the 15 lots smaller than 7,000 square feet, 7 of them are in areas where secondary apartments are allowed by a neighborhood plan. Overall, 91% of these existing ADUs appear to be in compliance with zoning. More research is necessary to learn whether these ADUs date back to times when secondary apartments were widely accepted and constructed or if they are new dwellings built out of code.

2.3 ESTIMATING POTENTIAL LOCATIONS FOR NEW ADUS THROUGH GIS ANALYSIS

A primary objective of this GIS analysis is to determine the number sites in Austin that could build an alley flat or, more generally, an accessory dwelling unit. This section provides an overview of the GIS analysis performed and its results, including the potential of ADUs in general and the potential of alley flats in particular.

2.3.1 OVERVIEW OF GIS ANALYSIS

There are a number of factors that determine site potential, including: 1) Whether or not a parcel is zoned SF‐3, the first requirement for most ADUs; 2) If the lot is at least 7000 square feet (ADUs allowed by right in SF‐3 zones); 3) If the lot is at least 5,750 square feet and less than 7000 (ADUs allowed by some neighborhood plans as a special infill tool); 4) If the lot still has space to build on given the constraint of impervious cover limits. Since the minimum building footprint would generally be 500 square feet, we assume there must be at least 500 square feet of available space. This calculation does not account for the allocation of space over the lot. As such, it shows only what is allowable under the impervious cover limits, and is not reliable as an indicator of which lots actually have enough space in one place to build: a. If a residential parcel is in the desired development zone, it is generally subject to a 45% impervious cover limit. Although some places have less restrictive limits, the Alley Flat Initiative aims to generally meet this standard.8

8 http://www.ci.austin.tx.us/watershed/ordinance_table.htm 34

b. If a residential parcel is in the Drinking Water Protection zone’s “water supply suburban” area, we assume that it is subject to a 30% impervious cover limit, although the requirement ranges from 30% to 40%.9 c. If a residential parcel is in the Drinking Water Protection Zone’s “Barton Springs Zone,” we assume it is subject to the recharge zone’s 15% impervious cover limit, even though the Barton Creek zone and Contributing zone have different limits (20% and 25% respectively). 10 5) If the lot still has space to build in light of the city’s Floor to Area Ratio (FAR) limit. Due to the McMansion ordinance, homes may not exceed a .4 FAR: the ratio of the home’s total square footage to the area of the lot may not exceed .4; 6) If the lot is adjacent to an alley (this is clearly of interest to the Alley Flat Initiative, but is generally more convenient than other secondary units); 7) Whether the lot already has one or no single family residences on it already. If it has only 1 single family home, it may very well have space for an alley flat. If it has none, then two homes could be built; 8) Whether the lot already has one garage apartment on it; and 9) Whether the lot already has multiple buildings on it, in general. Although the combined single family home and garage apartment test is probably the best measure, other buildings such as sheds may constrain alley flat development. If a lot has 0‐2 buildings on it already, it may likely still have space for another, since 2 buildings often reflect a main house and a shed. Lots with 3 or more buildings probably do not have enough space.

In light of these criteria, a parcel shapefile was created with attribute information for zoning classification, lot area, neighborhood planning area, neighborhood planning association acceptance of the secondary unit infill tool, total square footage of building footprints on the property, impervious cover limits on the property, total square footage of main areas in the home, total number of single family homes existing on the property, total number of buildings existing on the property, and adjacency to an alley. This data was pulled from several different sources into a single robust parcel shapefile in GIS, which was then used to perform the

9 http://www.ci.austin.tx.us/watershed/ordinance_table.htm 10 http://www.ci.austin.tx.us/watershed/ordinance_table.htm 35 suitability analysis for additional secondary units (and the overview of currently developed secondary units discussed previously). Since SF‐3 lots are the most common form of single family zoning and appear to be the most appropriate for ADU development, the analysis summarized here is limited to SF‐3 lots. Additional queries for ADU potential in non‐SF3 lots would be simply completed with the new database. The analysis is also limited to lots that are within neighborhood planning areas recognized by the City of Austin. Table 2.3.1 provides a basic summary of the queries used in this analysis of ADU potential on SF‐3 lots. It includes 3 sub‐tables which group queries of the GIS database to estimate the number of lots with ADU potential. Each column represents a different factor affecting a lot’s ADU potential (as identified above). Each row represents a different query, with an “X” showing the criteria applied and the total number of matching parcels shown in the 1st column. Each table pertains to a different development scenario and the queries are grouped by those with general ADU potential and those specifically with alley flat potential. The highlighted queries provide the most refined estimates for potential parcels. The italicized totals, which reflect consideration of existing building footprints (2003 data) are probably the best estimates. These tables include results for all Austin parcels, including those outside of recognized NPAs. Tables 2.3.2 and 2.3.3 only include parcels in recognized NPAs. They provide a neighborhood by neighborhood breakdown of the 33,264 lots with ADU potential by right and the 9,624 lots with ADU potential by NPA approval. Detailed information about the data sources used and the steps taken to create this parcel layer is provided in Appendix A.

2.3.2 POTENTIAL FOR ADUS IN GENERAL

The results of the GIS analysis suggest that there is tremendous opportunity for accessory dwelling unit (ADU) development throughout Austin. Tables 2.3.2 and 2.3.3 estimate that there are 42,888 SF‐3 lots that are already eligible for ADUs in Austin’s NPAs. This total includes 33,264 lots that are greater than 7,000 square feet and 2,931 lots that are both between 5,750 and 7000 square feet and located in areas where secondary apartments are allowed by the neighborhood plan. If secondary units were adopted throughout all of Austin’s neighborhoods, another 6,693 ADUs would be possible. Map 5, “Austin’s Secondary Apartment Potential (by NPA)” shows the varying potential of Neighborhood Planning Areas (NPAs) for ADUs. This analysis/map only considers SF‐3 lots

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38 greater than 5,750 ft2. While the map of existing neighborhoods (Map 4) shows that secondary apartments have been most common in neighborhoods closest to downtown, Map 5 shows that there is widespread potential for ADUs throughout Austin’s urban neighborhoods. The map includes a table of the 20 neighborhoods with the greatest number of potential ADU lots and notes the percentage of lots in those neighborhoods that would be allowed to be built today (based on lot size and whether or not the secondary apartment infill tool has been adopted). NPAs and subdistricts that have adopted this tool are also identified on the map. Comparing Map 5 to Map 4, it appears that some neighborhoods like Old West Austin and Old Enfield may have already achieved much of their ADU potential, at least in comparison to other neighborhoods. In absolute terms, however, Old West Austin can still dramatically increase its ADU development: it already has about 70 ADUs, but it could still accommodate another 261 (172 on lots over 7,000 ft2 and 89 on lots between 5,750 and 7000 ft2). Similarly, Old Enfield already appears to have 34 ADUs, but it could still accommodate another 198. Currently 146 of these are allowed by right, but the remaining 52 could only be built if the neighborhood adopted the infill tool. Clearly, Austin has only begun to realize its potential for ADU development. While zoning and existing development on a site dictate whether or not an ADU is possible, market forces will likely influence whether or not one is developed. Neighborhoods where the average improvement value of a lot is significantly less than the lot’s average land value are likely to face speculative development pressure. A low improvement to land ratio (ILR) suggests that a developer will be tempted to buy the lot, tear down the existing structure to build a new, more economically valuable structure in its place. In this way, low ILR values often signal gentrification pressure. Neighborhoods with low ILR values may be particularly interested in ADUs since 1) building an ADU could help a homeowner offset growing property taxes through rental income and make more productive use of his/her valuable land, and 2) development of a second house could help lower the ILR, thereby reducing property’s speculative value. The twenty neighborhoods with the lowest ILRs (and highest associated development pressure) are presented in Table 2.3.4, below, which is derived from Table 2.3.2 (and as such only includes parcels with ADU potential on SF‐3 lots greater than 7,000 ft2). Of these twenty neighborhoods, 15 are also in the top twenty neighborhoods in terms of existing ADUs (refer back to Table 2.2.1). These 15 NPAs appear in bold in Table 2.3.4, below. The table

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suggests that lots with ADU potential in all of these NPAs are under significant development pressure and have strong potential for further ADU (and alley flat) development.

Table 2.3.4 Top 20 Neighborhood Planning Areas in terms of highest speculative value of SF‐3 lots greater than 7,000 ft2 with Accessory Dwelling Unit (ADU) potential

PARCELS PARCELS WITH AVERAGE IMPROVEMENT WITH LIKELY LIKELY ALLEY AVERAGE TOTAL NEIGHBORHOOD TO LAND ADU FLAT IMPROVEMENT AVERAGE MARKET PLANNING AREA RATIO POTENTIAL POTENTIAL VALUE LAND VALUE VALUE NORTH LOOP 0.30 334 88 $61,272 $207,357 $268,629 OLD WEST AUSTIN 0.42 172 51 $159,616 $376,410 $536,026 HYDE PARK 0.43 450 105 $112,862 $260,999 $373,861 DOWNTOWN 0.45 41 0 $279,338 $614,769 $894,107 ROSEDALE 0.50 519 62 $125,406 $251,621 $377,026 HANCOCK 0.50 335 95 $142,599 $283,001 $425,600 WEST AUSTIN NEIGHBORHOOD GROUP 0.53 1,446 36 $258,518 $483,630 $742,148 WINDSOR ROAD 0.54 679 0 $207,794 $382,028 $589,822 BRENTWOOD 0.55 1,491 0 $90,784 $163,664 $254,448 WEST UNIVERSITY 0.57 114 62 $160,745 $282,969 $443,714 BOULDIN CREEK 0.58 429 156 $127,675 $219,984 $347,658 CRESTVIEW 0.66 1,121 0 $99,137 $151,027 $250,164 CHESTNUT 0.67 116 90 $69,310 $103,608 $172,918 ZILKER 0.67 720 34 $150,410 $224,279 $374,689 HOLLY 0.68 102 31 $90,855 $133,333 $224,189 CENTRAL EAST AUSTIN 0.72 277 126 $84,028 $116,505 $200,533 NORTH UNIVERSITY 0.80 123 50 $220,293 $273,956 $494,248 NORTH SHOAL CREEK 0.82 211 0 $101,841 $123,476 $225,317 ROSEWOOD 0.86 343 84 $76,804 $89,439 $166,243 BARTON HILLS 0.87 94 0 $220,171 $251,864 $472,036

* Highlighted neighborhoods are in the top 20 neighborhoods in terms of overall ADU potential on SF‐3 lots over 7,000 ft2.

2.3.3 POTENTIAL FOR ALLEY FLATS IN PARTICULAR

Across all SF‐3 lots greater than 5,750 feet2 in Austin’s neighborhood planning areas, there appear to be 3,385 lots with alley flat potential. These lots are contained within twenty NPAs (see Map 6, Map 7, and Table 2.3.5 below). Of these 3,385 potential lots, 2,424 would allow alley flat development now. The remaining 961 could only be built if their NPAs adopt the secondary apartment infill tool. Map 7 provides a detailed view of the Austin’s alley network and the location of potential additional alley flats in different neighborhoods. It also shows which areas have adopted the secondary infill tool and which have not. Map 7 also includes a summary table of each NPA’s total alley flat potential, along with a breakdown of how many potential lots already allow secondary apartments and how many would need new NPA

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41 approval. The table in the map is a selection from Table 2.3.4, above. Both tables are sorted by the total number of alley flats already allowed by right, in descending order, since these are the lots with the most immediate potential for alley flat development. Nearly all of the lots with alley flat potential also have very low ILR values, which is consistent with their central urban location and minimal existing improvements. Table 2.3.5 also shows the prevalence of neighborhoods in central East Austin among those with alley flat potential. Table 2.3.5 SF‐3 Lots (over 5,750 ft2) with Alley Flat Potential by Neighborhood Planning Area Lots Alley Alley flat with flat would alley flat already need Average Average NEIGHBORHOOD potential allowed NPA improvement Average market PLANNING AREA (total) by right approval ILR value land value value NORTH LOOP 325 325 0 0.31 $62,087 $199,862 $261,949 HOLLY 309 309 0 0.94 $93,597 $99,634 $193,231 EAST CESAR CHAVEZ 292 292 0 0.95 $99,391 $104,385 $203,776 CHESTNUT 262 262 0 0.65 $63,470 $97,125 $160,595 CENTRAL EAST AUSTIN* 334 177 157 0.66 $69,867 $106,625 $176,491 BOULDIN CREEK 373 156 217 0.55 $112,623 $204,069 $316,693 UPPER BOGGY CREEK* 174 141 33 1.40 $141,656 $101,521 $243,177 SOUTH RIVER CITY 190 117 73 0.98 $205,934 $211,074 $417,008 HYDE PARK 307 105 202 0.36 $91,657 $253,628 $345,286 ROSEWOOD 101 101 0 0.80 $74,458 $93,102 $167,561 HANCOCK 136 95 41 0.46 $125,498 $271,963 $397,461 OLD WEST AUSTIN 92 92 0 0.44 $152,542 $348,031 $500,573 ROSEDALE 128 62 66 0.40 $101,252 $251,198 $352,450 WEST UNIVERSITY 124 62 62 0.47 $121,510 $259,236 $380,746 NORTH UNIVERSITY 90 50 40 0.57 $135,069 $237,582 $372,651 WEST AUSTIN NEIGHBORHOOD GROUP 61 36 25 0.24 $106,265 $437,740 $544,005 ZILKER 71 34 37 0.61 $130,213 $212,422 $342,635 GOVALLE 13 6 7 0.81 $85,355 $105,444 $190,799 PLEASANT VALLEY 2 2 0 17.42 $111,518 $6,400 $117,918 GALINDO 1 0 1 0.26 $25,699 $100,000 $125,699 TOTAL / AVERAGE 3,385 2,424 961 1.46 $105,483 $185,052 $290,535 * Bolded NPAs have adopted the secondary apartment infill tool. Starred NPAs only adopted it in certain subdistrict(s). *Table sorted by the number of potential alley flats allowed by right. * Highlighted neighborhoods are in central East Austin

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2.3 WHERE TO BEGIN?

The results of this GIS analysis suggest that there is tremendous opportunity for ADUs in Austin in general, and that there are also ample opportunities for development of a special breed of ADUs, the alley flat. Certainly, development of ADUs in general on lots throughout Austin’s diverse neighborhoods is an important part of AFI’s broad vision of a flexible and self‐ perpetuating delivery system for efficient, affordable, and sustainable housing in Austin. However, every pragmatic, innovative experiment needs to start somewhere, strategically. This GIS analysis and several other theoretical and practical considerations make East Austin’s alleys a natural starting place. From a theoretical perspective, AFI’s interest in rejuvenating and reinventing urban infrastructure – including its abandoned alley ways – makes parcels located along Austin’s alley network a high priority. In theory, these alleys can support innovative urban infrastructures such as bioswales or solar panel covered pathways (see Chapter 6). Connected by these enhanced alleys, the alley flats themselves can become a vital urban infrastructure, contributing energy back to the grid and managing stormwater onsite. From a pragmatic perspective, alley flats also appear to be easier to develop than general ADUs. First, secondary homes located along alley ways are much easier to access: there is no need for a drive way connecting from the street to the back home. Additionally, the location of Austin’s alleys in central, urban neighborhoods (see Map 2) makes lots located along them more attractive for ADU development. For instance, the demand for small, efficient homes is largely driven by retirees, young adults, and small families who desire the convenience of urban living. Furthermore, many properties in these central Austin neighborhoods have high speculative value, which increases the threat of gentrification. As Chapter 1 showed, ADUs can help stave off gentrification pressure by enabling property owners to make more economically productive use of their land through rental income. The GIS analysis supports these findings. Of existing ADUs, the top twenty neighborhoods in terms of alley flats were also the top twenty neighborhoods in terms of general ADUs. While there are many possible inferences to be drawn from our finding, one may be that alley flats can help drive further ADU development.11 Additionally, neighborhoods where

11 Table 2.2.1 shows that the neighborhoods with the most alley flats are also the ones with the most ADUs. However, the number of ADUs in general is still significantly larger than the number of alley flats in 43 the speculative value of potential alley flat sites (on SF‐3 lots over 5,750 square feet) is highest (ILR values are lowest) are also frequently the neighborhoods with the highest number of existing ADUs.12 This suggests that prior to building ADUs, these lots may have shared the high speculative value (low ILR value) of current lots in these neighborhoods that do not currently have ADUs. This high speculative value may have helped drive ADU development. These practical and theoretical considerations provide a strong rational for ADU development along alleys. The GIS analysis also supports the decision to focus particularly on the alleys of East Austin. As Map 7 and Table 2.3.4 above show, six of the ten neighborhoods with the most potential for immediate alley flat development are located in central East Austin. These include Holly, East Cesar Chavez, Chestnut, Central East Austin, Upper Boggy Creek, and Rosewood (listed from greatest potential to least potential). Conveniently, early conversations with local affordable housing providers had identified the potential of alley flats in this area long before completion of this GIS analysis: the Guadalupe Neighborhood Development Corporation, one of the primary AFI partners, works primarily in the East Cesar Chavez NPA. In this case, quantitative GIS analysis of local conditions is thoroughly consistent with local knowledge. The following chapter, A Brief History of Austin’s Alley Flat Initiative, provides greater background on the development of the AFI partnership and its pragmatic experiments in sustainability.

each neighborhood. Further research would be necessary to test the theory that early adoption of alley flats in these neighborhoods helped create a neighborhood culture geared towards ADU acceptance. On the other hand, the fact that these neighborhoods are centrally located and subject to higher development pressure may also explain the higher number of ADUs in these areas. 12 Fifteen out of twenty neighborhoods with the lowest ILR values are also included in the set of the top 20 neighborhoods in terms of existing ADUs (see section 2.3.1 and Table 2.3.3 above). 44

3.0 A BRIEF HISTORY OF AUSTIN’S ALLEY FLAT INITIATIVE

As described in the preface, The Alley Flat Initiative (AFI) is a collaborative project of the University of Texas Center for Sustainable Development (UTCSD), the Guadalupe Neighborhood Development Corporation (GNDC), and the Austin Community Design and Development Center (ACDDC). Over the past four years, the project has challenged participants’ definitions of sustainability, offered valuable lessons about effective university‐community collaborations, and illuminated challenges involved in making distributed, individualized, “green,” and culturally appropriate housing affordable. The Alley Flat Initiative’s history can be broken down into four phases: 1) Partnership building and context familiarization (2003 – present) 2) Studio work and prototype design (3 studios, 2004 – 2007) 3) Prototype construction (2006 – present) 4) Research and planning to bring AFI to a larger scale (2008 onward) Although partnership building and prototype design are ongoing and iterative processes, the history leading up to the development of the first two East Austin prototypes still roughly follows these stages.

3.1 PARTNERSHIP BUILDING & CONTEXT FAMILIARIZATION

In the early stages of the AFI story, faculty and students at the University of Texas began conversations exploring possible partnerships with others interested in “sustainable,” affordable housing in East Austin. Although conversations began with many different neighborhood organizations and affordable housing leaders in the area, the Guadalupe Neighborhood Development Corporation (GNDC) emerged as a natural partner for the project. First of all, GNDC shares UT’s commitment to building environmentally sustainable, affordable housing in East Austin and was highly interested in developing a

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project with UT. As a leading community housing development organization (CHODO) in Austin with over 20 years of experience, GNDC has built over 25 affordable homes and created hundreds of affordable rental opportunities. Recognizing that its tenants would benefit from lower utility bills, GNDC has also achieved EnergyStar ratings for many of its properties. GNDC’s strength as a community‐based organization, with 100% of its Board members residing in the Guadalupe neighborhood, also made it an ideal partner for this community‐university collaboration. Early in the partnership building process the collaborators recognized three existing conditions that, taken individually didn’t mean much, but taken together added up to a significant opportunity. First, the development pattern of East Austin included a network of alleys. On the negative side the alleys had been abandoned by the city about 1997 and subsequently became weed choked and occasionally the scene of minor crimes. On the positive side, however, the alleys remained in the public domain. Second, the lot sizes in the original subdivisions of East Austin were generous by contemporary urban standards. From an urban design perspective they were underdeveloped. And third, a surprising 70% of these residential lots were owned outright by the families who had invested in them over several generations. These three conditions added up to an opportunity that was demonstrated by maps constructed by students: the Alley Flat Initiative was born. At the same time that UT and GNDC began building its partnership, UT students and faculty participants familiarized themselves with the historic, cultural, political, and ecological context of East Austin’s neighborhoods through secondary research, neighborhood walks, community action projects, and conversations with East Austin residents. They learned about how Austin’s first master city plan in 1928 created a segregated city by offering vital infrastructure to people of color if and only if they located east of what was then East Avenue and is now IH‐35. Students also learned how the city’s environmental politics led to the establishment of East Austin as the city’s Desired Development Zone. Although the 1997 SMART Growth plan may protect elements of the sensitive Edwards Aquifer and Barton

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Springs watershed on the west side of town, it became clear that Smart Growth would have unintended consequences for the east side of the city. While this was a victory for Austin environmentalists, it also meant that East Austin would bear much of the burden of growth for the city. Although some East Austinites welcomed the new public and private investment, many residents and affordable housing leaders were concerned about the resulting gentrification pressures. With property taxes skyrocketing, many long‐time residents began finding that they could no longer afford to live in their own homes and neighborhoods. Research about the use of secondary units as an affordable housing strategy in other cities affirmed the potential of alley flats to help East Austin residents hedge increasing gentrification pressure. Alley flats could consolidate family members at one property or offset rising property taxes through additional rental income. Unlike some other types of density increases, alley flats could fit seamlessly into existing neighborhoods.

3.2 STUDIO WORK AND PROTOTYPE DESIGN

Once UT and GNDC were both on board with the goal of developing sustainably designed alley flats in the Guadalupe neighborhood, a Fall 2005 architecture studio began designing prototypes. Leveraging the research and innovation of other UT design studios, including the East Austin Trapezoid study of 1999, the Civic Environmentalism Workshop of 2003, and the UT Solar Decathalon houses of 2002, 2005, and 2007, students were able to incorporate cutting‐edge environmental systems into their designs. To help ensure that their prototypes were appropriate to the needs of community members, students interviewed residents and individuals on the GNDC housing waitlist about their functional and aesthetic preferences for homes. They found that many valued large backyards, storage and energy efficiency, but visual tastes varied significantly and it proved impossible to come up with universally appealing design. This experience demonstrated the diversity of the neighborhood.

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When the students presented their designs to the GNDC Board at the end of the semester, they received generally positive feedback. GNDC wanted to explore construction of one of the prototypes and its designers elected to work with GNDC to take the project through development the following semester (Spring 2006). While the design was initially well‐received, Board members and residents later raised concerns that the modern look of the house would “stick out” in the community. Some felt that it looked like the types of houses the “gentrifiers” were building. Unfortunately, as the students tried to adjust the house design to fit in better, they lost some of the functional aspects of their design such as passive ventilation, correct solar exposure, and rainwater harvesting. Ultimately, timing and funding problems led to the abandonment of this particular project. This experience demonstrated the need for better communication. While the decision to end the construction of the first prototype was disappointing, UT and GNDC learned important lessons about the challenges involved with the project through dialogue and self‐reflection. The first challenge involved competing definitions of sustainability. For GNDC, “sustainable” housing generally means delivering homes that sustain the character of the existing neighborhood and save its residents money on utility bills at the lowest cost possible. The architecture students’ definition of “sustainable” focused more on delivering homes with minimal environmental impact and high energy and resource efficiency at the lowest cost possible. In the beginning the partners felt that their values were neatly aligned since all valued environmentally responsible, affordable, and culturally sensitive design. Unfortunately, the different weights the students and GNDC members gave to these factors ultimately led to a significant conflict. If some of these value conflicts had been addressed earlier through regular, open communication among partners, the final conflict might have been prevented. However, effective communication between university partners and community partners is easy to acknowledge, but difficult to achieve. Students and faculty operate on different schedules and sometimes use a different vocabulary.

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The lessons learned from this process greatly helped students in the Spring 2007 studio to improve their design efforts and general communication between AFI partners. Learning from the past studio, students were more aware and attentive to the aesthetic preferences of the GNDC Board and still managed to create energy‐efficient, environmentally responsible designs. Since AFI had already identified two separate GNDC clients with whom to build prototype homes, students were now able to tailor their designs to the specific needs of known clients rather than for mythical generic clients. The real clients and GNDC approved two of the prototypes and all agreed to move forward with construction. The scheduling and communication problems that weighed down the project in its early phases demonstrated the need for a third partner with technical and management skills who didn’t work on a semester time schedule of sixteen weeks. Fortunately, the Austin Community Design and Development Center (ACDDC) joined the AFI project as its construction manager soon after its incorporation as a Texas not‐for‐ profit Corporation in May 2007. As a permanent nonprofit committed to community design and construction of the AFI prototypes, the ACDDC has helped bridge communication between UT and GNDC. Regular meetings of the AFI steering committee including all AFI partners have also been essential to AFI’s growing successes. Simply put, we were learning by doing.

3.3 PROTOTYPE CONSTRUCTION

With AFI partnership responsibilities better defined and the ACDDC on board as the Construction Manager, two prototype designs were approved for construction by the GNDC Board of Directors. Unfortunately, when the projects were put out to bid, the quotes for construction costs came back much higher than initial estimates. AFI is still trying to understand why the bids have been so much higher than expected. Theories include: lack of familiarity among local contractors about innovative green building techniques, rising costs of construction in general, the small scale of the houses, and

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design limitations. The first prototype was completed in June 2008 after a lengthy period of value engineering and with the benefit of outside funding to support some of the unconventional technologies employed. Fortunately, bids for the second prototype to be constructed in the fall of 2008 are far closer to meeting the goal of affordability. It is clear, however, that additional research and experience is required to further reduce costs.

3.4 SCALING UP THE ALLEY FLAT INITIATIVE

Although the Alley Flat Initiative initially emerged as a response to the existing conditions prevalent in East Austin, its vision for a flexible and self‐perpetuating delivery system for affordable housing extends across Austin. The same problems that confront families in the Guadalupe neighborhood confront families in Old Wset Austin and Brykerwood. Now that the first alley flat has been constructed and the second is soon on its way, AFI is exploring how alley flats (and secondary units in general) could contribute to the growing demand for affordable, efficient housing throughout Austin’s diverse neighborhoods. The two graduate seminars conducted by Professors Moore and Palleroni in the Spring of 2008 explored the opportunities and constraints involved with achieving this vision. The research and findings of these two classes constitute the majority of this report.

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4.0 NEIGHBORHOOD CONTEXT

Recognizing that housing issues are neighborhood sensitive, this chapter provides context for the discussion of the Alley Flat Initiative through detailed examination of three central Austin neighborhoods: North Loop, East Cesar Chavez and Holly. An analysis of secondary dwelling type, property value of lots with existing secondary units, and neighborhood perception is performed to determine the financial and social viability of constructing Alley Flats within each representative neighborhood.

The secondary dwelling type information included in this chapter was gathered during a field study conducted in March of 2008 in which photographs and addresses of properties containing secondary dwelling units were recorded. The property value analysis compares the increase in property value of sample lots that have built secondary units (after the year 2000) to properties that have not added secondary units. The neighborhood perceptions were compiled based on the published neighborhood plans for the City of Austin and interviews conducted with neighborhood planning residents. Lastly, a set of financial scenarios compares the affordability of secondary alley flats within the three sample markets.

Understanding the process by which residential properties are appraised in Travis County is important to the discussion of secondary units. Travis County tax jurisdiction is broken into five different entities; Austin Independent School District (AISD), City of Austin, Travis County, hospital districts, and Austin Community College. Property tax rates can change annually based on the revenue needs of each taxing body, and no tax relief measure can be based on income level or ethnicity. Currently, Travis County allows the following tax exemptions: homestead exemptions, disable veterans exemptions, productivity appraisals to farm, ranch and timber land, and deferrals for homeowners 65 years and older or disabled. Residents wishing to protest their property tax assessment can do so through a formal appeal process.

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The single‐family property classification, ‘A: Real Property Single Family Residential’ covers single homes, condominiums, row houses, and owner‐occupied duplexes. Upon assessing the value of a residential property the county appraisal districts file a ‘Report of Property Value’ with the county’s Property Tax Division. These reports are based on the monetary value of the property, defined by the current market conditions at the beginning of the year. The process of assessing monetary value property is extremely complex. According to the Travis County Appraisal District, tax assessors use a “highly sophisticated information technology system for appraising property in the district. The Property Appraisal and Collection Software (PACS) allow the district to meet the requirements of Section 23.01 of the Tax Code, which requires that all appraisals must consider the individual characteristics of the subject property. The system can analyze sales data, perform ratio studies, display pictures of all properties and keep historical appraisal data on each property for 10 years.” 1 In order for the Alley Flat Initiative to effectively provide affordable housing, it is important to be continually aware of the processes and parameters affecting property values and their concomitant taxes.

4.1 NORTH LOOP NEIGHBORHOOD

The North Loop neighborhood is located approximately 5 miles north of downtown Austin, bounded in the north by Koeing Lane, the east by Airport Boulevard, the south by 45th Street to Red River and then 51st Street, and the west by Lamar Boulevard. According to the 2000 US Census, North Loop has a population of 5,870 and is

1 Texas Comptroller of Public Accounts, Window on State Government, Susan Combs, Appraisal Standards Review Travis Central Appraisal District ( TX Comptroller: January 2006) http://www.window.state.tx.us/taxinfo/proptax/cadreports/asr/travis/ch2.htm#2.2. Last accessed, April 15, 2008. 52

predominantly white (63%). Over 50 percent of the land is used for single‐family dwellings, while commercial properties comprise the second largest land use.2

In their 2002 Neighborhood Plan, the North Loop neighborhood is self‐described as having a “ ‘funky’ and eclectic character. This funkiness is embodied in some of the local businesses such as Forbidden Fruit, The Parlor, Hog Wild, and Room Service.”3 Since the closing of Robert Mueller Airport in 1999, the North Loop neighborhood has increasingly become a highly desirable place to reside. This increase in property values has resulted in significant development of open lots and the replacement of older homes with newer “McMansions.” The 2002 North Loop Neighborhood Plan refers to this tearing‐down of older homes as an opportunity to provide mixed type housing in the area.4

4.1.1 NORTH LOOP: SECONDARY DWELLING TYPES Secondary dwellings in the North Loop neighborhood vary from smaller cottage style units to large secondary units that maximize the floor‐to‐area ratio. Three specific areas in the neighborhood examined in this study are: Nelray Street, the alley between Avenue G and Avenue F, and the alley between Evans and Martin streets. Figure 4.1.1.1 (on the following page) depicts a new building on Nelray Street with a secondary unit in back of the main house. This particular picture highlights the parking issue that is often associated with building a secondary unit. These secondary units try to maintain architectural consistency with the older buildings in the area by matching the gable roofs and using conventional siding for the exterior. Sample secondary units between Avenues G and F are a combination of contemporary new build, old cottage style units, and larger buildings such as the ones on Nelray.

2 2000 Census Data, http://www.census.gov/. Last accessed April 27, 2008. 3 The City of Austin- Neighborhood and Planning Department, The North Loop Neighborhood Plan (Austin, TX: May 23, 2002) http://www.ci.austin.tx.us/zoning/downloads/nloop_np1.pdf. Last accessed April 10, 2008. 4 Ibid. 53

Figure 4.1.1.2 Nelray Street Figure 4.1.1.2 Avenue G

Sample secondary units between Avenues G and F are a combination of contemporary new build, old cottage style units, and larger buildings such as the ones on Nelray. Figure 4.1.1.2 displays an older secondary unit that is nestled into the area. The area between Evans and Martin Streets contains multiple secondary units where the accessory dwelling is of similar size to the main house. These types of secondary dwellings are often classified as duplexes, making them less comparable to a typical alley flat. However, neighbors frequently perceive these types of dwellings as secondary units and are frustrated by the codes that allow the construction of these units.

4.1.2 NORTH LOOP: PROPERTY VALUE ANALYSIS Housing prices in North Loop have increased Table 4.1.2.1 North Loop Analysis significantly over the past seven years since the closing North Loop MLS: Area 4 Ave Home Price $299,499.00 of Mueller airport. To understand the impact of a Ave Home Monthly Lease $1,556 constructing a secondary unit on residential property Ave Home square footage 1395 Ave Rental Price per Sqft $1.12 value this section compares the increase in property Ave MFI: North Loop $34,484.00 value of sample lots with secondary units to the 60% MFI Mon. rent $517.26 70% MFI Mon. rent $603.47 baseline increase in property value of surrounding 80% MFI Mon. rent $689.68 properties. A sample analysis was performed for the All neighborhood data: Realator.com: additional sources are listed in Appendix C. 5510 Avenue G lot, which underwent a remodel in 2005, adding an additional two bedrooms and a living space to the existing garage. This construction resulted in an additional 1152 square feet to the existing 698. Using tax assessment information from the Travis County Appraisal District,5 Figure 4.1.2.1

5 Travis County Appraisal District, http://www.traviscad.org/. Last accessed April 28, 2008. 54

compares the increase in property value for 5510 Avenue G to six surrounding properties to determine if the property value increase due to the secondary unit significantly impacted neighboring lots.6 Figure 4.1.2.1 North Loop Comparisons

The above charts clearly depict that the addition of the secondary unit to the property increased its overall property value – not unexpected due to the addition of square footage. Additionally, the data shows that adding the secondary unit did not have considerable adverse effects on the neighboring properties.

4.1.3 NORTH LOOP: NEIGHBORHOOD PERCEPTION As previously mentioned, the North Loop Neighborhood Planning Team envisions their neighborhood as an ethnically and economically diverse mix of residents. To achieve economic diversification, the Planning Team hopes to integrate a combination of multi‐ family, mixed‐use, and secondary units into the area. In an interview with the North

6 The study is complicated for two reasons. First, how a property is appraised in the state of Texas is unclear and subjective. Second, the properties themselves do not all have the same square footage, have been built at different times, and may have or have not had restorations done on them. The following graphs; therefore, only serve to provide the reader with a visual image of the increasing property value that this area is subjected to at this moment in time.

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Loop Neighborhood Planning Team, the team members revealed their main concerns related to secondary unit construction are student occupancy levels, parking associated with secondary units, and an increase of large developments for student housing in the area.7

4.1.4 NORTH LOOP: WOULD A SECONDARY UNIT BE AFFORDABLE IN NORTH LOOP? To determine the viability of affordable secondary unit construction in North Loop, we ran several financial scenarios in an attempt to answer the following questions:

• How much would one’s property tax increase with construction of an alley flat?

• Could a homeowner earn enough rental income from an alley flat that it would more than cover all of their property tax payments and the resulting increase in mortgage payments?

• Would the rent charged by the homeowner in order to financially benefit actually be affordable to people of more modest means?

Table 4.1.4.1 portrays the results of multiple financial scenarios based on three main variables of concern: square footage (assumed to be 750 square feet), construction cost ($70,000, $90,000, or $110,000), and mortgage rate (30‐year fixed rate of 5.92%, 6.29%, or 6.5%). In the table, the “Month_Pay” column shows the monthly mortgage payment required by the homeowner in each scenario. The “ATX_PropTX 2007” column shows the effective tax rate for properties, which was used to calculate the next column, “PTx_Inc.”, the estimated total yearly property tax burden to the homeowner. We have assumed that in order for the property owner to financially benefit from the new alley flat, they would need to charge rent that would at least cover their total property tax burden and monthy mortgage payments. The next column, “Mon_rent” reflects this sum of monthly property tax and mortgage payments.

