There’s a story Kirk Watson likes to tell to illustrate how he felt about the Austin Development Services Department as he ran for mayor in 2022.
“When I was running, I emphasized that I wanted to do a performance review of Development Services, the site-planning process in particular,” Watson told the Chronicle. “And the joke – but it was only partly a joke – that I used to say was that not a single person came up to me during that race and said, ‘Watson, don’t touch that development review process. That stuff’s really working good.’ Nobody said that.”
In fact, as Watson was quite aware, few people had said anything complimentary about the Development Services Department (formerly known as Planning and Development Review) for many years, or maybe ever. As the entity responsible for issuing permits and inspecting construction in Austin, DSD is one of the most important departments in the city, but it has a reputation for having the slowest permit review process of the state’s large cities. Developers, affordable housing advocates, and even the city itself say the slow reviews raise the cost of housing.
A series of audits stretching back to the 1980s have detailed DSD’s shortcomings. The 2015 Zucker Report described its permit review process as labyrinthine and fraught with miscommunication. It stated that the complaints researchers received from Austinites about the department were “the worst we have seen in our national studies.” City employees told the researchers that the rules governing permit approval were “so complex that it takes a year to understand or get proficient in the process.”
The Zucker Report recommended 464 ways to improve DSD. Some were big-picture, like transforming the department’s culture to prioritize customer service. Some were specific, like requiring employees to return phone calls promptly. Developers said the report validated the complaints they’d been making for years. Ward Tisdale, then-president of the Real Estate Council of Austin, said it “confirms that delays are a significant problem and ultimately those delays add costs, which are passed on to the consumers.”
City leaders promised to implement some of the Zucker Report’s recommendations, and they did place its planning functions into a separate department. But a city audit conducted in 2019 found that the department’s review process was still slow. “DSD does not actively track plan review times and does not seem to collect data in a way that could provide reliable information about where specific delays exist in that process,” the report stated.
Cody Carr, a builder who has completed 200 homes in the city, said it has only gotten harder for him to build since the Zucker Report’s release. “There’s been just a huge increase in the complexity and the amount of paperwork required to permit a house since I started,” Carr said. “And after COVID, Development Services essentially went online and there were very limited in-person services available. Most of the process shifted to nameless email boxes. Processes that had previously taken an hour or a day started taking four to six weeks or longer. And at the same time, the number of regulations that impact our type of housing has increased dramatically over the last 10 years.”
The Connection to Affordability
Watson got his performance review of DSD in early 2023. The city brought in third-party consultants McKinsey & Company to audit the department.
“A key part of why I wanted to do this was because we had such a focus on affordability,” Watson said, referring to the central message of his mayoral campaign. “I didn’t want Austin getting in its own way. We would say out of one side of our mouth, ‘We want more housing that is affordable.’ But then we would turn around and tie you up in red tape that added to the cost of building.”
This idea – that regulation and slow permit reviews make housing more expensive – is something you’d expect to hear from developers. However, Felicity Maxwell, executive director of Texans for Housing, told us she believes that 60% to 70% of housing advocates in Austin today share the belief. “Most of the folks who are younger and involved with groups like the Austin Housing Coalition are both pro-affordable housing and pro-deregulation – the YIMBY policies,” she said.
Maxwell said older housing advocates tend to be more suspicious of developers and committed to safeguarding the character of historic neighborhoods – as Austin residents as a whole have long been. She said she saw a shift in these views among the city’s affordable housing community during COVID. “When we had the big run-up in housing prices, and the huge supply issues because of COVID, and the influx of population, I think that’s when a lot of affordable housing folks were like, ‘Hey, you could build affordable housing ’til the cows come home, but people who work in decent jobs at UT still can’t afford a house.’”
McKinsey & Company presented its analysis of DSD just as the increase in housing costs plateaued in August of 2023. The report was especially damning in its description of the department’s site plan review process. Site plans are detailed drawings showing the location of utilities, fire lanes, and other construction elements in larger projects; they’re not necessary for single-family home construction but are the starting point for the approval of apartment complexes and large commercial developments.
The McKinsey report found that of the 178 DSD customers it surveyed, 76% reported low satisfaction with the department’s site plan review process. It said that as many as 11 city departments can be involved in the process, depending on a project’s complexity, and that the departments lacked a common vision and a common understanding of who its customers were. The report stated that the review process was “inconsistent and unstandardized” and that the Land Development Code and Criteria Manuals – the books of rules that tell developers what they can build and where – had at least 47 regulations directing two or more of the departments to make decisions on the same subjects.
In terms of numbers, the McKinsey report said that 80% of customers complained of waiting longer than a year to receive a permit. In 2022, the average applicant waited 345 days for the review process to run its course. The average number of days the city took to review permit applications from 2021 to 2023 almost doubled, increasing from 98 to 183.
