Austin leaders voted to extend a housing financing tool into several neighborhoods home to higher shares of lower-income residents, with the aim of bringing more affordable homes and apartments to those areas.

The setup

Under Texas law, cities can create Homestead Preservation Districts, or HPDs, to prevent displacement in targeted areas that have higher poverty rates and lower median resident incomes.

HPDs are meant to promote affordable housing within their boundaries, which must contain 75,000 residents or less under the law. A portion of city property tax collections in an HPD can be set aside to fund income-restricted housing development. Preservation district programs also allow cities and designated entities to buy up land for affordable housing.

The city's first—and until this fall, only—HPD covers a portion of East Austin that was designated almost two decades ago. Its millions of dollars generated so far have supported the creation of hundreds of affordable housing units, such as 120 apartments for youth exiting homelessness at The Works III.

What happened

On Nov. 20, City Council established three new HPDs in the West Campus area and portions of North Central and Southeast Austin. Officials also voted to double the share of property tax revenue reserved for affordable housing in the original East Austin HPD A.

The three newly designated districts include:

• HPD B, covering some areas south of Lady Bird Lake and east of I-35 home to nearly 60,000 people with an estimated 25.3% poverty rate
• HBD C, mainly covering neighborhoods south of Braker Lane, east of Burnet Road and north of US 183 with just under 75,000 people and a 26.5% poverty rate
• HPD D, covering West Campus areas with less than 11,000 total residents and a 59% poverty rate

The updates came two months after council member José Velásquez, who represents some of HPDs A and B, proposed the changes.

The conditions

While no changes were made to HPDs B and C, the West Campus district was slightly modified to remove an area with higher reported incomes. Council member Zo Qadri, who represents the downtown and campus areas, requested continued monitoring of the neighborhood in case it becomes eligible in the future.

What else?

While those districts have been designated, further action is needed before new financing for affordable housing formally begins. Council could review tools to be used in the new HPDs in the spring.

In the original HPD A, the increased share of tax collections for affordable housing will be effective this year and extend until at least 2035. For that east side zone alone, the city projects roughly $13.5 million-$18.5 million will be generated annually for affordable housing programs over the next decade—and that Austin's overall tax rate will be affected.

"The typical homeowner impact would be marginal, while the change provides additional resources for affordable housing," city staff wrote.

The new districts were formed a decade after Austin leaders last tried to expand the city's HPD program. However, conflicts with state law prevented those until a legislative update in 2023.