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How Austin Uses Creative Incentive Programs to Mitigate the Affordability Crisis

By David Carroll AIA LEED AP BD+C CDT

July 25, 2023

Austin has been one of the fastest growing cities in the U.S. for over the last two decades and as a result our housing supply is insufficient to meet the ever-increasing demand; consequently, many Austinites are struggling to find affordable housing options.

According to the National Low-Income Housing Coalition, nationwide there are only 37 affordable rental homes available for every 100 extremely low-income renting households. The demand for affordable housing in Austin has never been higher, and in response, in 2017 the City’s Strategic Housing Blueprint outlined the need to build 60,000 new affordable homes by 2028 within the next ten years. This equates to 6,000 new homes every year starting from 2018. Over the last three years however, only 7,601 affordable homes have been built; well below the goal of 18,000 for that same time period.

The failure to meet the annual targets is in part due to Austin’s inequitable and auto-centric land development code as well as the State’s prohibition on inclusionary zoning.

Image: Austin Strategic Housing Blueprint

Texas is one of only three states in the U.S. that prohibits mandatory inclusionary zoning; a zoning practice that requires portions of land to be developed at an affordable rate. Without the ability to use inclusionary zoning, and with the failure to adopt a comprehensive land development code, Austin has been utilizing creative incentive-based programs to help produce affordable housing.

Austin has been utilizing creative incentive-based programs to help produce affordable housing. There are currently 17 development incentive programs in Austin. These programs grant additional zoning entitlements, and in exchange, developments provide some amount of affordable housing

The city’s newest incentive program is Vertical Mixed Use 2 (VMU2), which increases height and density, reduces parking requirements, waives FAR, and reduces compatibility for projects that provide 12% of the units at affordable rates.

Our Bouldin Village project on South Lamar Blvd is one of the first projects to use this new program and will bring much-needed affordable housing to this popular area of town.

CASE STUDY: Under VMU, the height for this project was capped at 5 levels above grade, but VMU2 allowed 3 more levels to be added.


To learn more about how Austin’s incentive programs may help your project, give us a call.


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