7 North Loop planning team member, Interview by Elizabeth Walsh, Austin, TX, Fall 2007. 56

Of compelling interest for the North Loop neighborhood is its average median family income (MFI) of $34,484.00. According to the Housing and Urban Development, 30% of annual income should be allocated for housing, thus for a secondary unit to be deemed “affordable”, it would need to be priced at 30% or below of 80% (or 60‐70% depending on the particular standard) of MFI.8 The chart shows the monthly rent that a family with 60%, 70%, and 80% of the neighborhood median family income could afford. In comparison, the “rental $” column shows what the average market rent for a comparable apartment in North Loop is ($840/month), and the previous column, “sqft rent” breaks that monthly rent down in terms of cost per square foot ($840/750ft2). The “Surplus” column shows the difference between the average rental price for the area and the minimum monthly rate calculated. This figure reflects the amount of extra money a homeowner could make (beyond covering property taxes and construction costs worked inot the mortgage) if they charged full market rent for the area. The table shows that the addition of a secondary unit for the first three scenarios does make financial sense for a homeowner while still providing an affordable housing option for residents at 70% or 80% MFI.

Table 4.1.4.1 North Loop Scenarios

8 It is important to note that MFI is generally determined across the entire metropolitan area, as defined by the department of Housing and Urban Development (HUD). However, our analyses have been based on an MFI calculated particular to the neighborhood. Thus, if a neighborhood’s average MFI is significantly lower than another neighborhood, 80% of that MFI will reach families with more modest means than those in the other more wealthy neighborhoods. 57

4.1.5 NORTH LOOP: CONCLUSIONS The North Loop neighborhood values the integration of a secondary unit as an affordable option, but is hesitant of the negative impacts that often accompany growth in a specific area. Without a creative way in which to allocate property tax increase and to finance the mortgage payments, a secondary unit will increase the value of a property and may not serve as an affordable option. When compared to the high market rates commanded for comparable sized apartments in the North Loop area, there is little incentive for individual owners to make a potential Alley Flat affordable to lower‐income residents.

4.2 EAST CESAR CHAVEZ

The East Cesar Chavez neighborhood is located east of and adjacent to the downtown Austin area. The area is defined by the northern border of 7th street, the eastern border of Chicon Boulevard, the southern border of Lake Lady Bird, and the western border of Interstate 35. Historically, the neighborhood has been compromised predominately of Hispanic and lower income families. The median family income for a family of two is currently $23,885.00 and the average home in the area is assessed at $286,650.00.9

According to the 2000 US Census, 38.8% of land in the East Cesar Chavez neighborhood is used for single‐family housing, 11.9% for mixed family, 5.3% for commercial space, 12.5% for open space, and 9.3% for industry. The neighborhood is described in the 1999 East Cesar Chavez Neighborhood Plan as a “stable, mixed‐use area characterized by strong cultural values and a culturally diverse and rich Hispanic values.”10 The neighborhood goal is to “guide future development, protect the existing

9 Median Family Incomes are taken from Realtor.com, Official Site for the National Association of Realtors, http://neighborhoods.realtor.com/Austin/71/Metro, last accessed April 27, 2008. 10 City of Austin- Neighborhood and Planning Department, East Cesar Chavez Neighborhood Plan, (Austin, TX: 1999) http://www.ci.austin.tx.us/zoning/downloads/ecc_np1.pdf. Last accessed April 27, 2008. 58

neighborhood residents and businesses and to provide opportunities to improve the quality of life for everyone in the neighborhood.”11

4.2.1 EAST CESAR CHAVEZ: SECONDARY DWELLING TYPES The typical secondary dwelling types in the East Cesar Chavez neighborhood are context sensitive, established secondary units and contemporary oversized secondary units. Often, the latter is assessed as a duplex consisting of new buildings in both the front and back units. Developers use this type of construction to maximize the impervious cover restrictions prescribed by city codes to increase the monetary value of the property. This is viewed by the culturally sensitive neighborhood as an affront to their once quiet neighborhood. Nevertheless, East Cesar Chavez adopted the secondary infill option as part of their neighborhood plan, as they have built secondary units to provide space for cultural preservation. Figure 4.2.1.2 is an example of one such unit.

Figure 4.2.1.1 Lot on East 2nd Figure 4.2.1.2 Property on Haskell Street

4.2.2 EAST CESAR CHAVEZ: PROPERTY VALUE ANALYSIS The average home price in the East Cesar Chavez neighborhood is disproportional when compared to the average median family income of residents in this area. This discordance is seen in the sample property for the neighborhood, 1303 East 2nd Street. Originally 1058 square feet, an additional 836 feet was added in the form of a secondary unit in 2005, resulting in a house that exceeds the average (1338 square feet) for the area.

11 Ibid. 59

Figure 4.2.2.1 below depicts the increase in property value of the 1303 E. 2nd Street lot as compared to neighboring properties.

Table 4.2.2.1 East Cesar Chavez While it appears the addition of the secondary unit ECC MLS Area 5 increased the total property value of this particular Ave Home Price $286,650.00 lot, the overall increase of property value in this Ave. Home Monthly Lease $1,011 neighborhood is similar. In some cases, such as 1306 Ave. Home square footage 1215 Average price per Sqft $0.83 E. 2nd Street (which, according to the Travis County Ave MFI for ECC $23,885.00 Appraisal District hasn’t had any home additions), the 60% MFI Monthly rent $358.28 value has steadily increased since 2005, though this 70% MFI Monthly rent $417.99 may be attributable to the home’s relatively large 80% MFI Monthly rent $477.70 All neighborhood data- Realator.com: square footage. additional sources are listed Appendix C.

Figure 4.2.2.1 East Cesar Chavez Comparisons

4.2.3 EAST CESAR CHAVEZ: NEIGHBORHOOD PERCEPTIONS From conversations with a representative of the East Cesar Chavez neighborhood planning team, it appears that many of the residents who approved of the secondary apartment infill tool are now reconsidering the wisdom of that choice. The 60

neighborhood adopted the tool to help long‐time families remain in the community, plan for their retirement, and expand their living space to meet the needs of a growing family or care for an elderly relative. As stated in their 1999 neighborhood plan, the neighborhood would “like to see more housing available for its families, especially its elderly and young families. It is willing to absorb some increase in density to accommodate these needs, so long as the neighborhood keeps its character.”12

Unfortunately, many of the neighborhood planning team representatives do not find that the recently built secondary apartments fulfilling their goals. Instead, they suspect that their choice to permit secondary apartments has led to the development of “McLofts” – oversized secondary units that don’t fit into the neighborhood and become homes for yuppies. Worse, these new homes appear to be driving up surrounding property values, thereby increasing the property tax burden on long‐term residents (many of whom were already feeling financially stretched).

Lori Renteria, a strong neighborhood leader and member of the East Cesar Chavez neighborhood planning association (NPA), has been an advocate of secondary units for a long time but is concerned about them not fulfilling their intended results. She recalls when the city was beginning to promote secondary units as infill back in 1999, and notes that the Austin Housing Finance Corporation (AHFC) actually set aside $300,000 in forgivable loans to help landowners in her neighborhood renovate secondary units. She and the ECC planning team worked for almost two years to get their neighbors to take advantage of the funds, but no one was interested. She believes there were four reasons for their hesitance to participate:

1) Residents didn’t trust the city;

2) Residents were concerned that their inability to pay for the improvements would put a lien on their property;

12 City of Austin- Neighborhood and Planning Department, East Cesar Chavez Neighborhood Plan, (Austin, TX: 1999) http://www.ci.austin.tx.us/zoning/downloads/ecc_np1.pdf. Last accessed April 27, 2008. 61

3) Some community members would be leaving the neighborhood soon, so they didn’t feel the need to put in the investment; and

4) Intergenerational disagreement.

After the AHFC program was cancelled, five ADUs were built. Some of these homes ran into some obstacles with the design of the taxing set up between the two houses. Depending on the way the tax accounts are set up, she has found that the homestead exemption or a senior exemption can apply to different parts of the property. Lori feels that education about taxing and financing options for secondary units is crucial in her neighborhood. She believes that secondary apartments, home equity loans, and reverse mortgages are all good ways for community members to stay in their homes.

4.2.4 EAST CESAR CHAVEZ: WOULD A SECONDARY UNIT BE AFFORDABLE IN ECC?

Much like North Loop, the East Cesar Chavez neighborhood is confronted with its own specific conditions of land value and the economic levels of the residents. In Table 4.1.4.1, the same financial scenarios were developed for the East Cesar Chavez neighborhood as for the North Loop area, though the results are slightly different. Due to the lower median family income of the East Cesar Chavez neighborhood, none of the nine scenarios presented could be deemed affordable at the 60, 70 or 80% MFI level.

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Table 4.2.4.1 East Cesar Chavez Scenarios

According to the Crossland RealEstate Group, the average price per square foot for home rental price in this area is $.83.13 Therefore, the secondary unit could easily rent for a market rate of $622.50. These conditions elucidate the need for creative financing, particularly in such a culturally sensitive neighborhood that is feeling the intense pressures of development.

4.2.5 EAST CESAR CHAVEZ: CONCLUSIONS As a neighborhood close to the downtown area, East Cesar Chavez is quickly becoming an extremely desirable place to live. East Cesar Chavez is also a neighborhood that is in considerable need of an affordable housing program such as AFI. However, any additions to current homes exacerbate already dramatic increases in property value in the neighborhood. A strong affordable housing program, working collaboratively with city officials and neighborhood groups is needed to help alleviate the immense pressures of growth in the East Cesar Chavez neighborhood.

4.3 HOLLY NEIGHBORHOOD

The Holly neighborhood is situated to the east of the East Cesar Chavez neighborhood, bordered on the north by East 7th Street, the east by Pleasant Valley, on the south by

13 Steve and Sylvia Crossland ,Keller William Realtors, Crossland Team, Austin Rental Market Update (2006 Summary ) Austin Real Estate Blog... http://crosslandteam.com/blog/2007/01/21/austin-rental-market-update. Last accessed, April 28, 2008. 63

Lady Bird, and the western border by Chicon. The neighborhood has been historically comprised of a predominantly Hispanic population. According to the 2000 Census, 90% of Holly’s total population of 3811 is Hispanic.14

The current median family income in the Holly neighborhood is $29,000.00 and the average home is priced at $246,700.00. In 2000, land use in the area was comprised of 39.8% single family housing, 2.5% multi‐family housing, 7.0% commercial use, 20.5% open space, and 10.7% industry. With considerable open space and the closing of the Austin Energy Holly Plant, the neighborhood is viewed as a new opportunity for investment. Though the Holly neighborhood is not feeling the same extreme pressures of new growth as the East Cesar Chavez area, development is imminent and the neighborhood seeks to preserve a culture of community that is reinforced by activism and engagement.

4.3.1 HOLLY SECONDARY DWELLING TYPES Secondary units in the Holly neighborhood are dispersed throughout the area. Unlike East Cesar Chavez, the neighborhood has not been completely impacted by growth; consequently, the secondary building types are a combination of units that have existed for a long period of time, new buildings that fit into the local context, and more contemporary examples. The contemporary buildings are typically duplexes built more recently by developers; an example is depicted in Figure 4.2.1.1. These particular buildings are an indication of the new type of resident moving into the area and the units are becoming exceedingly less affordable.15 Figure 4.2.1.2 displays a secondary unit that appears to have been built in a style similar to the front unit and in accordance with the neighborhood architectural context.

14 2000 Census Data, http://www.census.gov/. Last accessed April 27, 2008. 15 During our investigation, we phoned the real estate agent and inquired about the price of the unit. It was listed as $400,000.00. 64

Figure 4.2.1.1 Riverview Street Figure 4.2.1.2 Haskell

This particular secondary building type is the most predominate in the area. Secondary dwellings are clearly being used in this area as a means to provide additional housing.

4.3.2 HOLLY NEIGHBORHOOD: PROPERTY VALUE ANALYSIS Table 4.3.2.1 Holly Analysis The average median family income for a resident in the Holly neighborhood is higher than East Cesar Holly MLS Area 5 Chavez, though the average home price is $40,000.00 Ave Home Price $246,700.00 less. The resulting difference between average home Ave Home Leased Price $1,011 Ave square footage 1215 cost and average income is also less for the Holly Ave rental price per sqft $0.83 neighborhood than for East Cesar Chavez. With homes Ave MFI: Holly resident $29,000.00 60% MFI: Monthly rent $435.00 in the Austin area costing on average $269,615.00, the 70% MFI: Monthly rent $507.00 Holly neighborhood is considered more affordable 80% MFI: Monthly rent $580.00 All neighborhood data- Realator.com: 16 than the greater Austin area. The sample lot used additional sources are listed in Appendix C.

16 Realator.com, Home Values of Austin, Texas. Their estimate definition is as follows: “An 'Estimate' is a computer-generated approximation of a property's market value calculated by means of the Automated Value Model (AVM). As such, an Estimate is calculated on the basis of: • Publicly available tax assessment records for the property • Recent sale prices of comparable properties in the same area There are many additional factors that determine a property's actual market value, including its condition, house style, layout, special features, quality of workmanship, and so on. For this reason, an Estimate should not be viewed as an appraisal, but rather as an approximate basis for making comparisons, and as a starting 65

for property value analysis for the Holly neighborhoods is located at 2210 Haskell. This particular property built a secondary unit in 2001, with construction that is similar to the front unit and the surrounding neighbors. The original square footage on the lot was 714, which increased by 582 square feet with the addition of the living space to the existing detached garage. Similar to the prior analyses, Figure 4.3.2.1 shows the increasing values of multiple properties in the neighborhood. In the Holly neighborhood, however, the sample property appears to be rising at a rate similar to the surrounding properties.

Figure 4.3.2.1 Holly Comparisons

The variance in property value of the lots depicted is likely attributable to differences in square footage, and not due to effects of neighboring a lot which contains a secondary unit.

4.3.3 HOLLY NEIGHBORHOOD: NEIGHBORHOOD PERCEPTION The Holly neighborhood no longer has a planning team that represents its residents to the City of Austin, though the region has had significant contention over how their neighborhood should be developed. A representative for the Holly Contact Team (one of

point for further inquiry.” http://www.realtor.com/homevalues/?source=ig#NEXHASHaddress=austin. Last accessed April 27, 2008.

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14 sub‐districts) explained in an informal interview that the issue of secondary unit construction is low on the priority scale in such a broken community. This tension between the neighborhood groups participants have led to missed opportunities for conversations about how to manage growth, including the Vertical Mixed Use and Transit Oriented Development planning processes.17

4.3.4 HOLLY NEIGHBORHOOD: WOULD A SECONDARY UNIT BE AFFORDABLE? In assessing the same financial scenarios as were presented for the North Loop and Cesar Chavez neighborhoods, Table 4.3.4.1 shows a secondary dwelling can be deemed an affordable option in Holly Neighborhood at the 80% MFI level. However, as it is often stressed by neighborhood affordable housing advocates, 80% MFI is not affordable in most cases, and more stringent standards must be applied in determining the accessibility of housing for low‐income families. Nevertheless, the Holly neighborhood provides a different context for the discussion of secondary unit affordability.

Table 4.3.4.1 Holly Scenarios

4.3.5 HOLLY NEIGHBORHOOD: CONCLUSIONS Though the Holly neighborhood is similar in many ways to East Cesar Chavez, its property values are much lower in comparison. Neighborhoods like Holly are important for the Alley Flat Initiative in that they allow the possibility of providing affordable

17 Representative for Holly Contact Team, Interview by Elizabeth Walsh, Austin, TX, 2007. 67

housing options before the development pressures are too intense to assuage. With this approach, secondary units would proactively preserve affordability, thereby preventing the social implications of unwanted growth.

4.4 RECOMMENDATIONS

Analysis of the North Loop, East Cesar Chavez and Holly neighborhoods helps elucidate the difficulty of providing affordable housing in the wake of growth and development. Depending on the existing housing market, the addition of a secondary dwelling unit can increase property values of the lot and its neighbors either moderately or exponentially with time. As market prices rise due to new development, the preservation of affordability becomes increasingly difficult. Recognizing that preventative measures are often more effective than combative ones, the Alley Flat Initiative will be most successful in pursuing secondary unit construction in neighborhoods that are beginning to rapidly appreciate such as Holly. In order to most effectively impact neighborhood preservation, we specifically recommend the following:

1. Plan secondary unit infill collaboratively with neighborhood groups and city officials. Secondary unit construction is an issue that is neighborhood sensitive, and must be shepherded collaboratively by representatives of these neighborhoods and city officials. 2. Employ creative financing to preserve affordability. As shown by financial analysis of potential secondary unit financing scenarios, affordability will be difficult to obtain in most Austin neighborhoods. Creative solutions must be applied in order to achieve accessibility of housing for low‐income families. 3. Focus on neighborhoods in transition. Preventative measures will likely be easier and more effective to implement than combating the powerful pressures of rapid development. Identifying neighborhoods in which growth is imminent but not yet fully impacted will be integral for successful secondary unit construction. 68

4.5 REGULATION

A planning conundrum currently exists in the City of Austin, as the present structure allows neighborhoods to remain relatively autonomous as the city relies heavily on neighborhood planning to achieve its visioning goals. Though this has led to the positive effect of empowering individual neighborhoods, this decentralized planning structure has also led to a city without a meaningful comprehensive plan or vision. Autonomous neighborhood planning has resulted in a difficult and confusing system of regulation, in which different neighborhoods plan for and desire different regulations that may or may not be supported by the city. When a particular code or regulation doesn’t fit what a neighborhood wants, they must traverse the complex system of opting in and out of various plans and establishing overlay zones. The treatment of secondary apartments in Austin is a case that falls victim to this type of planning. While secondary apartments are allowed by right on relatively large lots in certain zones, neighborhoods get to choose whether to allow them on smaller lots in their individual neighborhood plans. The implementation of secondary apartments has been a contentious issue in many neighborhoods, as what was envisioned with secondary apartments and what actually was built on the ground (and permitted by code) are not always congruent.

4.5.1 AUSTIN REGULATIONS AND ALLEY FLATS The Austin City Code §25‐2‐774 establishes standards and regulation for the category of land use called “two family residential use.” Under this category the code regulates what is called a “secondary apartment,” which applies to the alley flats envisioned by this report. This section of the code was crafted for duplexes but incorporates secondary apartments, though it is important to note that there is no section of the current standard code that is devoted solely to secondary apartments. This lack of specific regulatory code is a primary obstacle to overcome in the implementation of the Alley 69

Flat Initiative. Because alley flats are mostly a regulatory afterthought in Austin, many of the innovative ideas of the AFI may be difficult to realize.

The codes set forth basic, clear‐cut standards for secondary apartments. For example, the minimum lot size allowable to build a secondary apartment is 7,000 square feet. A secondary apartment can be no more than 30 feet tall, two stories with a gross floor area of 850 square feet and no more the 550 square feet on the second floor. The secondary apartment must be separated at least 15 feet from the primary unit or be built over a garage. Each entrance of a second dwelling unit must be more than ten feet away from a lot line. A paved driveway must serve the unit that is at least nine feet long and no more than 12 feet wide, but this requirement is waived if the unit is accessible from the alley.

One of the most restrictive regulations comes in the provision that the property cannot be covered more than 45% by impervious surfaces. Unfortunately, there are many porous surfaces that are considered impervious by the City of Austin. Examples include: porous pavement, green roofs, rooftop rain water collection systems, photo voltaic panels on a pole in the back yard, and a cistern that is buried under the back yard. While the City’s Water Shed Protection Department strongly encourages all of these practices they do not consider them pervious because they have not devised a way to regulate their implementation as of yet.

The Austin City Code § 25‐2‐511 has restrictions for detached secondary apartments that states that no more than four unrelated people can live in the primary unit and no more than two unrelated people can live in a secondary unit. This issue has been a contentious one in many Austin neighborhoods. Residents have opposed secondary apartments because often many more than six people will occupy a parcel, causing parking problems. Often these occupants are college students and have behaviors that are deemed undesirable by many residents. Though many of these

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situations are illegal, they go unreported and continue to frustrate residents of the neighborhood.

The Austin metro area is growing on pace with the fastest metropolitan statistical areas in the country. This is not an unexpected development, and the City recognizes that without a vision and proper planning Austin development will sprawl much like Dallas did in the 70’s and 80’s. To help keep urban sprawl at a minimum, the city has decided to encourage infill development through the use of an infill tool kit, which includes a section on secondary apartments. If a neighborhood adopts the secondary apartment toolkit through the neighborhood planning process the City will work with the community to lessen its restrictions. For example, after the toolkit is adopted the neighborhood can apply for an overlay zoning change that allows the minimum lot size for secondary apartments to decrease to 5,700 square feet. Building a secondary apartment also requires a special use permit. Though this secondary apartment toolkit is an important reference for infill development, the city code contains no mention of its existence. Most of the standards contained in the toolkit (e.g. the decreasing of the minimum lot size) are published in an informational booklet, and do not allow neighborhoods to adopt regulations tailored to their specific needs. The toolkit is not a code, and measures are required by both the neighborhoods and the City for its successful implementation.

4.5.2 REGULATORY REFORM

To make the implementation of secondary apartments more feasible the regulatory framework requires reform. With the comprehensive planning process imminent, this is a particularly relevant time to make needed suggestions for the next line of development code. The following is a suggested framework for alley flat ordinance options that is flexible, form‐based and prescriptive.

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a f

Alley Flat Residence 1. Defined

An alley flat residence is a small building set Primary Unit behind an existing single family residential Alley Flat building located on a single lot with private yards on all four sides.

15’ min separation

2. Character Examples

3. Building Placement and Function

DISTRICTS

USE Residential Ground floor Residential Residential Residential LOT

PERMITTED USES Area (min sf) 5,700

(section view) Width (min ft) 25

Impervious coverage (max) 45%

Front setback (min) 15’ Adjacent building separation (min ft) 10 REAR SETBACK

Abutting alley (min ft) 5 Side setback (min): 5’

Lot Width 40’ Property line SIDE SETBACK Abutting single‐family (min ft) 15 72 Rear setback Separation Abutting multifamily, non‐residential (min ft) 5 (min) 15’ (min) 5’ 4. Building height

Ground floor height:

9’ min / 14’ max Height

(section view)

HEIGHT

Building height (max stories) 2

Building height (max ft) 30 FLOOR HEIGHT Ground floor (min / max) 9/14

Upper floor (min / max) 9/14

5. Supplementary Standards

• A 14‐day site review will be administered for alley flats whose plan meets Austin Energy’s Green Building rating system (a least a 3 Star rating), or LEED ND certification. • An alley flat shall not be larger then the primary unit. • At least one of the buildings on any parcel that has an alley flat shall be owner occupied. Variances can be granted for Affordable housing projects, where both houses are rented to families that fall within 80% Median Family Income for the specific neighborhood where the parcel is located. • For a parcel where transit passes are provided continually the off‐street parking requirement will remain 2 spaces. • An additional 5% of allowable impervious coverage shall be granted for affordable housing units (80% MFI). • An addition 5% of allowable impervious coverage shall be allows if any two of the following are implemented: o Rainwater collection used for toilets and irrigation o Green roof covering 70% of the rooftop on either the primary house or alley flat o A low impact landscaping plan o Xeriscape for all outdoor yard areas o Lot is a participant of the Backyard Wildlife Habitat Program 73

4.5.3 STANDARDIZATION

The ever changing fitness landscape that is the housing market and the Austin neighborhood planning process will require the Alley Flat Initiative to remain flexible, allowing those who choose to participate accessible and easy implementation, and minimal impact to those who do not. Creation of a cohesive yet flexible code applicable to secondary units by the City of Austin will allow individual neighborhoods the ability to plan for and construct alley flats in keeping with the context of the area, yet allow the City an input to its comprehensive plan and vision.

4.6 BARRIERS AND OPPORTUNITIES FOR COLLABORATION

Much like understanding the housing context in which the Alley Flat is centered in, it is also equally important for the initiative to connect and work with a wide range of interest groups to guarantee its success. By conducting key stakeholder interviews and a field study of possible partnerships, the AFI will maintain an understanding of the ongoing challenges pertinent to the initiative and identify new opportunities for action. This understanding will allow the initiative to develop using a dynamic approach that continues to change as more partnerships emerge and as the landscape of the project changes.

4.6.1 ALLEY FLAT INITIATIVE POTENTIAL BARRIERS

Interviews were conducted with many key stakeholders representing city departments, community housing development organizations, and neighborhood planning groups to provide a picture of potential barriers and opportunities for collaboration for the AFI. The barriers discussed below can be categorized as barriers within the City of Austin, the County, neighborhoods, community organizations, and land use participants. 74

Stuart Hersh, the Project Coordinator for the S.M.A.R.T. housing program, helped us understand that there is a lack of concrete policies, initiatives, and incentives that can be utilized for affordable housing infill development.18 The City is focused on multifamily housing to achieve affordable housing. Also, through conversations with affordable housing advocacy organizations, it was evident that there have been many failed attempts to implement affordable housing policies. The Homestead Preservation District is one such policy that has been proposed.19 Currently, no concrete date has been set for when this ordinance will be passed and implemented.

The Neighborhood Planning and Zoning Department is unable to advocate or push for utilization of the secondary apartment infill tool.20 This is due to the oversized condos that were recently built in East Austin that do not fit into the neighborhood character. As discussed before in the overviews of East Cesar Chavez and Holly neighborhoods, many East Austin residents believe the development of these condos is directly related to the adoption of the secondary apartment infill tool. The residents are against these condo regimes and the density and change they represent for Austin neighborhoods. 21 Due to the lack of wide spread acceptance of the secondary apartment infill tool, the Neighborhood Planning Department does not consider it politically wise to advocate for the tool amongst residents.

While a property tax relief program could help reduce gentrification pressure, we found that such a program would be difficult if not impossible to establish. Through an interview with the Travis County Tax Assessor, we learned that it is illegal to establish tax abatement for low‐ income residents in Austin; tax abatement must be fair and applicable to the entire population. 22 A state constitutional amendment would be required to implement a policy that targets relief to a particular type of population (whether by geography, income, or some other designation). The other complication is that five property taxing districts exist in Austin and any type of

18 Stuart Hersh, Project Coordinator, S.M.A.R.T. Housing Program, Interview by Colleen Flynn, Austin, TX, March 25, 2008. 19 Homestead Preservation District is an ordinance that utilizes a TIF and other tools to combat the effects of gentrification and provide affordable housing options in a section of East Austin. 20 Sonya Lopez, City Planner, Neighborhood Planning, Interview by Colleen Flynn, Austin, TX, March 15, 2008. 21 Lori Renteria, Member of East Cesar Chavez Neighborhood Planning Team, Interview by Colleen Flynn, Austin, TX, April 12, 2008. 22 Nelda Wells Spears, Travis County Tax Assessor, Interview by Colleen Flynn, Austin, TX, April 1, 2008. 75

movement to try and abate property taxes for low‐income households would require working with each of these five entities.

Some neighborhood barriers were briefly discussed within the neighborhood context section. Several other neighborhood barriers that are important to the alley flat project were found through interviews and research. These barriers include competing interests and values within neighborhoods, a distrust of the city with less active or uninvolved residents,23 residents that do not want affordable housing in their neighborhood, and uncertainty among residents concerning infill projects due to gentrification that has already occurred. Another important dynamic discussed with Mark Rogers, the Director at the Guadalupe Neighborhood Development Corporation, is that many low‐income residents are not ideal candidates to become landlords and do not possess any capital to construct or maintain an alley flat. In many cases the low‐income households find it difficult to maintain their own home. 24

Key findings from interviews with local community organizations provided further insight into potential barriers. Most Community Development Corporations lack adequate financial assistance from the City of Austin to successfully create deep subsidized affordable housing. Additionally, the affordable housing business is complicated and requires creative financing packages from various local, state, federal, and private sources. The majority of the community development corporations in Austin have not mastered the sophisticated skill set required to create these financing packages. According to various affordable housing participants, Guadalupe Development Corporation is one of the only corporations that has the capabilities to create these packages.25

Through interviews with developers and realtors, two important barriers were revealed. One barrier is that developers and realtors feel that the AFI does not provide a large enough margin of profit. Additionally, developers see the alley flat initiative as extremely time‐intensive

23 Brad Deal, “Developing Equity: Designing for Affordable, Livable Density and the Evolution of Residential Development. A Master Design Study. (Austin, TX: 2007). 24 Mark Rogers, Director of Guadalupe Neighborhood Development Corporation, Interview by Colleen Flynn, Austin, TX, February, 20, 2008. 25Bo McCarver, Interview by Colleen Flynn, Austin, TX, April 12, 2008. 76

as each house is constructed under unique conditions and in a different location.26 These two barriers cause a lack of interest in participating in the AFI on behalf of developers and realtors.

Apparent in the barriers revealed through the interview process is the need to build support for the AFI through creating stronger connections and ties to all key stakeholders. Increasing trust will be especially important with neighborhood groups that are sensitive to densification. The AFI is attempting to tackle the inequities that exist for long‐term East Austin residents. East Austin residents are struggling to handle rapidly increasing property taxes, developers are swooping in and building condos for large profits, and local nonprofits and community leaders are hesitant to embrace the AFI for fear it might lead to more gentrification. Crucial to the AFI’s success in mobilizing a coalition is strategizing ways to build more trust with long‐term East Austin residents and local community groups. If these two groups do not become integral participants in the AFI, it will be difficult to create real change that can assist in preventing more gentrification through sustainable practices.

4.6.2 POTENTIAL PARTNERSHIPS

The key stakeholder analysis and investigation into City of Austin goals and policies provided a framework to envision possible partnerships to assist in eliminating key AFI barriers. This section condenses the barriers into 5 overarching themes that can potentially be mitigated through creative partnerships. The partnerships discussed are a snapshot of possible partnerships that could be forged. The information presented was gathered through interviews and secondary research.

There is a strong need to create partnerships to advocate for more affordable housing infill development. These partnerships can help galvanize community support for denser neighborhoods and create change within the city to improve affordable housing infill policies, funding and incentives. Partnerships could be established with Livable City, Texas Low Income Housing Information Service, HousingWorks, PODER, Community Development Corporations, Neighborhood Planning Teams, Affordable Housing Incentives Task Force Members, Habitat for Humanity and Foundation Communities. Livable City is a nonprofit that promotes policies, “that

26 Matt Bass, Habitat Modern Owner, Interview by Colleen Flynn, April 14, 2008. 77

address long term social, environmental and economic needs of the people of Austin”.27 One of their key concerns is affordable housing, they could assist with the AFI by promoting denser neighborhood development through a summit with community members. Low Income Housing Information Services is an advocacy organization for low income housing needs.28 HousingWorks is an affordable housing advocacy organization that has helped push passage of the Homestead Preservation District, GO Affordable Housing Bond Implementation and 25% TOD affordability. Both Low Income Housing Information Services and HousingWorks would be great resources for connecting AFI to a boarder group of affordable housing players, advocating for change within current City affordable housing policies and devising innovative solutions.

Through conversations with those affordable housing advocates and city officials involved in affordable housing, it may be possible to identify opportunities to incorporate alley flat development into other existing city affordable housing policies. For instance, the City has plans for seven Transit Oriented Districts (TODs) around future commuter rails and bus stations. The goal of the planned TODs is to focus denser growth around transportation systems to promote the use of public transportation, walking, and biking.29 One of the planned TODs, Plaza Saltillo, fits into the East Austin’s neighborhood alley network, and aims to make 25% of its housing units produced affordable. A report written for the City of Austin discusses several potential roadblocks for achieving this 25% goal from lack of land availability, high costs of land, construction, and infrastructure.30 The barriers for the City to create 25% affordability in future TODs could serve as an opportunity for the AFI. The AFI can advocate for the city to provide developers the option of constructing the affordable housing required offsite, in the surrounding existing neighborhoods. Alley flats can take advantage of this affordable housing offsite option and increase the production of alley flats.

27 Livable City, “Livable City’s Mission”, http://www.liveablecity.org/projects.php, last accessed April 25, 2008. 28 John Henneberger, Co Director of Low Income Housing Information Services, E‐mail Conversation with Colleen Flynn, April 16, 2008. 29 Austin City Connection, “Station Area Planning‐Plaza Saltillo”, http://www.ci.austin.tx.us/planning/tod/saltillo_sap_activities.htm, last accessed April 22, 2008. 30 Diana McIVer & Associates, Inc. Executive Summary. Draft Housing Element of the Transit‐Oriented Development (TOD) Districts Station Areas, http://www.ci.austin.tx.us/planning/tod/downloads/DraftSAP_Chapter3‐Housing.pdf, last accessed April 15, 2008. 78

In addition to the TOD affordability targets, there are several other city programs and initiatives that appear to be naturally synergistic with AFI goals. For instance, the CreateAustin Cultural Master Plan identified the need for affordable urban housing and studio space for create professionals. Alley flats could serve both of these needs for artists in existing neighborhoods. Alley flats could also be a central part of the Austin Climate Protection Plan since it aims to produce net‐zero energy homes that are located in urban, transit‐served neighborhoods. Should the Homestead Preservation District’s Tax Increment Financing (TIF) mechanism become implemented, funds generated through it would be a natural fit for East Austin alley flats: not only would money be going to affordable housing and helping existing residents stay in the community, it would also be going towards innovative, sustainable infrastructure systems that will help keep the neighborhoods affordable over time. Considering that TIF funds are traditionally used for infrastructure investments, this use is particularly appropriate.

The high property tax increases discussed in the neighborhood context section that East Austin residents are experiencing are a significant impediment to long term AFI success. Possible solutions for high property tax increases are to implement: 1) a property tax abatement for low income households or 2) a freeze on property taxes. The legal barriers associated with a property tax abatement or freeze for low income households are significant. There are several nonprofit legal organizations that assist low income individuals with housing issues that can facilitate changes in the Texas legal system. For research purposes Texas RioGrande Legal Aid Texas Taxpayer Assistance Program, UT Housing Law Clinic and Texas Appleseed were contacted. All three were very concerned about the gentrification occurring in East Austin and the continued increase in property values. All mentioned the need to administer some type of system to freeze or apply an abatement to property taxes for low income individuals.

Green building construction is extremely expensive, the AFI must find creative ways to reduce construction costs by tapping into existing nonprofits and volunteer labor pulls. Programs researched were AmericaCorps Vista Program, Public Design Lab, interns from the Renewable Energy Program at Austin Community College (ACC), Casa Verde Builders Program and Lower Valley Housing Corporation. One of the most viable options would be to work with interns from the Renewable Energy Program at ACC. Through this program students learn the

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skill set needed to enter into the renewable energy technology field.31 These interns could be used to cut costs through administering the installation of the alley flat renewable energy technologies. The Lower Valley Housing Corporation’s model could be adapted to fit into the AFI. The Lower Valley Housing Corporation is a nonprofit that helps families build affordable housing in El Paso County through a program called, “mutual self help.”32 This program forms groups of families and teaches them how to build their own homes. This greatly reduces the cost of each house by eliminating most of the labor costs. The family’s labor serves as a down payment for their house. This program also fosters community building amongst neighbors and is a model the AFI could implement to cut construction costs.