Carr said a lengthy review process can kill some of the projects his company seeks to build, especially modest apartment complexes of 5-16 units. These kinds of projects are part of what is called “missing middle” housing – townhomes, cottage courts, and other small developments. Proponents of affordability want to see this kind of housing built, as it provides less expensive options for first-time homebuyers and people of lower incomes who can’t afford single-family homes. Only 3% of Austin’s housing stock is missing middle, because the Land Development Code doesn’t lay out a specific track for its construction, which makes projects take longer.
“Time kills missing middle and small projects,” Carr reiterated. “If you have a limited budget on a small project and it takes a year or two, the carrying costs of that project, a lot of times, will make it financially unfeasible. That’s why people don’t do them.”
The McKinsey report estimated that each month of delays in the permitting process costs developers of residential homes an extra $9,700 in carrying costs. For builders creating multifamily housing, each extra month costs $546,000. Taylor Jackson of the Home Builders Association of Greater Austin pointed us to research suggesting that the additional costs can have a striking impact on housing affordability. According to the National Association of Home Builders, for every $1,000 increase in the price of a new home, 1,228 households in the Austin-Round Rock-San Marcos metropolitan statistical area are priced out of the market.
Taylor Smith of the Austin Board of Realtors also referred us to this research. He said it is this kind of analysis that informs ABoR’s advocacy on housing policy and reform. “We like to ask, ‘What can two AISD teachers afford, what’s that price point?’ Or if two EMS members are a household, what can they afford? And if we can find efficiencies in the process or a regulation that is no longer needed, how many families have we now created the opportunity to purchase this house, because we made it $1,000 cheaper?”
A New Approach
As in previous audits, the release of the McKinsey report was an occasion for promises. Watson said the report showed that the city’s permitting process was making the affordability crisis worse. “We’re gonna fix that,” he said.
To do so, Watson turned to DSD’s leaders – Director José Roig, who has since left the department, and Assistant Director Keith Mars – who was formally elevated to the top position in December.
Mars – a Tennessee native who moved to Austin 20 years ago – began working for the city as an environmental reviewer in 2008 and became an assistant city arborist soon after. Part of his job as an arborist was to tell developers that they couldn’t cut down certain trees, something they generally did not like to hear. But Mars had majored in political science along with biology, so he delivered the news with an unusual and even metaphysical diplomacy.
“I love relationships,” Mars told us. “I love being able to work on outcomes. That’s where the social science part of me really comes in – focusing on the outcomes that we are trying to get to, and not the means to an end.”
Mars would suggest to upset developers that they meet him at the jobsite to look at the trees. He said he soon realized there was something bigger than the trees that bothered them. It was the sense that they couldn’t trust the city, that it was inflexible, that it wouldn’t listen.
“Sometimes it was like, ‘Yes, we need to protect this tree, this is an amazing live oak,’” Mars remembered. “Or it could be, ‘Wow, the survey was actually wrong in this area. This is not a live oak, it’s a falling-down Arizona ash’ – which we saw a fair number of times. And having a very thoughtful approach – that paid huge dividends for us. That pivoted us from a narrative of, ‘Oh, the tree regulations are so tough and so onerous,’ when really the conversation was around risk and uncertainty and the time that it takes to get to what does need to be preserved.”
Mars told us that one of his major goals, now that he is director, is addressing the siloing of the departments in the development review process, their horizontality, their lack of communication.
“When we would have 10 other departments involved, there was no central case manager, there was no one that was trying to synthesize information or identify where there were conflicts,” Mars said. “Sometimes there are inherently conflicts. If the Fire Department says, ‘We need this turning radius for this road,’ and Austin Energy says, ‘Well, we need a transformer in that area,’ and we’re like, ‘Okay, but that’s where the building needs to go’ – we need to be able to identify that early. We need to be able to come together with departments and the engineering team on the private side, and work together to help solve that problem.
“And from the average contractor, all the way up to a very large development, those types of conflicts happen. And in the past, it was really just up to the applicant or the contractor to identify them – like, ‘Hey, this is one space, but I’m getting three different directions on what to do.’”
To avoid these kinds of conflicts, Mars said that DSD is now assigning case managers to help shepherd the larger development projects, like apartment complexes, through the process.
“One of the things we realized early is that housing is so important to the city that let’s just err on the side of applying dedicated case management for multifamily housing, because those become the really complicated ones,” he said. “We saw that as one of the biggest value-adds to cutting down the amount of time, cutting down the number of iterations, of back-and-forth in review. That case manager is able to hold folks accountable for timelines, be the central point of contact with the applicant, identify issues, and get those resolved.”
