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Housing prices in Austin have exploded in the past decade, leading to a city that’s not just unaffordable but also highly segregated. In this podcast, KUT lays out how we got here.

How developers and environmentalists made peace in the ’90s and charted a course for Austin's growth

An aerial photo of downtown Austin in the early 1990s.
Austin History Center, Austin Public Library [PICA-24891]
An aerial photo of downtown Austin in the early 1990s.

This story is Episode 4 of the podcast "Growth Machine." Listen to the full episode through the player above, and subscribe here.

Newly elected Austin Mayor Kirk Watson faced a challenge. A tech boom, hastened by city leaders, was worsening Austin’s ever-present growing pains. Popular local policies were under attack by the state Legislature and the city itself was riven by political division.

Sound familiar?

While the broad outlines of Austin’s social and political realities in the 1990s (surprise!) are eerily similar to today, the specifics are a bit different.

For one, the ’90s tech boom was spurred not by companies like Google and Tesla, but by the Clinton-era dot-com bubble. The city policies under attack had to do with efforts to curb development over the Barton Springs recharge zone. These political battles pitted West Austin environmentalists against land developers and homebuilders at the Chamber of Commerce and the Real Estate Council of Austin.

A photo of Austin City Council members in 1997, led by Mayor Kirk Watson.
Austin History Center, Austin Public Library, [PICA-30148]
A photo of Austin City Council members in 1997, led by Mayor Kirk Watson.

Watson says this fight was taking up all the oxygen in the city.

"It was as nasty as any two-party system you can think of,” Watson, who is once again mayor, told KUT after his return to City Hall in 2023. “Aquifer politics dominated a great deal of the politics of this community for a long time. I can even make an argument, in some instances, it still is a part of it.”

Back then, Watson said, the fight to restrict development in Southwest Austin and preserve water quality in Barton Springs was crippling attempts to tackle other city challenges. The city didn’t have an extensive public transit system (and still doesn’t) and residents were struggling with rising housing costs (and still are).

But this Barton Springs fight was also complicating Watson’s efforts to woo tech companies to the city.

“[We] would meet them at the airport … metaphorically,” Robin Rather, former head of the Save Our Springs Coalition, remembered. “Almost every tech company that came here we met with … and said, '[We’d] love to have you and your jobs. Do not move over the aquifer.'”

“The couple that did,” she said, “we fought like dogs.”

So Watson’s challenge was to grow Austin’s economy and build homes for its growing population without pissing off the city’s West Side environmentalists who at this time had amassed political power.

Rather remembers reading an article quoting Watson in the Austin American-Statesman. It said S.O.S., the Real Estate Council of Austin and the Chamber of Commerce had agreed to join forces and support a bond package proposed by the city.

The only thing was, as Rather remembered it, they hadn’t; Watson fibbed.

“I thought they had agreed!” Watson said when KUT asked whether he had tricked the groups into coming together.

Either way, the plan worked.

On March 27, 1998, Rather and Gary Valdez, then chair of the Austin Chamber of Commerce, stood together at a press conference on the shores of Lady Bird Lake and announced their support for the bond package. The thing that brought them together was money.

The package included funding to expand the downtown Austin Convention Center, a coveted prize for the city’s business sector. It also included $65 million to buy tens of thousands of acres of land over the aquifer and save it from development.

“What he did was put dollars on the table,” Rather said. “Everybody got something that they really wanted.”

Two months later, the bonds passed. It was the start of a partnership to chart the city's growth.

The Smart Growth Initiative

The convention center and watershed protection bonds were pitched as the beginning of Austin’s Smart Growth Initiative. Smart Growth was not just an Austin idea, but a national movement.

Cities across the country had spent decades sprawling, building homes farther and farther out, spurred by the construction of highways. The Clinton administration and national leaders began sounding the alarm on climate change and urging cities to grow in “smart” ways — that is, to build denser housing inside cities, instead of continuing to eat up land on the outskirts of town.