Another group of partners could address the cost and social barriers around sustainable technology delivery, education and advocacy. This group could involve the Backyard Wildlife Habitat Program, Rays of Hope, Sustainable Building Coalition, The Center for Maximum Potential Building Systems, TreeFolks, Innovative Water Solutions, 1 House at a Time and Austin Energy. Through the Backyard Wildlife Habitat Program an Austin resident can certify their backyard as a wildlife habitat. There is a set of criteria in order to receive this certification that includes utilizing rain water collection, water‐wise landscaping, rain garden, native plants and compost. Another part of this program trains residents as Habitat Steward Volunteers, who could then educate and assist alley flat home owners in implementing the sustainable gardening and greening practices stated above. Through an interview with the Conservation Program Coordinator with the City of Austin, Alice Nance, there is a desire to work more closely with East Austin residents.33 The City is trying to become a Community Wildlife Habitat and to reach this goal; Austin needs 600 more backyards certified by October 31, 2008. The nonprofit 1 House at a Time assists low income families on ways to make their house more energy efficient. Their goal is to reduce utility bills by 50%. This program could work with both the front house and alley flat residents to implement energy saving retrofits. There are various programs within Austin that the AFI can partner with to reach the goal of providing affordable sustainable technology.

31 Chris Fisher, Phone Interview by Colleen Flynn, April 11, 2008. 32 Boarder Coaltion.org, “Lower Valley Housing Corp”, http://www.bordercoalition.org/page9/page25/page25.html, last accessed April 8, 2008. 33 Alice Nance, City of Austin Conservation Program Manager, Interview by Colleen Flynn, April 12, 2008. 80

Another large roadblock is the lack of interest from developers to become active participants in the AFI. A steering committee could be comprised of developers, financial institutions, realtors and others involved in Austin housing industry. This steering committee could strategically think of creative marketing packages to sell the alley flat concept to developers. Some key partners could be: the City of Austin; Young Leaders Group within Urban Land Institute; and developers like Habitat Modern. The Young Leaders Group from Urban Land Institute are young Austin developers that are interested in finding solutions to land use problems and a natural AFI supporter. Habitat Modern, develops, buys, renovates and sells houses in East Austin. At the time of our typology field study, Habitat Modern was selling some of the secondary units in East Austin. In an interview with the owner of Habitat Modern, their strategy is to buy houses in East Austin, retrofit front and back houses with green building concepts, set up condo regimes and sell each unit for around $300,000 to $400,000.34 It was apparent through interviews with Habitat Modern and local realtors that many in the housing industry see secondary units as an opportunity to create condo regimes to maximize profits.35 Organizations like Habitat Modern and the Urban Land Institute can provide insight into ways the Alley Flat Initiative can be seen as a benefit to developers.

There is an assortment of creative partnerships that can be formed to break current roadblocks that exist for the AFI. These partnerships play a vital role in the AFI’s ability to increase capacity and build a stronger framework.

34 Matt Bass, Habitat Modern Owner, Interview by Colleen Flynn, April 14, 2008. 35 Richard Wedeikes, Realator, E‐mail Conservation with Colleen Flynn, April 22, 2008. 81

WORKS CITED

Affordable Housing Incentive Task Force. Affordable Housing Incentive Task Force Report, (Austin, TX: 2007), http://austintexas.gov/housing/downloads/AHITF%20Final%20Report.pdf. Last accessed April 20, 2008.

Alley Flat Initiative. “What is the AFI”. http://thealleyflatinitiative.org/. Last accessed May 1, 2008.

Austin City Connection. “Station Area Planning‐Plaza Saltillo”. http://www.ci.austin.tx.us/planning/tod/saltillo_sap_activities.htm. Last accessed April 22, 2008.

Austin Housing Financing Corporation. “About Us”. http://www.ci.austin.tx.us/ahfc/about_nhcd.htm. Last accessed May 3, 2008.

Bass, Matt. Habitat Modern Owner. Interview by Colleen Flynn, April 14, 2008.

Boarder Coaltion.org. “Lower Valley Housing Corp”. http://www.bordercoalition.org/page9/page25/page25.html. Last accessed April 8, 2008.

City of Austin‐Neighborhood Housing and Community Development. Preserving Affordable Housing, (Austin, TX: 2008). http://www.ci.austin.tx.us/housing/downloads/2008_preservation_study.pdf. Last accessed, April 20, 2008.

City of Austin‐ Neighborhood and Planning Department. East Cesar Chavez Neighborhood Plan, (Austin, TX: 1999) http://www.ci.austin.tx.us/zoning/downloads/ecc_np1.pdf. Last accessed April 27, 2008.

City of Austin. “Overview of Neighborhood Planning”. http://www.ci.austin.tx.us/zoning/overview_np.htm. Last accessed May 1, 2008.

City of Austin‐ Neighborhood and Planning Department. The North Loop Neighborhood Plan. (Austin, TX: May 23, 2002)http://www.ci.austin.tx.us/zoning/downloads/nloop_np1.pdf. Last accessed April 10, 2008.

CreateAustin. “CreateAustin Plan”. (Austin, TX: 2008), 82

http://www.ci.austin.tx.us/culturalplan/plan.htm. Last accessed April 10, 2008.

Crossland ,Keller William Realtors, Crossland Team. Austin Rental Market Update. (2006 Summary ) Austin Real Estate Blog. http://crosslandteam.com/blog/2007/01/21/austin‐rental‐market‐update. Last accessed, April 28, 2008.

Current Mortgage Rates: Bankrate.com. http://www.bankrate.com/. Last accessed April 28, 2008.

Diana McIVer & Associates, Inc. Executive Summary. Draft Housing Element of the Transit‐Oriented Development (TOD) Districts Station Area. http://www.ci.austin.tx.us/planning/tod/downloads/DraftSAP_Chapter3‐Housing.pdf. Last accessed April 15, 2008.

Deal, Brad. “Developing Equity: Designing for Affordable, Livable Density and the Evolution of Residential Development. A Master Design Study. (Austin, TX: 2007).

Environmental Protection Agency. “Aging Water Infrastructure Research Program: Addressing the Problem Through Innovation”. http://www.epa.gov/nrmrl/pubs/600f07015/600f07015.pdf . Last accessed May 1, 2008.

Fisher, Chris. Phone Interview by Colleen Flynn, April 11, 2008.

Flood Safety. “Flash Flood Alley Chapter Summary”. http://www.floodsafety.com/media/ffa/flashfloodalley_chapters.htm . Last accessed May 1, 2008.

Henneberger, John. Co Director of Low Income Housing Information Services. E‐mail Conversation with Colleen Flynn, April 16, 2008.

Keller and Williams. Crossland Real Estate Team. http://crosslandteam.com/. Lopez, Sonya. City Planner, Neighborhood Planning. Interview by Colleen Flynn, Austin, TX, March 15, 2008.

Livable City. “Livable City’s Mission”. http://www.liveablecity.org/projects.php. Last accessed April 25, 2008.

McCarver, Bo. Interview by Colleen Flynn. Austin, TX, April 12, 2008.

McDaniel Jr, Reuben R. and Lanham, Holly Jordan.“Complexity and the Problem of Balance”. Pragmatic Sustainability, ed. Dr. Steven A. Moore, (Unpublished 2008). 83

Median Family Income for Neighborhoods: Realator.com. http://www.realtor.com/Default.aspx?source=ig.

Median Family Incomes are taken from Realtor.com. Official Site for the National Association of Realtors. http://neighborhoods.realtor.com/Austin/71/Metro. Last accessed April 27, 2008.

Nance, Alice. City of Austin Conservation Program Manager. Interview by Colleen Flynn, April 12, 2008.

Property Tax Rates for 2007. Austin Chamber of Commerce.http://www.austinchamber.org/DoBusiness/TaxesAndIncentives/TxProperty. html.

Property Value Data: Travis County Appraisal District. http://www.traviscad.org/.

Renteria, Lori. Member of East Cesar Chavez Neighborhood Planning Team. Interview by Colleen Flynn, Austin, TX, April 12, 2008.

Rogers, Mark. Director of Guadalupe Neighborhood Development Corporation. Interview by Colleen Flynn, Austin, TX, February, 20, 2008.

Spears, Nelda Wells. Travis County Tax Assessor, Interview by Colleen Flynn. Austin, TX, April 1, 2008.

Stuart Hersh, Project Coordinator, S.M.A.R.T. Housing Program. Interview by Colleen Flynn, Austin, TX, March 25, 2008.

Travis County Appraisal District. http://www.traviscad.org/. Last accessed April 28, 2008.

U.S Green Building Council. “LEED ND Pilot Version Rating System”. http://www.usgbc.org/DisplayPage.aspx?CMSPageID=148. Last accessed February 2, 2008.

Wedeikes, Richard. Realtor. E‐mail Conservation with Colleen Flynn, April 22, 2008.

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5.0 OWNERSHIP AND FINANCING STRUCTURES

So, we're saying, if we can give developers and builders incentives to cut down on the regulatory barriers that are faced in this country, then we might be able to address the needs of affordable housing. ‐ Alphonso Jackson (Secretary of the United States Department of Housing and Urban Development)

A myriad of funding and ownership structures are available for potential alley flat owners. Given the unique financial limitations and social context of each development, the following sections serve to map out the various options that currently exist. A review of federally funded sources, City of Austin programs and community‐based initiatives are presented as a foundation of reference. This review is followed by an introduction to the relative advantages and drawbacks of multiple alternative ownership structures, including individual homeowners, non‐profit developers, private developers, neighborhood development blocks, and community land trusts. Throughout this text, it is emphasized that the preferred solution for the Alley Flat Initiative is not the same for each potential alley flat, but a flexible pairing of financing and ownership structures with available resources.

5.1 FEDERAL FUNDING SOURCES

There are three major federal institutions that provide low‐cost funds for affordable housing programs to various local (state) financial organizations throughout United States: United States Department of Housing (HUD), Fannie Mae and Freddie Mac, Community Development Financial Institution Fund (US Department of Treasury), and Federal Home Loan Banks (FHLB). The following sections discuss the most used financial instruments provided by these institutions. The United Stated Department of Housing provides, through Community Planning and Development and Housing program offices, the following financing instruments and programs for affordable housing:

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• Section 8 – Housing Choice Voucher Program1 • Community Development Block Grant (CDBG)2 • HOME program3 • Low‐Income Housing Tax Credit (LIHTC) program4 • Federal Housing Administration (FHA) insurance5

5.1.1 SECTION 8 HOUSING CHOICE VOUCHER PROGRAM The Section 8 Housing Choice Voucher Program provides rental assistance for low‐income families through local governments, community agencies and public housing authorities (PHA). Eligibility for this program is a function of several factors: household income (no more then 50% of HUD’s median income guidelines), size and composition, citizenship status, assets, and medical and childcare expenses. The subsidy provided by the program is the difference between 30% of the household monthly income and the 90%‐110% of the Fair Market Rent. HUD publishes Fair Market Rents for "modest" rental housing by locality. In Austin, “the Housing Authority of Travis County administers Housing Choice Vouchers for families who may select units in Austin and the surrounding areas within and near Travis County.”6

5.1.2 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) The Community Development Block Grant (CDBG) program is a major source of federal funding for affordable housing in Austin. The Department of Housing and Urban Development (HUD) administers the program, describing it as follows:

1 U.S. Department of Housing and Urban Development (HUD), “Section 8 Rental Voucher Program”, Housing and Communities, http://www.hud.gov/progdesc/voucher.cfm, last accessed May 4, 2008. 2 HUD, “Community Development Block Grant Program - CDBG”, http://www.hud.gov/offices/cpd/communitydevelopment/programs/, last accessed May 4, 2008. 3 HUD, “HOME Investment Partnerships Program”, http://www.hud.gov/offices/cpd/affordablehousing/programs/home/index.cfm, last accessed May 4, 2008. 4 HUD, “LIHTC Basics”, http://www.hud.gov/offices/cpd/affordablehousing/training/web/lihtc/basics/, last accessed May 4, 2008. 5 HUD, “The Federal Housing Administration (FHA)”, http://www.hud.gov/offices/hsg/fhahistory.cfm, last accessed May 4, 2008. 6 Housing Authority of Travis County, Texas, “Section Eight Housing Choice Voucher Program”, http://www.hatctx.com/section8.html, last accessed May 4, 2008. 86

government and States.”7 Each year, the City of Austin receives CDBG dollars from the U.S. Department of Housing and Urban Development (HUD). To date, the City of Austin has received more than $200 million in federal grants,8 though most of these funds are directed to small (mostly rural) communities and have little impact on keeping housing affordable in urban locations.

5.1.3 HOME PROGRAM The HOME program provides formula grants to states and localities, often in partnership with local nonprofit groups, to fund a wide range of activities that build, buy, and/or rehabilitate affordable housing for rent or homeownership or provide direct rental assistance to low‐ income individuals and families. 9 According to the HOME program progress dashboard for Austin, TX, the City received $55 million since 1992. 10 The ensuing rental projects averaged a cost of $46,683 per unit while for homebuyer projects averaged a cost of $64,747 per unit. According the Department of Housing and Urban Development, the Austin Housing Finance Corporation received two HOME grants in January 2008.

5.1.4 LOW‐INCOME HOUSING TAX CREDIT (LIHTC) PROGRAM The Low‐Income Housing Tax Credit (LIHTC) program11 provides tax credits (subtracted directly from one’s tax liability) to developers of qualified projects. “Developers then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the developer would otherwise have to borrow. Because the debt is lower, a tax credit property can in turn offer lower, more affordable rents.”12 Allocation of tax credits and eligibility can be

7 HUD, “Community Development Block Grant Program - CDBG”, http://www.hud.gov/offices/cpd/communitydevelopment/programs/, last accessed May 4, 2008. 8 Austin City Connection, “The City of Austin Celebrates National Community Development Week April 9 - 15”, http://www.ci.austin.tx.us/housing/2007/cdbg.htm, last accessed May 4, 2008. 9 HUD, “HOME Investment Partnerships Program”, http://www.hud.gov/offices/cpd/affordablehousing/programs/home/index.cfm, last accessed May 4, 2008. 10 HUD, “Program Progress Dashboard”, http://www.hud.gov/offices/cpd/affordablehousing/reports/dash/tx_austin_dash.pdf, HOME Investment Partnerships Program, last accessed May 4, 2008. 11 HUD, “LIHTC Basics”, http://www.hud.gov/offices/cpd/affordablehousing/training/web/lihtc/basics/, last accessed May 4, 2008. 12 HUD, “LIHTC Basics”, http://www.hud.gov/offices/cpd/affordablehousing/training/web/lihtc/basics/work.cfm, last accessed May 4, 2008. 87

found online at the Department of Housing and Urban Development’s website.13 The LIHTC program allows the project owner tax credits of 40 to 90 percent of the value of a residential rental property over ten years if the owner agrees to keep rent (and qualifying tenant incomes) below certain levels.14 The Texas Department of Housing and Community Affairs is the approving organizing for the LIHTC program n Texas.

5.1.5 FEDERAL HOUSING ADMINISTRATION (FHA) INSURANCE Federal Housing Administration (FHA) insurance is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934. 15 Nearly a quarter of a million more families may be eligible this year to purchase or refinance their homes using affordable, FHA‐insured mortgages, due to the economic growth package signed in March 2008. While FHA insurance is not a direct source of funds it reduces the lenders’ risk, as FHA will pay in the event of a homeowner default.

5.1.6 FANNIE MAE AND FREDDIE MAC MyCommunityMortgage™ is a suite of flexible, high loan to value, flow product options for low‐ to moderate‐income borrowers of one‐ to four‐family homes. The financial instruments provided through MyCommunityMortgage™ are targeted to borrowers who have limited savings and/or cash assets, do not have credit or have nontraditional income sources. To reach these low‐income borrowers, Fannie Mae works with several local partners: major banks and lending institutions, housing advocacy groups, community and nonprofit organizations, federal, state, and local governments, developers and homebuilders, employers and syndicates. Financial instruments for multifamily affordable housing include Tax‐Exempt Bond Credit Enhancement, Low‐Income Housing Tax Credits, Funded Forward Commitment, Unfunded Forward Commitment, and 15‐Year Rate Cap.

13 HUD, “LIHTC Basics”, http://www.hud.gov/offices/cpd/affordablehousing/training/web/lihtc/basics/work.cfm, last accessed May 4, 2008. 14 Enterprise Community, “Financing Mechanisms for Affordable Housing”, http://www.practitionerresources.org/cache/documents/194/19410.doc#_Tax_Credits, last accessed May 4, 2008. 15 HUD, “The Federal Housing Administration (FHA)”, http://www.hud.gov/offices/hsg/fhahistory.cfm, last accessed May 4, 2008. 88

5.1.7 COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS (CDFI) Community Development Financial Institutions (CDFIs) are lending institutions committed to increasing the availability of capital, credit, and financial services to low‐income communities throughout the United States. Although they are individual entities, they also receive signicant federal support through the CDFI Fund: “The CDFI Fund was created for the purpose of promoting economic revitalization and community development through investment in and assistance to community development financial institutions (CDFIs). The CDFI Fund achieves its purpose by promoting access to capital and local economic growth in the following ways: 1. through its CDFI Program by directly investing in, supporting and training CDFIs that provide loans, investments, financial services and technical assistance to underserved populations and communities; 2. through its New Markets Tax Credit (NMTC) Program by providing an allocation of tax credits to community development entities (CDEs) which enable them to attract investment from the private‐sector and reinvest these amounts in low‐income communities; 3. through its Bank Enterprise Award (BEA) Program by providing an incentive to banks to invest in their communities and in other CDFIs; and 4. through its Native Initiatives, by taking action to provide financial assistance, technical assistance, and training to Native CDFIs and other Native entities proposing to become or create Native CDFIs.” 16

In Austin there are four CDFIs: PeopleFund, Business Invest in Growth, Corporation for the Development of Community Health Centers and Praxis Corporations. While most of these CDFIs target small businesses, for several years PeopleFund has been promoting the Community Land Trust as a way to finance homes for low‐income families,17 though they have not yet posted a success story for this particular purpose.

5.1.8 FEDERAL HOME LOAN BANKS (FHLB)

16 United States Department of the Treasury, “Community Development Financial Institutions Fund”, http://www.cdfifund.gov/, last accessed May 4, 2008. 17 PeopleFund, “Community Land Trust”, http://www.peoplefund.org/programs/landtrust.php, last accessed May 4, 2008. 89

Federal Home Loan Banks through the Affordable Housing Program (AHP) provide grants twice a year through financial institutions for investment in low‐ or moderate‐income housing initiatives. Member banks partner with developers and community organizations to finance the purchase, construction, or rehabilitation of owner‐occupied or rental housing. AHP funds can be used in combination with other programs and funding sources. The AHP is funded with 10% of the FHLBank System’s net income each year, making AHP one of the largest private sources of grant funds for affordable housing in the country. Since the program’s inception in 1991, over $2.9 billion dollars in AHP funds have been awarded. The FHLBank System is the largest corporate contributor to Habitat for Humanity International, as one in four Habitat homes in the U.S has received AHP funds.18 AHP grants can be used to fund housing for families or individuals with incomes at or below 80% of the area median. For AHP funded rental housing, 20% of the units must serve households with incomes at or below 50% of the area median. Funding is awarded only to financial institution members of the FHLBank System working in partnership with a community sponsor organization. In Texas, FHLBank is located in Dallas.19 A success story of the FHLBank of Dallas is an $8 million award in Affordable Housing Grant, while West Jackson CDC received a $336,0 00 grant through BankPlus.

5.2 ADDITIONAL FUNDING SOURCES

The Alley Flat Initiative must use public and community‐based financing tools to achieve its greatest impact. A major issue for the AFI is construction financing for the units, where estimations range from $85,000 to $120,000 apiece. A lack of control over construction costs can be detrimental to funding requests from various organizations. Both the City of Austin and community organizations offer valuable funding sources for affordable housing ventures.

5.2.1 CITY OF AUSTIN SMART HOUSING INITIATIVES

18 FHLBanks, “FHLBank Programs”, http://www.fhlbanks.com/html/programs.html, last accessed May 4, 2008. 19 FHLBanks, “FHLBank Programs”, http://www.fhlbanks.com/html/programs.html, last accessed May 4, 2008. 90

One strong financing and development program through the City of Austin is the SMART Housing policy and development review initiative. SMART (Safe, Mixed‐Income, Accessible, Reasonably‐Priced and Transit‐Oriented) Housing is a preliminary step to access expedited processing and fee waivers if a developer meets certain affordable housing criteria.20 Table 5.2.1.1 below lists the criteria and associated fee waiver guidelines for qualifying developers.

Table 5.2.1.1 SMART Housing Guidelines21 If a builder provides: The City of Austin provides: 10 % Reasonably‐Priced Units 25% fee waivers 20% Reasonably‐Priced Units 50% fee waivers 30% Reasonably‐Priced Units 75% fee waivers 40% Reasonably‐Priced Units 100% fee waivers

Though the SMART Housing program can help alleviate some of the permitting costs and expedite review cycles associated with alley flat construction, considerable costs remain.

5.2.2 CITY OF AUSTIN GENERAL OBLIGATION BOND While SMART Housing will provide expedited review and fee waivers, it does not cover the vast majority of the cost of construction. Austin’s General Obligation Bond ($55 Million) is an additional source of funding the City has designated for affordable housing projects.22 Currently, the City of Austin has an open notice of Fund Availability for the General Obligation Bond money. The open application process has no specified deadline, which encourages affordable housing developers to apply as soon as possible for bond financing. Applications for General Obligation Bond financing are ranked on scale of 140 points; if an application is awarded100 points, the project qualifies for consideration by the Austin Housing Finance Corporation. The Austin City Council, acting as the Board of Directors for the Austin Housing Finance Corporation,

20 City of Austin, “S.M.A.R.T. Housing,” http://www.cityofaustin.org/ahfc/smart.htm, last accessed May 1, 2008. 21 City of Austin, “S.M.A.R.T. Housing Waivers,” http://www.cityofaustin.org/ahfc/smart_waivers.htm, last accessed May 1, 2008. 22 City of Austin, “General Obligation Bonds,” http://www.cityofaustin.org/ahfc/gobonds.htm, last accessed May 1, 2008. 91

reviews the proposals, and ultimately decides whether to appropriate funds to the project or reject the request.23 Points are awarded to projects based on the following qualifications: • Experience and qualifications of the developer • Project budget: completion and accurate estimations • Sources and uses of funding • Leverage: bond funding relative to total project costs • Number of affordable units • Average general obligation bond investment per unit • Affordability period • Geographic dispersion • Project readiness and development schedule • Neighborhood Support • Participation of Minority or Women‐owned Business Enterprises • Partnership with Non‐Profit entities24

Though the Alley Flat Initiative meets many of the qualifications for the General Obligation Bond financing it does not provide a high number of affordable units per project nor does it carry significant leverage against the funds needed. Also, since these requirements do not give any preference to projects that are energy‐efficient – thereby more affordable in the long‐run – sustainably designed, modestly sized alley flats are likely to have a higher price per square foot than competing projects. Funds from the General Obligation Bond have typically gone toward multi‐unit development projects, though the City recently awarded the Lydia Street alley flat with $60,000 in General Obligation Bond money. To obtain future General Obligation Bond funding, the Alley Flat Initiative may be successful in packaging the construction of multiple alley flats as a single “project”.

5.2.3 LOCATION‐EFFICIENT MORTGAGE Location‐Efficient Mortgages (LEM) are another form of providing purchasing power to individuals who would not otherwise be able to afford a home. Location efficiency is defined as the “measure of the transportation dollars people can expect to save by living in location efficient neighborhoods, based on the levels of population and public transit service in their

23 Stuart Hersh, interview by Julienne Bautista, Austin, TX, April 12, 2008. 24 City of Austin, “General Obligation Bonds.” 92

communities.”25 LEM lenders then count the additional income saved on transportation towards the income of the purchaser(s).

LEM rates are fixed and offered at 15 or 30‐year periods. As with all mortgage financing, home‐buyers must have a good credit/income history, stable employment, a maximum of housing‐to‐income ratio of 35%, a total debt‐to‐income debt ratio of 45%, and buyers must participate in a counseling sessions for home‐buyers. LEM mortgages are available for the purchase of single‐family homes or condominiums in the following cities: Seattle, Chicago, San Francisco and Los Angeles. Many of the LEM lenders are locally owned mortgage companies who promote community participation and involvement.26 Though a LEM provider does not currently exist in Austin, this is a type of funding of which the Alley Flat Initiative should be aware, given the project’s focus on urban infill development in areas easily accessible to public transit.

5.2.4 ENTERPRISE COMMUNITY PARTNERS Enterprise Community Partners is a national organization that assists affordable housing development. Although it generally focuses on larger, multi‐family affordable housing development and, in Texas, has focused on Dallas and San Antonia, it still may be a funding source available to AFI. According to the organizations website, “Enterprise helps build affordable housing for low‐income Americans by providing financing and expertise to community and housing developers. Their for‐profit subsidiary, Enterprise Community Investment, offers tax credit financing and asset management services…Enterprise has invested $65 million in Dallas over the past 17 years to help 5,000 families to become first‐time homebuyers through management of the City of Dallas Mortgage Assistance Program, provide affordable housing opportunities to an additional 4,500 families, create the Dallas Community Development Partnership (DCDP) to bring critical resources to eight community organizations that have produced more than 1,300 affordable homes between 2003 to 2004, a 25 percent increase in the city's housing production in just three years.”27

25 Location Efficient Mortgage, http://www.locationefficiency.com/, last accessed April 30, 2008. 26 Location Efficient Mortgage, http://www.locationefficiency.com/, last accessed April 30, 2008. 27 Enterprise Community, “Dallas”, http://www.enterprisecommunity.org/local_work/dallas/, last accessed May 4, 2008. 93

5.2.5 LOCAL INITIATIVES SUPPORT CORPORATION (LISC) LISC is another national organization committed to urban community development. According to its website, “LISC helps resident‐led, community‐based development organizations transform distressed communities and neighborhoods into healthy ones – good places to live, do business, work and raise families. By providing capital, technical expertise, training and information, LISC supports the development of local leadership and the creation of affordable housing, commercial, industrial and community facilities, businesses and jobs.”28

Although LISC’s has focused most of its activity in Texas in the Houston area, after opening its first and only Texas office there in 1989,29 this organization may still represent a potential funding source for the Alley Flat Initiative.30

5.2.6 GREEN FUNDING SOURCES There are currently several sources of funding available for energy efficiency and green technology projects. The Department Housing and Urban Development has initiated a mortgage targeted at energy efficiency, called the Energy Efficient Mortgage Program. The program provides financial assistance to new or existing homes for energy‐efficient improvements. Homeowners must qualify under the Fair Housing Act qualifications for their mortgage insurance.31 Another green funding device is the support provided by Enterprise Communities’ Green Communities program. Green Communities provides grants for the implementation of green components of affordable housing.32 They also provide loans for affordable rentals and homes to developers who meet the following requirements:

28 LISC, “Who We Are,” http://www.lisc.org/section/aboutus, last accessed April 30, 2008. 29 In Houston, LISC has created 4,689 homes and apartments, 650,718 square feet of commercial space, $88.7 million total investment, and $190.5 million leveraged since 1989. LISC, “Houston, TX”, http://www.lisc.org/content/offices/detail/633/, last accessed May 8, 2008. 30 LISC, “Local Offices,” http://www.lisc.org/section/offices/, last accessed April 30, 2008. 31 U.S. Department of Housing and Urban Development, “Energy Efficient Mortgages Program,” http://www.hud.gov/offices/hsg/sfh/eem/energy-r.cfm, last accessed May 1, 2008. 32 Green Communities, “Funding,” http://www.greencommunitiesonline.org/tools/funding/, last accessed April 30, 2008. 94

ƒ Integrated Design ƒ Site, Location and Neighborhood Fabric ƒ Site Improvements ƒ Water Conservation ƒ Energy Efficiency ƒ Materials Beneficial to the Environment ƒ Healthy Living Environment ƒ Operations and Maintenance

Green Communities also provide tax credits for new housing and rehabilitation projects, if a project is at least 25 or more units for individuals with incomes lower than 60% median family income, and its rental housing is permanently affordable. In order to access funding from Green Communities under its current requirements, the Alley Flat Initiative would need to form projects which contain multiple alley flats.

5.3 ALLEY FLAT DEVELOPMENT SCENARIOS

In order to have wide‐ranging application to the unique situations presenting homeowners and neighborhoods, the Alley Flat Initiative must allow for alternative development scenarios. Potential drivers for the development of alley flats explored in the following sections are individual homeowners, non‐profit developers, private developers, neighborhood not‐for‐profit development corporations, and community land trusts. The motivations, preferences, primary levers and funding strategies for each of these groups are discussed to determine their potential effectiveness of alley flat development.

5.3.1 INDIVIDUAL HOMEOWNER The Alley Flat Initiative is applicable to individual property owners living in the primary house on the lot in which the secondary unit is to be built. The underlying motivation for these homeowners to construct alley flats likely includes one or more of the following: creating

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supplemental income, housing their kin, and preserving the culture and character of their neighborhood. The type of alley flat that this group is likely to prefer stems from the value of neighborhood preservation. Their preferred building type will generally be consistent with the architectural style of the surrounding area. Given they reside on the same lot, individual homeowners may also be concerned with privacy issues that may arise from building a secondary unit in their back yard. Cost will be a major factor in the individual homeowner’s decision to pursue construction of an alley flat, particularly if he or she is looking to preserve affordability in his/her neighborhood. Homeowners will benefit from many of the creative financing packages discussed later in this chapter. Individual homeowners are typically not well versed in zoning laws and municipal land use regulations. Overly complex regulation may inhibit their attempts to build affordable infill housing. The greater the laws regarding building a traditional single‐family house differ from those applying to secondary unit construction, the less likely homeowners are to participate in the Alley Flat Initiative. Though individual homeowners may be initially receptive to green technologies and their impact on monthly operating expenses, the decision to include these technologies in the design of an alley flat will be greatly affected by the upfront cost required to install these systems. The long‐term economic benefits and payback period of green technologies will need to be emphasized to make them more palatable to homeowners, though these individuals may still be uncomfortable with the contemporary aesthetics associated with green building.

FUNDING OF INDIVIDUAL HOMEOWNER DEVELOPMENTS Individual development of an Alley flat is accomplished just like any other traditional homeowner‐funded construction. A resident would acquire funding through a lending institution in order to pay for construction of the alley flat, and this loan would be repaid using the revenue generated through the rental of either the original home or secondary unit. This revenue must be sufficient to pay for both the construction of the alley flat and the increase in property taxes that result from improvements to the property. The development of secondary dwelling units (SDUs) in this area independent of the AFI indicates that this project is economically viable. The main difference is that these SDUs are rented out at market rates. In

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order to allow for an affordable level of rent, AFI projects must use the financing tools outlined earlier in this report to obtain better financing terms, grants or tax abatements. These concessions will allow SDUs to become beneficial to the owner and retain affordability for the renter. This is supported by the analysis of the loan terns required to retain affordability on a loan for the SDU. Table 5.3.1.1 depicts the monthly affordable housing cost for qualifying low‐ income families at 50%, 60% and 80% of MFI.

Table 5.3.1.1 Affordable Housing Cost FY 2007 Travis County, Austin TX % Spent on Housing Housing cost Monthly 50% Median Income $ 24,900 25% $ 6,225 $ 518.75 60% Median Income $ 29,850 25% $ 7,463 $ 621.88 80% Median Income $ 39,850 25% $ 9,963 $ 830.21

The construction costs incurred in building an affordable secondary unit (to be rented to or used by a low income individual) assuming market loan terms (interest rate, down payment, maturity period), maintenance and taxes associated with the secondary unit were developed using financial models at various levels of MFI. The results of these financial models are presented in Table 5.3.1.2 (50% MFI), Table 5.3.1.3 (60% MFI), and Table 5.3.1.4 (80% MFI), assuming the median income from 2007 from Travis County and 25% of income is spent on rent. Though the constructions costs that can be afforded may look promising for loans with interest rates around 5% and of 20 to 30 years maturity, careful consideration must ensue as fixed interest rates and relatively low down payments were assumed. The advantages of this type of project for the homeowner are simplicity, adaptability, and full homeownership. Project funding is the most common and straightforward so there are few legal and financial barriers. The projects are financed and constructed individually allowing for adaptation for both the physical and financial circumstances of each situation.

Table 5.3.1.2 Construction Cost When Alley Flat Rented at 50% MFI

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Time Construction Interest Down Rent Rent Maintenance Tax Period Cost That Can Rate Payment Revenue Growth (% of (% of Be Afforded (Fixed) (50% MFI) Rate Revenue) Revenue) 15yrs $63,940 6% 10% $518.75 4% 10% 20% 20yrs $81,094 6% 10% $518.75 4% 10% 20% 30yrs $110,448 6% 10% $518.75 4% 10% 20%

15yrs $68,762 5 % 10% $518.75 4% 10% 20% 20yrs $89,215 5% 10% $518.75 4% 10% 20% 30yrs $126,897 5% 10% $518.75 4% 10% 20%

Table 5.3.1.3 Construction Cost When Alley Flat Rented at 60% MFI Time Construction Interest Down Rent Rent Maintenance Tax Period Cost That Can Rate Payment Revenue Growth (% of (% of Be Afforded (Fixed) (60% MFI) Rate Revenue) Revenue) 15yrs $76,651 6% 10% $621.8 4% 10% 20% 20yrs $97,215 6% 10% $621.8 4% 10% 20% 30yrs $132,404 6% 10% $621.8 4% 10% 20%

15yrs $82,432 5 % 10% $621.8 4% 10% 20% 20yrs $106,950 5% 10% $621.8 4% 10% 20% 30yrs $152,123 5% 10% $621.8 4% 10% 20%

Table 5.3.1.4 Construction Cost When Alley Flat Rented at 80% MFI Time Construction Interest Down Rent Rent Maintenance Tax Period Cost That Can Rate Payment Revenue Growth (% of (% of Be Afforded (Fixed) (80% Rate Revenue) Revenue) MFI) 15yrs $102,330 6% 10% $830.21 4% 10% 20% 20yrs $129,783 6% 10% $830.21 4% 10% 20% 30yrs $176,761 6% 10% $830.21 4% 10% 20%

15yrs $110,047 5 % 10% $830.21 4% 10% 20% 20yrs $142,780 5% 10% $830.21 4% 10% 20% 30yrs $203,085 5% 10% $830.21 4% 10% 20%

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Individually funded projects allow the homeowner to retain full ownership of the property (both of the original structure and the alley flat), and to realize all increases in property value and rental revenue. Disadvantages of individually developed projects include a lack of economies of scale, slower growth and no long‐term affordability retention. Projects developed on an individual basis will allow homeowners less bargaining power with lenders, contractors and suppliers. The growth of the Alley Flat Initiative will be slowed if projects are undertaken on an individual basis, and individual development will not accomplish the goal of retaining long‐term affordability. While funding sources may require owners to retain rental affordability in exchange for low interest loans, tax credits or grants they are not likely to encumber the re‐sale value. This may result in the eventual loss of the affordability this project seeks to maintain.

5.3.2 NON‐PROFIT DEVELOPER Non‐profit developers likely to participate in the Alley Flat Initiative are respected community development corporations (CDCs) or community housing development organizations (CHODOs) that have development experience in community asset building and the resources to fund alley flat development. CDCs are typically motivated by a sense of social advocacy in their projects and the goal of the AFI, to provide affordable and sustainable housing, should be aptly positioned as such. The building and maintaining of working relationships in the community will also be a motivating factor for this group. Given the positive relationships CDCs have with neighborhood organizations, they will generally prefer building types that blend with the existing architecture. Neighborhood preservation will be an important factor in selecting the design of alley flats. Like individual homeowners, non‐profit developers have limited resources and cost considerations will be taken very seriously. This group will have more experience at accessing innovative financing packages and grants, and will need to use this background to build suitable alley flats. Community development and housing organizations may have more regulatory experience than the average homeowner, allowing them to more easily navigate the City’s code and permitting processes. Non‐profit developers will be concerned with the aesthetic

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compatibility of green technology in the context of low‐income neighborhoods, as well as determining the appropriate party ultimately responsible for installing, operating, maintaining and paying for these features.