Since October, the department has piloted another program designed to facilitate communication called Expedited Site Plan Review. Mars said DSD began the pilot after learning that developers often waited to submit plans for large projects until they were completely drawn, in the hope they’d be approved quicker.
“There’s risk with that,” he said. “There’s the risk of, what if the city doesn’t agree? So we have established a team representing every city department involved that starts reviewing at the time of the plan concept. And then that development goes through what we call a 30, 60, 90 phase of development. When you get 30% planned, then all the departments get in a room. People from the departments actually sit down and review the plans at each stage, so the developers aren’t getting new comments for what they think are complete plans.”
In February, Mars released a memo updating the city on other work DSD has undertaken since the McKinsey report. For developers, the most exciting proposal was the promise to simplify the rules governing development. These come from the Land Development Code, but the LDC’s general directions are made more specific in a group of criteria manuals that provide detailed instructions on how to complete the various elements of any given construction.
The rules and regulations in the criteria manuals are constantly changing with advances in technology and best practices, so they contain redundant, conflicting, and obsolete instructions, developers say. In 2023, City Council established a group of several city employees and approximately 50 industry experts called the Technical Advisory Review Panel, which meets monthly to go through the criteria manuals and make sure the rules are relevant, effective, and not duplicative. In the memo, Mars announced that the panel is examining the rules to determine whether they should be revised or eliminated.
DSD is also reforming the way in which the rules are updated. In the past, the departments involved in the permitting process announced changes in the criteria manuals every three months. But because the departments’ schedules weren’t synchronized, builders could be confronted with new rules for development or permit applications which appeared without notice every month. Mars said such new rules will now be released only once a year.
People in the development community seem to be almost holding their breath in gratitude for Mars’ work. Carr said that reducing the frequency of changes in the criteria manuals and permit applications has been extremely helpful for his business. Jackson of HBA said the community is seeing reductions in the amount of time projects spend in review. City leaders and housing advocates are similarly impressed. Maxwell of Texans for Housing said DSD has seized a leadership role in the city’s development process. Mayor Watson said Mars “wakes up every morning trying to figure out how we do greater improvements.“
“The beauty of this is that it’s coming from within,” Mars said. “It’s coming from a recognition, broadly within the city, that we’ve got to do things differently.” Then, as he had throughout the conversation, he returned to the larger idea of what DSD’s work is meant to accomplish, and for whom.
“It’s all development,” he said. “It’s community. This becomes community. The built environment where you drop off kids, you go to the dentist, you go wherever – it’s all part of the same thing. So I think that perspective helps humanize and give some humility to the work that we do. We’re not just regulating to regulate. We’re trying to actually have a safe and a desirable community.”
All Anybody Could Afford
In our conversation with Mars, we asked if he believed the city should attempt once again to replace the Land Development Code. City leaders tried to replace the LDC for much of the last decade with a new set of rules called CodeNEXT. It didn’t go well.
Mars responded musingly at first, characterizing the code as an organizing, or disorganizing, document, calling it “an economy of words.” Then he got to the point. “If we tell someone, ‘Hey, comply with code, comply with rules,’ it’s like – have you ever stacked up that paperwork? Do you know how tall that is? That’s just not a reasonable position to take. So our ability to make words matter and make rules matter requires us to go back and look at what has impact and outcome, and then what doesn’t. So I think there’s actually a lot of appetite for that.”
The Land Development Code is generally described as a messy, contradictory, and multi-layered document. It has been amended hundreds of times since its creation in 1984. People in the development community have said that, like the criteria manuals, it is littered with superfluous and conflicting requirements.
“It’s one of those things that has just been left to us over time,” said Alina Carnahan of the Real Estate Council of Austin, a group representing commercial real estate professionals. “The people who are reviewing it, they didn’t write it. Their predecessors didn’t write it. Their predecessors’ predecessors didn’t write it. It’s just there because it’s always been there.”
A city report released in January on missing middle housing – the triplexes, townhomes, and small apartment buildings that Austin lacks – opens by criticizing the LDC for creating separate construction paths for commercial uses, single-family homes, and apartments. That separation of uses “reflects outdated planning principles and is misaligned with current City plans and policy goals,” the report states. “By prioritizing single-use development over mixed-use development, the code has contributed to Austin growing in a way where many residents live far from where they work, play, and access goods and services.”
The report points out that the code was written to support only two types of housing – single-family homes and large apartment complexes – and that this has left very few options for people looking for housing that is less expensive than a single-family home but not part of a large apartment complex.
