Northwest Austin Edition | March 2026

Government

BY BEN THOMPSON

Austin planners are now working on new roadmaps for affordable housing policy, both in response to a new state law limiting some local affordability programs and to focus more on lower-income earners. Austin has used hundreds of millions of bond dollars and development bonus programs to support new developments with income-restricted units. Approved by state lawmakers last year, Senate Bill 840 is affecting how some of those programs function. Under SB 840, multifamily and mixed-use housing projects are now allowed in places zoned for commercial uses, and the new density baselines go beyond those in programs offered by the city. Housing plans to undergo reform SB 840 has made many of Austin’s density bonuses less effective. Impact of Senate Bill 840 Under Austin’s density bonus programs, additional height and density allowed if affordable housing provided Before Under SB 840, unlimited floor-to-area ratio, a measure of density, and up to 54 units per acre by right After Decreased incentive for developers to participate in density bonus programs Impact

The background

A quickly rising MFI also means residents may face more competition for affordable units, while there’s less housing set aside specifically for the lowest income levels. The low-income threshold for a four-person household jumped more than $26,000 from 2020- 2025, a 33% increase.

Changes under the 2025 law come after years of sharp increases for the local median family income, attributed largely to an influx of higher-earning residents. The share of Austinites making $200,000 or more annually has jumped around 300% since 2010, per city reports, while the share of those making below $50,000 has fallen.

Income limits can be used to determine affordable housing eligibility. The federal government defines “low-income” as 80% of the median family income and below. Austin metro median family income

$140K $120K $100K $80K $60K 0

Median family income (4-person household)

Low-income limit/80% MFI (4-person household)

NOTE: THE AUSTIN-ROUND ROCK METROPOLITAN STATISTICAL AREA INCLUDES BASTROP, CALDWELL, HAYS, TRAVIS AND WILLIAMSON COUNTIES.

Fiscal year

SOURCE: DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT/COMMUNITY IMPACT

On the horizon Options for changes to Austin’s affordable housing strategy could include: Lowering income limits for density bonus programs Exploring new financial incentive and financing options for affordable projects Improving city development reviews and cost barriers for housing construction Partnering with a wider range of local groups and builders

What’s next?

City housing staff will revise Austin’s 10-year blueprint to track affordable housing, supported by a $750,000 share of a $6.7 million grant awarded by the Department of Housing and Urban Development. “The city manager’s housing policy team is going to be looking at all potential new incentives to be able to create new affordable units,” said Erica Leak, a city management team housing officer.

SOURCE: CITY OF AUSTIN/COMMUNITY IMPACT

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