5.3.3 PRIVATE DEVELOPER It is highly unlikely that a private developer will engage on their own in the Alley Flat Initiative because of the low levels of profitability associated with the alley flat model. However, there may be situations in which private developers seek a partnership with a CDC or to build an alley flat unit in order to supplement an affordability component for another project. The motivations of the private developer to take part in the AFI will vary. For example, if a developer is building a high‐end condominium in downtown Austin, and as part of the permitting process committed to providing affordable units in the project, they may choose to sell all of the units in the high‐end building at the market rate and develop affordable units elsewhere. They may also develop AFI units in order to improve their public relations in the community. Private developers will likely have less stringent standards for building type standards, as long as the construction process is efficient. Cost will be an important consideration for private developers, but may be less limiting than for individual homeowners or non‐profit organizations. In the off‐site affordable housing scenario mentioned above, if the large market rate condominium is extremely profitable, the developer might be more willing to take financial concessions on the affordability component of the project. Private developers will be extremely familiar with the regulatory system and most able to maneuver within its framework. Developers may also have the previous experience to implement many of the important green building technologies more cost‐effectively than the previous groups, while using green development as a marketing tool for future business.

FUNDING OF GROUP DEVELOPMENTS Group development involves the construction of multiple alley flats by a private developer or non‐profit organization. The parent organization, developer or non‐profit, would pay for and

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retain ownership of multiple secondary dwelling units on multiple homeowners’ lots. The parent organization would either use existing resources or funds acquired from a lender. The private developer or non‐profit would then collect rental revenue in order to cover the costs of development. Once the parent organization had recovered a sufficient level of costs the ownership of the alley flat could be transferred back to the homeowner. This scenario has several advantages including rapid development potential, economies of scale, the potential to retain both future affordability and full ownership for the resident and the ability to develop without individual homeowner funding. A well‐suited parent organization will speed up the planning process from a legal, financial and technical point of view by streamlining the permitting process, arranging funding for many projects at once, and using common alley flat designs. Economies of scale may also be realized, as financing, labor, materials, and oversight costs per unit would be reduced as the number of projects increased. The parent organization would also have the ability to maintain affordability through restrictions built into project contracts. These restrictions may require affordably priced rent to be maintained for a certain period on either the alley flat or primary residence, or the restrictions may require re‐sale to the parent or designated organization in order to maintain affordability in the future. Homeowners can also benefit from this arrangement because they will not have to fund projects on their own, a challenge to many of the owners the AFI targets. Disadvantages of this method of development include the need to locate or develop a parent entity, the increased need for oversight and the reduction of control afforded the homeowner. The first challenge is to create a dedicated non‐profit or identify an existing organization to act as a parent. The parent will have significant oversight responsibilities, which, because of the unusual nature of this project, will require significant legal and financial expertise. The financing obligations, revenue sharing, ownership issues, and individuality of each project will all make this a very challenging endeavor to manage. Finally, homeowners may be less enthusiastic because of the reduction of control and ownership resulting from parent ownership of the alley flats or restrictions on rental rates and re‐sale options.

5.3.4 NEIGHBORHOOD PARTNERSHIP BLOCK DEVELOPMENT SCENARIO (COOPERATIVE)

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The neighborhood partnership block development scenario is a hypothetical situation in which a contiguous block of residents organizes with a local community development organization to develop alley flats on every lot within that block. Figure 6.3.4.1 illustrates this scenario. There are many motivating factors for a group to form a neighborhood partnership block like the one above; of these, neighborhood preservation and culture are likely paramount. A neighborhood may be drawn to the opportunity to participate in an innovative community‐building project guided by the values of social advocacy and the provision of affordable housing, while understanding working as a group may be more efficient than working on an individual basis. Because a neighborhood partnership block is composed of individual homeowners and non‐profit organization, neighborhood context and sensitivity will be the overriding factor when selecting the appropriate building type. The main benefit to this scenario is its potential to leverage economies of scale to reduce project costs. Regulatory concerns will be a driving factor for neighborhood blocks, as these types of community‐initiated developments are completely outside the normal conventions of zoning and development regulations. To overcome this obstacle, the community will have to work closely with the city planning, development, and code enforcement departments.

Figure 5.3.4.1 Block Scenario

• White buildings are privately owned, red are owned by a CDC. Blue lots are privately held. • City of Austin donates lot 7 to CDC • Owner leases lots 6 and 8 to CDC 102

There are many motivating factors for a group to form a neighborhood partnership block like the one above; of these, neighborhood and cultural preservation is likely paramount. A neighborhood may be drawn to the opportunity to participate in an innovative community‐building project guided by the values of social advocacy and the provision of affordable housing, while understanding working as a group may be more efficient than working on an individual basis.

FUNDING OF NEIGHBORHOOD BLOCK (COOPERATIVE) DEVELOPMENTS Cooperative Housing is a form of ownership between a group of people who are equally invested in real estate property and also reside at that property. There are two types of Cooperative ownership: market rate and limited equity. Limited equity is the main method to ensure affordability for long periods of time. Limited equity controls the price of the unit when sold so to maintain affordability.33 The previous owner realizes a portion of the market gain but it remains close to original purchase price.34 The Alley Flat Initiative can fit into this scenario when there is more than one entity owning the property. The alley flat is often on one parcel of land where a single family home is located in the front and the accessory dwelling unit is in the rear. This situation may require a number of families on a block to create a cooperative, controlling the value of the neighborhood and allowing many families to stay. Another form of cooperatives is a building cooperative. Building cooperatives are comprised of group of individuals who create an entity to purchase building and construction materials to build their homes. This could also be implemented in a neighborhood community or block level to provide financial equity and sweat equity to provide lower construction costs for potential alley flat homeowners.35

33 Gerald Sazama, “A Brief History of Affordable Housing Cooperatives in the United States,” University of Connecticut, Department of Economics Working Paper Series, Working Paper 1996-09, 1996: 7. 34 Dr. Elizabeth Mueller, interview by Julienne Bautista, Austin, TX, April 15, 2008. 35 Community Economic Development Institute, “Co-operatives: A Short History,” http://www.uccb.ca/CED/ced/1/1e.html, last accessed May 1, 2008. 103

Co‐op housing represents a shared equity model, which can take many different forms depending on its context. Co‐op housing in the AFI development would involve aggregating the resources of a large swath of the community to fund the construction of secondary dwelling units. Multiple households in the community would fund the parent non‐profit organization. This parent could then develop alley flats as discussed in the group development funding section. The revenues would be allocated in a similar manner to cover the costs of development. This model could eventually pass alley flat ownership on to the primary resident once costs are recovered. This type of development would have many of the same advantages as group development including rapid development potential, economies of scale, the potential to retain both future affordability and full ownership for the resident and the ability to develop without individual homeowner funding. Additionally, co‐op development could increase community awareness, support and buy‐in—a pattern of development linked to place‐making and localism. Cooperatives established by neighborhood blocks may be seen by residents as an opportunity to contribute to the improvement of their community. These residents will have a more vested interest in the development of the project, resulting in increased enthusiasm, participation, and the potential ability to acquire “sweat equity” while reducing direct costs. A co‐op or neighborhood block development has its share of disadvantages. The disadvantages of group development include the need to locate or develop a parent entity,the increased need for oversight, and the reduction of control afforded the homeowner. Additionally, obtaining funding support from an already struggling community for a moderately risky endeavor may be hazardous. In order for a co‐op to remain stable, funding contributors would have to realize a sufficient return on their investment.

5.3.5 COMMUNITY LAND TRUST MODEL Using a community land trust to further the Alley Flat Initiative is an intriguing possibility. Land trusts take a variety of forms but they have tended to focus on either conservation or affordability goals. In the context of the AFI, ownership of the land and structures is split. A

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land trust, usually organized as a non‐profit, owns the parcel of land while a resident owns the structures on top. The resident is allowed to share in the appreciation of the land value. The amount of appreciation allocated to the homeowner is added to the purchase price in determining the eventual resale value. This resale formula can take a variety of forms and is usually tied to the appraised value of the property or an index such as median income for the area. This type of development offers benefits to both the homeowner and the community by allowing for some return while maintaining affordability, though it has many challenges in the context of the AFI. The primary challenge for this scenario is establishing a community land trust in an area that has already been developed and has already seen rising prices. This requires a very large initial cash investment in order to acquire the land for the trust. Additionally, attempting to convince current residents to sell their land with the assurance that they will retain residency rights will be a challenge. Unused, city‐owned lots in Austin’s residential neighborhoods represent an opportunity for the community land trust idea. These lots could form the beginnings of a land trust. There are multiple examples of successful land trusts, including the Champlain Housing Trust (formerly the Burlington Land Trust), which has increased affordability and grown substantially during its tenure, and the Northern California Land Trust CLT, which is younger than the Champlain Housing Trust, yet has been successful when given proper oversight and support. The advantages of developing using the land trust model include those discussed earlier in conjunction with group development along with the ability to retain greater affordability for future residents while allowing families to share in returns from the land. The development of a land trust in Austin has been modeled using a variety of assumptions about future property value growth, building development costs and potential mortgage rates.36

Figure 5.3.5.1 Community Land Trust Financial Model

36 Assuming: 1) The appraised value of the property is equal to $200,000, 2) The property value growth rate is 10%, 3) The appreciation allowance is 25%, 4) The cost of an alley flat is $85,000, and 5) The property tax rate is 2.15%. 105

The results presented in Figure 5.3.5.1 indicate that families investing in the construction of an alley flat can easily achieve returns substantially above their mortgage rates. The returns are even more favorable when considering the absence of property taxes the resident would have otherwise been paying for ownership of the land. Variations in the assumptions noted are illustrated through several sensitivity analysis models contained in Appendix C (Figures 5.3.5.2 – 5.3.5.4) of this report. The disadvantages of developing as a community land trust can be substantial. Like group and co‐op development the community land trust will require substantial oversight due to its legal and financial complexity. The formation of a community land trust also involves a significant initial capital inflow, which may be difficult to obtain. The public perception of a land trust is mostly untested in the Austin area, though it may be assumed that residents would initially be very hesitant to give up ownership rights to their land. This fear may be alleviated if land is initially obtained from third parties rather than individual homeowners.

5.4 RECOMMENDATIONS

The financing and ownership tools and structures available for the development of affordable and sustainable housing are diverse. However, this broad spectrum of options allows for flexible solutions to the various financial and social conditions facing potential alley flat owners.

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Rather than defining a single “best” package of funding sources and preferred ownership structure, we recommend employing the following strategies when selecting the resources for a particular project:

1. Take advantage of all applicable federal, city and community programs. There are a myriad of funding sources available, and different projects may qualify for different funds. Using public funds to finance alley flat construction will help to drastically reduce the cost to the homeowner. 2. Leverage economies of scale when possible. Packaging the development of several alley flats together will enable homeowners to decrease costs and increase the pace of infill development. 3. Employ resources and social capital of existing organizations. Many organizations exist in the Austin area with working knowledge of the regulatory and financial obstacles facing the development of affordable housing. Partnering with these organizations will ease navigation of these frameworks for homeowners. 4. Test alternative ownership structures. Neighborhood block partnerships, cooperatives and community land trusts are all innovative yet relatively untested ownership structures in Austin. Piloting these types of ownership structures will allow the Alley Flat Initiative the opportunity to learn‐by‐doing and determine the long‐term viability of each of these options.

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WORKS CITED

Austin City Connection. “The City of Austin Celebrates National Community Development Week April 9 ‐15”. http://www.ci.austin.tx.us/housing/2007/cdbg.htm. Last accessed May 4, 2008.

City of Austin. “General Obligation Bonds”. http://www.cityofaustin.org/ahfc/gobonds.htm. Last accessed May 1, 2008.

City of Austin. “S.M.A.R.T. Housing”. http://www.cityofaustin.org/ahfc/smart.htm. Last accessed May 1, 2008.

Community Economic Development Institute. “Co‐operatives: A Short History”. http://www.uccb.ca/CED/ced/1/1e.html. Last accessed May 1, 2008.

Enterprise Community. “Dallas”. http://www.enterprisecommunity.org/local_work/dallas/. Last accessed May 4, 2008.

Enterprise Community. “Financing Mechanisms for Affordable Housing”. http://www.practitionerresources.org/cache/documents/194/19410.doc#_Tax_Credi ts. Last accessed May 4, 2008.

FHLBanks, “FHLBank Programs”, http://www.fhlbanks.com/html/programs.html. Last accessed May 4, 2008.

Green Communities. “Funding”. http://www.greencommunitiesonline.org/tools/funding/. Last accessed April 30, 2008.

Hersh, Stuart. Interview by Julienne Bautista, Austin, TX, April 12, 2008.

Housing Authority of Travis County, Texas. “Section Eight Housing Choice Voucher Program”. http://www.hatctx.com/section8.html. Last accessed May 4, 2008.

Location Efficient Mortgage. http://www.locationefficiency.com/. Last accessed April 30, 2008.

Mueller, Dr. Elizabeth. Interview by Julienne Bautista. Austin, TX. April 15, 2008.

PeopleFund. “Community Land Trust”. http://www.peoplefund.org/programs/landtrust.php. Last accessed May 4, 2008.

Sazama, Gerald. “A Brief History of Affordable Housing Cooperatives in the United States”. University of Connecticut, Department of Economics Working Paper Series. Working Paper 1996‐ 09, 1996: 7.

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U.S. Department of Housing and Urban Development. “Community Development Block Grant Program ‐ CDBG”. Homes and Communities. http://www.hud.gov/offices/cpd/communitydevelopment/programs/. Last accessed May 4, 2008.

U.S. Department of Housing and Urban Development. “Energy Efficient Mortgages Program”. Homes and Communities. http://www.hud.gov/offices/hsg/sfh/eem/energy‐r.cfm. Last accessed May 1, 2008.

U.S. Department of Housing and Urban Development. “HOME Investment Partnerships Program”. Homes and Communities. http://www.hud.gov/offices/cpd/affordablehousing/programs/home/index.cfm. Last accessed May 4, 2008.

U.S. Department of Housing and Urban Development. “LIHTC Basics”. Homes and Communities. http://www.hud.gov/offices/cpd/affordablehousing/training/web/lihtc/basics/. Last accessed May 4, 2008.

U.S. Department of Housing and Urban Development. “Program Progress Dashboard”. http://www.hud.gov/offices/cpd/affordablehousing/reports/dash/tx_austin_dash. pdf. HOME Investment Partnerships Program. Last accessed May 4, 2008.

U.S. Department of Housing and Urban Development. “Section 8 Rental Voucher Program”. Homes and Communities. http://www.hud.gov/progdesc/voucher.cfm. Last accessed May 4, 2008.

U.S. Department of Housing and Urban Development. “The Federal Housing Administration (FHA)”. Homes and Communities. http://www.hud.gov/offices/hsg/fhahistory.cfm. Last accessed May 4, 2008.

U.S. Department of the Treasury. “Community Development Financial Institutions Fund”. http://www.cdfifund.gov/. Last accessed May 4, 2008.

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6.0 DISTRIBUTED INFRASTRUCTURE

American history tends toward order and centrally‐controlled systems. This is particularly true in the world of infrastructure—the wires, pipes, roads, and dams that make modern life comfortable. Our power and water systems in particular, which were developed at a time when energy was cheap and our population dispersed, reflect this pattern of thinking. But as we are increasingly aware, the economic, ecological and social contexts in which we produce and use electrical power and water are changing radically‐‐far more quickly than our ability to adapt such basic systems. The negative environmental impacts of large central electrical generators are now recognized as are the highly inefficient “line losses” of transporting energy over long distances. Likewise, the largest single utility cost to the City of Austin, as is typical of any American city, is the pumping of water up and down hills for human consumption. These changed conditions have challenged our historical devotion to centralized infrastructure. Just as personal computers and the internet have replaced centralized computing, infrastructure that is distributed closer to the point of consumption is increasingly accepted as a necessary part of our future. But infrastructure is not only wires, pipes, roads and dams. It also includes the engineers, managers, linemen and plumbers that design and operate technical systems as well as the consumers who turn on faucets and flip swithes. Infrastructure is, then, best described as a socio‐technical system—it is impossible to alter one‐side of the system without also altering the other. Chapter 6 considers how affordable housing can be understood as units of infrastructure production rather than only as units of consumption. In the process of reframing the role played by housing we describe what a distributive infrastructure is and what it might look like. While the chapter is divided into two halves, water and energy, both of these basic services have a close, if parallel, relationship. Water services require energy; energy services require water. In a small way understanding the purely technical knowledge of a water and energy distributed infrastructure is easy. But

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solutions are not as simple as installing solar panels onto rooftops. There is a societal and legal backdrop which brings challenges. These also bring opportunities. For each part, water and energy, the chapter provides a background context and legal framework. It is from these that solutions will be created.

6.1 WATER: BACKGROUND & CONTEXT

We think of our land and water and human resources not as static and sterile possessions but as lifegiving assets to be directed by wise provisions for future days." ‐ Franklin D. Roosevelt

This introduction puts into context City of Austin’s (COA’s) water needs. The first section gives a brief description of global and regional trends: increasing water demand and diminishing water supplies. These trends put strain on surrounding cities that compete with the COA for water sources. The second section describes the challenges facing the COA as demand increases and infrastructure costs also increase correspondingly. While the city has implemented programs to reduce water demand, these programs have had limited success, because these trends come from systemic failures to use sustainable design and technology. Population growth and city development also compound increasing water demand with increasing stormwater runoff. Fortunately, the Alley Flat Initiative introduces partial solutions to both of these that are cost effective, practical and sustainable.

6.1.1 GLOBAL AND REGIONAL DEMAND FOR WATER

70% of the earth is covered by water, but only 3% of this is fresh water of which two‐ thirds is frozen. With only 1% of fresh water available readily for use, there is a shortage

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that corresponds to population increase and waste. The United Nations in early 2006 estimated that 1.2 billion people did not have access to safe drinking water.1 The United States, in 2000, used 408 billion gallons of water per day, an amount strongly related to population growth and its demand from human consumption, production of food and electricity. As demand grows municipalities have been expanding their search and are fighting to secure reliable supplies. The State of Texas is currently 2nd in water consumption in the 50 states, with nearly 30 billion gallons of water drawn per day; of this, 4 billion gallons are for Public‐ Supply withdrawals.2 In the past decade, several cities in Texas have made strategic moves to ensure that they have access to fresh water in the future. For example, the City of Corpus Christi's primary water supply was the Choke Canyon / Lake Corpus Christi Reservoir System which is fed by the Nueces, Frio and Atascosa Rivers. Due to several years of low water production resulting from drought, the City was at one point about two years away from exhausting all the water in its reservoirs. In the early 90’s the City decided to construct a 64‐inch 101‐mile long pipeline from Lake Texana to supplement the City’s water supply.3 Currently, 50% of the water delivered to Corpus Christi comes from Lake Texana. The City of Dallas is in the process of connecting to Lake Fork by late 2008 and early 2009, and to Lake Palestine by 2015 to supplement its current water supplies.4 The City of San Antonio is currently conducting studies to determine the feasibility of a project to provide 134 million gallons per day from the Lower Colorado River Basin.5 In addition to acquiring water rights, the cities have also been proactive in promoting water conservation programs to reduce water use. These programs range

1 United Nations. “Beyond Scarcity: Power, poverty and the global water crisis.” Human Development Report 2006. Accessed 30 March 2008. 2 Hutson, Susan S. “Estimated Use of Water in the United States in 2000.” United States Geological Survey. http://pubs.usgs.gov/circ/2004/circ1268/. Accessed 23 April 2008. 3 “Water Resources: Local Water Supply.” City of Corpus Christi. http://www.cctexas.com/?fuseaction=main.view&page=1009. Accessed 22 April 2008. 4 “City of Dallas Planning and Water Supply Strategies.” City of Dallas. (6 December 2006).www.dallascityhall.com/pdf/dwu/WaterPlanningSupplyStrategies.pdf. Accessed 13 April 2008. 5 “One of the State’s Largest Water Projects Moves Forward .” San Antonio Water Systems. http://www.saws.org/our_water/waterresources/projects/lcra/. Accessed 30 March 2008. 112

from education and outreach programs to water rationing for lawn use to rebate programs for water efficient fixtures. Another reason why cities have been promoting water conservation is because of the energy impacts associated with treating and pumping water. It is estimated that between 2 to 3 percent of the world’s energy is used to treat and pump water.6 Associated with this energy consumption are the impact of carbon dioxide and other pollutant emissions from energy producing sources.

6.1.2 AUSTIN’S WATER SYSTEM: DEMAND, INFRASTRUCTURE AND PROGRAMS

The COA is coping with our own high water demand that is putting a strain on supply and water waste management. As demand continues to rise the City is having to invest increasingly more and more in its water service infrastructure. Although Austin has initiated many programs to reduce water demand, the programs have had a limited effect, because population continues to grow and water demand is a broad issue resulting from a systemic failure to use sustainable design and available technologies. Sustainable design and technologies will not only reduce water demand, but also relieve stormwater and localized flooding.

6.1.2.1 DEMAND AND ACCESS TO WATER COA currently uses an average of approximately 140 million gallons of water per day. It is estimated that more than 60% of this usage is for residential use, while less than 40% is for industrial use.7 The increase in the city’s water use is mostly related to the population growth it has experienced and is compounded by droughts which regularly occur in Central Texas.8 There has been an approximate 30% increase in water usage from 1995 to 2005, and a 40% increase in population growth from 1995 to 2005. In 1999 the COA came to an agreement with the Lower Colorado River Authority (LCRA) to purchase 325,000 acre‐feet of water per year (AFY). At that time, it was

6 “Water and Energy Efficiency: Overview.” Watergy. http://www.watergy.org/. Accessed 8 April 2008. 7 City of Austin / Lower Colorado River Authority (LCRA), Public Information Meeting Tuesday, September 21, 1999 8 Keiser, Ronald A. Handbook of Texas Water Law: Problems and Needs. College Station: Texas A&M Press. No Date. 113

anticipated that the 325,000 AFY would meet COA’s demands through 2050. In late 2007, the COA agreed to a Supplemental Water Supply Agreement that would allow the city to access an additional 250,000 AFY from LCRA through 2100. This supplemental agreement was the direct result of anticipated population growth in Austin over the next 50 years.

Table 6.1.2.1 City of Austin population and total water use changes9

Under the 1999 agreement, the COA paid $100 million for the water right to LCRA. As part of the agreement, the City prepaid for water up to 201,000 AFY. It is noted in the agreement that if and when the COA exceeds the demand of 201,000 AFY for more than two consecutive years, the city would have to pay LCRA an annual fee between $8‐$14 million per year for all water use over 150,000 AFY. It should also be noted that long‐term dependency on groundwater has caused Austin’s groundwater resources to decline significantly.10 In addition to securing new water supplies, in 1990 Austin enacted the Water Reclamation Initiative (WRI) to expand development of reclaimed water to meet current and future non‐potable water demands. In 2004, about 3% of the wastewater received

9 City of Austin. “Public Information Meeting.” Lower Colorado River Authority. (21 September 1999).

10 Keiser, Ronald A. Handbook of Texas Water Law: Problems and Needs. College Station: Texas A&M Press. No Date. 114

at the City's wastewater treatment plants was treated and reused for non‐potable uses, mostly irrigation of golf courses.11 Austin now uses 1.17 billion gallons per year of reclaimed water— equivalent to the amount of water used by 5,300 homes in a year. Plans call for more than tripling that amount to 5.5 billion gallons per year—freeing up potable water supplies to serve the equivalent of more than 25,000 homes. Reclaimed water is a vital supply component for meeting Austin’s growing demand.12

6.1.2.2 AUSTIN’S WATER SERVICE INFRASTRUCTURE The city is currently served by three water treatment plants (Davis, Green, and Ullrich) which draw water from the Colorado River. The plants have a rated combined maximum capacity of 310 million gallons per day (mgd), and a storage capacity of 167 million gallons. The Green Water Treatment Plant is noted to be decommissioned starting in 2009, resulting in a reduction of 42 mgd, and thus the maximum capacity will be 268 mgd.13 In order to make up the demand, and to prepare for future demand, the COA is currently planning to build Water Treatment Plant 4 (WTP4). This plant is scheduled to be operational by 2014, at which time it will be able to treat 50 mgd. The added 50 mgd treatment capacity should be able to meet the city’s demand until 2025. Additional phases are planned for the plant which would raise its treatment capacity to 300 mgd. Currently, the estimated cost of this plant, including land, design, and construction is $421 million. In addition to this, the city has spent another $56 million to buy and design a plant at the Bull Creek Site, which has since been abandoned.14 This put the total cost of the plant close to $475 million.

11 Austin City Connection. The City of Austin Water Reclamation initiative. http://www.ci.austin.tx.us/water/onlinebrochurewri.htm 12Austin City Connection. 51st Street Elevated Tank Project. http://www.ci.austin.tx.us/water/writower.htm 13 City of Austin, Downtown Report, Green Water Treatment Plant Decommissioning and Redevelopment, January 2008 (Revised 02/15/08) 14 Austin Statesman, Austin Water Plant Costs Keep Rising, March 26, 2008 115

Table 6.1.2.2.1 Projected Demand vs. Capacity chart for water in City of Austin15

In addition to the cost of the water treatment plant, there are additional costs associated with the cost of constructing and replacing potable water piping. A 2001 report by the American Water Works Association (AWWA) noted that the national cost to replace deteriorating potable water piping in the United State over the next 30 years would be $250 billion or about $6300 per household.16 This did not include the cost for wastewater infrastructure or inflation. Per the same report the cost to COA between 2000 and 2050 for water main replacement is $2.35 billion. Lastly, in 1999 the COA received an Administrative Order (AO) from the United States Environmental Protection Agency. The AO required that the COA upgrade its wastewater treatment systems to eliminate Sanitary Sewer Overflows (SSOs) from the wastewater collection system.17 These overflows are often the result of too much water being diverted to the water treatment plants during rainstorms. In 2007, the estimated cost of these upgrades, which mostly involve the replacement and upgrading of wastewater lines, was estimated at $235 million.18

15 Austin Water Utility – Water Treatment Plant 4 Information 16 American Water Works Association, Dawn of the Replacement Era, Reinvesting in Drinking Water Infrastructure. http://www.win-water.org/reports/infrastructure.pdf 17 City of Austin. “Austin Clean Water Program.” Overview. http://www.ci.austin.tx.us/acwp/. Accessed 23 April 2008. 18 City of Austin. “Austin Clean Water Program.” Water and Wastewater Commission Quarterly Report. (January 2007).

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Table 6.1.2.2.2 Projected water main replacement costs19

With so many costs associated with the centralized access, treatment, and pumping of water, alternatives based on decentralized systems, or systems that are dedicated to individual sites become more attractive.

6.1.2.3 AUSTIN WATER UTILITY PROGRAMS TO REDUCE WATER DEMAND

Currently, there are many programs in place to reduce residential water consumption at the end user. These include rebates for efficient toilets, clothes washers, rainwater harvesting, irrigation, and pressure reducing valves. There are also programs for free toilets, showerheads, faucet aerators, and irrigation system evaluations, and a program

19 American Water Works Association. Dawn of the Replacement Era, Reinvesting in Drinking Water Infrastructure. http://www.win-water.org/reports/infrastructure.pdf. Accessed 23 April 2008. 117

for reduced price rain barrel purchase. There are also outreach and education program implemented by the Austin Water Utility (AWU) for water conservation. According to a study performed for the AWU in 2005, the conservation efforts implemented by the city lead to a 7% reduction in average daily per capita water use, and a 14% reduction in peak day per capita water use.20

Table 6.1.2.3.1 Per capita per day water use for the City of Austin from 1980 to 200021

Although these conservation programs have been successful in reducing the per capita water usage, the water usage as a whole has gone up due to population growth. As such, the city needs to not only be more aggressive in its conservation efforts, but also to provide more incentives to end‐users and put policies in place to reduce and supplement the current water capacity.

6.1.2.4 STORMWATER AND WATERSHED PROTECTION

Stormwater can create problems for watershed protection. Watershed protection is broken down into three issues: water quality, flood control and erosion. To address each issue the City of Austin Department of Watershed Protection is divided into three

20 City of Austin. “Water Treatment Plant 4: News to Neighbors.” Austin Water Utility. http://www.ci.austin.tx.us/water/communications.htm. Accessed 21 April 2008. 21 City of Austin. “Austin Clean Water Program.” Water and Wastewater Commission Quarterly Report. (January 2007).

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respective main areas of control.22 Currently each of the divisions has separate goals and ideal practices for each specific issue. Some of these practices conflict. For example, for the best water quality water should percolate through the soils and back into the water table, but for flood control the goal is to get water away from structures and roads in the quickest, most managed fashion. With incoherent stormwater management, COA cannot address its worst watershed problems. The worst watersheds in the COA are located in the most urban areas. For example, East Austin is currently grappling with a stormwater system in crisis.23 The system in place is about one hundred years old and was sized without the rainfall data that is currently available today. In 2006, COA passed a bond for drainage and open space. The report for this bond identified 16 of the most important projects. Many complaints of street and house flooding made the East 4th Street/Pedernales project an important one in East Austin.24 Rising construction costs caused the project to be scaled down from an estimate of $11.8 million to an allowance of $8.6 million, reducing more than twenty‐five percent of the required improvements.25 Because of its stormwater system, East Austin’s Boggy Creek and Waller Creek rank 31 out of 46 watersheds. The reasons for the low rank are the amount of aquatic life and the water chemistry (amount of pollutants).26 While the low rank is not due to any specific problem,27 there is much room for improvement for all the East Austin watersheds in regard to water quality. Reducing the velocity of stormwater runoff helps to reduce erosion in creek beds. Runoff increases the bed load of sediments which prevent a healthy aquatic community and reduce the soil quality surrounding the

22 Matt Hollon, Environmental Program Manager, Planning & GIS, Watershed Protection & Development Review, interview by author [Erin Bernstein]. Austin, Texas, March 31, 2008. 23 Matt Hollan, interview by author [Erin Bernstein]. 24 City of Austin Watershed Protection – Development Review. Flood Control: East 4th St./Pedernales St. City of Austin. http://www.ci.austin.tx.us/watershed/flood_4th_st.htm. 25 Glen Taffinder, P.E., Engineer C, Watershed Engineering Division, City of Austin, interview by author [Erin Bernstein]. Austin, Texas, April 8, 2008. 26 City of Austin Watershed Protection – Development Review. Austin’s Watersheds: Boggy Creek Watershed. City of Austin. http://www.ci.austin.tx.us/watershed/fs_boggy.htm#wq and City of Austin Watershed Protection – Development Review. Austin’s Watershed’s: Waller Creek Watershed. City of Austin. http://www.ci.austin.tx.us/watershed/fs_waller.htm. 27 Robert Clayton, Watershed Protection Department, City of Austin, email to author [Erin Bernstein]. April 9, 2008. 119

creek.28 Steps made to reduce water velocities into the creeks, lakes and rivers improve the overall health of the body of water.

6.1.2 WATER: LEGAL FRAMEWORK & OPPORTUNITIES

"Water is the lifeblood of our bodies, our economy, our nation and our well‐being." ‐ Stephen Johnson, EPA Administrator, upon dedicating the new desalination plant at El Paso, TX, 2007

This section gives a history of Texas water law and an overview of the City’s regulation. In this complex backdrop of law and numerous agencies, the Alley Flat Initiative will need to collaborate with the Austin Water Utility and COA to implement its sustainable design and technologies for reducing water demand and relieving stormwater. While the Municipal Utility District is a possible legal mechanism, it would prove to be burdensome and expensive. It would also create a neighborhood utility district with strategies misaligned with the city’s. Rather, AFI seeks to persuade COA to adopt a unified water policy based on on‐site sustainable design and technology.

6.1.2.1 TEXAS WATER LAW: PAST AND PRESENT

Water exists in a complex and evolving system of Federal, state and local law, regulation and agency bureaucracy. Texas water law begins with Spanish civil law brought by Spanish explorers and missionaries in the 1600s. In the early 1800s, an influx of Anglo‐ American settlers introduced English common law, or riparian law, which emphasizes private property over government ownership. The Texas legislature began reconciling its Spanish and English laws during a drought cycle in the late 1880s and early 1890s by adopting the Prior Appropriation Doctrine. The Doctrine states that the container in which the water is found determines ownership and control.

28 Robert Clayton, email to author [Erin Bernstein]. 120

In 1967, the Texas legislature passed the Water Rights Adjudication Act to merge the riparian water rights system into the prior appropriation system. This Act required any person claiming a riparian water right to file a claim for the “water right” with the Texas Water Commission.29 Texas courts further complicated Texas water law by dividing the hydrologic cycle into unrelated legal classes with different rules of law governing the ownership of each class. These laws decide who is entitled to use the available water supply, in what quantities, for what purposes, and often specifies when and where the water may be used. The four legal classes of water are: (1) natural surface water, (2) diffused surface water, (3) percolating groundwaters, and (4) underground streams. 30 In addition to legislative and judicial influence on Texas water law, today there are more than 6,000 federal, state and local entities. These entities include 5 federal departments and numerous agencies that are directly involved in water development or protection in the state, and state agencies. For example, the Texas Water Development is involved in water planning, development, quality protection and allocation and the Texas Department of Health enforces federal standards for drinking water.31

6.1.2.2 RELEVANT AUSTIN REGULATION AND LAW

On‐site water collection treatment systems and stormwater strategies offer a cost effective and practicable supplement to Austin’s current water system. To facilitate on‐ site water systems, city codes authorize residences to install rainwater harvesting and catchment systems. Generally landowners have the right to intercept, impound, and use diffused surface water on their land (i.e. rainwater before it enters a natural watercourse). Diffused water can be collected in tanks by landowners on their own property without a permit, insofar as the reservoir does not exceed 200 acre‐feet in

29 Keiser, Ronald A. Handbook of Texas Water Law: Problems and Needs. College Station: Texas A&M Press. No Date. 30 “Texas Water Law.” Texas Water Resources Education. http://texaswater.tamu.edu/waterlaw.texas.htm 31 Keiser, Ronald A. Handbook of Texas Water Law: Problems and Needs. College Station: Texas A&M Press. No Date. 121

storage capacity and the water is used only for domestic and livestock purposes. A permit is required if the water exceeds storage limits, if a dam is on a stream, or if the water is to be used for other purposes.32 When it enters a natural watercourse, it becomes state water and is appropriated.33 On its way to the watercourse, drainage water often flows across privately owned lands. In such cases, the water does not automatically become the property of the landowners, though they may capture and use it.34 When capturing and diverting the flow of water, there are three general rules of law that must be considered: 1) Common Enemy Rule – whereby drainage water is regarded as an enemy to all landowners, and every owner may take any measure to protect property, regardless of the consequences to other neighbors. 2) Natural Flow or Civil Law Rule – each landowner is entitled to rely upon continuation of the natural flow. Therefore, a landowner who increases runoff and causes flooding is liable for damages. 3) Reasonable flow – landowners may divert or change drainage water, even to the extent of harming adjoining neighbors, insofar as the diverter’s actions are “reasonable” considering all circumstances.35 Current city regulation is structured around a “single lot” paradigm whereas city codes allow for one rain harvesting system per unit per single lot. City codes restrict utilities from crossing property lines. 36 However, the most effective on‐site water system may require aggregating two or more lots in order to share holding tanks, bioswales and other features described in the technical analysis. The Alley Flat Initiative has identified two legal mechanism to facilitate and oversee the aggregation of two or

32 “Water Law.” The Handbook of Texas Online. http://www.tshaonline.org/handbook/online/articles/WW/gyw1.html. 33 Keiser, Ronald A. “Who Owns the Water?” Texas Parks and Wildlife. July 2005. http://texaswater.tamu.edu/Resources/tpwd_Water_Article.pdf 34 Texas Water Resources Education. Water Law. http://texaswater.tamu.edu/waterlaw.texas.htm 35 Texas Water Resources Education. Water Law. http://texaswater.tamu.edu/waterlaw.texas.htm 36 The Code of the City of Austin, Texas. Title 15 Utility Regulation. 15-1 Cross-Connection Regulations. 122

more single lots in order to maximize on‐site water systems. The two solutions are: 1) Municipal Utility Districts, and 2) the Austin Water Utility. 6.1.2.3 Municipal Utility Districts Texas law authorizes the creation of a Municipal Utility District.37 A Municipal Utility District (MUD) is similar to a mini‐water utility and has the authority to develop and sell water by building reservoirs, drilling water wells, constructing water treatment and wastewater treatment plants, distributing water and billing consumers. 38 MUD may also create its own regulatory rules within the district. A MUD does not have to be a contiguous tract of land, but may consist of separate areas of land. To create a MUD in Austin’s municipal boundaries, the City must issue a written consent and the MUD must comply with state law, Title 25 ‐ Land Development.39 Austin Water Utility maintains a supervisory role over all MUDs created in its authority. MUDs are managed and governed by a publicly elected board of directors, subject to the continuing supervision of the Texas Water Commission. The board would establish policies in the interest of customers and have the ability to adopt and enforce all necessary charges, fees and taxes in order to provide district facilities and services.40 MUDs have some advantages. First, its local structure brings water management closer to the local and neighborhood level. Second, developers would have to work with the MUD and is required to pay for or write a letter of credit equal to 30 percent of the cost of the utilities. 41 This would ensure a closer working relationship among developers and neighborhoods. Third, MUDs are tax‐exempt political subdivisions of the state, and therefore would no longer pay taxes to the City for water services.

