City of Austin Proposed Tax Rate Election Effect on Multifamily Rental Properties

For the past three weeks, the Austin City Council has held weekly work sessions and council meetings focused on the FY 2025–2026 City Budget. This year’s budget process is especially challenging due to a significant deficit.

As we have previously reported (Read More Here), the city is facing an almost $33 million budget shortfall caused by lower-than-expected sales tax revenue, decreased property valuations, and the expiration of federal funding such as the American Rescue Plan Act.

Given this financial reality, City Council is now considering a Tax Rate Election (TRE), which would raise property taxes beyond the maximum amount allowed under state law without voter approval.

During the week of August 4, Council Members began forming “sub-quorums” — informal groups aligned around different TRE scenarios.

The table below outlines each TRE scenario under consideration and the Council Members supporting it.

The mayor’s 3.5-cent proposal, TRE-A, focuses on funding basic services while prioritizing affordability. This plan would allocate additional funding to the Homeless Strategy Office, emergency services and public safety, and parkland maintenance. You can view his full proposal here.

The 6.75-cent increase, TRE-B, would fund programs such as homeless services for youth, rapid rehousing initiatives, Austin ISD parent support specialists, and additional EMS call takers. You can view TRE-B here.

The 5.75-cent proposal, known as TRE-C, would use the additional revenue generated from the higher tax rate to fund a variety of initiatives, including shelter for unhoused individuals, improved emergency response, and climate resilience programs. You can view the proposal on how to spend the additional revenue here.

Council Member Duchen has proposed a 2-cent TRE, though a detailed spending plan has not yet been released.

It is clear that Austin will have a TRE on the ballot. What remains uncertain is the size of the increase. Each proposal would impact the cost of operating multifamily rental housing and, ultimately, the rents that residents pay.

While homeowners can claim a homestead exemption and receive some tax relief, there is no comparable relief for multifamily properties or the renters who live in them. The potential impact of these tax increases on multifamily housing could drive up the cost of living in the years ahead and undermine the progress the City Council has worked to achieve in reducing housing costs over the past three years.

Although the City has released data on the effect of the proposed tax rates for homeowners, there has been no comparable analysis on how these increases would affect multifamily properties and, by extension, the 48% of Austinites who are renters.

AAA has compiled data from 2024 and 2025 to show how each proposed tax rate would affect the average multifamily property.

A tax rate election will have an impact on the average renter that is far greater than on the average homeowner.

Data released by the Mayor’s Office showed that the average homeowner would see an additional $10 to $23 added to their monthly cost, while renters would see a much higher increase, ranging from $22 to $29 compared to last years taxes.  

AAA has met with council offices and shared this data, illustrating the effect on renters. AAA has discussed fees and the impact of taxes on the multifamily housing operations. We continue to advocate for sensible solutions that meet the needs of the city, while maintaining affordability in the ever-evolving market.

Regarding fees, Council Member Vela offered an amendment directing the City Manager to review development fees and processes, and to make recommendations that consider project scale, current economic conditions, efficiency, and the long-term sustainability of department finances. This amendment can be viewed in full on page 32 of the Draft Budget Items from Council (IFCs) from council.

Council will meet again on August 13th, to approve the budget and amendments to the budget.

The Association will continue to monitor this item as it develops over the next week and through a Tax Rate Election this November.