The Case For CodeNEXT’s Elimination of Conditional Overlays

We strongly support CodeNEXT’s proposed elimination of “conditional overlays,” commonly called COs, as a tool for future rezones. As explained below, COs greatly complicate the City of Austin’s zoning process, significantly increase costs, and require extensive lot-by-lot rezonings that detract from the City Council’s ability to focus on broader land use planning decisions appropriate for a legislative body. They are a vestige of a highly transactional zoning culture that keeps Austin from pursuing its larger vision and goals.

What are Conditional Overlays?

COs are a device that the City of Austin created in the late 1980s in order to condition individual zoning changes on site-specific requirements not generally applicable within a particular zoning district. They are negotiated as part of the zoning process, with City staff often acting as mediators between developers, neighborhood residents, and councilmembers.

While COs take many forms, they are most commonly used to: (1) reduce the number of uses allowed on a property—sometimes dramatically; (2) impose more restrictive limits on things like height, setbacks, or impervious cover; and (3) control the layout of development on a site.  The zoning map depicts properties subject to a CO with a suffix, which follows the (often quite long) base district notation. For example, a property may be zoned GR-MU-CO.

Why are Conditional Overlays a Problem?

1. Increased Need for Rezones

When zoning is conditioned on a CO, future redevelopment often requires City Council action to change conditions imposed by the CO even though the redevelopment is allowed by-right under the zoning district regulations. This often requires hiring consultants or attorneys and adds an additional, highly unpredictable step to the development process.

It also greatly increases the number of rezone applications filed each year and, consequently, the amount of time the City Council spends processing site-specific rezones. As observed in the Land Development Code Diagnosis Report (2014), the use of COs requires the City of Austin to process far more rezoning requests than other cities:

“An indication of an inefficient and outdated regulatory system in the city is the use of conditional overlays, and the number of applications requesting a rezone. In fiscal year 2013, the City Council approved 191 rezoning applications prior to subdivision or site plan approval. This is a 10% increase from the number of rezone applications from the previous year. While the increase may be an indication of improvements in the economy, the sheer volume of rezoning cases is extraordinary.”

2. Inconsistent with National Best Practices

Most major cities use some form of “conditional use” permitting and “planned unit development” zoning as a tool for tailoring requirements to particular developments or categories of development. However, we are aware of no other city that imposes site-specific conditions on standard rezones to the extent the City of Austin does. Additionally, because regulations are required to be “uniform” for each class of structure or use regulated within a zoning district, conditional overlays may not even be legally valid.

3. Impact on Affordability and Stifles Beneficial Redevelopment

The use of COs invariably impacts affordability and increases costs by making redevelopment, even for uses allowed in the base zoning district, contingent on discretionary Council approval of a change to the CO. Additionally, because COs operate as a separate layer of regulation on top of base-district zoning regulations, they make applying the permitting process far more complex. Simply finding out what a CO requires can itself be a time-consuming endeavor, as they are uncodified documents and often drafted using confusing, non-standard language that varies from case to case.

Besides increasing development costs for projects that move forward, COs invariably stifle beneficial redevelopment that would better serve the needs and desires of Austin residents for a more walkable urban environment. How many corner stores or other popular, desirable uses have been unable to get off the ground because of use-restrictive COs? It’s impossible to say for sure, but it stands to reason that COs have prevented many older developments from converting to uses more compatible with community needs. For example, if a CO from 1988 forbids specific uses, it may be difficult to change that CO in the future to meet the changing needs of a neighborhood.

4. Undermines True Land Use Planning

The use of COs invariably requires the City Council, as well as the City’s zoning planners, to spend a great deal of time on project-level minutiae that is not the appropriate province of zoning. This is because, rather than focusing on broader legislative questions, COs make zoning into a kind of site-plan permitting process in which the details of individual projects are locked in through ordinance conditions and restrictive covenants.

The result is a highly reactive zoning process, in which the City Council spends far more time and energy processing individual, site-specific rezoning applications than on areawide or small-area planning initiatives that have broader citywide impacts and are characteristic of legislative zoning practices in other major cities with similar goals and aspirations. The priorities necessitated by Austin’s system of complex, conditional zoning trickle down to City zoning staff, who—like the Council—spend more time negotiating individual zoning cases than on thoughtful, forward-thinking planning decisions.

5. Fosters a Highly Transactional Zoning Culture

Most rezone requests should be evaluated based on whether the uses allowed in the proposed district are compatible with development patterns in the surrounding area and with the City’s long-term planning goals. The use of COs, however, has fostered a culture in which City planners seek to please all sides by negotiating what are essentially project-level conditions, rather than focusing on these bigger picture legislative questions. “Jerry’s Guesses,” a well-known internal document circulated before most zoning meetings, epitomizes this “get to yes” culture by opining on likely vote counts and the status of negotiations between parties.

While the individuals involved in negotiating COs are generally well-intentioned, the process itself has made zoning in Austin too dependent on the needs and desires of individual interest groups surrounding a particular project, at a particular moment in time. This “horse-trading” quality benefits attorneys and consultants, who have made COs into a cottage industry, and creates an impression of insider access which in turn reduces public confidence in the integrity of the zoning process and the City’s ability to think and plan for the long-term.

What are CodeNEXT’s Alternatives to Conditional Overlays and How Could They be Improved?

CodeNEXT provides new tools to resolve the problems that COs were supposed to address. First and foremost, it includes a better menu of zoning districts that provide a much more varied combination of land uses. While we believe the proposed zoning districts could be significantly improved, by allowing more housing options and uses such as co-op housing, the tools available in Draft 3 are an improvement over the current Land Development Code.

The “minor use permit” process and the broader administrative authority described in Chapter 23-1 are intended to reduce the need for site-plan level conditions in zoning cases by providing greater flexibility at the administrative level. We support this objective, even if the details need further refinement or clarification. It will allow a simple administrative procedure to handle details like dumpster placement, traffic flow, and other items. If for some reason the process is controversial, it allows a minor use permit to be appealed to the appropriate citizen commission for review and reconsideration.

Finally, while we fully support the elimination of new COs, the goal of reducing applications for site-specific rezones will not be achieved without a more robust zoning map than proposed in Draft 3. This means far less (if any) reliance on “Former Title 25” zoning and greater use of R4 and the new mixed-use commercial districts, as well as options for corner stores (à la 43rd& Duval), cooperative housing, and a wider variety of housing choices. These changes are essential for CodeNEXT to meaningfully realize the goals of the Imagine Austin comprehensive plan.

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