37 Municipal Utility Districts (MUDs). http://www.alamotitle- austin.com/library/20/MunicipalUtilityDistricts.pdf 38 Keiser, Ronald A. Handbook of Texas Water Law: Problems and Needs. College Station: Texas A&M Press. No Date. 39 The Code of the City of Austin, Texas. Title 25. Land Development. Chapter 25-9. Water and Wastewater. http://www.amlegal.com/nxt/gateway.dll/Texas/austin/thecodeofthecityofaustintexas?f=templates$fn=defa ult.htm$3.0$vid=amlegal:austin_tx$anc= 40 Municipal Utility Districts (MUDs). http://www.alamotitle- austin.com/library/20/MunicipalUtilityDistricts.pdf 41 Municipal Utility Districts (MUDs). http://www.alamotitle- austin.com/library/20/MunicipalUtilityDistricts.pdf 123

6.1.2.4 Austin Water Utility Austin Water Utility already serves the functions of a MUD except on the city‐level as opposed to a neighborhood‐level. However, there is no reason why Austin Water Utility cannot facilitate and supervise on‐site water system just as effectively. Austin Water Utility already has venerable goals and strategies to achieve them. These goals are shared in part by the Alley Flat Initiative. By using current city expertise and legal authority, we can develop strategies to promote and advance sustainable on‐site water design and technology.

6.1.3 WATER TECHNOLOGY ANALYSIS

"When the well is dry, we learn the worth of water." ‐ Benjamin Franklin

In addition to the increasing strain from population growth, the City’s existing water utility and stormwater systems also face challenges from eroding treatment plants and pipelines, increased energy costs, higher standards for water quality, and competition from other cities for the same water sources. To reduce demand on the water utility, AFI proposes employing the strategies of rainwater harvesting systems (RWHS) and gray water reuse systems (GWRS). These strategies have the added benefit of reducing energy consumption, reducing carbon dioxide emissions, improving air quality, and improving water quality. To mitigate stormwater, AFI proposes best management practices (BMP) and low impact developments (LID). These strategies have the added benefit of reducing water demand, reducing water pollution, and eliminating localized flooding. This section will describe the design and technology solutions to reduce water demand and to relieve stormwater. There will then be a scenario comparison to demonstrate the measurable benefits to the city as these design and technology solutions are implemented. The scenario comparisons will compare a hypothetical single lot’s net water usage, net energy use related to water treatment and pumping 124

and the associated carbon emissions, as well as net water quality and flooding. The scenarios compared include a “business as usual” scenario in which no strategies were employed, a minimal strategy implementation case where the strategies were partially employed, and a maximum strategy implementation case where all the strategies were employed to their fullest potential.

6.1.3.1 AFI TECHNICAL SOLUTIONS TO WATER DEMAND

Water demand upon the Austin Water Utility may be reduced by supplementing their services with on‐site water collection and treatment. By combining rainwater harvesting and graywater re‐use we can begin to lower the demands on the city’s infrastructure and to build a lasting and sustainable system.

6.1.3.1.1 RAINWATER HARVESTING As opposed to water conservation, which is based on the management of water which is treated and delivered by the water utility, rainwater harvesting systems (RWHS) serve as a supplemental water source. In terms of the management of water, rainwater is captured, treated, and distributed at the source. Although a small portion of RWHS costs are rebated by the COA and there is a reduced cost rain barrel sales program through the COA, the full potential and associated benefits of this technology is not yet realized. There are many benefits associated with using rainwater, such as: 1. Rainwater in central Texas is fairly pure. The ph is close to neutral. It can be readily used to serve as landscape irrigation. It can be used for all potable usage after appropriate treatment.

2. Rainwater is free. There are variable costs associated with storing, pumping, and treating water at a site depending on its intended use:

a. Landscape only – Water can be piped to a cistern. Aside from screening the water and providing a first flush system, no additional treatment is required. As the pressure from the cistern is insufficient to serve drip irrigation or a sprinkler irrigation system, a pump, a

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pressure tank, and other pumping accessories are required to serve this system. A make‐up potable water line to the cistern is also required.

b. Landscape and potable water – Requirements are similar to the landscape only system, but a treatment system is required to treat the water to meet potable standards.

3. Harvesting rainwater reduces the amount run‐off water from site and in turn improves water quality. It helps in several ways:

a. It helps divert water from the stormwater system which flows into streams, creeks, etc. This helps to reduce erosion of these waterways, and reduces flooding.

b. It reduces the amount of water that is carried by the stormwater piping and is either treated at the water treatment plant or diverted into a lake or river.

c. It reduces the quantity / concentration of fertilizers, pesticides, and other surface pollutants that are introduced into the stormwater.

4. It reduces the water load on the water supply utility. It also reduces the erosion of existing infrastructure as less potable water is treated and pumped and piped to households.

5. It reduces the energy used by the utility to treat and pump water, and thus

reduces CO2 and other pollutants, and improves air quality.

6. It reduces water bills for the end user, and increases awareness in the end user about how water usage habits affect the quantity of water supplemented by the water utility.

6.1.3.1.2 GRAY WATER RE‐USE

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Gray water is potable water that has been used once through household plumbing fixtures such as bathtubs, showers, bathroom faucets, and clothes washers. Gray water can comprise as much as 65% of all the indoor water usage in a household. It can replace up to 40% of the water required for landscape irrigation.

Figure 6.1.3.1.2 Typical Indoor Household Water Use42

There are many benefits of gray water re‐use system (GWRS), such as: 1. Reduced use of treated water from water utility to serve irrigation. It also reduces the erosion of associated with treated water as less potable water is treated and pumped and piped to households.

2. Reduction of water discharged directly to the waste water system, as this water is used to serve landscape irrigation and/or slab irrigation.

3. Recharge of ground water after water is filtered through topsoil.

4. Similar to RWHS, it also reduces the energy used by the utility to treat and

pump water, and thus reduces CO2 and other pollutants, and improves air quality.

42 American Water Works Association. Dawn of the Replacement Era, Reinvesting in Drinking Water Infrastructure. http://www.win-water.org/reports/infrastructure.pdf. Accessed 23 April 2008.

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5. Once used through the house, gray water is free, and thus results in lower water bills. The initial costs associated with it are for the installation of separate gray water piping system to serve the home, and a piping system to serve the landscape. There are also costs associated with treating gray water.

6.1.3.2 AFI TECHNICAL SOLUTIONS TO STORMWATER

Stormwater, the water that originates from rain events, is of importance for two main reasons: the volume and timing of runoff water (flooding) and what the water picks up and carries (pollutants). Inherently, by adding buildings and driveways to an existing neighborhood, as the AFI proposes, surface runoff, the flow from rainfall, increases. The increased runoff adds to local flooding and reduces water quality of nearby lakes, rivers and creeks. By using these solutions as buildings and driveways are added, runoff and stormwater can be reduced instead of increasing.

6.1.3.2.1 RAINWATER CATCHMENT SYSTEMS Rainwater catchment systems, including rain barrels and cisterns, capture and hold rainwater as it falls and allow for a delayed release. By catching water before it enters the cycle toward the stormwater system, the overall stormwater runoff velocity is automatically reduced and the water avoids coming into contact with various pollutants. Rainwater avoids pollutants on streets and in lawns though these systems. Simply, catchment systems reduce the quantity of water sent to the storm sewer system at one time.43 Rainwater catchment systems do require maintenance. They must be emptied in order to be effective, as full barrels are no different than impervious cover. The AFI

43 Chicago Department of Transportation. The Chicago Green Alley Handbook: An Action Guide to Create a Greener, Environmentally Sustainable Chicago, 29. http://egov.cityofchicago.org/city/webportal/portalContentItemAction.do?BV_SessionID=@@@@108284 8393.1209272727@@@@&BV_EngineID=cccfadedmfdefhkcefecelldffhdfgk.0&contentOID=536946345 &contenTypeName=COC_EDITORIAL&topChannelName=Dept&blockName=Transportation%2FGreen +Alleys%2FI+Want+To&context=dept&channelId=0&programId=0&entityName=Transportation&deptM ainCategoryOID=-536883915. 128

proposes, above, using some of this water for indoor use as well. Costs for the catchment systems vary based on size.44

6.1.3.2.2 BIOSWALES A bioswale is a shallow depression created in the ground to take and carry stormwater.45 Bioswales use natural means, including vegetation and soil, to take up contaminants being transported in the runoff.46 Specifically, bioswales use native vegetation and allow stormwater to infiltrate back into the ground rather than into the storm sewers. The benefits of this type of system include filtration of pollutants and other debris and ground water recharging. Additionally, they can reduce storm sewer costs by reducing or eliminating the need for piping and drains. They also may lessen or rid the need for large detention areas and create wildlife habitat.47 Bioswales require soil mixtures that are at minimum moderately permeable, requiring a large portion to be sand. Native topsoil aids in pollutant trapping. Underdrains may be added to increase water travel time. Figure 6.1.3.2.2.1 shows a generic model of a bioswale.48 Figure 6.1.3.2.2.1 Bioswale in section, displaying storms intensities that can be held.49

44 No further cost analysis is done as it is assumed that this will be done in the tank sizing portion of the report. 45 Public Works Department – City of Salem. “What is a “Bioswale”?” City of Salem, Oregon. http://www.cityofsalem.net/export/departments/spubwork/admin/water_res/bioswale/wr_bio_whats_biosw ale.htm. 46 Ibid. 47 Benefits found in Chicago Department of Transportation. The Chicago Green Alley Handbook: An Action Guide to Create a Greener, Environmentally Sustainable Chicago, 34. 48 Entire paragraph credited to Leonard J. Hopper, editor. Landscape Architectural Graphic Standards. (Hoboken: John Wiley & Sons, Inc., 2007), 385. 49 Leonard J. Hopper Landscape Architectural Graphic Standards, 385. 129

Generally, bioswales have a few design requirements. Swales should measure at least 20 feet in length and the side slopes should be no more than 6%.50 Figure 6.1.3.2.2.2 displays more requirements. Additionally, certain plants work best in bioswales. The specific native plants for Austin, Texas are listed in Figure 6.1.3.2.2.3.

Figure 6.1.3.2.2.2 Bioswale in section, displaying proper design measurements. 51

Figure 6.1.3.2.2.3 Ideal plant palette for bioswales and rain gardens in Austin, Texas.52

50 Specifications credited to Robert L. France, editor. Handbook of Water Sensitive Planning and Design. (Boca Raton: CRC Press LLC, 2002), 136. 51 France, Handbook of Water Sensitive Planning and Design, 136. 52 List complied by colleague for separate Austin, Texas project. List not exhaustive. Caroline Castello, interview by author [Erin Bernstein], Austin, Texas, April 9, 2007. 130

The design of each specific bioswale is dependent on the soil type, the existing slopes, and the sun or shade of the location. Design specifics will vary based on site specifics, which will affect the costs. Costs have been estimated at $8 to $30 per square foot, but will depend on labor needs, plant costs, soil needs and how much re‐grading will have to do be done to the site.53

6.1.3.2.3 RAIN GARDENS A rain garden is a landscape feature that is planted with native plants and slows the stormwater runoff from impervious surfaces and to allow infiltration back into the ground.54 Rain gardens are not set up to retain water, but instead to drain at slower rates to recharge ground water. Additionally, they allow for plants to aid in water and pollutant absorption. Rain gardens do not have to be very large to make an impact and can aid with rain barrel overflow problems.55 Figure 6.1.3.2.3 demonstrates a rain garden collecting rain barrel overflow. Rain gardens are best planted with native plants (refer to Figure 6.1.3.2.2). Figure 6.1.3.2.3 Detail of rain garden and situation to maximize water catchment. 56

53 Price range taken from Chicago Department of Transportation. The Chicago Green Alley Handbook: An Action Guide to Create a Greener, Environmentally Sustainable Chicago, 34. Again, it must be reiterated that the prices are extremely variable, especially labor costs, since homeowners may or may not elect to do the labor themselves. 54 Chicago Department of Transportation. The Chicago Green Alley Handbook: An Action Guide to Create a Greener, Environmentally Sustainable Chicago, 28. 55 Matt Hollan, interview by author [Erin Bernstein]. 56 Gweneth Newman. “Rain Gardens Reduce Runoff,” Westchester Environment, January – February 2003. http://www.fcwc.org/WEArchive/010203/roofs.htm. 131

Design specifications for rain gardens include a minimum width of four feet and a minimum depth of one foot. Eighteen inches of topsoil should be included and the side slopes should be no more than 2:1 or 50%.57 The style of the rain garden can either be formal or informal. The size of the garden is determined by the storm event desired to size for and the amount of impervious cover that it will collect from. Like bioswales, rain garden design is site specific. Rain gardens have been estimated to cost $3 to $12 per square foot, depending on the source of plants and labor involved.58

6.1.3.2.4 POROUS PAVEMENT Porous pavements, pavement that allows water to drain all the way through the pavement structure, consist of alternatives to traditional asphalt and concrete or dense pavement.59 There are various types of porous pavements and each reduces the amount runoff going directly to the stormwater system. Many systems aid in pollution reduction through filtration and percolation. The benefits of porous pavement systems are numerous. Aside from recharging groundwater, filtering pollutants and reducing the rate and quantity of stormwater entering the sewer system, porous paving may reduce the urban heat island effect and creates additional options in aesthetics.60 Porous pavements can aid in localized flooding reduction. There are currently five prominent types: pervious asphalt, grass pavers, concrete blocks and grids, plastic grids and pervious concrete. Pervious asphalt is a variation on the typical hot mix asphalt, with the permeable mix omitting the fine

57 France, Handbook of Water Sensitive Planning and Design, 132. 58 Source chosen because it acknowledges reasons for the range in costs, which vary if its homeowner designed and planted or a professional is hired. Natasha Kassulke. “A Run on Rain Gardens: Capturing Water and Attracting Wildlife,” Wisconsin Natural Resources Magazine (February 2003), http://www.wnrmag.com/supps/2003/feb03/run.htm. 59 Source chosen because the definition fit all types of porous paving. See Thomas H. Cahill et al., “Stomrwater Management with Porous Pavements,” Government Engineering (March-April 2005), http://www.govengr.com/ArticlesMar05/porous.pdf. 60 Chicago Department of Transportation. The Chicago Green Alley Handbook: An Action Guide to Create a Greener, Environmentally Sustainable Chicago, 31. 132

portion of aggregate.61 Grass pavers are paving systems that allow turfgrass to grow through and open cell of concrete or plastic that transfers the weight of automobiles to an underlying base course.62 Concrete blocks and grids are precast concrete that can be in the shape of a grid or a block with open voids to allow for infiltration.63 (Figure 6.1.3.2.4 displays the aesthetic of this type of porous paving.) Similar to concrete blocks and grids, plastic grids hold a larger volume of fill material in the pavement structure and are mostly pervious. The plastic can be filled with topsoil, turf or gravel.64 Pervious concrete is a modification on regular concrete. Fine sands are usually omitted and the slurry is tamped or rolled into place. It is notably less forgiving than traditional concrete.65 Each type of paving is markedly different with distinct aesthetic qualities while still maintaining the ability to reduce runoff and increases the site’s groundwater recharge capacities.66 Consistent throughout all types of pervious paving is layers.

Figure 6.1.3.2.4 Image detailing how concrete blocks allow for filtration67

61 Michael E. Dietz, “Low Impact Development Practices: A Review of Current Research and Recommendations for Future Directions,” Water, Air, & Soil Pollution 186 (2007): 351-363. 62 William J. Thompson and Kim Sorving. Sustainable Landscape Construction: A Guide to Green Building Outdoors. (DC: Island Press, 2000), 184-190. 63 Dietz, “Low Impact Development Practices,” 357. 64 Ibid, 358. 65 Ibid, 358. 66 Thompson, Sustainable Landscape Construction, 184. 67 Image from Rice Creek Watershed District. Best Management Practices: Pervious Pavement. Rice Creek Watershed District. http://ricecreek.org/bmp/pp#. 133

With the addition of alley flats, comes the need to create additional parking spaces and possibly paved walkways. These options are not currently “credited” by COA, but have the potential to radically alter the way residential pavement is looked at.68 Costs for pervious paving systems are variable. They are dependent on the type of porous paving system and the area paved with it. On average, pervious systems are more expensive than standard pavement materials, by 10 to 25 percent.69 Additionally, porous paving systems require additional maintenance. Although the up front costs of pervious systems are higher, they can be offset by reducing needs for other traditional stormwater infrastructure, such as pipes and gutters.70

6.1.3.2.5 NATURALIZED DETENTION Naturalized detention is large areas used to store runoff temporarily and to release it at a rate that is at or below that allowed by local ordinances.71 Native vegetation improves water quality and habitat benefits. Naturalized detention can be thought of as large rain gardens. They are only filled with water after large storms and then draining within the COA required 48 hours. The benefits are similar to that of a rain garden, but the large size can make naturalized detention areas an additional site amenity. The costs to incorporate naturalized detention are even more variable than the other potential solutions suggested. These are more difficult to calculate because land acquisition would have to be part of the equation (finding a large enough space to hold additional runoff from the creation of alley flats.) Similarly to bioswales and rain gardens, naturalized detention creation costs can be lessened with neighborhood labor efforts.

6.1.4 SCENARIOS: USING RAINWATER HARVESTING AND GRAYWATER RE‐USE

68 Matt Hollan, interview by author [Erin Bernstein]. 69 Lakesuperiorstreams. 2005. LakeSuperiorStreams: Community Partnerships For Understanding Water Quality and Stormwater Impacts at the Head of the Great Lakes. http://duluthstreams.org/stormwater/toolkit/paving.html. 70 Ibid. 71 The Nature Conservancy and Chicago Wilderness. Conservation Development in Practice. 17. http://www.nipc.org/environment/sustainable/conservationdesign/Conservation%20Development%20in%2 0Practice/CD_Presentation.pdf. 134

In this section, the above defined potential solutions are put into the context of the AFI. The calculations below are dependent on the following assumptions: 1. The size of the typical alley flat is assumed to be 750 s.f. The size of the front house is assumed to be 1600 s.f. This would make the combined s.f. of these two homes 2350 s.f., the same size as that of a typical US family home.72

2. The number of occupants is the alley flat is assumed to be 2. The number of occupants in the front house is assumed to be 3.

3. Indoor water usage is based on 49.6 gallons per person per day for an average water‐conserving household based on an AWWA 1999 study.73

4. The total water usage in the household dedicated for outdoor usage is 30%74.

5. Energy use is 6.2 kWh / 1000 gallons treated and pumped.75

6. Average residence annual consumption is 11,300 kWh for Austin.76

7. Pricing of water is $5.35 for the customer charge, plus unit volume change as follows77:

0‐2,000 Gallons $0.93 / 1,000 gallons 2,000‐9,000 Gallons $2.43 / 1,000 gallons 9,001 – 15,000 Gallons $4.18 / 1,000 gallons

72 Adler, Margot. “Behind the Ever-Expanding American Dream House.” National Public Radio. (4 July 2006). http://www.npr.org/templates/story/story.php?storyId=5525283. Accessed 14 April 2008. 73 Krishna, Dr. Hari J. “The Texas Manual for Rainwater Harvesting.” Texas Water Development Board. (Austin, TX: 2005). 74 United States Environmental Protection Agency. “Outdoor water used in the United States”. Water Sense. http://www.epa.gov/owm/water-efficiency/pubs/outdoor.htm. Last accessed 27 April 2008. 75 Austin Water Conservation Division. “Water Conservation Plan”. Austin Water Utility. http://www.ci.austin.tx.us/watercon/downloads/fiveyearplan05.pdf. May 2005: 36. 76 Muraya, Norman. “Environmental Savings Summary Worksheet”. Email to author. 24 March 2008. 77 Austin Energy. “Residential Service.” About Us. www.austinenergy.com/About%20Us/Rates/residential.htm. Last accessed 26 April 2008. 135

8. Assume the total of gallons used on a yearly basis is divided equally on a monthly basis.

9. Carbon Dioxide, Sulfur Dioxide, and Nitrogen Oxides production is based on a spreadsheet provided by Austin Energy, titled “Environmental Savings Summary”

In order to determine the impact of the RWHS and GWRS, we prepared a comparison to analyze the following: 1. Total annual household water consumption. This is the amount of water provided by AWU to the household.

2. Annual energy use due to water treatment and pumping associated with water consumption.

3. Annual pollutant (CO2, SO2, NOX) production due to energy use associated with water consumption.

4. Annual water utility bills associated with water consumption.

6.1.4.1 SCENARIO ONE: BUSINESS AS USUAL As the codes are currently written, alley flats are not required to be provided with RWHS and GWRS. In Scenario I, the secondary units will be built as a typical water‐ conserving household, with low flow showerheads, low flow toilets, efficient clothes washers and dishwasher. It is assumed that no modifications are made to the front house, and that the front house does not have water conservation showerheads, toilets, clothes washer, and dishwasher. The case generated the following output:

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Table 6.1.4.1.1 Scenario I ‐ Business as Usual Results Estimating Indoor Daily Domestic Demand ‐ Front House Water consumption using Usage Per AWWA Number of persons Household conserving fixtures in household daily demand

Toilets (Low 2.2 (gal/flush) 6 (flushes / person / 3 39.6 Flow Toilets) day) Showerheads 5.0 (gal/minute) 5 (minutes / person / 3 75 day) Faucets 4.0 (gal/faucet/min) 5 (minutes / person / 3 60 (Kitchen / Bath) day) Clothes Washer 40 (gal/load) 2.6 (loads / week) N/A 104 Dishwasher 8 (gal/cycle) 0.7 (cycles/day) N/A 5.6 Total (gallons) 284.2

Estimating Indoor Daily Domestic Demand ‐ Alley Flat Water consumption using Usage Per AWWA Number of persons Household conserving fixtures in household daily demand

Toilets (Low Flow 1.6 (gal/flush) 6 (flushes / person / 2 19.2 Toilets) day)

Showerheads 2.0 (gal/minute) 5 (minutes / person / 2 20 day)

Faucets (Kitchen / 2.2 / 1.0, Average 1.6 5 (minutes / person / 2 16 Bath) (gal/faucet/min) day)

Clothes Washer 18 (gal/load) 2.6 (loads / week) N/A 46.8 (very efficient)

Dishwasher 6 (gal/cycle) 0.7 (cycles/day) N/A 4.2 Total (gallons) 106.2

Total Usage for Both Homes Total indoor household water Total indoor household water Total outdoor household water Total household consumption per day (gal) consumption per year (gal) consumption per year (gal) water consumption per year (gal) 390 142,350 61,007 203,357

Energy Use for Pumping and Annual CO2 produced by AE Annual Sulfur Dioxide / Nitrogen Total water utility Treating Water by AWU per due to Energy Use (lbs) Oxides produced by AE due to cost per year to year (kWh) Energy Use (lbs) household

1281 1,657 Negligible $522

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6.1.4.2 SCENARIO TWO: UPGRADING THE FRONT HOUSE In Scenario II the toilets, showerheads, and faucet aerators, each of which are currently available for free through AWU, are changed in the front house. This work could be completed by the plumbing contractor working on the alley flat. This case generated the following output:

Table 6.1.4.2 Scenario II ‐ Front house with water conservation measures Estimating Indoor Daily Domestic Demand ‐ Updated Conservation Front House Water consumption using Usage Per AWWA Number of persons Household conserving fixtures in household daily demand

Toilets (Low Flow 1.6 (gal/flush) 6 (flushes / person / 3 28.8 Toilets) day)

Showerheads 2.0 (gal/minute) 5 (minutes / person / 3 30 day)

Faucets (Kitchen / 2.2 / 1.0, Average 1.6 5 (minutes / person / 3 24 Bath) (gal/faucet/min) day)

Clothes Washer 40 (gal/load) 2.6 (loads / week) N/A 46.8 Dishwasher 8 (gal/cycle) 0.7 (cycles/day) N/A 5.6 Total (gallons) 135.2

Total Usage for Both Homes Total indoor household water Total indoor household water Total outdoor household water Total household consumption per day (gal) consumption per year (gal) consumption per year (gal) water consumption per year (gal) 241 87,965 76,494 164,459

Energy Use for Pumping and Annual CO2 produced by AE Annual Sulfur Dioxide / Nitrogen Total water utility Treating Water by AWU per due to Energy Use (lbs) Oxides produced by AE due to cost per year to year (kWh) Energy Use (lbs) household

1140 1,475 Negligible $428

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6.1.4.3 SCENARIO THREE: USE OF 1000 GALLON RWHS, GWRS, WITH UPGRADED FRONT HOUSE Per the Texas Commission of Environmental Quality (TECQ) rainwater can be used for landscape irrigation, toilets, and clothes washer with minimal treatment requirements. In Scenario III the RWHS serves the landscape irrigation requirements for the entire lot, and the toilets and clothes washer in the alley flat. The RWHS gathers rainwater from only the alley flat. Updating the plumbing in the existing front house to have the RWHS serve the toilets and clothes washes would be very costly, and therefore is not considered. We also make the following assumptions: 1. The GWRS received all its water from the alley flat bathroom faucets, showers, and clothes washers. Out of the 16 gal/day used by the faucets, 10 gal/day is assigned to the bathroom faucets. 2. The RWHS tank is limited to 1,000 gallon based on optimal sizing for a tank served by the alley flat. 3. The RWHS is used effectively, and the pumping energy used for the RWHS is negligible compared to the energy used by AWU to treat and pump water.

Table 6.1.4.3 Scenario III ‐ 1000 gal. RWHS, GWRS, with upgraded house

Estimating Indoor Daily Domestic Demand ‐ Alley Flat Water consumption using Usage Per AWWA Number of persons Household conserving fixtures in household daily demand

Toilets (Low Flow 1.6 (gal/flush) 6 (flushes / person / 2 0 Toilets) day)

Showerheads 2.0 (gal/minute) 5 (minutes / person / 2 20 day)

Faucets (Kitchen / 2.2 / 1.0, Average 1.6 5 (minutes / person / 2 16 Bath) (gal/faucet/min) day)

Clothes Washer 18 (gal/load) 2.6 (loads / week) N/A 0 (very efficient)

Dishwasher 6 (gal/cycle) 0.7 (cycles/day) N/A 4.2 Total (gals) 40.2

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Total Usage for Both Homes Total indoor household water Total indoor household water Total outdoor household water Total household consumption per day (gal) consumption per year (gal) consumption per year (gal) water consumption per year (gal) 175 74,092 63,110 137,202

Energy Use for Pumping and Annual CO2 produced by AE Annual Sulfur Dioxide / Nitrogen Total water utility Treating Water by AWU per due to Energy Use (lbs) Oxides produced by AE due to cost per year to year (kWh) Energy Use (lbs) household

951 1,230 Negligible $192

In the above scenario, 24,090 gallons of water are required per year by the toilets and clothes washer. However, the 1,000 gallon RWHS can only provide 13,873 gallons. As such the difference is added to the total indoor household water consumption. The RWHS is also unable to contribute any water towards the outdoor household water consumption.

6.1.4.4 SCENARIO FOUR: USE OF 3000 GALLON RWHS, GWRS, WITH UPGRADED FRONT HOUSE In Scenario IV we consider a 3000‐gallon RWHS serving the lot. This is the optimal size for a tank that is provided rainwater from both the front house and the alley flat. Aside from the increase in the system size, the scenario is the same as that described in section 1.4.3. This case generated the following output: Table 6.1.4.4 Scenario IV ‐ 3000 gal. RWHS, GWRS, with upgraded house

Total Usage for Both Homes Total indoor household water Total indoor household water Total outdoor household water Total household consumption per day (gal) consumption per year (gal) consumption per year (gal) water consumption per year (gal) 175 63,875 43,730 107,605

Energy Use for Pumping and Annual CO2 produced by AE Annual Sulfur Dioxide / Nitrogen Total water utility Treating Water by AWU per due to Energy Use (lbs) Oxides produced by AE due to cost per year to year (kWh) Energy Use (lbs) household

746 965 Negligible $164

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6.1.4.5 SCENARIO COMPARISON We can further evaluate the saving in water usage by comparing the four scenarios. As shown in following tables, there is almost a 50% reduction in water usage between Scenario I, the Business As Usual Case, and Scenario IV, where we apply a 3000 gallon RWHS, GWRS, and upgrade the front house. There is also a 42% reduction in the kWh required for water service.

Table 6.1.4.5.1 Comparison of Scenario Water Usage – Single Lot

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Table 6.1.4.5.2 Percent Reduction for Various Scenarios

Table 6.1.4.5.3 shows the effects of constructing a 1000 and 7000 alley flats. Table 6.1.4.5.3 Percent Reduction for Various Scenarios

Effect of applying Strategies to 1000 homes

Water Used Energy Used Yearly CO2 Emitted Yearly SO2 / NOX Yearly (gal) (kWh) (lbs) emitted Yearly (lbs) Scenario I 203,357,000 1,281,000 1,657,000 1045 / 1155 Scenario II 164,459,000 1,140,000 1,475,000 930 / 1028 Scenario IIII 137,202,000 951,000 1,230,000 776 / 858 Scenario IV 107,605,000 746,000 965,000 608 / 673

Effect of applying Strategies to 7000 homes

Water Used Energy Used Yearly CO2 Emitted Yearly SO2 / NOX Yearly (gal) (kWh) (lbs) emitted Yearly (lbs) Scenario I 1,423,499,000 8,967,000 11,599,000 1045 / 1155 Scenario II 1,151,213,000 7,980,000 10,325,000 930 / 1028 Scenario IIII 960,414,000 6,657,000 8,610,000 776 / 858 Scenario IV 753,235,000 5,222,000 6,755,000 608 / 673

These numbers signify the potential exponential saving for COA in terms of water, energy, and pollutant reduction.

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6.1.5 SCENARIOS: USING STORMWATER SOLUTIONS

In this section, the above defined potential solutions are put into the context of the AFI and AFI’s East Austin prototype. The calculations below are dependent on the following assumptions: • 550 gallons of water from 1” of rain per 1000 square feet.78 • Lot size is 7000 square feet.79 • Front houses are 1500 square feet.80 • Alley flats have a 750 square feet footprint.81 • 3 parking spaces are impervious cover measuring 600 square feet.82 • 14 houses with alley flats to a block.83 • The average rainfall in Austin, Texas is 32 inches per year.84 While these numbers are simply assumptions, the underlying concepts can be applied to real situations.

6.1.5.1 SCENARIO ONE: BUSINESS AS USUAL As the code and laws are currently written, alley flats are allowed to be built without requiring any attention to stormwater. If this is the case, small secondary units being built, with no care to best management practices or low impact development, stormwater runoff will increase and water quality will decrease.

78 Assumption received from personal communication with Robert Clayton via email February 4, 2008 and verified as a conservation assumption from Matt Hollon in an in-person meeting. Numbers may be more specific through different formulas. 79 Number determined as minimum lot size required for no zoning change in Appendix A of Barbara Brown, et al. 2007. “History of the Alley Flat Initiative.” PDF, School of Architecture, University of Texas at Austin. Chapter 2 of this report includes updated data. 80 This is arbitrary. Front houses may range in size from 600 square feet to over 2000 square feet. Without calculating each individual lot and house square footage, an estimate was made and determined average. 81 This is based on the prototype houses. 82 Based on large parking spaces sized at 10’X20’ and the required 3 on site parking spots for the existing front house and additional of a secondary dwelling unit. 83 This is based on looking at a map of the block with 904 Lydia Street prototype alley flat. (7 houses on each side of the alley.) 84 Average rainfall found at National Weather Service Forecast Office Austin/San Antonio, TX. Austin Climate Summary. National Weather Service. http://www.srh.noaa.gov/ewx/html/cli/ausnorm.htm. 143

Based on the assumptions listed above, an additional 412.5 gallons of rainwater will become runoff per inch of rain per alley flat built. If every house on a block builds an alley flat, that would be 5575 additional gallons per inch of rainfall of runoff per block. That number assumes a parking spot for the alley flat is not built. Adding the required parking spot per alley flat brings the additional gallons per inch to 522.5 per alley flat and 7315 gallons per inch per block. Given that storm sewer system in East Austin is already underperforming, any additional amount of runoff is not ideal for the neighborhood. The additional total water added to the storm sewer systems per year totals 16,7720 gallons per inch for each alley flat and its parking space. While more difficult to quantify, the pollutants in the runoff will increase as well. The parking spot and alley flat home remove pervious surfaces for impervious ones, hence adding more pollutants from daily activities and 950 square feet less opportunity to percolate naturally through the soils to filter out pollutants before reaching the creeks and ground water. If nothing is done, and even a few alley flats are built, the Waller Creek, Boggy Creek and Town Lake watersheds will see increases in pollutant levels. Due to the alley flat’s residential nature, the likely pollutant increase is with domestic pollutants including nitrate and phosphorous from fertilizers, herbicides and pet waste byproduct.85

6.1.5.2 SCENARIO TWO: RAINWATER CATCHMENT One of the simplest solutions to reducing runoff is to capture rainwater as it moves off roofs. As detailed above, there are several methods for water capture before it ever hits the ground. The first method, as exemplified by 904 Lydia Street, simply uses six COA distributed (and rebated) rainbarrels. These barrels cost $60 for Austin Water Utility customers and include a debris screen and outflow hose and an overflow tube.86 Homeowners or contractors must pick up the barrels as there is no home delivery

85 Robert Clayton, email to author [Erin Bernstein]. 86 Austin Water: Water Conservation. Rainbarrel Sales Program. City of Austin. http://www.ci.austin.tx.us/watercon/rbsales.htm. 144

service for them. It is also important to note that the rainbarrels provided by COA rebate program are for non‐potable uses only, meaning for landscaping and other water needs where water does not get near anyone’s mouth.87 Provided empty at rainfall, the six barrel combination has the capacity to capture 450 gallons of water, being enough to capture every bit of water from a 750 square foot alley flat roof. Beyond one inch of rainfall or if the barrels are already holding water, the six barrels are no longer helpful. Figure 6.1.5.3 shows the look of the COA rainbarrels.

