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

On July 11th, Austin City Manager T.C. Broadnax released the proposed budget for the City of Austin’s fiscal year 2025-2026. The proposed budget totals $6.3 billion, marking a 5.1% increase from last year.

• You can view the full proposed budget here: FY 2025-26 Proposed Budget Document
• The City Manager has also included a Proposed Taxpayer Impact Statement: FY2025-26 Proposed Taxpayer Impact Statement

The budget includes tax-rate hikes and fee increases. These increases are not unusual; however, the city's financial state plays a significant role in determining their scale.

Previous financial forecasts from the city painted a gloomy outlook. In April, the Office of Budget and Organizational Excellence presented a forecast to the City Council showing the city was facing an estimated $33 million shortfall. Contributing factors included low sales tax revenue, stagnant property values, property tax caps, and the expiration of federal funding such as the American Rescue Plan Act (ARPA).

In response, the City Manager directed departments to identify cost-saving measures. The current budget reflects some of these, including reductions in overtime spending for police and fire departments.

However, even after implementing these measures, the city required a one-time transfer of $14.1 million from the Budget Stabilization Fund to the General Fund in order to provide transitional funding for social service contracts.

Still, as the proposed budget does not include a tax rate election, even with cost-saving measures and use of reserves, the cost of balancing the budget is being passed on to taxpayers. The proposed budget includes increases to both water and property tax rates.

For enterprise departments, those funded by fees or revenues they generate rather than the General Fund, fee increases are also proposed.

Impact on Multifamily and Rental Housing

The proposed budget includes increases to fees from both Austin Resource Recovery and Development Services that directly affect the multifamily rental housing industry.

Development Services

Development Services is eliminating eight vacant positions while increasing its budget for temporary and contract employees, resulting in $1.2 million in savings.

Fee increases include:

• Site and Plan Reviews
  • Regular rezoning case: $1,975.75 (up from $1,548, nearly a 30% increase) Page 957 of Budget

• • Traditional site plan: $6,528.79 (up from $3,692.70, a 76% increase) Page 957 of Budget

• Plan Review Fees for Additions or Remodels
  • Base fee for additions/remodels: $303.34 (up from $163, an 86% increase) Page 969 of Budget

• • Interior remodel base fee: $212.99 (up from $109.80, a 94% increase) Page 969 of Budget

• HVAC Change-Out Permits
  • First system: $80.09 (up from $61.20, a 30% increase) 

• • Each additional system: $41.47 (up from $17.10, a 142.5% increase) Page 970 of Budget

• Contractor Permits
  • Building, Electrical, Plumbing, or Sign Permits: $32.47 for both residential and commercial (a 62.4% increase) Page 971 of Budget

• Repeat Offender Program Registration
  • New fee: $983 (up from $660, a 48% increase) Page 974 of Budget

• Clean Community Fee (which funds Austin Code)
  • Increase of $0.10 per year for the next two years 

• • FY25-26 rate: $6.60 for commercial properties — Page 973 of Budget

Overall, permitting fees are increasing significantly across all categories.

Austin Resource Recovery 

Austin Resource Recovery is allocating $619,000 for six new positions to expand the litter abatement team and operate a new furniture reuse warehouse.

Code enforcement functions that were previously under the jurisdiction of Austin Resource Recovery are now being consolidated into Development Services to streamline operations.

Housing

• $1.7 million in additional funding for the Housing Voucher Program
• $500,000 in one-time funding, provided through the Housing Trust Fund, for the Displacement Mitigation Plan
• $400,000 increase, also from the Housing Trust Fund, for Emergency Rental Assistance, bringing the total annual budget to $4 million

However, the budget does not include:

• Any expansion to rebate programs for mandated multifamily composting
• Creation of a rebate program for air conditioning
• Continued funding for the Housing Trust Fund

The Housing Trust Fund, established in 2000 to fund affordable housing using revenue from property taxes generated by the sale of public lands, has been zeroed out in the proposed budget. $8 million, a majority of its balance, is being transferred to fund the Marshaling Yard, an emergency shelter for unhoused individuals.

While the Housing Trust Fund is not the primary funding source for affordable housing, any reduction limits the city's ability to increase the supply of truly affordable units.

The city is clearly in a difficult financial position, shaped by a range of circumstances.

But the question remains: Is passing the burden on to taxpayers, homeowners, and housing providers the only option? Or can the city identify innovative, structural solutions to reduce the long-term financial strain?

With nearly half of Austin’s population being renters, the proposed increases to taxes and tax rates could significantly impact affordability and housing stability.

Next Steps 

Below are the remaining council meetings related to the budget. At these meetings, the council will have the opportunity to present additional funding items before approving the budget. Additionally, the council will have to decide whether to have a tax rate election. Based on the current state of the budget and financial forecasting, we are almost assured to have a tax rate election.

FY 2025-2026 Timeline

• July 15: City Manager’s Proposed Budget Presentation
• July 23: Community Input & Work Session
• July 29: Work Session
• July 31: Public Hearing & Work Session
• August 5^th & 7^th: Work Session
• August 13^th-15^th: Budget Readings & Tax Rate Hearings
• October 1^st: First Day of the Fiscal Year

The Austin Apartment Association will continue to monitor developments and keep you informed throughout the process.

If you have any questions or concerns, please contact the Government and Community Affairs Director, Hannah Garcia