Advocating for the Multifamily Housing Industry – City of Austin FY 25-26 Budget

On Tuesday, July 15th, Austin City Council had their first meeting discussing the FY 25-26 Budget. In the coming weeks, Austin City Council will host various meetings in their districts and at city hall to hear from the community and propose amendments to the budget.  

AAA previously released an article briefing members on the dire financial state of the city, property tax increases and fee increases.  

The City of Austin's Proposed FY 2025-26 Budget: Effects on Multi-family & Rental Housing 

Of note, Development Services fees for site plan review, remodeling permits and other permits, have increased dramatically. 

Nearly half (46.3%) of Austinites rent their home according to a study done by Rent.com in August 2024 (Austin Has One of the Highest Rentership Rates in the U.S. – Here’s Why, Rent.com). 2022 data from Harvard University’s Joint Center for Housing Studies showed that nearly 48% of those renters spent more than a third of their wages on rent and utilities. Futhermore, 23% of Austin renters spent more than half of their income on housing costs. (America’s Rental Housing 2024 Report, Joint Center for Housing Studies of Harvard University)  

These numbers illustrate the need to build more housing and ensure that development is financially viable in all parts of the city. The city needs ALL types of housing. Single family homes, duplexes and triplexes, garden style apartments, mid-rise and high-rise apartments along with the newly allowed single stair buildings.  

In the City of Austin budget, many fees for constructing new buildings dramatically increased including site plan review (76.8% increase), rezoning, which many properties must do to build taller than regularly allowed (27% increase).  

For existing apartment communities, fees for remodeling, HVAC permitting, and the Repeat Offender Program (ROP) have also increased substantially.  

While it is important to spread the cost among taxpayers and corporations alike, the fees have increased substantially without clear reasoning for why.  

For example, the fee associated with the Repeat Offender Program has fluctuated in the past 5 years, but this year’s increase of 48.9% to $983 is the most significant increase the program has seen in the past 5 years. In fact, the fee decreased by $14 last year.  

Additionally, the city recently updated the International Property Maintenance Code and now requires that all residential units have AC capable of cooling each habitable room to at least 85 degrees or 15 degrees cooler than the outside temperature (Read more about the AC mandate here) but is now increasing the charge for HVAC change out permits.  

HVAC change-out permits are increasing by 30.9% from $61.50 to $80.90 for the first system. Each additional system will now cost $41.47 to permit. This is a 142% increase in cost.  

In the context of the City's Development Services department experiencing a decline in volume of construction projects, therefore presenting the need to right size to remain financially stable; the Austin Apartment Association is highlighting the concern of these costs for rental housing providers, and ultimately, renters.  

These fees and increases, will result in costs that add upward pressure to rents, to effectively financially manage the property and pay for the operations, property taxes, and mortgages, etc.   

Research from the National Apartment Association, Thirty Capital Performance Group and weareapartments.org, breaks down where each dollar paid towards rent goes at Texas multifamily rental properties. 2023 data showed that ONLY 5¢ of every dollar goes towards profit.  

• 2¢ of a $1 of rent go towards capital expenditures like HVAC replacements, roof replacements and other important repairs to ensure that residents have quality housing; 
• 40¢ goes towards the mortgage of the property; 
• 14¢ go towards property taxes; 
• 29¢ go towards operating expenses such as property and liability insurance, utilities and ongoing maintenance; 
• 10¢ goes towards payroll expenses for employees like property management and maintenance staff, who play a pivotal role in the operations and safety of a property and quality of life for residents.  

We are calling on the Austin City Council to review the Development Services and Austin Code fees and put rental housing and renters, first.   Renters don't benefit from the same savings and tax-advantages as homeowners, who receive the homestead exemption.

Affordability is a priority for each member of the council, as is long-term sustainability of the rental housing market to ensure housing for all Austinintes.