June 2021

History of Racist Housing

History of Racist Housing

  • Exclusionary zoning initially started explicitly to keep minorities out of certain areas of a city.
  • Once the Supreme Court struck down these explicitly racist laws, new exclusionary zoning laws were passed that were based on alleged economic principles but had the same racist effects.
  • Similar laws carry through to today with zoning that limits housing and hurts affordability throughout a city.

It kind of went under the radar a little bit, but last week the White House put out a blog entry on the history of exclusionary zoning and its lasting effects. Based on how much we’ve talked about similar issues here in Texas – especially in Austin – I thought it would be good to look at exclusionary zoning this week. So that’s what we will do.

I mention this a lot, but its important to note that racist housing and zoning policy in the US is a much, much bigger topic than I have space to address in this blog. This, therefore, is just a quick, basic overview of the issue. It is not a comprehensive analysis.

Origins of Exclusionary Zoning

In the late 1800s/early 1900s cities around the US began more comprehensive planning – including setting up zoning. Unfortunately this included many areas setting up explicitly racist zoning laws. These laws would literally keep minorities out of certain areas and not allow them to live there. There would be separate, specific areas that were the only places that minorities were allowed to live. Thankfully, in 1917, the US Supreme Court ruled that explicitly racist zoning laws like this were illegal.

As a result, after that cities had to become more creative with how they enforced their racism.

The Rise of Exclusionary Zoning

Once cities were not allowed to enact explicitly racist zoning laws, they started passing other laws that looked neutral on their face but were ultimately aimed at achieving the same racist goals.

For example, in St. Louis the council enacted zoning laws designed to preserve homes in areas that were unaffordable to most Black families, and the city’s zoning commission would change an area’s zoning designation from residential to industrial if too many Black families moved in. Similarly, research on ,Seattle’s 1923 zoning laws shows that areas in which Black or Chinese-American families lived were disproportionately likely to receive commercial zoning.

,Here in Austin, the council had a city plan to isolate minorities which included a 1928 proposal to create a “Negro District” — making it the only part of the city where African-Americans could access schools and other public services.

,Most of this was done under guise of economic development. It was helped by the ,Supreme Court, which explicitly permitted zoning regulations in a 1926 case. Writing for the majority, Justice Sutherland referred to a planned apartment complex as “a mere parasite” on the neighborhood and how it would affect neighborhood property values.

I’m not going to go through the entire history of racist zoning from the 20s, but suffice it to say that it has continued in a similar way since that time.

Present Day Exclusions

And when I say it has continued – I mean it continues to this day. Here I want to be perfectly clear – I do not think that modern day proponents of exclusionary zoning are normally doing it for racist intent. Usually it is done to protect single family housing and keep a neighborhood with its current status.

This is done through putting restrictions on the type of homes that can be built in a neighborhood. For example, cities often enact zoning laws that have minimum lot size requirements, minimum square footage requirements, prohibitions on multi-family homes, parking requirements, and limits on the height of buildings. While they may not have been explicitly enacted for racist intents, they trace their lineage directly to the racist zoning of the early 20th century.

And in addition to that, these restrictions severely hurt affordability. By enacting these restrictions, a city limits the total number of housing units available in an area. As a result, there is less supply in the city. And, as any econ 101 student can tell you, the price for the available housing goes up.

Austin is going through this exact issue now. I’ve written before about how it has tried to solve the issue with changes to its code. But now that is stuck in the courts – with no end in sight. Hopefully our leaders can get creative to get rid of some of these exclusionary zoning laws and allow higher density housing that improves access and affordability for all.

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The Great Texas Freeze Revisited

The Great Texas Freeze Revisited

  • Its been about 4.5 months since the great Texas winter freeze.
  • The storm caused tremendous physical property damage throughout the State.
  • If your insurance company still has not compensated you for that damage, you can file a lawsuit. But there are strict notice provisions you must give before you file.

Its hot in Texas. This week has been sweltering. But the good news is we only have a little over 4 months until November. It almost makes me long for the cool (cold) days of February. Almost.

Its been almost 4.5 months since the February great freeze. It was a brutal time for us – at least 151 of our fellow Texans died because of the storm. And, of course, there was tremendous damage to residential and commercial property.

This week, I want to take a look back at the storm, assess the damage that was done, and see where we have to go from here.

The Details

In case you do not remember, in the middle of February, it got brutally cold in Texas. In Austin, on Monday, February 15, temperatures fell into the single digits. Accompanying that temperature drop was lots of snow and ice.