To be clear, Smart Growth is simply a marketing term. But its ideals are upheld today as cities try to weather climate change, infrastructure and affordability issues.

Led by Watson, Austin signed onto this idea. The city adopted maps to encourage development in a “desired development zone” east of MoPac and discourage it to the west, where much of the Barton Springs watershed sits.

“The deal was simple,” Gary Bradley, longtime Austin developer and S.O.S. opponent, told KUT. “S.O.S., you can have everything southwest. You can shut it down completely, but you can't shut down the whole damn town, OK?”

They all went for it.

“Long ago, Austin fell under siege as business people and environmentalists began fighting over who controlled Austin’s future and who made the rules,” read an agreement signed by S.O.S., the Chamber of Commerce and the Real Estate Council in March 1999. “Recently the side agreed on a peace truce that holds real promise for the community.”

The truce allowed the West Side environmentalists to preserve the land they wanted, while paving the way for developers to build out the city downtown, to the North and on Austin’s East Side.

Home values soar in East Austin

As people — typically with higher incomes — began to move downtown and as the city courted early tech companies, housing prices began to rise in East Austin, neighborhoods where many of the city’s Black and Hispanic residents lived.

Residents living east of I-35 had been busy fighting their own environmental battles, ones that didn’t gain attention at City Hall as quickly, or as dramatically, as the fight for Barton Springs. For decades, they had dealt with pollutants in their air and soil from power plants and recycling centers in their neighborhoods.

As the city began rezoning this land in the 1990s and activists fought — and eventually succeeded — in having these industries move, Susana Almanza, an activist who grew up in East Austin, said she began to worry about rising home prices in the area.

A mural depicts the PODER environmental organization on a fence along the vacant property
Michael Minasi
The grassroots organization PODER fights for environmental justice for residents of East Austin.

“We're busy closing down all these hazardous industries and organizing and cleaning up our community and protecting the health of our families,” Almanza said.

“The next fight is going to be gentrification. So what do y'all want to do?" she remembers asking the board of the organization she helped found, People Organized in Defense of Earth and Her Resources, or PODER. "And they said, ‘Well, we got to clean up the neighborhood first.’’”

Once they did, she said, East Austin neighborhoods became more appealing to others. That, coupled with the push to have more people live in the city center, increased the demand for housing and sent home values in East Austin soaring; in 2000, the Travis Central Appraisal District said while home appraisals were up across Austin, they’d grown the fastest in East Austin.

As appraisals rose, so did property taxes, pushing out residents who couldn’t afford the increase. Between 2000 and 2010, the median household income in 78702, a ZIP code in East Austin, nearly doubled. Across the city, incomes had risen only by 20%.

Almanza said part of the problem with Smart Growth and the “desired development zone” was that she and others weren’t consulted.

“When the people were working on Smart Growth they were looking as if East Austin was void, as if no one lived on that land,” she said. “You can [encourage growth], as if people didn't live there.”

Watson said blaming Smart Growth for the gentrification and displacement of people from East Austin is “overly simplistic.” But he did acknowledge he did not have conversations about how to protect current residents from rising home prices.
“One of the things that’s always been troubling is that the people that fought so hard to make life better [in East Austin], they haven't all had the opportunity to enjoy the benefit of it,” he told KUT.

What started as a fight over a development in Southwest Austin became a debate about how the entire city should grow.

In the 1990s, Austin’s population increased by roughly 200,000 people — an enormous jump. Couple that with a powerful environmental movement focused on one geographic part of the city, and a quest to save Barton Springs became a debate about where new housing should be built and whose neighborhoods would have to change.

Mose Buchele focuses on energy and environmental reporting at KUT. Got a tip? Email him at Follow him on Twitter @mosebuchele.
Audrey McGlinchy is KUT's housing reporter. She focuses on affordable housing solutions, renters’ rights and the battles over zoning. Got a tip? Email her at Follow her on Twitter @AKMcGlinchy.
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