Figure 6.1.5.2 Image of COA rebated rainbarrels.88

Another scenario for rainwater catchment is placing the COA rainbarrels on both the alley flat and the front house. Since the front house is larger, more barrels can possibly be placed around and allow for increased capture. For example, twelve barrels can be place around both structures and capture 900 gallons of water that would otherwise become runoff. This number can be increased by adding more barrels. At 27” at the barrels widest portion, thirteen barrels could be along thirty feet of one side of a front house, which would allow for 975 gallons of capture or more than one inch of rain from a 1500 square feet roof.89 If this scenario is expanded to an entire block, 18,900 gallons of rainfall can be prevented from becoming runoff. 10 blocks using this scenario

87 Ibid. 88 Ibid. 89 27” size of COA rainbarrel found at http://www.ci.austin.tx.us/watercon/rbsales.htm and the other calculations are made from the assumptions listed above. 145

of nineteen rainbarrels can capture 189,000 gallons of rainwater and delay that amount from entering the storm sewer system. Moving beyond COA rainbarrels, other catchment systems can be used to capture more water. Based on the above findings for two individual’s water needs and Austin rainfall numbers, an alley flat can have a cistern with the capacity for 1000 gallons of water at optimal sizing. This scenario can capture 2.3 inches of rain in its entirety provided the cistern is empty. Considering that 2.3 inches of rain is average for a two‐year storm with 3‐hour duration, a cistern this size will contain all water for storms this size and smaller.90 It will also capture all the water for a 5‐year storm with one‐hour duration.91 Using the scenario of a cistern providing potable water for the front house and the alley flat, the optimal cistern size is 3000 gallons. Capturing 3000 gallons of rainfall off of 2250 square feet of roof limits all the water from a two‐year storm with 12‐hour duration or a 5‐year storm with two‐hour duration.92

6.1.5.3 SCENARIO THREE: RETROFITTING THE EXISTING LOT In addition to capturing the water, adding bioswales, rain gardens, porous pavements will help slow the velocity of runoff for individual lots. These practices, especially in combination, encourage percolation and groundwater recharging. Provided all the systems are in place and in perfect working order at maximum capacity, 7000 square feet lots will contribute minimally to the storm sewer systems during periods of intense rain. Most water will remain on site in some capacity, either in the catchment systems or the various rain gardens or underground. With maximum runoff reduction, 3850 gallons per inch of rain are prevented from entering the storm sewer system per lot and 123,200 gallons per inch per lot per year are diverted down into the ground instead of surface runoff.

90 Average for event storm and duration are found in U.S Department of Interior & U.S. Geological Survey. Atlas of Depth-Duration Frequency of Precipitation Annual Maxima for Texas, by William H. Asquith and Meghan C. Roussel. (Austin, Texas: U.S. Geological Survey, 2004), http://pubs.usgs.gov/sir/2004/5041/, p. 15 91 Ibid, 25. 92 Ibid, 17, 26. 146

Additionally, that amount of water, 123,200 per alley flat lot per year, is potentially either treated or kept from exposure to runoff pollutants. While the exact amount of pollutants cannot be determined without direct research on a particular lot, previous studies show that up to 68% of pollutants can be removed (relative to concentration).93 That means that per year, 123,200 gallons of rainwater will have more than half of its pollutants removed before entering the ground water or creeks. That amount can help return Town Lake, Waller Creek and Boggy Creek to healthier states. In addition to pollutant removal, bioswales, rain gardens, and porous pavement keep water cooler on its journey to the creeks, rivers and lakes. This is important because many species depend on certain creek temperatures to survive. Paved surfaces capture solar radiation and then transfer that heat to stormwater runoff.94 Given that the best management practices and low impact development systems are not perfect, previous studies have shown that bioswales can reduce runoff by 41%.95 The runoff reduction and slowing of velocity causes less erosion and makes the water in the creeks clearer, improving the habitat. 50,512 gallons of water per one inch of rain (based on the previous assumptions and 41%) can be slowed per lot. This number can help with flooding from the entire lot, and makes the additional 522.5 gallons of water per inch from each alley flat seem considerably less important. One of design ideas for an ideal alley flat block is to turn the alley into a bioswale. This idea has several considerations that must be taken into account. Provided a lot can be graded to send all water to the back alley rather than the typical front gutter and sewer system, the remaining 72,688 gallons per inch that cannot be captured on the lot can be sent to be further slowed in velocity and have further pollutant pick up in the alley. Continuing with the same assumptions, those gallons can be reduced to only 42,886 gallons per inch of rain entering the storm sewer system, reduced from the average of 123,200 gallons of rain falling on each 7000 square feet lot.

93 France, Handbook of Water Sensitive Planning and Design, 130. This chapter references a Portland Bureau of Environmental Services study on native vegetation swales. 94 Matthew Jones, “Overview,” Stormwater BMPs and Runoff Temperature, http://www.bae.ncsu.edu/topic/bmp-temperature/. 95 Ibid. 147

Additionally, that water is further treated by the native plants and even more pollutants are removed before entering the stormwater system and creeks. Provided all homes in a block have an alley flat and their lots incorporate all of the low impact development techniques and best management practices and all are graded to direct water to the bioswale in the alley, a maximum of 1,017,632 gallons per inch of rain fall are diverted from the city stormwater system. Not only is this over a million gallons of rainfall diverted, that which hits the ground may be filtered and has a significant reduction of pollutants. While no single lot can alone improve water quality and flooding in East Austin, the more flats that are built with these practices in place can add up to create a healthier living environment in terms of both pollutant reduction and reduced flooding. Additionally, each home will have a more vibrant yard filled with native plants and unique paving surfaces. Especially given the variability in designing the solutions that can mitigate problems of stormwater, unique landscapes can tie together the neighborhood and create an even more distinct Austin neighborhood.

6.1.5.4 SCENARIO FOUR: DETENTION Given an ideal situation, the AFI could create an elaborate system of bioswales and naturalized detention. Each lot could be retrofitted to drain into a series of bioswales all leading to one naturalized detention area. This process would create a closed neighborhood system that ultimately would eliminate the need for traditional stormwater management facilities. Each individual lot would capture the optimal size in a catchment system and overflow would drain through on site rain gardens or bioswales located in both the alley and front yard. The system of swales would all join in a large detention area planted with native vegetation and would handle the overflow runoff until it percolates down or into the creeks. This ideal naturalized system would ultimately be less expensive the new underground systems, and could possibly even become a community project to aid in labor cost reduction.

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While not a perfect facsimile, Habitat Trails, an affordable neighborhood in Rogers, Arkansas deals with stormwater runoff by retaining and treating it through a contiguous network of bioswale corridors, infiltration trenches, stormwater gardens, sediment filter strips, and a constructed wet meadow.96 Costs in the project were reduced by using ecologically based systems rather than a traditional curb‐gutter‐pipe system from $450/linear foot to $250/linear foot.97 Proved savings of $200 per linear foot of stormwater treatment is significant. While AFI is not a contained project, in the same way, the reduction of costs presented in the project cannot be ignored for an area with failing systems. Additionally, it is important to note that Habitat Trials relies on unique public/private collaborations. The upfront costs are considerably less, but as with the AFI the land costs are the additional element that makes the project work. By identifying additional land in East Austin that can be used, a similar and more cost effective solution is possible. Figure 6.1.5.4 below details the flow of stormwater through Habitat Trails.

96 ASLA 2006 Professional Awards. Analysis and Planning Award of Honor: Habitat Trails. Habitat for Humanity: From Infill House to Green Neighborhood Design, Rogers, Arkansas. American Society of Landscape Architects. http://www.asla.org/awards/2006/06winners/079.html. 97 Ibid. 149

Figure 6.1.5.4 Flow of water through Habitat Trails, Rogers Arkansas98

6.1.6 CONCLUSION AND RECOMMENDATIONS

Through analysis of the COA’s current access to water, its water service infrastructure, its water conservation plans, and assessed the impact of rainwater harvesting systems, gray water reuse systems, rainwater catchment systems, and low impact development we concluded that there are substantial benefits in terms of reduced utility water consumption, energy consumption, and pollution when these strategies are implemented.

98 ASLA 2006 Professional Awards. Analysis and Planning Award of Honor: Habitat Trails. Habitat for Humanity: From Infill House to Green Neighborhood Design, Rogers, Arkansas. American Society of Landscape Architects., http://asla.org/awards/2006/06winners/images/largescale/079_07.jpg. 150

1. There are policy and financial challenges that must be overcome to make RWHS and GWRS strategies viable for individuals and developers to implement. However, these challenges are not insurmountable, and with the right policy and financial incentives in place, these systems could become commonplace.

Being that COA does not require any stormwater mitigation as part of building alley flats on approved lots, it is imperative that it be considered by individual homeowners. When the 522.5 gallons per inch of rainwater is multiplied by a potential 7000 lots, the effects on East Austin are remarkable. (That creates 3,657,500 additional gallons of runoff per inch of rain and an average of 117,040,000 gallons of runoff per year!) This project cannot successfully happen without taking care to mitigate stormwater effects. The ideas brought forth in this section show "what is old is new again." Returning to a more natural and ecological system of stormwater management is a shift in thinking, but a move toward better water quality and reduced flooding problems. The technology presented is simple, use plants and soils to deal with water rather than concrete and metal pipes. Not only are these choices less expensive, but also more aesthetically pleasing. Additionally, by creating opportunities for individual homeowners to install many of these technologies themselves, the neighborhood can grow stronger. Neighbors can interact along the bioswales and help each other install rain gardens. Tips can be shared about the plants that thrive the best. Below is a list of recommendations to meet the financial and policy obstacles: 1. The city should attempt to develop a program to reimburse a greater cost of the RWHS. The program should take into account the Median Family Income (MFI), and provide a larger rebate to those below certain levels of the MFI. This will allow more end users to participate in the program. The rebate should also be structured to take into account if the rainwater will be used for irrigation only, irrigation/toilets/washers, or all irrigation/potable use. Additional incentives, such as reduced permit and/or tap fees should also be provided to individuals or developers.

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These costs can be more than offset when compared to the cost associated with obtaining, treating, and pumping water. 2. A GWRS rebate program, similar to the RWHS should be established.

3. The COA should amend the new residential design and compatibility standards, so that buried or above ground tanks do not count against the pervious cover requirement.

4. Building codes dealing with the installation of RWHS and GWRS should be adopted. The COA should educate contractors about these codes, so that installed systems meet the adopted codes.

5. AWU should set up a webpage for approved RWHS and GWRS installers similar to the web page set up by Austin Energy for approved Solar Installers.

6. COA should encourage through awareness and, eventually, requirement of BMPs and LIDs. For awareness, literature is vital. The implication of additional pervious surfaces is not well understood by most people and since it is currently not a requirement under current city code for alley flat units, an awareness element is important.

7. COA should further study naturalized detention systems and incorporate many of the methods into the overall stormwater system improvements. This overall change can reduce costs and reduce pollution.

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6.2 ELECTRICITY: BACKGROUND AND CONTEXT

The sun does not shine for a few trees and flowers, but for the wide world's joy. ‐ Henry Ward Beecher

"I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait 'til oil and coal run out before we tackle that." ‐ Thomas Edison (1847–1931)

The City of Austin (COA) is a recognized leader in energy policy. As part of their energy policy the City Council has passed an aggressive ordinance that will require that in 2015 all new single‐family homes be built as “Zero Energy Capable Homes.”99 Zero Energy Capable Homes are expected to be approximately 65% more efficient than homes built in 2006. The remaining 35% of the energy requirement will be picked up with “on‐site or its equivalent energy generation.” 100 Zero Energy Homes are part of a broader Climate Protection Plan with goals for 2020 that 30% of the electricity used by the Austin Energy grid will be from renewable sources and the city will have a 15 per cent improvement in efficiency compared to 2003. Currently the city expects to achieve 30% of renewable energy mostly with wind generation. The remainder of that goal is to have 100 MW of solar by 2020. To achieve this goal AUSTIN ENERGY has initiated their aggressive and effectual Solar Rebate Program. As described in the Legal Framework & Opportunities section, both wind generation and solar generation have their challenges and benefits. The city is correct to focus on using both types of generation to utilize their benefits while hedging against their disadvantages. Time and experience will reveal the balance AUSTIN ENERGY must achieve in order to maximize the benefits while minimizing the disadvantages. The

99 Zero Energy Capable Homes Task Force, Austin City Council, Final Report to Council, by Committee, September 5, 2007. http://www.ci.austin.tx.us/council_meetings/wams_item_attach.cfm?recordID=7329. 100 Zero Energy Capable Homes Task Force, Austin City Council, Final Report to Council, by Committee, September 5, 2007. http://www.ci.austin.tx.us/council_meetings/wams_item_attach.cfm?recordID=7329. 153

following Technology Analysis section will analyze currently available Photovoltaic Distributed Generation (PV DG) systems and offer a guide on how to achieve that optimal balance. That optimal balance will be shaped by the legal and physical framework of the ERCOT transmission grid and Austin Energy’s municipal distribution grid.

6.2.2 LEGAL FRAMEWORK AND OPPORTUNITIES

The word "energy" incidentally equates with the Greek word for "challenge." I think there is much to learn in thinking of our federal energy problem in that light. Further, it is important for us to think of energy in terms of a gift of life. ‐ Thomas Carr

This section provides a background of Texas’s electric grid, energy policy and legal framework. Essentially, Texas’s approach to energy is to utilize free markets to increase energy supply. However, increasing energy supplies will also increase grid congestion that ERCOT may or may not be able to handle. Increasing energy supplies also comes with increasing environmental costs. Austin is in the heart of Texas and in Texas’ political arena. Austin is on the right path by realizing the need to use renewable energy such as wind and to management energy demand. However, wind energy has its own challenges because energy prices in Texas are affected by the price of natural gas, unsuitable state policy, and physical constraints in the ERCOT grid. Austin will not be able to rely solely on wind energy generation. Wind generation must be supplement with on‐site solar generation. Austin adopt a legal framework to promote on‐site solar generation so that current technologies may be optimized.

6.2.2.1 BACKGROUND: TEXAS AND THE ERCOT GRID

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In May 1999 Senate Bill 7 restructured the Texas electricity industry.101 Electricity is divided into generation, transmission, distribution and retail. Senate Bill 7 deregulated the generation and retail portions in order to create a competitive marketplace to make and sell electricity under the theory that marketplace forces will lower price and increase service for customers. Transmission and distribution remains regulated, because it is cost prohibitive and impractical for each private enterprise to build redundant, multi‐billion dollar transmission lines. The Electric Reliability Council of Texas (ERCOT) is charged with overseeing 80% of the Texas grid, 70,000 MW of generation, and 37,000 miles of electrical lines.102 ERCOT’s specific role is to operate the transmission grid in order to ensure equal access for generators, curtail grid congestion, and manage the deregulated wholesale market. While AUSTIN ENERGY has opted out of deregulation and remains an municipality, AUSTIN ENERGY does participate in the ERCOT wholesale market, helping to balance the power needs of the statewide grid by contracting to buy and sell power with other producers.

6.2.2.1.2 THE STATE’S APPROACH TO ENERGY The Texas legislature considers electricity as largely outside the responsibility of government and only regulates in so much as to allow for open market competition. ERCOT is to facilitate the transmission and maintain the marketplace for the independent operating utilities (IOUs) to compete. As private enterprises IOUs operate for the purpose of profit and not for holistic energy management. Ever since Spindletop in 1901 Texas has considered itself to be a world leader in energy. When Texas surpassed California as the leading producer of wind generation, the state legislature popularized wind energy as a way to maintaining Texas’ leadership. Texas wind generation is a result of its abundant wind resources and not as a result of

101 Houston Advanced Research Center and Institute for Energy, Law & Enterprise, Guide to Electric Power in Texas 3rd Edition (2003) Facts on Texas Electric Power, 1‐9. http://www.beg.utexas.edu/energyecon/documents/guide_electric_power_texas_2003.pdf. 102 ERCOT Company Profile, http://www.ercot.com/about/profile/index.html. 155

official state policy. The legislature is currently attempting to develop an official state policy to maximize wind resources and energy generation.103 State policy will focus on increasing energy generation and increasing transmission capacity to accommodate increased energy generation, and will focus little on demand management. Indeed IOUs have profit‐making incentives to promote ever‐increasing energy consumption. IOUs structure their pricing schedules to promote increased electricity usage by charging less for bulk usage. Utility companies also have actively promoted for decades the mass adoption of household appliances and air conditioners for their energy use.104 Because of the promotion of electricity use and inefficient building standards, in 2003, Texans used 28% more electricity on average than the U.S.105 and 106 was the eighth largest emitter of CO2 in the world. With a majority of Americans living in the south and southwest, this discrepancy in usage cannot be caused strictly by summer air‐conditioner usage.

6.2.2.1.3 NOT FOR THE ENVIRONMENT The Texas legislature considers wind energy more as an opportunity for economic development and not as an opportunity for the environment. For example the House killed a bill proposed by State Sen. Kirk Watson to set up a taskforce to study climate change.107 The same news article reported that: “Bill Peacock, who testified against climate change bills for the influential conservative think tank, Texas Public Policy Foundation, says not having a government‐mandated plan puts Texas in front of the rest of the world.

103 Joint Meeting of Texas State House Committees on Economic Development and Energy Resources, Hearing on Texas Economic Development Act, 80th Legislature, April 17, 2008.

104 Gail Cooper, Air‐Conditioning American: Engineers and the Controlled Environment, 1900‐1960 (Baltimore: The Johns Hopkins University Press, 1998). 105 Houston Advanced Research Center and Institute for Energy, Law & Enterprise, Guide to Electric Power in Texas 3rd Edition (2003) Facts on Texas Electric Power, 13. http://www.beg.utexas.edu/energyecon/documents/guide_electric_power_texas_2003.pdf. 106 House Select Committee of Texas State House, Hearing on Invited Testimony on Generation Capacity and Environmental Effects, 80th Legislature, April 9, 2008. 107 John Burnett, “In Texas, Climate Creeping onto Agenda,” National Public Radio, November 26, 2007, http://www.npr.org/templates/story/story.php?storyId=16511614. 156

‘Companies here are free to respond to the marketplace," Peacock says. "So, yes, I'm very pleased the Texas legislature decided to take more time on this issue without passing anything.’”108

The Governor has established his Task Force on Global Warming and Electric Generation and Supply Work Group. The Governor’s Task Force focuses on Carbon Capture and Storage (CSS) as a primary solution.109 An August 27, 2007 report centers on a state version of the scraped Federal FutureGen project where a fossil fuel generation plant will be carbon neutral by injecting its emission carbon into underground formations.110 In addition, private industry is pressuring the state legislature to defer any carbon‐ trading legislation until the federal government acts upon it.111

6.2.2.1.4 TEXAS’ RENEWABLE ENERGY: FOR INCREASING GENERATION CAPACITY As part of Senate Bill 7, Texas produced its first Renewable Portfolio Standard (RPS). The RPS mandates that electricity providers (competitive retailers, municipal electric utilities, and electric cooperatives) to collectively generate 2,000 megawatts (MW) of additional renewable energy by 2009. 2,000 MW is 3% of the peak demand of 65,469 megawatts112 of electricity in 1999. Therefore, an electric provider must provide 3% of its sold electricity with renewable energy or purchase Renewable Energy Credit (REC) for that amount. One REC represents one megawatt‐hour of qualified renewable energy that is generated and metered in Texas. If a utility earns extra credits, it can sell the credits to other utilities who need credits to meet the RPS requirements. This enables electricity providers that

108 John Burnett, “In Texas, Climate Creeping onto Agenda,” National Public Radio, November 26, 2007, http://www.npr.org/templates/story/story.php?storyId=16511614. 109 Electric Generation and Supply Work Group, Texas Governor’s Task Force on Global Warming, Carbon Capture and Storage, August 27, 2007. http://dnr.wi.gov/environmentprotect/gtfgw/documents/MWGEG20070827.pdf. 110 Electric Generation and Supply Work Group, Texas Governor’s Task Force on Global Warming, Carbon Capture and Storage, August 27, 2007. http://dnr.wi.gov/environmentprotect/gtfgw/documents/MWGEG20070827.pdf. 111 House Select Committee of Texas State House, Hearing on Invited Testimony on Generation Capacity and Environmental Effects, 80th Legislature, April 9, 2008. 112 Texas Environmental Profiles, Electricity in Texas. http://www.texasep.org/html/nrg/nrg_2ele.html. 157

do not own or purchase enough renewable energy capacity to purchase credits instead of capacity. The REC trading program is currently scheduled to continue through 2019. Senate Bill 20, passed in 2005, increased the state’s RPS goal to 5,880 MW by 2015, of which, 500 MW must come from non‐wind resources.113 The RPS goal sets at 10,000 MW in renewable energy capacity by 2025. By December 2008 AUSTIN ENERGY will have a green power portfolio of about 11 percent already surpassing the 2015 RPS goal.114 Part of the pressure to diversify Texas’ energy needs with the RPS comes from Texas projected population of 50 million by 2040 (from today’s 24 million115).116 This population increase has very long term consequence as explained by PUC Chairman Smitherman: there is a projected gap in generation capacity predicted for 2028. With a projected deficit of 57,000 MW – 77,000 MW, he observed, “Texas has a dramatic need for power going forward.”117

6.2.2.1.5 CONSEQUENCES FOR ERCOT TRANSMISSION CAPACITY While generation and retail have been deregulated, ERCOT still regulates transmission. As a practical matter this creates a tragedy of the commons where everyone wants to use the public good over their competitors and without having to pay for it. Like a public highway, everyone wants fair and equal access often resulting in a traffic jams. Recognizing the wind generation potential of west Texas, Senate Bill 20 requires that competitive renewable energy zones (CREZ) be designated in the best areas in the state and that an electric transmission infrastructure be constructed to move renewable energy from those zones to markets where people use energy. ERCOT is charged with

113 PUC: Goal for Renewable Energy, §25.173. http://www.puc.state.tx.us/rules/subrules/electric/25.173/25.173ei.cfm 114 Austin Business Journal, Austin Energy boosting wind generated power, Sept. 4, 2007, http://www.bizjournals.com/austin/stories/2007/09/03/daily9.html. 115 Texas State Library & Archives Commission Web Site, United States and Texas Populations 1850‐2007, http://www.tsl.state.tx.us/ref/abouttx/census.html. 116 Texas Senate Business and Commerce Committee and Senate Natural Resources Committee, Testimony on Energy Resources and Environmental Issues, 80th Legislature, April 15, 2008. 117 Texas Senate Business and Commerce Committee and Senate Natural Resources Committee, Testimony on Energy Resources and Environmental Issues, 80th Legislature, April 15, 2008. 158

overseeing the CREZ process. 118 The Public Utility Commission of Texas (PUCT) will direct the construction of additional transmission lines to deliver the power after ERCOT designates the CREZ areas.119 In July 2007, the PUCT announced its approval for additional transmission lines that could deliver 10,000 more megawatts of renewable power by 2012.120 Currently PUCT's interim final order outlines four scenarios for building transmission from 10,000 MW to 22,806 MW, depending on cost and the number of wind farms that are built. The final order is expected in 2008.121 Even if the PUCT were to build an additional 22,806 MW of capacity, this falls short of the 46,000 MW that are in requested studies to connect to the grid. In other words developers of more than 46,000 MW of new wind resources have requested studies to connect to the grid.122 The generation and demand for wind power has grown faster than the grid can handle and is expected to continue to outstrip any addition transmission capacity. ERCOT studies identify $3‐$6.5 billion in wind transmission costs in addition to $3 billion in transmission costs not related to CREZ.123 This is to move an addition 24,000 MW and not 46,000 MW. These costs will ultimately be carried over to consumers at a cost of $1.50 per 1000 kWh.124 There is a still a political question as to how and where the transmission lines will be built. State Sen. Brimer concluded that the CREZ transmission plan may not be practical. State Sen. Fraser has said that he is

118 http://www.seco.cpa.state.tx.us/re_rps‐portfolio.htm 119 Austin Business Journal, Texas, private partners to invest $10B in wind energy, Oct. 3, 2006, http://www.bizjournals.com/austin/stories/2006/10/02/daily9.html 120 State Energy Conservation Office, Texas Renewable Portfolio Standard, http://www.seco.cpa.state.tx.us/re_wind‐transmission.htm. 121 State Energy Conversation Office, Wind Energy Transmission, http://www.seco.cpa.state.tx.us/re_wind‐transmission.htm. 122 Reuters, Texas wind generation creates power‐market turmoil, April 1, 2008. http://www.reuters.com/article/bondsNews/idUSN0131266520080401 123 Texas Senate Business and Commerce Committee and Senate Natural Resources Committee, Testimony on Energy Resources and Environmental Issues, 80th Legislature, April 15, 2008. 124 ERCOT, Transmission Issues Associated with Renewable Energy in Texas, March 28, 2005, http://www.ercot.com/news/presentations/2005/RenewablesTransmissi.pdf. 159

concerned with the idea that ERCOT must interconnect a plant “no matter where it is built.”125

6.2.2.2 AUSTIN ENERGY: OPERATING WITHIN ERCOT

While a majority of Texas deregulated in 1999, Austin Energy continues to maintain its autonomy as a municipality. Austin Energy services the City of Austin and parts of Travis and Williamson Counties. It is the tenth largest city‐owned utility in the nation, with 360,000 customers (representing a total of 800,000 people), over a 421 square mile area. The company maintains 5,000 miles of primary and secondary overhead lines, 4,000 miles of underground lines, and 48 substations. Currently, its total production is approximately 2600 MW representing about 4% of the state‐wide generation load.126 Austin Energy is a publicly owned municipality charged with managing the city’s energy needs. Austin Energy has several successful, nationally recognized policies and programs in place to manage Austin’s energy supply and demand. The result is that Austin Energy customers pay a fraction of what deregulated customers pay. Energy rates are 3.55¢ per kWh for the first 500 kWh and 6.02¢ per kWh, for all kWh over 500 kWh.127 In contrast a customer for deregulated electricity can pay 15.9 cents per kWh for the first 500 kWh and 14.4 cents per kWh, for all kWh over 1,000 kWh.128 Austin Energy’s overall plan is for 30% of electricity used by the Austin Energy grid to be from renewable sources by 2020. Austin Energy will utilize wind generation and solar generation to achieve their goal.

6.2.2.2.1 CHALLENGES TO UTILIZING WIND GENERATION

125 Texas Senate Business and Commerce Committee and Senate Natural Resources Committee, Testimony on Energy Resources and Environmental Issues, 80th Legislature, April 15, 2008. 126 Ankur Mukerji, Brad Deal, John Randall, and Michael Meyer, “Distributed Generation in the Blackland Neighborhood of Austin, Texas,” Spring 2006. unpublished. 127 Austin Energy: Residential Service, http://austinenergy.com/About%20Us/Rates/residential.htm. 128 Cirro Energy: Electricity Facts Label, http://www.cirroenergy.com/docs/offering/CTPT_Resi_Smart_Pass_12_EFL_0308.pdf. 160

Austin Energy uses 10‐year, fixed price contracts to purchase wind energy from wind farms in west Texas. These bilateral contracts are not accessible to the PUCT and are not heavily regulated like the day‐ahead and spot market. However, these bilateral contracts are still affected by the energy market and by physical transmission constraints. While bilateral contracts are individually negotiated between the Austin Energy and the wind farm operator, these contracts do exist within the energy market. Wind farm operators do not sell wind energy based on the cost to produce, but on overall market conditions and ERCOT rules tie energy market prices to natural gas. As energy from natural gas increases in price, wind operators will attempt to sell their energy at higher prices as well. Furthermore, as natural gas prices rise, customers are more willing to pay higher prices for nominally cheaper wind energy.129 Also, because Austin Energy utilizes the ERCOT grid Austin Energy must also participate in the statewide coordination for grid usage which includes the accompanying costs such as congestions fines, grid maintenance fees, and a partial loss of autonomy. The roughly $10 billion cost to upgrade the ERCOT grid will be passed on to utilities and their customers. These costs will more than likely be assigned based on a utility’s grid usage. The “more” transmission a utility uses, the more the utility will be charged. The access and costs to utility grid usage is a result of the physical constraints affecting transmission such as thermal limits, voltage limits, and system operation factors.130 Transmission lines can only carry a limited amount of electricity. Transmission lines also have physical inefficiencies. These physical costs were estimated at 7.2% in the United States in 1995.131 Physical transmission constraints are amplified when the distance between the generation and the consumption points are farther. Austin Energy contracts for 213 megawatts in wind energy from a wind farm located

129 Kate Alexander, “Austin looking to own wind farm,” Austin Statesman, Feb. 16, 2008. http://www.statesman.com/news/content/news/stories/local/02/16/0216wind.html. 130 Guide electric power 131 U.S. Climate Change Technology Program, 1.3.2 Transmission and Distribution Technologies, (2003), http://climatetechnology.gov/library/2003/tech‐options/tech‐options‐1‐3‐2.pdf. 161

near McCamey and a wind farm west of Abilene. 132 By December 2008, Austin Energy will contract an addition 225 megawatts in wind energy from wind farms located 60 miles northeast of Lubbock in Floyd County and from Abilene in Shackleford County.133 Wind energy also has its own inefficient use of transmission, because wind‐ generated electricity is not a steady generation, but varies with wind velocity. Generally, enough capacity must always be available to handle the peak output of a “wind farm.” However, that peak output is unlikely to occur more than about 30% of the time. In other words, the transmission capacity may not be used at all by the electricity from wind turbines for 50 to 70% of the time. For at least the foreseeable future energy market prices will continue to rise with the costs of fossil fuels, transmission capacity from west Texas to the urban centers will remain overloaded even as more transmission capacity is added, and the state legislature will continue their free‐market approach to electricity. As the first GreenChoice bilateral contract for wind expires in 2011 and as Austin Energy looks for new GreenChoice contracts, Austin Energy will begin to feel these pressures. While Austin Energy can avoid some of the market pressures by investing and owning their own wind farm and PV farm, Austin Energy cannot avoid market pressure and physical constraints of the transmission lines.

6.2.2.2.2 CHALLENGES TO UTILIZING SOLAR GENERATION To fulfill Austin’s ambitious goal for 100 MW of solar by 2020 Austin Energy established the Solar Rebate Program. The rebate program gives Austin residences an incentive to invest in a PV DG system for their house or business by rebating on average 72% of the

132 Austin Energy, Press Release Archive, Austin Energy Wins 2005 Wind Power Pioneer Award, Oct. 25, 2005, http://www.austinenergy.com/about%20us/newsroom/press%20releases/press%20release%20archive/2 005/windenergyaward.htm 133 Austin Business Journal, Austin Energy boosting wind generated power, Sept. 4, 2007, http://www.bizjournals.com/austin/stories/2007/09/03/daily9.html. 162

cost for resident homes and 76% for commercial installations.134 To qualify for the Rebate a participant must meet the following basic requirements135: • Own the house • Roof must unobstructed and non‐shaded • No deed restrictions • Roof must be in good condition. • Participant must have access to cash ($1,000 ‐ $10,000) to pay for PV DG System Austin Energy recognizes the numerous benefits of utilizing on‐site generation. A PV DG system for on‐site generation is environmentally friendly, because no air pollution is produced and an insignificant amount of water is needed. It is also economically beneficially, because it reduces the demand to build new generating facilities and reduces the expense of transmission and distribution maintenance and upgrading. Finally, an on‐site system increases the energy security by mitigating the effects from natural disasters such as storm outages or ice storms, and from human‐ induced crises such as terrorist attacks or an industrial accident. Energy security is also increased by reducing the reliance on fossil fuel imports. These benefits are enjoyed by Texans, COA and the individuals who install PV DG systems on‐site. As of end of 2007 500 residential homes have utilized the Austin Solar Rebate Program generating 1.5 MW of solar energy. The program is designed to promote small scale arrays to be utilized by individuals and not for larger projects. The rebate program caps at: • $4,500 per kWh, and $13,500 total or 80% of invoice for residential installations • PV DG system size 1 to 3 KW These caps are reasonable, because Austin Energy is creating and funding a program to benefit as many Austin residences as possible with the purpose of helping residences power their specific needs. Austin Energy is not looking to subsidize a solar energy generation company. Further, current PV DG systems benefit very little from economies

134 Leslie Libby, interview by author, Austin, TX, March 2008. 135 Austin Energy: Power Saver Program, Solar Photovoltaics, http://www.austinenergy.com/Energy%20Efficiency/Programs/Rebates/Solar%20Rebates/index.htm 163

of scale. For instance the cost to install and equip a 6 KW system is roughly twice the cost to install and equip a 3 KW system. However, for the impressive success of the Austin Solar Rebate Program there are some residents that cannot benefit from the program. The barriers to these residences are financial, environmental and legal. First, even with rebates a large portion of lower income residences still cannot afford PV DG systems and primarily, cannot afford to improve their roofs in order to qualify for the rebate program. Second, Austin has a 32 percent tree canopy covering the city. At minimum a city should have 40 percent tree canopy. Indeed Austin has a proactive program to protect its trees and increase its urban canopy. The environmental costs to cutting or removing trees more than offsets any benefit from a PV DG system installed on a specific roof. It also does not make sense to remove shade‐providing trees when a more practical solution is to be flexible in where PV DG systems are installed. Even roofs that are partially shaded cannot utilize PV DG systems because solar panels are hooked up in a series as opposed to parallel wiring. When one panel in a series of panels is shaded, the entire PV DG system stops working. 136 Third, some neighborhoods and houses are sold with deed restrictions and restrictive covenants disallowing the installation of PV DG systems. Indeed Austin Energy is “considering building a large solar‐power station in West Texas, because our solar rebate program for homes and businesses in Austin cannot generate the amount of solar power needed to meet our goals.”137 However, PV DG systems are optimal for on‐site or near‐site generation, because they are flexible in size and location. PV DG systems do not have an optimal size in terms of maximizing energy generation. Maximizing energy generation is more dependent on location. However, the current legal framework hinders maximizing PV DG energy generation, because current legal rules constrain location choice. Instead of a legal framework that is

136 Bo McCarver, Blackland Develoment Corp., interview by author, Austin, TX, April 2008. 137 Fred Yebra, “Austin’s Green Campaign,” Transmission and Distribution World, July 1, 2007, http://tdworld.com/customer_service/power_austins_green_campaign/. 164

designed to maximize PV DG system energy generation, the legal framework is designed to ensure Austin Energy’s status as a municipality within a free‐market oriented state.

