Austin Apartment Association Calls for Reconsideration of Proposed City Budget Fees

Austin Apartment Association Calls for Reconsideration of Proposed City Budget Fees

On behalf of the Austin Apartment Association (AAA) members, Emily Blair spoke before City Council on Thursday to express significant concerns regarding the proposed City of Austin Budget for Fiscal Year 2025-2026.  

Blair spoke to the importance of those providing rental housing in Austin, noting, that "collectively, our organization is responsible for the housing of nearly half of the households in our City."

Blair commended the city's efforts over the past few years to increase housing supply, "We've seen firsthand that when cities prioritize housing like Austin has, renters benefit from greater choice and affordability."

Proposed Fee Hikes Threaten Housing Affordability

It was noted that proposed fee increases directly threaten to undermine the positive momentum we've seen in housing and will have significant long-term consequences for Austin's housing market.  The Association's concerns about the fees proposed, for example, in the FY 25-26 Development Services (DSD) budget are shared by both renters and housing providers throughout our city. 

Of utmost concern are the proposed Development Services fee increases, which include:

• Plan Review fees for Additions or Remodels: An 85% to 96% increase.

• HVAC Change-Out Permits: A 30% to 142% increase for new systems.

• Repeat Offender Program Registration: A 48% increase.

In the short term, these increased fees will inevitably lead to upward pressure on rents. Housing providers must cover operational costs, property taxes, and mortgages to manage their properties financially.  Blair noted, "the development services budget will create a higher cost burden that renters and rental housing providers cannot currently bear."

In the long term, without systemic changes to truly impact housing development costs and timelines, ongoing fee escalation like this will hinder and limit future housing projects, crippling the reinvestment in new housing essential for our city’s growth.

Understanding the Economics of Rent

With so much discussion around rent prices and housing affordability, and a prevailing misconception that rental housing owners enjoy large margins, the Association communicated to City Council members a breakdown of how each dollar of rent is allocated.

On average, 2023 research in Texas showed that 95 cents of every dollar of rent goes directly back into the properties for expenses like mortgages, maintenance, insurance, property taxes, staffing, and capital improvements. This left, on average, just 5 cents on the dollar as a return for rental housing owners. While 2025 data isn't yet available, it is now believed that in today's housing market in Austin, this 5-cent return has become a negative number.

In the past few years, mortgage rates have climbed, property insurance has tripled, and product costs and property taxes have all increased. When these rising costs are combined with unprecedented vacancy rates and new regulations in Austin, many rental housing providers and properties are struggling to meet their financial obligations. In the current market, operating expenses often exceed the income received from rent, forcing owners to dip into reserves monthly just to meet property expenses.

AAA Recommendations for the City of Austin

The Association urged the Austin City Council to reconsider the proposed Development Services and Austin Code fees and to prioritize both rental housing and renters, proposing that the city limit these fee increases to 10%.

The Austin Apartment Association will continue to advocate and partner with elected officials on real reform solutions to ensure the long-term sustainability of Austin's rental housing market.