Central Business District (CBD) is the zoning designation for office, commercial, residential, or civic uses located in the downtown area as show on the map. CBD zoning has no height limit and limits development to no more than an 8:1 floor-to-area-ratio (FAR). This means that for example, on a 10,000 square feet lot, the building floor area can be at most 80,000 square feet. To build anything above the 8:1 FAR limit, developers must participate in the Downtown Density Bonus program. The program requires that either on-site affordable units are provided or a fee-in-lieu is paid to provide for affordable housing in another location. According to the Austin Density Bonus Program Assessment published in December 2024, the Downtown Density Bonus was established in 2013. While very few on-site affordable units have been built, the program has generated more than $27 million dollars in fee-in-lieu payments that have been used by the city to build affordable housing units in other locations. On an annual basis, the Downtown Density Bonus program generates 70% of all affordable housing fee-in lieu payments in Austin.
Senate Bill 840 (SB 840) was passed by the Texas Legislature during the 2025 session. The bill allows multifamily and mixed-use residential developments in commercial zones (including CBD) to build to a height that is the maximum of 45 feet or the height allowed for commercial uses on the site. FAR limits are specifically prohibited by SB 840. This means that since September 1, 2025, when the bill was enacted, projects with CBD zoning can be built with no size limit and no fee-in-lieu requirement. To quickly deal with the loss of the 8:1 FAR limit, staff has proposed to impose a height limit. However, instead of proposing the 210 feet limit that would be equivalent to an 8:1 FAR, the staff and the Planning Commission recommend a 350 feet limit. Every single foot of increased entitlement above a 210 feet maximum is a gift to developers and takes away money that would go into the Affordable Housing Trust fund. This would be undesirable at any time, but especially inappropriate now when the City Council can’t balance the City budget without a tax rate election. In addition, keeping the base height equivalent to 8:1 FAR ensures that gatekeeper requirements such as Great Streets continue to be mandatory for most projects.