6.2.2.3 STRIKING A BALANCE

The Alley Flat Initiative contains the principle that all people without respect to their income level should be treated as productive and contributory members of a community. A community should not simply see lower income individuals as something to be dealt with and as something to be placed in some location. Rather, they should be incorporated into the community’s productive and civil spheres that we all enjoy. For two hundred years, energy generation was performed by the individual. There was a national ethos of self‐sufficiency. At the turn of the 20th century as individuals moved from rural to urban centers self‐sufficiency was no longer practical. Cities took on the duty to provide energy needs. Cities built centralized generation systems because they are easier to manage and have economies of scale. At the turn of this century the responsibility of generation is moving from the city to state and Federal agencies. As our demands for energy increase, our state and national governments continue to rely on the proven method of massive, centralized generation coupled long‐ distance transmission. However proven methods of yesterday can become no longer practical. Proven methods of yesterday can also give way to better ways of today. We have some reluctance to give up old methods, because they have proven to be tested and reliable. New methods to energy generation are not tested. We know the technology works, but we do not know how they will work within a societal context. If Austin Energy is to have a goal of becoming a zero carbon emissions city and to have by 2020 30% from renewable sources, Austin Energy cannot rely on proven methods that are being overloaded by a state‐wide free‐market system. ERCOT’s goal is to simply increase energy generation and not to actually manage energy needs. ERCOT’s goal is contrary to the goals of Austin Energy.

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Austin Energy will need to rely on wind generation to fulfill its goals. And Austin Energy will need to rely on on‐site PV DG systems as well. While Austin Energy cannot direct ERCOT policy, COA does have the ability to direct city policy and local regulation. By adjusting local regulation, COA can contribute to achieving its energy goals, decrease its reliance on ERCOT, and incorporate lower income residences into the community productive and contributory members. The equivalent to on‐site generation is near‐site generation. 138 COA can adjust its local regulations to allow for near‐site generation while maintaining Austin Energy’s autonomy as a municipality and while better serving its residences.

6.2.2.3.1 SPECIFIC RECOMMENDATIONS Current legal frameworks hinder optimal placement of PV DG systems. By maintaining flexibility COA may work through the legal hurdles to increase solar participating by its residences. At the same time there are several strategies that COA can use to protect itself: 1. Place PV DG systems on city‐owned land that is scattered around the city. Create a community solar garden program (similar to plant community gardens) where local organizations agree to maintain the area. 2. Maintain ownership of PV DG systems installed across the city, whether on public or private property in order to provide near‐site generation. a. Liability on the City can be reduced by release and hold harmless agreements for any damage and injury. 3. Create and designate energy districts similar to that of water districts. Austin Energy can and would maintain jurisdiction and allow for electricity to be aggregated among the participating landowners. The City would maintain jurisdiction over its distribution grid and can change its rules appropriately. a. Allow for electric cooperatives within those energy districts as operated by Austin Energy.

138 Zero Energy Capable Homes Task Force, Austin City Council, Final Report to Council, by Committee, Sept. 5, 2007. http://www.ci.austin.tx.us/council_meetings/wams_item_attach.cfm?recordID=7329. 166

4. Define a customer on the basis of the individual customer and not on basis the property. One customer individual can aggregate its property into one electricity account. That customer can still be charged an appropriate grid usage fee. 5. Identify and utilize state legislators such as Rep. Solomons who are proponents of solar power, especially in urban areas. These state legislators will work to protect Austin Energy from state interference. a. The City should ask for and rely on informal opinions from the state’s Attorney General office and PUC to ensure compliance with state law.

6.3 TECHNOLOGY ANALYSIS

I believe that the average guy in the street will give up a great deal, if he really understands the cost of not giving it up. In fact, we may find that, while we're drastically cutting our energy consumption, we're actually raising our standard of living. ‐ David R. Brower

Solar panels produce solar energy. The most determinative factor of a PV panel’s efficiency to produce energy is its location. Optimal location of solar panels will have lead to the greatest efficiency for solar energy generation. System size has little effect in increasing a PV DG system’s efficiency. This section quantifies the benefits of AFI using PV distributive generation. The section then describes several scenarios for PV DG system placement under current city regulation and then under city variances. The section ends with possible future developments in solar technologies and finally, recommendations.

6.3.1 MAXIMIZING SOLAR ENERGY WITH PHOTOVOLTAICS

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Solar energy is an enormously untapped resource of “electromagnetic energy transmitted from the sun” 139 in the form of solar radiation. Unlike other energy sources that can use economies of scale to with a centralized generation system, solar energy does not have an economy of scale. Because of variations in cloud cover, tree canopy and building shadows, a PV distributed generation system could collect more solar energy with the least environmental impact and smaller economic cost. For example, while a large field could be cleared to install a centralized solar generation system, this approach would be an inefficient use of resources and land space, and also antagonistic to the concept of sustainability. A distributed generation system would use less land area by being placed on building roofs and other structures. Photovoltaic panels (PVPs) are a series of silicon cells arranged into a module that convert sunlight into electricity. Implementing a Photovoltaic Distributed Generation system maximizes the collection of total solar energy reaching the ground while minimizing economic and environmental costs. If the Alley Flat Initiative integrates a PV DG system into its estimated 7,000 secondary units, COA will enjoy enormous benefits. Austin’s population will continue to grow and so will its need for housing. With a PV DG system the population growth will have a smaller impact on COA’s infrastructure and reduces the need for additional generation capacity.140

6.3.2 QUANTITATIVE BENEFITS OF A PV DG SYSTEM

Meridian Solar in Austin has used 30 years of data to display monthly KWH averages generated per KW in a given PV system. For example, a one KW system would generate approximately 101 KWH in the month of February:

Table 6.3.2.1

139 “Solar Energy Technologies Program.” United States Department of Energy: Energy Efficiency and Renewable Energy. http://www1.eere.energy.gov/solar. Accessed 12 April 2008. 140 “Austin Energy Power Saver Program: Saving Energy Together.” Solar Program Guidelines. January 2008. 1. 168

By summing the monthly averages, an annual total of 1,363 KWH are generated per KW. If a home installs a two KW system, the annual total would be 2,726 KWH. Currently under construction, Alley Flat 1804B in East Austin is specified to have a 2.4 KW system. This system is expected to generate an annual average of 3,271 KWH. Table 6.3.2.2 shows the amount of solar energy generated annually depending on how many alley flat units are built multiplied by the KW capacity of the solar system installed on each unit: Table 6.3.2.2 Number of Alley Flat Units 1 10 100 500 1000 4000 7000 1 KW 1363 13630 136300 681500 1363000 5452000 9541000 2 KW 2726 27260 272600 1363000 2726000 10904000 19082000 2.4 KW 3271 32712 327120 1635600 3271200 13084800 22898400 2.8 KW 3816 38164 381640 1908200 3816400 15265600 26714800

Capacity 3.2 KW 4362 43616 436160 2180800 4361600 17446400 30531200 3.6 KW 4907 49068 490680 2453400 4906800 19627200 34347600 4.0 KW 5452 54520 545200 2726000 5452000 21808000 38164000 System 4.4 KW 5997 59972 599720 2998600 5997200 23988800 41980400

Solar 4.8 KW 6542 65424 654240 3271200 6542400 26169600 45796800 5.2 KW 7088 70876 708760 3543800 7087600 28350400 49613200 5.6 KW 7633 76328 763280 3816400 7632800 30531200 53429600 6.0 KW 8178 81780 817800 4089000 8178000 32712000 57246000 Annual KWH Generated

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If the Alley Flat Initiative builds the estimated 7,000 secondary units each with a 2.4 KW system (just as the Alley Flat 1804B prototype) the PV DG system would generate approximately 22,898,400 KWH a year. Its energy capacity would be 2.61 MW.141 At 2.61 MW the Alley Flat Initiative would contribute over 2.5% to Austin Energy’s goal of 100 MW of solar energy by 2020. Furthermore, Austin Energy would save on the development and purchase costs of the 13 acres needed for an equivalent solar power plant. 142 2.61 MW of on‐site PV generation capacity is 2.61 MW of generation capacity that does not have to installed else where or by other fuels. The following table illustrates the proportional costs to building a power plant that is equivalent to generating 2.61 MW of solar energy. For example, an equivalent 2.61 MW wind farm would cost between $2,871,000 ‐ $5,742,000 to install. Table 6.3.2.3

Capacity Cost Total Cost to Fuel Type Per KW Generate 2.61 MW Natural Gas $650.00 $1,696,500 Coal $2250‐$3000 $5,872,500 ‐ $7,830,000 Nuclear $2000‐$6000 $5,220,000 ‐ $15,660000 Wind $1100‐$2200 $2,871,000 ‐ $5,742,000 Capacity cost per KW numbers determined by Michael E. Webber, Ph.D. University of Texas143

6.3.2.1 RENEWABLE ENERGY CREDITS In additional to the savings from not needing to install additional generation capacity, Austin Energy would benefit from the Renewable Energy Credits (RECs) generated by a PV DG system. Currently RECs are valued at $10 per REC.144 One 2.4 KW system will

141 Converting 22,898,400 KWH to MWH and then dividing that by 8,760 hours per year, energy capacity is calculated to be 2.61MW. 142 Roscheisen, Martin. “Municipal Solar Power Plants.” NanoSolar News Letter. www.nanosolar.com. Accessed 18 April 2008. A one MW solar power plant requires approximately 5 acres of space for installation. A 2.61 MW solar power plant would require approximately 13 acres. 143 Webber Ph. D., Michael E. “The Cost For Electricity Generation.” The University of Texas. January 17, 2008. 144 “Austin Energy Renewable Energy Credit Assignment Agreement.” Solar Rebate Program. April 2004. 1. 170

generate 3271 KWh annually or 3 REC145 for $30 per Alley Flat. If 7,000 units are built, Austin Energy would generate 21,000 RECs annually for a total of $210,000. Austin Energy could use this money to invest in additional renewable energy, energy efficiency and reforestation projects in Austin to help in achieving its zero‐carbon goal.

6.3.2.2 QUANTITATIVE ENVIRONMENTAL BENEFITS OF PV DG SYSTEM A PV DG system also has quantitative environmental benefits. Based on annual KWH savings of a 2.4 KW system per unit, the tables below show the amount of carbon dioxide and pollution prevented from emission, the equivalent of cars being removed from Austin roads, and acres of forests planted. Table 6.3.2.2.1

Table 6.3.2.2.2

145 One Renewable Energy Credit equals 1000 KW. 3271 KWh of renewable energy generated would equal 3 RECs 171

Table 6.3.2.2.3

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Table 6.3.2.2.4

Figure 6.3.2.2.1

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Area showing 25,390 acres (approximately 7.2 mile diameter) superimposed over the City of Austin.

6.3.3 SOLAR THERMAL COLLECTORS

We can also use solar energy to heat water. Solar thermal collectors, or flat plate collectors, are solar water heating modules installed to heat water for residential usage by means of collecting solar energy. A solar thermal collector contains pipes in a sealed, insulted box covered with tempered glass, and pumps water through the pipes where it is warmed and then returned to a storage tank. This is called an active system and is the system Austin Energy recognizes in order to qualify for their rebate. The storage tank must be abundantly insulated to preserve the heat generated by the solar collectors.146 Water systems usually include an electric energy source to provide hot water when solar energy cannot. Solar water heaters can reduce water‐heating bills between 50‐80%147 depending on the hot water usage, geographic location, system performance and tax incentives. Additionally, an 80‐gallon storage tank is sufficient for three to four people, which is more than enough for a typical alley flat dwelling. In regards to placement, the flat plate collectors will take up no more than 30 square feet of roof space. With prices ranging from $800 to $3500+, it is important to note that funding for solar thermal collectors may not initially be present during the construction of the house. Therefore, it is recommended that all newly constructed alley flats be “pre‐ piped” where the houses are able to receive a solar thermal collector in the future when funds allow for it. Pre‐piping houses avoids potential renovations and alterations thereby reducing material and labor costs. Solar thermal collectors can be fitted and installed hassle free at a minimum installation cost in a pre‐piped home.

6.3.4 IMPACT OF ALLEY FLATS WITHOUT SOLAR ARRAYS

146 “Solar Water Heaters.” Renewable Energy: The Infinite Power of Texas. (Austin, TX: Texas Comptroller of Public Accounts, 2006). 10.3. 147 “The Economics of a Solar Water Heater.” The united States Department of Energy. http://www.eere.energy.gov/consumer/your_home/water_heating/index.cfm/mytopic=12860. Accessed 30 March 2008. 174

According to an energy analysis simulation of Alley Flat 1804B, the structure is projected to use 3,724 KWH annually. Assuming future alley flats will consume no more than this amount due to efficiency increases in construction methods and appliance usage, it is possible to project a worst case scenario in regards to energy consumption and its effects on Austin Energy. If 7,000 dwellings are constructed without solar arrays, the houses will annually consume 26,068,000 KWH directly from Austin Energy. This is equivalent to constructing 2,447 new average size homes that are completely depended upon the grid. Overall strain on the existing utility infrastructure will increase immensely, as will the emission pollutants into the atmosphere. Furthermore, if Austin Energy were to supplement these houses with renewable solar energy, they would have to purchase 15 acres to develop a 3MW solar power plant.

6.3.5 SCENARIOS ALLOWED UNDER EXISTING CITY ORDINANCES

In order to capitalize on all the potential benefits described above, PV placement location must address contextual issues. According to existing Austin Energy Design Criteria 1.3.8, electrical facilities are not allowed to cross property lines if served by AUSTIN ENERGY utilities.148 Operating within these parameters, an alley flat may obtain alternative energy via photovoltaic panels only when the dwelling and array occupy the same property lot. The location of the PVP array can fall into one of six categories. Progressing from the alley back towards the main parallel street, the array can be situated as follows: on a trellis or carport facing the alley, on the roof of the alley flat, on a shared trellis between the alley flat and main house, on the main house, on a trellis or carport in front of the main house, and on a pole placed within the lot lines of the property. Note: all images are for diagrammatic purposes only.

6.3.5.1 ARRAY ON A TRELLIS OR CARPORT FACING THE ALLEY

148 “Austin Energy Design Criteria.” City of Austin Electric Utility. February 4, 2005. 11. 175

Placing the PVP array on a trellis or carport facing the alley allows for additional use of new or existing structures. The system would be wired from the structure back to the alley flat. Placing the array on the trellis will allow for installation flexibility, especially if the orientations of the house and roof design are not viable options. This allows for ease of installation and maintenance. Depending on orientation of the lot and tree cover, locating the array on a trellis may provide conditions for optimal results. It is important to note the trellis option may affect calculations that contribute to the 40% impervious cover regulation.

Figure 6.3.5.1

6.3.5.2 ARRAY ON THE ROOF OF THE ALLEY FLAT If the array is to be located on the roof, it must be addressed during the design development of the house. For example, it would be advisable to introduce a roof surface that is oriented towards south. This would provide an opportune surface for the array. Another important reason to consider the array placement during the design

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development period revolves around aesthetics. The system can be architecturally designed to blend into the aesthetic of the dwelling, alleviating the appliqué appearance of roof arrays. Moreover, by placing the system on the roof, no additional wiring is necessary and no extra costs incur.

Figure 6.3.5.2

6.3.5.3 ARRAY ON A SHARED TRELLIS BETWEEN THE ALLEY FLAT AND MAIN HOUSE If conditions within the alley are not ideal and roof shape or orientation of the alley flat are inadequate, placing the array on a trellis between the alley flat and main house may serve as the next best option. As mentioned in topics 2.6.1 and 2.6.2, the shared trellis option depends on lot orientation and surrounding context. Not only providing a framework for the array, the trellis can help facilitate social and cultural interaction between the two homes. With a strong sense of community rooted in East Austin, a shared trellis helps frame outdoor space, creating a place where families can congregate. This would help diminish the potentially social awkward situation of a

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shared backyard. It is important to note the trellis option may affect calculations that contribute to the 40% impervious cover regulation.

Figure 6.3.5.3

6.3.5.4 ARRAY ON THE ROOF OF THE MAIN HOUSE As mentioned in topic 2.6.2, placing the PVP array on a roof is the most common option in retrofitting houses for solar energy. With an existing structure already in place and given adequate conditions, placing the array on the existing home may be the optimal solution. There is added benefit in pursuing this option. Most existing homes are larger in size than the maximum 800 square foot footprint of the alley flat. Consequentially, this means that there is a greater amount of roof surface area on the main house; therefore a larger array can be accommodated. By introducing a larger array, there is potential to not only provide solar energy to the alley flat, but also to the main house as well. Additionally, by not introducing additional structures, such as any of the trellis

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options, no further land coverage will be consumed, allowing the main house and alley flat to fit comfortably within the 40% impervious cover regulations.

Figure 6.3.5.4

6.3.5.5 ARRAY ON A TRELLIS OR CARPORT IN FRONT OF THE MAIN HOUSE Similar to topic 2.6.1 and 2.6.3, the array should be placed on a trellis or carport located in the front yard of the main house if roof and alley options are not adequate. If there were an existing structure, such as a garage, placing the array here would not contribute additional area to the 40% impervious cover regulation. Moreover, a majority of main houses have driveways, which already are taken into consideration concerning impervious cover calculations. Constructing a new trellis or carport over the driveway takes advantage of an existing infrastructure, resulting in no further area addition to impervious cover regulations.

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Figure 6.3.5.5

6.3.5.6 ARRAY MOUNTED ON POLE If none of the options mentioned above can be implemented, the solar array can be mounted on a pole and placed anywhere on the lot as long as it is within property line boundaries. This allows for maximum flexibility, adjusting to the most adequate location on site to receiver the most solar radiation. A pole mount system allows the array to be situated above shadows cast by adjacent buildings and tree canopies.

Figure 6.3.5.6

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6.3.6 SCENARIOS POSSIBLE UNDER VARIANCES TO CITY ORDINANCES

If placement possibilities according to existing ordinances fail to provide an adequate location for the PVP array, it may prove advantageous to introduce a variance applicable to qualifying alley flats. This variance would allow electrical facilities to cross property lines under the discretion and supervision of Austin Energy. Austin Energy would document the location of newly introduced power lines, as to avoid any confusion that may occur in future projects. If pursued, the variance would introduce a great deal of flexibility in regards to array placement, allowing alley flat housing to generate renewable energy regardless of property context. Additionally, by powering the alley flats with renewable energy, energy bills are reduced which contribute to the overall affordability of the dwellings. Finally, by introducing shared utilities, it may be easier to achieve economies of scale, reducing purchasing and installation costs, as well as operation and maintenance costs. Note: all images are for diagrammatic purposes only.

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6.3.6.1 ARRAYS ON TRELLIS DOWN CENTER OF THE ALLEY Placing the PVP arrays down the center of the alley allows individual homeowners to take advantage of economies of scale. Arrays can be installed, operated and maintained much more easily as opposed to having the arrays installed on individual houses. Additionally, installing arrays on a trellis allows all alley flats to receive some power from renewable energy, regardless of its immediate context. For example, if one of the properties in the middle of Figure 6.3.6.1 happens to have thick canopy cover, it can still receive solar energy from the shared array, called a shared district utility. Furthermore, placing the trellis over the alley takes advantage of existing impervious cover and will contribute zero area in regards to individual lot impervious cover requirements. Finally, it is important to consider trellis height, especially if the City of Austin begins to service the alleys. It may be necessary to place the trellis at least 12’ high, as to let emergency vehicles pass through.

Figure 6.3.6.1

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6.3.6.2 ARRAYS ON TRELLIS OVER SIDE WALK OF PARALLEL MAIN ROAD Placing the PVP arrays parallel with the main roads introduces yet another design option, contributing to the overall flexibility of the array placement. Sharing all the qualities in topic 2.7.1, placing the trellis on a main road begins to address the more social aspects of the immediate community. With such a visible structure, the trellis can have multiple functions such as a covered walkway, covered bus stop or mini‐pavilion to house vendors during a weekend street fair. Overtime, the trellis can achieve an iconic status, serving as a symbol and gathering place for a particular neighborhood.

Figure 6.3.6.2

6.3.6.3 ARRAY ON TRELLIS OVER SIDE WALK OF PERPENDICULAR MAIN ROAD Topic 2.7.3 shares all the similar qualities of economies of scale, ease of operation and maintenance, and iconic status as in topic 2.7.2. The major difference is that in the current option, the trellises and arrays run perpendicular to the alley. The main advantage is they merge into one supply line that would run down the center of the

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alley and then disburse energy to the alley flat dwellings. Inevitably, there is a reduction in material usage as well as installation costs.

Figure 6.3.6.3

6.3.6.4 ARRAYS SITED ON A VACANT LOT If there is a vacant lot in the alley, it can possibly be developed as a shared district utility solar garden. Arrays would be placed on a series of trellises or other structures gathering solar energy. From there, the energy would be transferred to a power line running down the center of the alley and then power would be distributed to individual houses. If pursued, the lot can also be developed as a park or garden for the local community. A park would not only address energy needs, but also environmental, social and cultural desires. The park could potentially be the “heart and soul” of an entire city block.

Figure 6.3.6.4 184

6.3.6.5 ARRAYS ON SHARED ROOF SPACE Utilizing shared roof space is yet another alternative. In Figure 6.3.6.5, the homes in the bottom right hand corner are sharing a series of PVP arrays. For clarification purposes, the property with the PVP array will be called Property One. The property receiving energy from Property One will be called Property Two. The owners of both properties can pursue this shared utility option one of two ways. First, both homeowners can split purchase, installation and maintenance costs in half. Each would pay an equal share and receive an equal amount of renewable energy. The second option would be a rental option. Property Two is unable to install PVP arrays on his/her property due to inadequate solar exposure, but Property One has ample solar exposure. Property One can rent out his/her roof space in order from Property Two to install PVP arrays and capitalize on solar energy. To be clear, Property One is not selling energy to Property Two, but rather renting roof space to accommodate Property Two’s energy desires. Next Generation Energy Alternative in Toronto, Canada has pursued a similar option. Their goal is to “rent roof space on large buildings, condos and co‐ops where PVP arrays

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can be mounted to generate clean power.”149 Power is then sold to the city utility where NGEA uses the profits to install additional PVP arrays.

Figure 6.3.6.5

6.3.7 FUTURE TECHNOLOGIES

Advancements in PV system production and efficiency continues to make solar technologies more affordable to consumers. According to the United States Photovoltaic Industry, technological advances in plastic solar cells, nanotechnologies and dye‐sensitive solar cells have the potential to lower production costs and increase performance efficiency compared to current silicon cells.150 Inexpensive modules allow PV systems to become affordably accessible to the Alley Flat Initiative. Two leaders in solar technology development are Nanosolar, based out of San Jose, California and Heliovolt, located in Austin, Texas.

149 “Welcome to NGEA.” Next Generation Energy Alternative.” http://www.ngea.org/. Accessed 24 April 2008. 150 “Our Solar Power Future.” United States Photovoltaic Industry. www.seia.org/roadmap.pdf. September 2004. 186

6.3.7.1 NANOSOLAR Nanosolar’s mission and vision is to develop products that generate solar power into electricity at a cost‐efficient scale. Researching nanotechnologies and their role in solar power generation, Nanosolar has been able to “change the cost efficiency and production scalability of solar electricity cells and panels.”151 The two products currently on the market are Nanosolar Utility Panel and Nanosolar SolarPly. The Utility Panel has been designed for utility‐scale power plants and able to generate more power by carrying 5‐10 times the amount of current than typical thin‐film panels.152 SolarPly is a solar‐electric cell foil that can be used for any sized system or use, i.e. commercial or residential, providing flexibility at a low cost. Both systems are available wholesale in large volumes, making these products, especially SolarPly, a financially feasible option if a co‐operative is formed, as suggested in Section 2.5.2.

6.3.7.2 HELIOVOLT Heliovolt is also developing customized photovoltaic panels that are high in quality and low in cost. Focusing on thin film technologies, Heliovolt is able to produce photovoltaic film 100 times faster and 100 times thinner than typical silicon cells.153 Product name FASST, the films are produced in a printing style process, much like a newspaper press. The film can be printed on any service, such as glass, steel, metal, composites and polymers, allowing for complete integration into the design aesthetic of a building. For example, if an alley flat is being constructed and there exists a great deal of fenestration on the south and western facades, FASST film can be printed onto the materials and begin generating solar energy. Heliovolt also produces “mass‐market modules,” allowing solar power to be integrated into myriad architectural systems; sunshades,

151 “Our Vision.” Nanosolar. www.nanosolar.com. Accessed 22 April 2008. 152 “Products.” Nanosolar. www.nanosolar.com. Accessed 22 April 2008. 153 “From the Ground Up‐ FASST.” Heliovolt: Solar Power. From the Ground Up. www.heliovolt.net. Accessed 22 April 2008. 187

louvers, curtains, skylights, and spandrels.154 With a new factory slated to open in 2009, a co‐operative partnership between Heliovolt, Austin Energy and the Alley Flat Initiative would provide affordable energy options to communities who need the partnerships most.

6.3.7.3 SMART GRID Title XIII of The Energy Independence and Security Act of 2007, an act of Congress, first introduced the concept of “Smart Grid”, an advanced power network that allows two‐ way distribution of electricity, as well as enhanced communication, reliability and security: Section 1301 establishes a federal policy to modernize the electric utility transmission and distribution system to maintain reliability and infrastructure protection. The term “Smart Grid” refers to a distribution system that allows for flow of information from a customer’s meter in two directions: both inside the house to thermostats, appliances, and other devices, and from the house back to the utility. Smart Grid is defined to include a variety of operation and energy measures – including smart meters, smart appliances, renewable energy resources, and energy efficiency resources.155

Though the Smart Grid concept is still in its theoretical stages, Austin Energy is eager to be at the forefront of its implementation. High tech businesses, a vital sector of the Austin economy, continually expect increased levels of reliability and security from their local power grid. “Meeting those standards increasingly requires utilities to be ready to employ Smart Grid technologies, which in turn requires a robust IT enterprise architecture. Andres Carvallo, the CIO of Austin Energy, believes that the Smart Grid will

154 “Power Modules.” Heliovolt: Solar Power. From the Ground Up. http://www.heliovolt.net//index.php?option=com_content&task=view&id=24&Itemid=48. Accessed 22 April 2008. 155 Sissine, Fred. Congressional Research Service, Resources, Science and Energy Division. Energy Independence and Security Act of 2007: A Summary of Major Provisions. December 21, 2007. 188

be deployed a lot sooner than most people think. He is on a mission to make Austin Energy a Smart Grid leader.156 In order to provide increased reliability over traditional energy grids, Smart Grid will have the ability to incorporate capacitor storage banks within its distributive power networks. Capacitors can be used as short‐term energy storage device, and, in contrast to batteries, capacitors are a much more environmentally friendly energy storage mechanism.157 The Alley Flat Initiative has the potential to contribute greatly to the distributive network of a Smart Grid through the use of solar energy fed capacitors. Excess energy produced by Alley Flat grid‐connected photovoltaic systems can potentially charge capacitors located on utility poles near the residential units. The energy captured by the capacitors can be redistributed to the grid as required, adding a layer of reliability to the Smart Grid network and decreasing the need for additional energy production.

6.3.8 CONCLUSION AND RECOMMENDATIONS

Harnessing solar power through photovoltaics is a small, yet integral step towards energy independency. By equipping all newly constructed alley flats with photovoltaic arrays, local communities and city utilities benefit immensely. Solar energy provides home owners with clean, quiet, renewable energy while contributing minimal external impact to the surrounding community and environment. Generating electricity via PV arrays reduces emissions of carbon dioxide, carbon monoxide, sulfur dioxide and other harmful pollutants, contributing to cleaner, fresher air that all of us are entitled to. Additionally, by selling Renewable Energy Credits generated by the solar systems, Austin Energy can invest profits into projects that further benefit the Austin community, such as park development and research in energy efficiency.

156 Burkhalter, Michael. “Austin Energy Delivers Opportunity.” SmartGrid Newsletter. http://www.smartgridnews.com/artman/publish/Industry/Austin_Energy_Delivers_Opportunity.html. Accessed April 23, 2008. 157 Marshall, Brian and Charles W. Bryant, “How Capacitors Work.” http://electronics.howstuffworks.com/capacitor.htm. Last accessed May 1, 2008. 189

For each KW of solar array installed, Austin Energy is reducing the amount of energy they need to generate and distribute by an annual average of 1,363 KWH. While a single PV array may not have a substantial impact on the whole of the system, multiple systems do. With over 7,000 lots suitable for alley flat development, the amount of solar energy generated annually can contribute immensely to Austin Energy’s capacity, as well as renewable energy goals. Furthermore, it is important to mention that with new technologies, as being developed by Heliovolt and Nanosolar, increases in PV system efficiencies will occur, generating an even greater amount of energy and contributing more to Austin Energy’s overall generation capacity. Finally, it is important to address context issues of the alley flats. 7,000 lots mean 7,000 different sites. In order to accommodate each and every dwelling with solar energy, it is vital to remain as flexible as possible in regards to panel placement and installation. In some cases, a shared district utility may be needed. If this option is pursued, it is important for Austin Energy to supervise the installation processes, documenting the location of new utility lines in order to avoid any future altercations when maintaining the utilities. Though installation of photovoltaic and solar thermal systems in the Alley Flat units will provide significant benefits to the community, these systems also come at a significant cost to the owner. In analyzing the financial viability of these systems it is important the weigh the potential gains in annual operating cost with the total cost of materials and installation. Though Austin Energy rebates and reductions in federal tax liability help to make these energy efficiency measures more affordable, they are still inaccessible to lower income families in many cases. The use of alternative funding structures, such as buyers’ cooperatives and partnerships with relevant non‐profit organizations will help reduce the overall cost borne by the Alley Flat owners. In order for the Alley Flat Initiative to have the greatest impact on the City of Austin, local communities and Austin Energy, we specifically recommend the following:

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1. Employ flexibility in regards to PV placement. Initially pursue options 6.2.6.1‐ 6.2.6.6. If these options are not viable, consider forming a district utility as mentioned in topics 6.2.7.1‐6.2.7.4. A last case scenario would be to rent neighboring roof space and cross property lines, as mentioned in topic 6.2.7.5. 2. Pre‐pipe every newly constructed alley flat house for future solar thermal use. It is expected in some cases that funding for a solar thermal unit may not be present during the building process. When funding is accessible, it is recommended that each newly constructed dwelling be pre‐piped as to avoid future retrofitting and renovation costs of solar thermal units. The units would simply plug‐in to the dwelling, reducing labor, material and installation costs. 3. Form a co‐operative between the Alley Flat Initiative, Heliovolt and Austin Energy. A co‐operative would provide affordable energy options to communities who need the partnership the most. With Heliovolt opening a new US factory in 2009, PV technologies can be offered to communities at a discounted rate, especially when purchased in bulk. Additionally, for every KW of capacity generated by solar energy, Austin Energy is saving anywhere from $650‐6,000. 4. All profits from Renewable Energy Credits generated by the Alley Flat Initiative should be reinvested into the communities where alley flats are prevalent. Reinvesting profits into these communities would introduce another means of accessing funds for the installation of affordable renewable energies. 5. Be open‐minded to new technologies. Thin film technologies, as being developed by Nanosolar and Heliovolt, are cheaper and more efficient. The more affordable a product is, the more likely a greater number of alley flats will employ solar energy for it is not a huge financial burden. Additionally, these newer technologies are more flexible and able to be installed in any architectural module. 6. Aim to provide every alley flat with solar energy. Solar energy causes less infrastructural strain for Austin Energy and is better and cleaner for the environment and the City of Austin.

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7. Leverage all existing Austin Energy rebates and federal tax credits. The tax incentives currently in place for photovoltaic and solar thermal systems are significant, and the requirements to qualify for these rebates and tax credits should be met. In order to take full advantage of the federal tax credits, photovoltaic and solar thermal systems should be not be installed in the same fiscal year (unless the combined total credit for both systems is less than the $2000 cap). 8. If installing in separate years, focus on solar thermal first, then proceed with the photovoltaic system. Owing to its significantly lower upfront cost and decreased payback period of solar thermal systems, it is recommended that this be the higher priority installation. Rapidly rising fuel costs make the conversion from traditional gas water heaters to solar thermal systems increasingly fiscally responsible. 9. Organize a solar buyers’ cooperative for Alley Flat owners. This buyers’ cooperative should facilitate the bidding process, bulk buying and installation of photovoltaic and solar thermal systems. In leveraging its economics of scale to negotiate discounted materials and installation costs, a buyers’ cooperative will significantly reduce the upfront cost and payback period associated with photovoltaic and solar thermal installation. Previous models have shown a cooperative of at least 20 households can negotiate 20 percent discounts in retail solar prices. 10. Pilot a strategic partnership with Rays of Hope. Partnering with Rays of Hope, a local non profit organization which provides free materials and installation of photovoltaic systems for low income families seems a natural fit with the Alley Flat Initiative. A successful pilot with this organization could result in a fruitful long‐term partnership.

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APPENDIX A GIS ANALYSIS METHODS

This appendix provides a detailed description of data used and the steps taken to complete the GIS analysis to determine the number sites in Austin that could build an alley flat or, more generally, an accessory dwelling unit. First, we review a number of different factors that determine the suitability of a site for a secondary unit. Then we review the spatial data sources that allow us to perform a GIS analysis based on those factors. The majority of this appendix describes the specific steps taken to bring all of the spatial data together into a single geographic information system with a parcel shapefile that provides detailed attribute information for each parcel.

1.1 FACTORS USED TO DETERMINE LOT SUITABILITY

There are a number of factors that determine a parcel’s potential for an Accessory Dwelling Unit (ADU), including: 1. Whether or not a parcel is zoned SF‐3, the first requirement for ADUs 2. If the lot is at least 7000 square feet (ADUs allowed by right in SF‐3 zones) 3. If the lot is at least 5,750 square feet and less than 7000 (ADUs allowed by some neighborhood plans as a special infill tool) 4. If the lot still has space to build on given the constraint of impervious cover limits. Since the minimum building footprint would generally be 500 square feet, we assume there must be at least 500 square feet of available space. This calculation does not account for the allocation of space over the lot. As such, it shows only what is allowable under the impervious cover limits, and is not reliable as an indicator of which lots actually have enough space in one place to build. a. If a residential parcel is in the desired development zone, it is generally subject to a 45% impervious cover limit. Although some places have less restrictive limits, the Alley Flat Initiative aims to generally meet this standard.1 b. If a residential parcel is in the Drinking Water Protection zone’s “water supply suburban” area, we assume that it is subject to a 30% impervious cover limit, although the requirement ranges from 30% to 40%.2 c. If a residential parcel is in the Drinking Water Protection Zone’s “Barton Springs Zone,” we assume it is subject to the recharge zone’s 15% impervious cover limit, even though the Barton Creek zone and Contributing zone have different limits (20% and 25% respectively). 3 5. If the lot still has space to build in light of the city’s Floor to Area Ratio (FAR) limit. Due to the McMansion ordinance, homes may not exceed a .4 FAR: the ratio of the home’s total square footage to the area of the lot may not exceed 4:10. 6. If the lot is adjacent to an alley (this is clearly of interest to the Alley Flat Initiative, but is generally more convenient than other secondary units).

1 http://www.ci.austin.tx.us/watershed/ordinance_table.htm 2 http://www.ci.austin.tx.us/watershed/ordinance_table.htm 3 http://www.ci.austin.tx.us/watershed/ordinance_table.htm 197

7. Whether the lot already has one or no single family residences on it already. If it has only 1 single family home, it may very well have space for an alley flat. If it has none, then two homes could be built. 8. Whether the lot already has one garage apartment on it. 9. Whether the lot already has multiple buildings on it, in general. Although the combined single family home and garage apartment test is probably the best measure, other buildings such as sheds may constrain alley flat development. If a lot has 0‐2 buildings on it already, it may likely still have space for another, since 2 buildings often reflect a main house and a shed. Lots with 3 or more buildings probably do not have enough space.

