City staff recommend a new housing tax zone for Southeast Austin, but not for North Austin or West Campus

Austin's housing staff are recommending a new tax zone in Southeast Austin that would set aside part of the area's future property tax growth for affordable housing, according to an Oct. 15 memo from Austin Housing Director Deletta Dean, posted this week. Staff do not recommend similar zones in North Austin or West Campus for now.

For residents, the question is how much new tax money from growing neighborhoods stays there to build or preserve homes people can afford, and how much goes to the city's general budget for services citywide.

The background

Chapter 373A of the Texas Local Government Code, cited in the council's 2025 resolution, lets cities create homestead preservation districts in areas that meet its eligibility criteria and, within them, homestead preservation reinvestment zones. A zone captures a share of the growth in property tax revenue, the "increment," and puts it toward affordable housing.

Austin created its first district, District A in East Austin, in 2007. On Nov. 20, 2025, the council created three more: District B in Southeast Austin, District C in North Austin and District D in West Campus. It also extended the East Austin zone by 10 years and raised its share of the increment from 20% to 40%, the memo says.

What the study found

The city hired a consultant, Hayat Brown, to project tax revenue in all four districts. The memo summarizes the findings:

• District A, East Austin: Still productive. At 40%, the zone is expected to generate about $188.5 million from 2027 through 2036.
• District B, Southeast Austin: The "strongest candidate" for a new zone, driven by transit investment and rapid growth.
• District C, North Austin: Viable but more modest, with more single-family homes, scattered development and possible tax-exempt projects ahead.
• District D, West Campus: Lowest priority, because the built-out student housing market leaves limited room for growth.

The consultant recommended starting any new zone at a low share, around 5%, and raising it as investment arrives. It also urged the city to weigh the effect on the general fund, since a zone redirects future tax growth that would otherwise pay for citywide services. It noted that much of the eligible area, especially in District B, overlaps federal Opportunity Zone tracts.

The recommendation

Staff recommend creating a zone in District B with a low starting share "to lock in today's lower base value while moderating impacts on the General Fund." Staff will bring a final financing plan for the East Austin zone's 10-year extension to the council by the end of the year. The memo closes out the two 2025 resolutions.

What our records add

Who asked. On Sept. 11, 2025, the council approved two resolutions led by Council Member José Velásquez, both 11-0 on consent: one to extend and expand the East Austin zone, co-sponsored by Council Members Ryan Alter, Vanessa Fuentes and José "Chito" Vela, and one to create new districts and study new zones, which also listed Council Member Natasha Harper-Madison as a co-sponsor.

How the districts passed. On Nov. 20, 2025, the council created District B and District C 11-0 and approved the East Austin zone extension 11-0 after a public hearing. District D in West Campus passed 10-1, with Council Member Marc Duchen voting no. A boundary correction for District D in December also passed 10-1, with Duchen voting no.

Where District B is. The ordinance describes District B as bounded generally by I-35 on the west, East Ben White Boulevard on the south, Pleasant Valley Road on the east and the Colorado River on the north. That area overlaps the East Riverside corridor, where a separate city study this fall found the largest concentration of unsubsidized low-rent apartments. Our story on that report has details.

Tax zones and this council. Tax increment zones have split the council before. The zone for the Dog's Head development passed 7-3 in July.

What's next

Staff say the financing plan will come to the council by year's end. Creating a zone in District B would take further council action, with a public hearing. With a new council taking office in January, the timing could fall to members elected this week. Our calendar of what's left this year lists the remaining meetings.