The Downtown Commission has urged the City Council to reject proposed new height limits for downtown towers and instead replace the city’s Downtown Density Bonus Program with a funding system linked to future property tax revenue.
This recommendation, which received approval last week, stands in stark contrast to the Planning Commission’s earlier call to establish a 700-foot height cap in the Central Business District (CBD), doubling the previously suggested 350-foot limit by city staff.
Both votes occurred as city planners seek to comply with Senate Bill 840, a state law effective September 1 that limits Texas cities’ ability to regulate floor-to-area ratios (FAR) for residential and mixed-use developments.
This new law significantly diminishes Austin’s ability to negotiate community benefits such as affordable housing and green spaces in exchange for increased building heights or densities.
Under SB 840, mixed-use or multifamily construction is permitted by right in nearly all commercial zones, mandating a minimum of 36 units per acre (54 if the city already allows that density) and a minimum height of 45 feet.
Due to the prohibition of FAR limits, developments in the CBD could potentially have no height restrictions.
City Planner Alan Pani informed the Downtown Commission that the new state law weakens the incentive for CBD parcels to engage in density bonus programs, which have historically generated substantial fees to support affordable housing.
City staff have recommended a 350-foot base height, approximately equivalent to an 8:1 FAR, to maintain a rationale for developers to participate in the bonus program.
Developers seeking heights beyond this standard would still require City Council approval through the density bonus program.
However, commissioners raised concerns about the validity of setting any cap at all.
Commissioner David Carroll criticized the 350-foot proposal as “arbitrary and hurtful,” arguing it risks decreasing the revenue flow into Austin’s affordable housing trust fund.
Carroll stated, “You’re proposing 350 feet, which seems arbitrary to me. I’m not sure where that number is coming from, but that difference in real-world practice will leave a lot of money on the table that will not go into that affordable housing trust fund.”
Pani acknowledged that the chosen height was partly based on current construction trends and partly aimed at preventing down-zoning that could deter new projects.
Analysis shows the median height for sites participating in the Downtown Density Bonus Program has remained around 220 feet, even though many recent towers have exceeded 500 feet.
At the same meeting, the Downtown Austin Neighborhood Association (DANA) advocated for the removal of any base height limit and the elimination of the density bonus system altogether.
DANA proposed redirecting a portion of incremental property tax growth from unrestricted developments permanently to the city’s Affordable Housing Trust Fund, mirroring the fund’s initial funding mechanism.
The commission embraced DANA’s recommendations, urging the Council to “remove height and FAR restrictions downtown” and assign a portion of resulting revenue to the Affordable Housing Trust Fund or a similar entity assigned with actual affordable housing development.
This amended motion passed following the inclusion of language prioritizing middle- and lower-income housing for the use of funds.
Some commissioners expressed doubt about the notion that increasing market-rate supply would lower housing costs.
Commissioner Gina Houston highlighted a historical trend in Austin, stating that despite decades of belief that increased unit supply would reduce prices, costs have consistently continued to rise.
In contrast, Commissioner Phil Wiley contended that limiting supply directly contributed to making the 78701 ZIP code the priciest area in the city.
Pani told commissioners that the Planning Department intends to present a narrow CBD-height amendment to the Council next week to avert an immediate decline in program participation.
He cautioned against a proposed 120-day delay sought by various stakeholders, including the Downtown Austin Alliance, emphasizing the need for a prompt solution to maintain program participation before a comprehensive rewrite in 2026 aligned with a new Central City District Plan.
image source from：austinmonitor