Housing advocates tried to replace the LDC with CodeNEXT, beginning in 2013. The struggle that followed was often presented in simple terms: young urbanists who didn’t give a damn about the city’s historic neighborhoods versus older Austinites, NIMBYs, who wanted to wall the city off to newcomers. Those who looked beyond the caricatures, however, saw deeply informed civic engagement on both sides. For example, many who opposed CodeNEXT did so not because they were indifferent to the need for affordable housing but because they believed the new code was poorly designed and wouldn’t encourage affordability.
Then-Mayor Steve Adler pulled the plug on CodeNEXT in 2018 and the effort collapsed for good after a court challenge in 2022. That, ironically, was the year Austin voters elected an urbanist supermajority to the City Council. Since the 2022 election, Council has taken a piecemeal approach to land reform, passing a handful of amendments to the LDC which would have been part of CodeNEXT, had it been approved.
These include the HOME amendments, introduced by Leslie Pool. Pool was a loyal opponent of CodeNEXT for most of her decade on Council, as home prices rose steadily. When they rose again during the COVID pandemic, she worried that her daughter might never be able to afford her own home in Austin, the city in which she’d grown up.
“What I saw was a real disintegration of the ability for people my daughter’s age to be able to afford to buy a house,” Pool said. “It looked like renting was probably going to be all anybody could afford. So I reengaged the whole CodeNEXT conversation with my staff and we started looking back at the elements of the zoning reform that everybody had agreed with.”
Pool found a pair of proposals to champion. What is known as HOME 1 was passed in 2023. It allows homeowners and developers to build three homes on one lot, something which makes the construction of the small backyard cottages known as accessory dwelling units or granny flats easier. HOME 2 was passed in 2024, allowing homes to be built on lots as small as 1,800 square feet, a strategy that encourages the creation of affordable housing, not just because the structures are small but because the lots are too, which helps to lower the price of the home.
Housing advocates say the two provisions have helped create what they call a “gentle densification” of the core of the city. Since HOME, Council has passed other measures to gently densify. These include the elimination of minimum parking requirements, something housing advocates have said makes it easier to permit homes and other structures. Council also passed new rules allowing builders to create housing closer to multistory buildings. And it approved a pair of proposals designed to encourage the development of missing middle housing: Site Plan Lite and the Infill Plats Initiative.
Site Plan Lite was designed to reduce regulations on apartment complexes with 5-16 units, so they don’t have to follow the same rules as 300-unit apartments. The Infill Plats Initiative was meant to make it easier to subdivide lots, allowing developers the ability to include more homes on the same piece of land. Developers told us that the initiatives have been only partially successful because of language in the criteria manuals. Carnahan said developers have to work backward through the Land Development Code to complete the projects, making them more of a challenge. Others told us that subdividing lots is still a problem. It can take more than a year and cost over $250,000 in Austin, while in cities like Houston, the same process takes only months and costs far less.
On March 26, Council Member Paige Ellis, the author of Site Plan Lite, presented a resolution meant to fix some of the problems. The resolution amends the LDC to create new missing middle and mixed-use zoning districts in appropriate places throughout the city. It directs the city manager to find and eliminate administrative barriers to missing middle and mixed-use development in the criteria manuals and the development review processes. And it emphasizes the importance of bringing the departments that are part of the process to the table to make the work happen.
Approximately 30 Austinites spoke on Ellis’ resolution before the vote, breaking three to one in favor of it. The generational divide between supporters and opponents was obvious. Older residents said they feared the resolution would damage their neighborhoods – one used the term “obliterate.” Younger residents said they thought it would give them a chance to remain in the city. The Council members voted 10-1 to approve the resolution. “The aim is to create more walkable, sustainable, and friendly communities,” Ellis said.
As momentum for housing construction continues to increase, the Pew Charitable Trusts released a report two weeks ago showing that Austin added 120,000 units of housing from 2015 to 2024, more than any similar city in the country over that time period, with large apartment buildings accounting for about half of the new units. Seven percent of the new single-family and townhome housing – 2,850 units – were accessory dwelling units. The report pairs that info with the news that Austin’s median rent fell from $1,546 in December 2021 to $1,296 this January.
Carnahan said the Pew report and other coverage should not interpret the falling rents solely as the result of the housing reforms and changes at DSD. She said it’s too soon to know how those actions will affect home prices. But she was quick to add that the efforts by city leaders to encourage development feel unprecedented, completely new.
“It feels like there’s alignment at the city leadership level,” Carnahan said. “They’ve come to a point where they’re like, ‘Why are we wrestling with this? We need homes for people who are retiring or starting families, who aren’t just looking for a 4,000-square-foot single-family home or a 400-square-foot studio apartment. We’ve got to have something in the middle.’ And so that’s kind of the sea change that we’re seeing. More and more people at the city are rowing in the same direction.”
This article appears in April 3 • 2026.