1.2 GIS DATA SOURCES

In light of these criteria, a parcel shapefile was created with attribute information for zoning classification, lot area, neighborhood planning area, neighborhood planning association acceptance of the secondary unit infill tool, total square footage of building footprints on the property, impervious cover limits on the property, total square footage of main areas in the home, total number of single family homes existing on the property, total number of buildings existing on the property, and adjacency to an alley.

This shapefile is constructed from the following GIS data: 1. The Travis County Appraisal District’s (TCAD’s) 2008 parcel layer, ParcelPoly.shp. 2. TCAD’s listing of Austin’s city limits, a subset of its City_Jurisdiction.shp file. 3. Zoning data from the City of Austin, zoning.shp, last updated in 2003.4 4. Neighborhood Planning Area (NPA) jurisdictions,5 neighborhood_planning_areas.shp, provided by the City of Austin. 5. City of Austin poster indicating which 20 NPA districts/subdistricts accepted the secondary apartment infill tool.6 6. 2003 building footprint data from the City of Austin, Bldg_ftprnts_2003.shp, from which the total developed square footage and the total number of buildings per parcel could be derived.7 7. The “Comprehensive Watershed Ordinance” layer, bcwo.shp,8 which shows the desired development zone (assigned a 45% impervious cover limit), the drinking water protection zone’s “water supply suburban” area (assigned a 30% impervious cover limit), and the drinking water protection zone’s “Barton Springs Zone” (assigned a 15% impervious cover limit). In all cases, the most restrictive limit of a range was applied to the whole area. 8. TCAD’s 2008 property roll, provided as an Access database. Since each property id was linked with a particular parcel, data about properties could be linked spatially to the lots. The database classifies the type of improvements, which allows us to identify likely secondary units: these are either categorized as a second single family house on the lot

4 ftp://coageoid01.ci.austin.tx.us/GIS‐Data/Regional/zoning/zoning.zip 5 Provided by Scott Grantham, from the City of Austin’s Neighborhood Planning and Zoning Department. 6 Map shared by Sonya Lopez, Senior Planner from City of Austin’s Neighborhood Planning and Zoning Department. 7 ftp://coageoid01.ci.austin.tx.us/GIS‐Data/Regional/planimetrics/build_p.zip 8 ftp://coageoid01.ci.austin.tx.us/GIS‐Data/Regional/environmental/bcwo.zip 198

(code “01”), or a garage apartment (living quarters over a garage, with code “21”). The database also includes the square footage of all improvements, enabling a summation of all main floor areas. Homeowner occupancy on the lot and improvement values can also be derived from this database and were incorporated into the new master shapefile. 9. A layer of Austin’s alleys, Alleys_Austin.shp, created by Elizabeth Walsh by individually identifying right of ways separating blocks that did not have streets on them.

1.2 COMBINING EXISTING SHAPEFILES INTO MASTER PARCEL FILE

The GIS data layers listed are all spatially related to each other, but they were not easily combined initially. Since spatial joins were complicated by oddly overlapping layers, many intermediate steps were taken. Also a great deal of data analysis was performed in Access in order to enrich the attribute information of the master parcel layer.

1.2.1 CONVERSION OF POLYGONS TO POINTS In order to apply values from larger polygons to smaller ones within them (such as zoning values to parcels, or parcel values to building footprints), these polygons were first transformed to points using ArcInfo’s “features to points” tool. This tool assigns all of the attribute information from the original polygon to a point (centroid) located in the center of that polygon. This avoids the problem of a building showing up in two different parcels, or a parcel showing up in two different zoning layers.

1. Converted all Bldg_ftprnts_2003.shp to a new point file, bldgftprnt_points2. 2. Converted parcels to points. a. Since the Parcel_Poly.shp file was too large to convert to points, I selected only those parcels that 1) have their centroid in Austin’s city limits, or 2) had their boundary crossed by Austin’s city limits. I exported this selection as a new polygon layer, Aus_parcel_addtl.shp. b. Converted Aus_parcel_addtl.shp to a point file, Aus_parcel_addtl_FeatureToPo.shp.

1.2.2 RELATING BUILDING FOOTPRINT DATA TO PARCEL DATA The first step to getting building footprint information linked to parcels is to match each building footprint point with the parcel data that pertains to it. Once each building footprint is assigned the appropriate parcel identification number (Parcel ID), building footprint information can be generalized and linked back to the parcel polygon layer via the unique field, Parcel ID. 1. Since we are generally only dealing with Austin properties and already chose to limit parcels to Austin, I narrowed the building footprints to Austin. I selected by location all features in bldgftprnts_points2.shp that are within Aus_parcel_addtl.shp, and exported selection as bldgftprnt_points_Aus_addtl.shp. 2. Next, I spatially joined bldgftprnt_points_Aus_addtl.shp (the target) with Aus_parcel_addtl.shp, creating a new file, bldgftprnt_pts_Aus_addtl_wparcels.shp.

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3. Since we ultimately only want summary information about the building footprints (total square footage of all building footprints, and total number of buildings) for each parcel, it is useful to dissolve by Parcel ID and summing desired building footprints statistics. a. First, I created a new field, Num_bldgs (short interger, 0 precision) and assigned each record (each building) a value of 1. b. Next, I dissolved by PROP_ID and used the statistics option to find the total square footage of each building footprint (AREA field) and the total number of buildings (Num_bldgs field). This resulted in a new layer, diss_bldgftpts_parcelinfo.shop c. Note: 1,549 out of 237,779 parcels have parcel IDs of 0, so these are now all combined together. Many of these appear to be owned by the LWCRA. 4. Joined Aus_parcel_addtl.shp with diss_bldgftpts_parcelinfo.shp through PROP_ID, and then exported as a new file, Aus_parc_addlftpts1.shp. This new file is a polygon layer that has all of the original parcel data and the total square footage of buildings and the total number of buildings.

1.2.3 RELATING PARCEL DATA TO ZONING DATA Using the same process described in the previous section, next I assign zoning information to parcel point data and then connect that information to the parcel layer created in the previous section. 1. To make analysis easier later, I created a new field (ZTYPE_GEN) in the zoning layer (zoning.shp) to assign the general code “SF‐3” to all of the different types of SF‐3 zones identified in the file. 2. I then spatially joined Aus_parcel_addtl_FeatureToPo.shp (target) to zoning.shp to create a new file, Aus_parcel_addl_zoning.shp. 3. Next, I spatially joined Aus_parc_addlftpts1.shp (the polygon parcel layer created in the previous section) with Aus_parcel_addl_zoning.shp (the point parcel layer with zoning information) to create AusParcelAddtl_ftpts_zoning.shp. This new polygon parcel layer has all of the original parcel data, the building footprint data, and zoning values.

1.2.4 ADDING NEIGHBORHOOD PLANNING AREA DATA TO PARCEL LAYER The secondary unit potentials of parcels also depend on their neighborhood planning areas. Since the neighborhood planning area shapefile from the City of Austin did not include a field about whether or not neighborhoods adopted the secondary apartment infill tool, this file needed some updates. Once updated, this layer was joined to a parcel point layer and joined back to the growing master parcel layer. 1. To simplify the parcel point layer for easier joining, I stripped extra fields from Aus_parcel_addtl_FeatureToPo.shp by dissolving it based on PROP_ID, resulting in a new file, Aus_parcel_addtl_FeatureToPo1.shp 2. To complete the neighborhood_planning_areas.shp file, I added a new field, “2nd_units” and assigned a value of “yes” for each NPA that adopted the secondary apartment infill tool. As mentioned before, this field is based off of a poster of infill tool adoption provided by the City of Austin (no date). 3. I then joined Aus_parcel_addtl_FeatureToPo1.shp to neighborhood_planning_areas.shp to create a new point file, AusParcelAddtl_NPA.shp.

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4. Finally, I joined AusParcelAddtl_ftpts_zoning.shp (polygon from last section) with AusParcelAddtl_NPA.shp, and exported to create AusParcelAddtl_ftpts_zoning_NPA.shp. Now the parcel layer has all of the original parcel data, the building footprint data, zoning values, and neighborhood planning area data.

1.2.5 DETERMINING AVAILABLE BUILDING AREA FROM IMPERVIOUS COVER LIMITS Impervious cover limits, which vary across the City of Austin, restrict the buildable area of each parcel. To determine the amount of buildable area remaining, it is necessary to multiply the relevant impervious cover limit (a percentage of the total lot allowed) by the total square footage of the parcel, and then subtract the total square footage of the building footprints.

The impervious cover limits vary as follows, according to a CoA website: Water Quality Zones Single Family Limits Water District Types Desired No limit Urban Development Zone 45%‐60% Suburban City Limits 45%‐60% Suburban N.Edwards/ETJ Drinking Water 30%‐40% Water Supply Suburban Protection Zone 1 unit per 2 acres Water Supply Rural 15% / 20% / 25% Barton Springs Zone (Recharge / Barton Creek / Contributing)

This values are mostly reflected by the Comprehensive Watershed Ordinance GIS file (bcwo.shp), which has only five of the Water District Types (there is only one Suburban file in Desired Development Zone) and does not break the Barton Springs Zone into three different areas. The GIS file also did not provide impervious cover limits. 1. I created a new field, ImpLim, to enter the relevant impervious cover limits. To be conservative, chose the lower (more restrictive) impervious cover limit for each range. After renaming the file, ImpLimits.shp, I deleted extraneous fields. 2. To get parcel IDs linked with impervious cover limits, I joined Aus_parcel_addtl_FeatureToPo1.shp with ImpLimits.shp to create a new file, Parcels_ImpLimits.shp. 3. I then joined AusParcelAddtl_ftpts_zoning_NPA.shp with Parcels_ImpLimits.shp and made a few adjustments to the joined files: a. I added a new field, SF3ImpLim to AusParcelAddtl_ftpts_zoning_NPA.shp. b. I then selected all SF3 parcels and calculated values for the SF3ImpLim field based on the ImpLim field in ImpLimits.shp. c. I also added fields for Water District and Water Zone to make these fields from ImpLimits.shp permanent in Aus_parcel_addtl_FeatureToPo1.shp. d. Finally, I removed the join from AusParcelAddtl_ftpts_zoning_NPA.shp. 4. I created a new ImpAllowed field in AusParcelAddtl_ftpts_zoning_NPA.shp, and calculated is value as Shape.Area * SF3ImpLim. a. For non‐SF3 fields, I assigned a value of ‐1 to help keep them out of the analysis. 5. I added a new field, AvalSqF2, in which to calculate the total available space for ADU development.

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a. To calculate only values for SF3 lots, I selected these lots and then performed the calculations. b. The AvalSqF2 field was calculated as follows: ImpAllowed‐SUM_AREA.

1.2.6 RELATING ALLEY ADJACENCY TO PARCEL DATA Adding a field to the master parcel layer that notes whether a parcel is adjacent to an alley was also important. This required creation of a new alley shapefile and then selection of all parcels that are adjacent to those alleys. 1. The alley shapefile, Austin_alleys.shp, was created manually through a visual comparison of city streets, streets.shp,9 with public right of ways (identified through the City of Austin’s 2003 land use file, landuse2003.shp.10 Generally, it was assumed that rights of ways without streets on them running between/along blocks were alleys. Each alley was drawn manually along the center of the right of way into a line file, Austin_alleys.shp. 2. To prepare the master parcel layer to record alley adjacency, I added a new field, AlleyAcces. 3. Determining adjacency: Since the alleys were drawn in the center of the alley right of ways as lines, they do not have a defined width, which a simple search for all parcels (in AusParcelAddtl_ftpts_zoning_NPA.shp) that intersect alleys is insufficient. Even a search for alleys intersecting an area 10 feet from an alley is not enough to catch some parcels clearly abutting alleys. A search for parcels intersecting a 20 foot buffer of the alley line segment appears to catch all parcels that do in fact abut alleys, however, it was still necessary to manually select and deselect a few parcels. This process resulted in a selection of 8,473 parcels abutting alleys. 4. With all 8,473 parcels selected, I assigned them a value of 1 for their AlleyAcces field.

1.3 INCORPORATING ATTRIBUTE DATA FROM THE 2008 TCAD ROLL

As mentioned previously, the TCAD’s 2008 Appraisal Roll has a great deal of valuable attribute information within it. Not only does it have the property value of all of the lots and homes, it also records a great deal of information about the improvements on the lots, including what type of improvements exist (single family home, garage apartment), how much area each improvement detail occupies (including main areas such as first floor, second floor, etc), and whether the lot is owner‐occupied. Since the TCAD database is so large (it includes detailed information for every single property in Travis County), it was not immediately compatible with GIS analysis: some query work was necessary to complete within Access before exporting into GIS. One of the initial challenges was that although the database included detailed information for every single improvement (which each had its own improvement ID number), a given land property might have multiple improvements on it. The tables that pertained directly to individual properties did not include information about the total number or type of improvements present. In order to be useful in GIS, improvement data needed to be aggregated into property/parcel data. Also, there

9 ftp://coageoid01.ci.austin.tx.us/GIS‐Data/Regional/regional/cenart.zip 10 ftp://coageoid01.ci.austin.tx.us/GIS‐Data/Regional/landuse/landuse_2003.zip 202 were some property ID numbers that were shared by multiple – often spatially separated – parcels. Although this was the exception to the rule, to avoid potential problems caused by duplication when grouping property information by property ID, I dissolved the parcel layer by property id so that I would be able to work with a set of unique IDs.11 The following sections document the approaches I used to prepare the Access data relevant to the Alley Flat Initiative for use in ArcMap. I used two sets of queries to create three master spreadsheets, one with information about residential lots that have 2 or more single family homes on them, one that has information about residential lots with 1 or 0 single family homes on them, and one that identifies residential lots with garage apartments on them. In all cases, I first limited the query to lots that were within the City of Austin’s jurisdictional limits, as identified previously through TCAD’s jurisdiction shapefile. I then dissolved it by property id to ensure that “PROP_ID” would serve as a unique key attribute through which I could relate different data tables. I created copy of the dbf file from the master parcel shapefile (AusParcelAddtl_ftpts_zoning_NPA.shp) and named it Austin3.dbf. After I imported this table into Access and used it to limit future searches to Austin.

1.3.1 QUERYING FOR RESIDENTIAL LOTS WITH 2 OR MORE HOMES To create a master spreadsheet with detailed information about all Austin residential properties with 2 or more single family homes, I performed a three‐step query.

QUERY #1: “Q_Single_Family_Type_01_Austin_Addresses_group1” The first query used three linked tables, each linked by their common prop_id field: 1. AUSTIN3 (to limit the query to Austin properties), 2. PROP (which includes all of the property information), and 3. IMP_INFO (which includes information specific to the each improvement which can related back’ to PROP through a many to one relationship via property ID number (prop_id).

First, I limited the search to all residential properties (prop_type_cd = “R”), and properties with single family homes (imprv_type_cd = “01”). Since GIS analysis through the parcel shapefile requires an attribute table based on parcel/property ids, we needed to summarize the IMP_INFO data by prop_id. To accomplish this, I grouped by the PROP tables’ prop_id field, which ended up grouping all of the multiple improvement ids by their common prop_id. In order to preserve the IMP_INFO property information, I included many of these fields with specific group‐related instructions (see Figure 1): 1. Count for Imprv_type_cd, so that the total number of improvements for each property is counted and reported. In order to return only those lots with 2 or more homes on them, I restricted the count to “>=2.” 2. Min for Imprv_val so that the value of the least valuable single family home is reported. 3. Max for Imprv_val so that the value of the most valuable single family home is reported.

11 In the master shapefile, parcel records that had previously been multiple, distinct parcels with identical property id numbers can be identified by the “DupCount” field. To do this, I first added a column “ParcelCt” to the original parcel layer and then dissolved by parcel ID, while summing the “ParcelCt” field. This created a new shapefile that had a single record for each property ID and a count of all of the parcels that have that property ID. I then joined this back to the original mater parcel shapefile by property ID and added in the “DupCount” field to the master parcel shapefile. 203

4. Sum for Imprv_val so that if the sum of all of the values of single family homes is greater than the sum of the min and max, the value of other homes could be derived. 5. Average for Imprv_val so that the average improvement value of the property could be known. This query found that there are a total of 1752 residential lots in Austin that already have two or more single family homes on them. This does NOT include duplexes or triplexes which would have a code other than “01.”

QUERY #2: “MultipleUnits_ImpDets_MA” The purpose of the second query was to tally the square footages of each of the main areas, as provided in the IMP_DET table. This query used the previous query (“Q_Single_Family_Type_01_Austin_Addresses_group1”) and the IMP_DET table. The IMP_DET table provided square footages for every single improvement, some of which did not make sense and were not main areas. To limit this search, I used TCAD’s “Improvement Detail Code List,” a pdf document that they included with the data CD. This document coded all of the improvement details that count as a main area of the home and would be used to calculate total square footage. According to this table, I limited the Imprv_det_type_cd to “ ‘1/2’ Or ‘1st’ Or ‘2nd’ Or ‘3rd’ Or ‘4th’ Or ‘5th’ Or ‘addl’ Or ‘ATRM’ Or ‘BELOW’ Or ‘CONC’ Or ‘DOWN’ Or ‘FBSMT’ Or ‘LOBBY’ Or ‘MEZZ’ Or ‘PBSMT’ Or ‘RSBLW’ Or ‘RSDN’.”12 In order to include the sum of all of these details’ areas, I grouped by prop_id and then used the Sum command for the imprv_det_area field (see Figure 2). This query results in 1752 properties.

Figure 1

12 These values stood for half‐floor, first floor, second floor, third floor, fourth floor, fifth floor, additional floor, atrium, “below”, “conc”, “down”, finished basement, lobby, mezzanine, partial basement, residence below, and “rsdn.” Many of these classifications are specific to larger homes and commercial buildings, but I included all by TCAD’s definition of main areas. 204

Figure 2

QUERY #3 “MultipleUnits_Full” For the third and final query,“ I combined the first two queries along with the PROP table to create a master spreadsheet that could be used in GIS to create an attribute‐rich shapefile. The following table includes the fields that were added to this spreadsheet, and the queries/table from which they originated:

QUERY/TABLE FIELDS INCLUDED FIELD DESCRIPTION PROP land_hstd_val Value of Land under homestead exemption land_non_hstd_val Value of land outside of homestead exemption. imprv_hstd_val Value of improvements under homestead exemption imprv_non_hstd_val Value of improvements outside of homestead exemption market_value Market value of the property. appraised_val Market value minus productivity loss assessed_val Appraised value minus homestead 10 percent homestead cap loss (loss for TCAD) hs_exempt Homestead exemption applies to property chodo_exempt A CHODO (community housing development organization has an exemption) py_owner_name Name of property owner

Q_Single_Family prop_id Property ID (key attribute) _Type_01_Austi CountOfImprv_type_cd Count of all single family homes on property n_Addresses_gro MinOfImprv_val Value of the least valuable single family home up1 MaxOfImprv_val Value of the most valuable single family home SumOfImprv_val Total of all single family homes FirstOfImprv_homesite Is the property owner‐occupied? MultipleUnits_I SumOfimprv_det_area Total square footage of all main areas in all homes mpDets_MA (necessary to determine FAR limits)

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1.3.2 QUERYING FOR RESIDENTIAL LOTS WITH 1 OR 0 HOMES The analysis for a master sheet with 1 or no single family homes used a three part query that is essentially the same as previous analysis. The primary differences are: 1. In Query #1, “Q_Single_Family_Type_01_Austin_Addresses_group2,” the count of Imprv_type_cd was limited to “<2” so that it would return only those residential properties with 1 or no single family homes (the query was grouped by prop_id, limited to “01” improvements, and limited to “R” properties as in the previous analysis. This query returned 139,793 residential properties with 1 or no single family homes, which suggests some possibility for an alley flat. 2. Query #2, “SingleUnits_ImpDets_MA” was essentially the same as Query #2 in the last analysis, except it naturally used the query “Q_Single_Family_Type_01_Austin_Addresses_group2” instead. 3. Query #3, “SingleUnits_FULL” was the same as Query #3 in the analysis above, except that it used “Q_Single_Family_Type_01_Austin_Addresses_group2” and “SingleUnits_ImpDets_MA.”

1.3.3 QUERYING FOR RESIDENTIAL LOTS WITH GARAGE APARTMENTS The query for identifying residential lots with garage apartments was much easier than the ones above. It was just like the first queries of the three part queries above. I used the same three tables and simply restricted the imprv_type_cd field to “21” and the prop_type_cd to “R” and saved it as “Q_Single_Family_Type_21_Addresses_final.” This query returned 584 residential lots in Austin with garage apartments. Again, garage apartments are strictly defined to be garages with dwelling quarters above them. Since it could also be useful to know the improvement value and the square footage of each garage apartment, I performed additional queries to be able to get this information into GIS and the master parcel shapefile as well. To create a spreadsheet with the improvement value of each garage apartment, I ran a query based off of the initial query for residential lots with garage apartments (“Q_Single_Family_Type_21_Addresses_final”) and the IMP_INFO table, linked by imprv_id, and included the fields “prop_id” from the garage apartment query, “Imprv_val” from IMP_INFO, and “Imp_id” from IMP_INFO. To create a spreadsheet with the square footage of the garage apartment, I followed the same approach as outlined previously using the IMP_DET table. I added these fields in in case they would be useful for comparison of size and value of secondary units in different neighborhoods, NOT so that they would be involved in the FAR calculations. This is because lots that already have garage apartments on them would not be eligible for another secondary unit, even if their FAR allowed more square footage.

1.3.4 BRINGING THESE THREE ACCESS QUERIES INTO A GIS SHAPEFILE In GIS, I was able to make a database connection (through Microsoft Jet Engine) with TCAD_Roll.odc, which enabled me to open each of these three queries in GIS. Once I opened each, I was able to export each as a dbf file. I did the same for important TCAD Access tables (PROP, IMP_INFO, IMP_DET) so that they could be available for future use analysis in the GIS. These new dbf files were far more easily manipulated in GIS and could be easily joined to the master parcel file. Upon joining them, I was able to export all records and make the fields permanent. Alternatively, while the fields were joined, I could create a new field and calculate values based on one of the newly joined fields to make those attribute fields and their values 206 permanent in the shapefile. When I finished adding attribute fields and values to this file, I had a parcel shapefile with a very robust attribute table. While most of the new attribute information was easily joined directly from the new spreadsheets, attribute fields related to the FAR requirements had to be derived from those fields and others already in the shapefile. To do this, I first calculated the total amount of buildable square footage that would be allowed by the CoA’s .4 FAR limit applied to the size of the parcel. I created a new field, “MaxImpSqFt” (maximum improvement square footage) and calculated its value as .4*[SHAPE_area]. I then added another field, “MaxNewImp” (maximum new improvement square footage allowed) and calculated its value as [MaxImpSqFt]‐ [TOTFlrArea]. “TOTFlrArea” is the field that includes the total of all of the main areas in each single family residential home on the lot (derived originally from the IMP_DET table). This FAR analysis does not consider the square footage of any properties other than single family residential homes. Once the FAR analysis was completed, the master parcel file had all attribute data needed to perform a basic suitability analysis and to analyze the patterns of secondary unit development in different neighborhoods (range of sizes, improvement values, frequency of development, etc). The suitability analysis for potential secondary unit development consisted of queries (selection by attributes) of different combinations of relevant factors, which were tallied in a spreadsheet. Queries were also used to estimate the total number of accessory dwelling units (and alley flats in particular) that have already been created in Austin.

1.4 NEIGHBORHOOD ANALYSIS OF EXISTING AND POTENTIAL ADUS

Since neighborhood trends are an important part of our overall analysis and the ultimate success of the Alley Flat Initiative, it was important to be able to examine the number of existing and potential ADUs by neighborhood planning area. To do this, after running each query from the one of the master parcel shapefiles, I exported it as a separate shapefile. This resulted in separate shapefiles for: 1. Estimated total number of accessory dwelling units on SF‐3 lots (including all lots with two or more single family homes or garage apartments), called “SF3_ADU_parcels.shp.” 2. Estimated total number of accessory dwelling units on non‐SF‐3 lots (including all lots with two or more single family homes or garage apartments on lots that are not zoned SF‐3) called “NonSF3_ADU_parcels.shp” 3. Estimated total number of SF‐3 lots of at least 7000 square feet with potential for secondary units, based on impervious cover and McMansion limitations and presence of no more than 1 single family home and no existing garage apartment. This query was exported and named “Over7000_AllPotentialTCAD.shp”. 4. Estimated total number of SF‐3 lots greater than 5750 square feet and less than 7000 square feet with potential for secondary units, based on impervious cover and McMansion limitations and presence of no more than 1 single family home and no existing garage apartment. This query was exported and named “5750_7000_AllPotentialTCAD.shp”.

To summarize the results of these queries by neighborhood, I dissolved each of the first two shapefiles by neighborhood planning area (“SUB_NAME”) and included statistics for the following fields: 1. ParcelCount Æ SUM This gives a count of each parcel in the layer.

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2. GarageApt Æ SUM This returns a count of all garage apartments by neighborhood for the parcels in the shapefile. 3. AlleyAccess Æ SUM This returns a count of all parcels with alley access by neighborhood for the parcels in the shapefile. 4. MinImpVal Æ SUM For a given parcel, this field is value of the least valuable home, generally the secondary unit. It can be divided by the count of records with values for this field to calculate the average value of these homes. 5. MinHouseCt Æ This newly created field was created to count the number of homes that had a value for MinImpVal – each record with a MinImpVal value was assigned a value of 1. This sum is necessary to find the average value of ADUs. 6. MaxImpVal Æ SUM For a given parcel, this field is value of the most valuable home, generally the primary unit. It can be divided by the count of records with values for this field to calculate average primary home value. 7. MaxHouseCt Æ SUM This newly created field was created to count the number of homes that had a value for MinImpVal – each record with a MinImpVal value was assigned a value of 1. This sum is necessary to find the average value of ADUs. 8. GarAptVal Æ SUM this returns the total value of each neighborhood’s garage apartments and can be used to derive the average garage apartment value in the neighborhood and the overall average ADU value. 9. TotLandVal Æ SUM TotLandVal is the sum of the homestead and non‐homestead land values from TCAD. Since some parcels were missing land values, I summed this field in the dissolve so that it could be averaged over those with recorded values, as represented by MaxHouseCt. 10. TotImpVal Æ SUM TotImpVal is the sum of the homestead and non‐homestead improvement values from TCAD. Since some parcels were missing land values, I summed this field in the dissolve so that it could be averaged over those with recorded values, as represented by MaxHouseCt. 11. Market_val Æ SUM This returns the sum of the market value (improvement plus land value) of all parcels in each neighborhood, which can be used to find the average market value of parcels by dividing by MaxHouseCt later. 12. 2ndApprvl Æ SUM This field was newly created from the 2nd_units field, where “yes” in the 2nd_units field became “1” in the 2ndApprvl field so that it could be summed. 13. Over7000 Æ SUM This field was newly created to help show how many ADUs are being built on lots where they are often permitted by right. All lots over 7000 square feet were assigned a value of 1 for this field. 14. SF1_SF2 Æ SUM This field was newly created to help show how many ADUs are being built on lots where they are only permitted in neighborhoods that have adopted the secondary apartment infill tool. All lots with SF1 and SF2 zoning were assigned a value of 1 for this field. 15. SF5_MF Æ SUM This field was newly created to help show how many ADUs are being built on lots where they are permitted by right on lots over 7000 square feet. All lots with SF5, SF6 and Multifamily zoning were assigned a value of 1 for this field.

Once each dissolve was complete, I exported each attribute table as a dbf, opened each in Excel, and formatted as a Workbook. I created a new average ADU improvement value field to show the average of all types of ADUs (garage apartments and the smaller of two single family homes on a lot. I calculated this field as follows: = ([SumMinImpVal]+[SumGarAptVal]) / ([SumGarageApt]+[SumMinHouseCt]).

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APPENDIX B: STAKEHOLDERS

It takes a village to build an alley flat. From preliminary neighborhood approval, regulatory obstacles limiting innovative green building practices, cumbersome city codes, creative financing and ownership structures, and general community education, the future success and ultimate sustainability of the Alley Flat Initiative’s housing delivery system depends on the interest, support, and collaboration of diverse stakeholders. While, as Figure 1 depicts, the ultimate decision of whether an alley flat will be built or not depends directly on the motivation and means of homeowners, housing developers (both non‐profit and for‐profit), the options available to them for their alley flat are constrained – for better or for worse – by a multitude of other factors determined by a wider group of stakeholders (represented in the orange ring). To date, AFI has already benefited from the insights of many important stakeholders. As noted in the Acknowledgements section, we are greatly thankful to the community leaders, City of Austin employees, housing professionals, environmental design professionals, and other UT faculty member who invested their time and energies in our class discussions and many follow up conversations. This Appendix identifies additional stakeholders who have also already consulted with us, and/or who we believe could play an important part in the Alley Flat Initiative’s future work.

Figure 1: AFI Stakeholders influencing alley flat development

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STAKEHOLDER LIST

CITY OF AUSTIN DEPARTMENTS & INITIATIVES The Alley Flat Initiative shares many overlapping goals with other City of Austin initiatives and departments, suggesting many opportunities for future collaboration. Key stakeholders include: • Stewart Hersh: Project Coordinator, Affordable Housing Finance Corporation, which oversees the SMART Housing program, the $55 million General Obligation (GO) Bond for affordable housing. 1 • Mayor Will Wynn, Austin Climate Protection Plan • Steve Barney, Neighborhood Housing & Community Development Department2. • Jennifer Kim and Laura Morrison, two Austin City Council members who are particularly committed to affordable housing and neighborhood planning issues. • Sonya Lopez, The Neighborhood Planning and Zoning Department3 • Dick Peterson, Austin Energy Green Building Program • Matt Hollon, Watershed Protection and Development Review • Members of the Affordable Housing Task Force • Dave Sullivan, Planning Commission • Alice Nance, Conservation Program Coordinator for the City of Austin4 • Janet Seibert, Civic Arts Coordinator, CreateAustin

AFFORDABLE HOUSING ADVOCATES/NON‐PROFIT DEVELOPERS • John Hennenberger, Texas Low Income Housing Information Service • HousingWorks • Affordable Housing Task Force Members • Michael Willard, Habitat for Humanity • Walter Monroe and Sunshine Mathon, Foundation Communities • Lower Valley Housing Corporation5

1 Mr. Hersh has already volunteered his time responding to questions from students. 2 In its 2008 Preserving Affordable Housing in Austin report, the NHCDD recommended that the city implement tax abatements, establish community land trusts, develop a creative public/private preservation fund, and support production of qualified nonprofits. All of these recommendations are similar to AFI objectives. 3 Sonya Lopez is the Senior Planner involved in the TOD planning process. Although 25% affordability is the goal, the City of Austin suspects that limited availability and high costs of land, as well as construction and infrastructure costs will impede this goal. Developers could be given the option of constructing the required affordable housing offsite in the surrounding existing neighborhoods. 4 We are grateful to Alice Nance for the insights and experiences she shared with Colleen Flynn , April 2088. 5 The Lower Valley Housing Corporation could be a helpful consultant to AFI. LVHC is a nonprofit that helps families build affordable housing in El Paso County through a program called, “mutual self help.” This program forms groups of families and teaches them how to build their own homes. This greatly 210

SUSTAINABLE URBAN DEVLEOPMENT & AFFORDABLE HOUSING ADVOCATES • Livable City

HOUSING FINANCE GROUPS • PeopleFund • Federal Home Loan Banks/Affordable Housing Program • Enterprise Community Partners, Enterprise Community Investment, and Green Communities • Local Banks • Brandi Clark, with proposed socially and environmentally responsible bank

NEIGHBORHOOD PLANNING GROUPS & COMMUNITY ACTIVISTS • Lori Renteria, East Cesar Chavez Planning Team6 • Susanna Almanza and Sylvia Herrera, People Organized in Defense of Earth and Her Resources, and the Govalle‐Johnston Neighborhood Planning Team • Patrick Goetz, North Loop NPA7 • Linda Johnson, Central East Austin Neighborhood Planning Association8 • Zelda Boetha, Holly Neighborhood leader9 • Jane Rivera, Rosewood Neighborhood Planning Association.10 • Girard Kinney, Upper Boggy Creek Neighborhood Planning Association.11 • [do we want to try to send reports to all NPAs that have adopted secondary units?]

GREEN BUILDING & DESIGN COMMUNITY • Richard Halpin, CasaVerde Builders Program

reduces the cost of each house by eliminating most of the labor costs. The family’s labor serves as a down payment for their house. This program also fosters community building amongst neighbors and is a model the AFI could implement to cut green building construction costs. 6 Lori Renteria has been a great help to the Alley Flat Initiative since its inception by sharing her insights and lessons learned in neighborhood planning. 7 We are grateful to Peter Goetz for sharing his insights about secondary apartments and neighborhood planning in an interview with Elizabeth Walsh, Summer 2007. 8 We are grateful to Linda Johnson for sharing her insights about secondary apartments and neighborhood planning in an interview with Elizabeth Walsh, Summer 2007. 9 We are grateful to Zelda Boetha for sharing her insights about secondary apartments and neighborhood planning in an interview with Elizabeth Walsh, Summer 2007. 10 We are grateful to Jane Rivera for sharing her insights about secondary apartments and neighborhood planning in an interview with Elizabeth Walsh, Summer 2007. 11 We are grateful to Girard Kinney for sharing his insights about secondary apartments and neighborhood planning in an interview with Elizabeth Walsh, Summer 2007.

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• Ed Ardizoni, Program Coordinator, Austin Community College’s Renewable Energy Program • Warren Heatwole, Department Chair, Austin Community College’s Building Construction Technology Program • Chris Maxwell‐Gaines, Innovative Water Solutions • David Venhuizen, Wastewater management systems • Effie Brunson, Rays of Hope • Susan Roothan, 1 House at A Time • Sustainable Building Coalitionm / Design~Build~Live • Gail Vittori, The Center for Maximum Potential Building Systems • Tree Folks • Backyard Wildlife Habitat Program (National Wildlife Federation) • Lynn Osgood, Public Design Lab, University of Texas

FOR‐PROFIT DEVELOPERS/BUILDERS • Young Leaders Group from the Urban Land Institute • Matt Fass, Habitat Modern12 • Michael Hamilton, Lisa Alonzi, Mid City Homes • Michael Casias, Esperanza Development • Richard Huffman, Huffman Homes • Bob Hinman, Discovery Homes/Palm Harbor Homes

STATE POLICY MAKERS • Representative Eddie Rodriguez, who introduced the Homestead Preservation District and is generally an advocate for affordable housing.

PROPERTY TAX EXPERTS & POLICY MAKERS • Nelda Wells Spears, Travis County Tax Assessor/Collector and Dusty Knight, Chief Operating Officer, Tax Assessor Collector’s Office.13 • Texas RioGrande Legal Aid Texas Taxpayer Assistance Program • Heather Way, UT Housing Law Clinic • Texas Appleseed

12 We are grateful to Matt Hass for the insights and experiences he shared with Colleen Flynn in an interview, April 2008. 13 We are grateful to both Nelda Wells Spears and Dusty Knight for the insights and experiences they shared regarding the property tax systems with several graduate students. 212

APPENDIX C: OWNERSHIP AND FINANCING STRUCTURES

Figure A.5.3.5.2 Variation in Property Value Growth

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Figure A.5.3.5.3 Variation in Cost of Alley Flat

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Figure A.5.3.5.3 Variation in Initial Land Value

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