I know that does not seem abnormal for the northerners who may read this blog, but for us it was brutal. We were just thoroughly unprepared for temperatures in that range. As a result, our energy plants froze and many people – including me – were without power for up to five days.

As stated above, at least 151 people died during the storm. And there was lots of physical damage to buildings when pipes burst and ice pierced buildings.

Insurance Claims Filed

As a result of that damage, there were a lot of insurance claims filed. In April, there was speculation that total damages would likely be between $10 and $20 billion. One common damage for residential home owners, for example, was to have their exterior tankless water heater explode. That’s what happened at my house.

Similarly, many commercial buildings throughout the state had burst pipes that caused significant water damage. In early April, the Texas Department of Insurance released a study that insurance companies had paid out $1.7 billion in damages by that time. It has undoubtedly risen since.

But Some Didn’t Pay

But not all insurance companies have paid out their claims. You can see from the numbers above – estimated damages are $10-20 billion but only 10% of that has been paid out so far. As with any large loss, some insurance companies have been hesitant to pay what they owe.

As a Texas property owner, what do you do in that situation? There are basically two solutions –

1) Demand appraisal or

2) File a lawsuit.

Appraisal is a process where you hire an appraiser and the insurance company hires an appraiser and they try to agree on the amount of damages. If they cannot, they agree to hire a third, independent umpire who will come to an agreement on damages with at least one of the appraisers.

Appraisal can be a helpful process – especially for smaller claims by residential homeowners. But for any larger claims – especially commercial claims – we always recommend filing a lawsuit. In a lawsuit, you have a lot more control over your claim and you can help determine what the damages are and if and when you should settle with the insurance company.

But before you file a lawsuit, please make sure you are aware of the Texas notice rules. A few years ago, the Texas legislature enacted a strict notice provision that must be given to insurance companies before filing suit against them. There are a lot of technical requirements that go into the notice so its very important to get a lawyer that is versed in those requirements.

The February freeze was a brutal storm that caused significant property damage. And whenever there is an event like that, some insurance companies will try to avoid their responsibilities. So if you are still fighting your insurance company, please give Bukowski Law Firm a call at 512-614-0335 and we can help.

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The Legend Begins

The Legend Begins

  • Austin F.C.’s first home game is scheduled for Saturday, June 19.
  • Its new stadium is built up in northern Austin by the Domain.
  • That submarket is booming. How much is attributable to a new soccer stadium is debatable. But the submarket is thriving and shows no signs of stopping.

We are finally here. Its time. Its Austin’s time to Grow the Legend.

I reckon most of you have no idea what I’m talking about. But I could not be more excited about Austin F.C.’s inaugural home game coming up on Saturday, June 19. Its been a long time coming and I have been on the edge of my seat for 18 months.

I’d love to take this space and talk about Josh Wolff’s formations or Cecilio Dominguez goal scoring ability. But, sadly, this is nominally a commercial real estate blog – not a sports blog. So instead I’m going to talk about the area around the new Austin F.C. stadium and how the allure of a new team has helped transform that area.

Austin FC Expansion

Just to give a brief history of the club, Major League Soccer seems to have been interested in putting a team in Austin for a while. It flirted with moving the Columbus Crew to Austin. But when that fell through, Austin was looked at as a potential expansion city. Then, in early 2019, it was officially announced that Austin F.C. would join MLS for the 2021 season.

When the plan for the Crew was being discussed, the Austin City Council debated a few different locations for where to put the stadium. It ultimately decided to put it up north by the Domain – near the corner of N Burnett and Breaker Lane.

A quick disclaimer – in this article, I will talk about how the area around the stadium continues to transform. When the stadium site was first proposed, a study found that it could bring up to $6.56 million in economic benefit to businesses in the area each year. I am always very skeptical of these arguments. So often the numbers do not seem to work out as predicted. I do very much hope that study is correct, but time will tell.

Local Area

Having said that, the area around the stadium is growing tremendously. Right at the corner of Burnett and Breaker, the Domain II Office tower is being built. When finished, it will be the tallest building in Austin outside of downtown. And the developer ultimately plans to have 3 million square feet of office along with a boutique hotel in that same area.

In addition, a 300 unit apartment community is going up in the same area. The residential market in the area is on fire. I mean – its on fire everywhere in Austin, but in that specific submarket, home prices have risen 28% in the last 12 months. Its an extremely popular place to live.

