Austin City Council votes to require developers to pay higher parkland fees

The construction fees Austin uses to acquire and develop parkland are set to increase by 10%, a smaller increase than sought in earlier calls to double the fee, but enough that some wonder if it will deepen the city's housing affordability crisis.

In a vote balancing the desire for more parks against rising housing costs, the Austin City Council on Thursday reached a thread-the-needle compromise in establishing the new annual fee. In a related council decision, the parkland fee for the first time will be required not only of residential developments but also of commercial developments.

The fees, known as parkland dedication, have been around since the 1980s and funded more than 100 parks that Austin residents and visitors enjoy every day. City rules require that money from the parkland fees be spent on a park near the development that paid the fee. Developers can avoid the fee, or reduce it, by dedicating a portion of their project to on-site parkland.

Last year, the city bought 35 acres of parkland for about $19 million.

As land values jump year after year, the cost to acquire parkland has likewise increased. So, last year, to reflect the rising land prices, the development fee doubled. This year, it was set to double again, based on a staff recommendation, but the council refused to go for it.

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Council debates what to do about Austin parkland fees

The council for weeks had been divided on whether to raise the fee at all. But they agreed to the 10% compromise, with 10 members voting for it and one, Mackenzie Kelly, opposing it. Proposed as an amendment by Council Member Paige Ellis on Wednesday night, the 10% increase nearly splits in half the 25% increase floated by Council Members Alison Alter and Ann Kitchen, and the no increase option preferred by members Natasha Harper-Madison, Sabino "Pio" Renteria and Chito Vela.

Their differences had played out at Tuesday's work session. Vela said raising the fee will hurt struggling residents, who are likely to be saddled with the added costs that would be passed along from developers.

Renteria agreed: "Citizens of Austin, beware: Your rent's going to go up."

Council Member Leslie Pool disagreed. She said there's no evidence housing prices are linked to construction fees.

"That particular fact is explicitly absent," she said. Pool suggested an increase, but not a drastic one.

In the lead-up to Thursday's vote, some developers warned that doubling the fee would damage the city's housing supply because they would choose to pass on large-scale projects.

The fee is required of new developments and certain redevelopments that require a zoning change. Single-family homes will pay $6,000. Multifamily structures, depending on density, will pay $3,700 per unit or $4,900 per unit. Hotels will pay $1,600 per room.

Last year, the city collected $14.3 million in developer fees for parkland.

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How do Austin's parks stack up?

The higher fee comes amid an ongoing discussion about Austin's park system and whether taxpayers are getting the level of service they want.

As of last year, roughly two-thirds of Austin residents lived near a park or open space. That's defined as a quarter-mile for residents in the urban core and a half-mile for residents outside the urban core. At the time, the city had about 18 park acres per 1,000 residents. That's lower than the city's goal of 24 acres per 1,000 residents but higher than the 10 acres per 1,000 residents recommended by the National Recreation and Park Association.

In a 2021 community survey conducted by the city, three-fourths of respondents said they were satisfied or very satisfied with the overall quality of Austin's parks.

But in at least one metric, Austin's parks system is mediocre. According to the Trust for Public Land, which assesses parkland quality, Austin ranks 39th among the 100 largest American cities. Austin scores well for investment, but average or below average in park access, acreage, amenities and equity.

The hope is Austin's parks will improve with contributions from commercial developments. The thought behind adding the fee to commercial developments is that they benefit from Austin's parks when their employees of those developments use them but live outside of the city limits and don't pay taxes to the city.

That fee will be assessed based on a development's square footage — about $1 for office and retail, and about 40 cents for a warehouse. City staff predicts the city will generate $4 million annually from commercial fees that can be used to acquire 11 acres per year.

The policy change is not popular with businesses. Chris Randazzo, board chair at the Real Estate Council of Austin, recently called it "tone-deaf."

This article originally appeared on Austin American-Statesman: Austin to require developers to pay higher parkland fees