Finally, the bars and restaurants in the area (and around the city) have had watch parties for the away games that FC has had so far. And its not hard to assume they will be crowded for the home games also.

Correlation does not Equal Causation

So is my beloved Austin F.C a boon to Austin and the Domain area submarket? That’s hard to say.

The entire city of Austin is booming. And the Domain has been thriving for years. Lots of people live, work, and play in the area. Apple, Amazon, and Facebook have all announced they are building offices in the general area. Strong schools and a second downtown make the area attractive to newcomers.

More than likely, the growth in the area is a mix of all of this – schools, entertainment, employers, and Austin F.C. The bottom line, though, is the North Burnett/Domain area of Austin is hot. And there are no signs it will slow any time soon.

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How will Austin Solve its Housing Problem

How will Austin Solve its Housing Problem?

  • Austin has long been trying to rewrite its building code to promote higher density living. It thought it had finally passed an updated version in early 2020.
  • Local homeowners then sued the City for allegedly violating Texas law on code change procedures. The district court agreed with them.
  • Austin still has a desperate need for increased density and more housing. With the Code rewrite stalled, it needs to look to alternative methods for increasing density.

I want to give you a little peak behind the writing curtain this week before we get started. While these weekly blog entries are not particularly long, they do take a time commitment to write. But often, the writing isn’t even the hardest part. Some weeks I struggle to come up with an interesting topic to write about.

And then there are some weeks like this week. And someone just happens to hand you a blog topic on a silver platter. This week that person is the Mayor of Austin – Steve Adler. In an Austin Business Journal article this week, Adler lamented the state of Austin housing and how we desperately need a Code rewrite. Putting aside the fact that he and the City Council have been trying to get the Code rewritten for 10 years or so now – this is something on which we agree. Austin desperately needs to rewrite its building code to promote more density.

So in this week’s entry we are going to look at what’s stalling the code rewrite and where we can go from here.

The Foibles of the Code

Any Austinites reading this entry will surely know the story already but, as mentioned above, the City Council has been trying to rewrite the Code for almost 10 years now. It started with CodeNext. This was an initiative by the Council to have years of public hearings before attempting to make sweeping changes to the Code. The basic premise of it seemed sound – implement changes that will allow higher density housing, especially along important corridors.

CodeNext’s failure is a long story in itself but ultimately the project failed. After an attempt at editing the code (as opposed to a large scale overhaul), the Council unanimously voted to kill in in 2018.

Shortly thereafter, the Council asked City Manager Spencer Cronk to update the current Code with a proposed overhaul that would again promote higher density living. In early 2020, the City Council adopted Cronk’s proposal. And Austin was set with a new Code. Or so we thought.

Citizen Suit Against the Code

Because we are Austin, some single family homeowners did not like the new Code. They apparently did not want the zoning for them and their neighbors to be changed. As a result, they challenged the new code in Court on the grounds that the approval process did not follow state guidelines.

Specifically, the homeowners argued that Austin did not give proper notice of the changes to the Code. And, under Texas law, once property owners objected to the changes, approval required a 75% vote of the City Council. In response, the City argued that the law was only applicable to changes at a smaller level – a single house or a group of houses in a neighborhood. It did not apply to a complete overhaul of the City’s Code.

In March 2020, the local Austin District Court ruled in favor of the homeowners group stating that Austin did need to follow the entire change procedures. If this holding sticks, it appears to mean that for Austin to overhaul its Code, it would have to hold individual hearings for each change in each area it makes and get a 9 vote approval for each one. This makes it basically impossible.

Prior to the start of the pandemic, the City Council appealed the ruling. The appeals court has yet to rule on that appeal.

So What Now?

So what does Austin do now? In Mayor Adler’s ABJ interview, he again recognized Austin’s need for increased density and suggested that the Council use programs like the Downtown Density Bonus Program – in which the City Council allows developers to build higher story buildings to increase density in exchange for concessions to the Council.

This could – and should – be a good program. But too often the Council is holding developers hostage and trying to extract a king’s ransom that ultimately makes the development untenable to build. Or a local neighborhood group will protest the development because it is not a perfect solution to an imperfect problem.

So while the bonus program is helpful, it certainly can’t replace a complete overhaul of the building code. That is still desperately needed because we absolutely have to have more density.

While we wait for the Appellate Court to weigh in on the citizen lawsuit described above, hopefully the mayor or someone on City Council will come up with better ideas to allow for the increased density we so desperately need.

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