Shaping Exclusion: Zoning Law and a Changing Austin

Paola García

Edited by Keerthi Chalamalasetty, Samuel Huron, Mac Kang, and Sahith Mocharla

In 1926, the Supreme Court ruled in the landmark case Village of Euclid v. Ambler Realty Co. that the police power to maintain “public health, safety, morals, [and] general welfare” grants municipalities the constitutional right to regulate local land use through zoning laws [1]. Zoning laws designate property into residential, commercial, industrial, and agricultural zones, ensuring that incompatible zones are separated to maintain property value and aesthetics [2]. In the case of Euclid, zoning laws aimed to prevent businesses and apartment buildings—zoned as industrial establishments—from being built in single-home zones, which fell under residential zoning, by dividing the city into zoning districts [3]. Ambler Realty Co. owned land across various districts, stating that it would lose value if reappropriated from an industrial zone to a residential zone [4]. Ambler argued that this was unconstitutional under the 14th Amendment’s protection of liberty and property, which requires due process before the state can “deprive any person of...property” [5]. Alongside finding the use of police power permissible, the Supreme Court found the evidence was insufficient to support a significant change in property value [6]. Ultimately, the Court determined that no general constitutional restrictions would be applied to zoning and police power; instead, these challenges would be assessed on a case-by-case basis [7].

This practice, now referred to as Euclidean zoning, raises the question of whether zoning laws are always justifiably used as an instrument of public welfare or if they facilitate discriminatory policies that create unequal development and gentrification. Euclid defines zoning broadly as a neutral tool of police power, so long as it benefits the public, therefore allowing municipalities to determine what falls within these guidelines. The 1928 Supreme Court case Nectow v. City of Cambridge provides some clarity on zoning restrictions. Here, Nectow’s property was zoned residential despite being located between industrial land, which cost him the sale of his property [8]. The Court found the zoning ordinance violated due process under the 14th Amendment as it did not “bear a substantial relation to the public health, safety, morals, or general welfare” [9]. 

Together, these cases establish an incongruency within the limitations of zoning laws that allow discriminatory policies to occur. While Nectow demonstrates that zoning laws can be subject to constitutional limitations, it also reveals how the expansive rule of Euclid creates space for inconsistent application, as it lacks a definition of constitutionality. Thus, zoning policies could have discriminatory effects, but be constitutionally protected by the overarching protection of public welfare. This theory has been applied in practice historically. 

In the city of Austin, the steadily increasing population necessitates that lawmakers examine housing accessibility and current zoning laws. However, this population expansion may lead to damaging socioeconomic consequences, itself a pervasive tendency when reflecting on Austin’s history. This pattern of discrimination has specifically affected the majority Black and Latino population(s) of East Austin. As these populations of Austin were affected in different capacities by zoning, this article will specifically focus on the Black population of East Austin.

Euclidean zoning is reflected in Austin’s policies, beginning with early plans to industrialize. In 1928, “A City Plan for Austin, Texas” was created to serve as the basis for the City Plan Commission to develop a plan for the city’s future [10]. The plan was all-encompassing, outlining strategies to build new infrastructure like streets, schools, and parks, and to determine the zoning guidance for different property types based on the “principle of public safety and public health” [11]. At the same time, these zoning policies effectively institutionalized racial segregation by moving the Black population of Austin east of East Avenue, under the justification that it would be more efficient, as it would prevent the need to build both white and Black public use spaces in the same area [12]. The city plan offered this change as a recommendation, stating the explicit use of zoning for segregation was unconstitutional, yet in its aftermath, public facilities and schools intended for Austin’s Black population outside of East Austin were closed, forcing compliance through necessity [13]. A City Plan served as the foundation for zoning until the 1950s, when the Industrial Development Plan of 1957 rezoned all property in East Austin as industrial to allow for cumulative zoning, a tiered zoning practice that allows higher-tiered zones, like residential, to be on the same property as lower-tiered zones, like industrial; thereby creating the conditions for ‘mixed-zone’ developments [14]. By designating East Austin as an industrial zone, the Industrial Development Plan permitted the expansion of Austin’s business market by building industrial plants in a majority residential area. The emissions from these plants polluted the surrounding areas and contributed to substantial property devaluation due to worsened air quality [15]. Later developments, such as the construction of I-35, continued to exacerbate segregation in the 1960s, further entrenching the barrier between neighborhoods from merely felt to physical. Zoning laws did not change significantly again until the Austin Tomorrow Comprehensive Plan of 1980. Informed by a growing population and an effort to prevent urban sprawl and increased suburbanization, the plan mandated a zoning ordinance to guide more housing developments specifically aimed at protecting single-family housing zoning in central Austin and preserving its historical nature [16] [17]. No similar effort was made within East Austin. 

Derived from the 1980 Austin Tomorrow Comprehensive Plan and, as a result of the tech boom of the 1990s, which brought large investments from tech corporations, the Smart Growth plan was implemented across Austin in 1998. Smart Growth was intended to act as a compromise between developers and environmentalists who wanted to protect Austin’s urban green spaces [18]. This included zoning all areas from downtown to East Austin as Desired Development Zones (DDZs) to protect Barton Creek and the city’s aquifer zone and offering incentives to developers that scored well on the Smart Growth Criteria Matrix, a point-scale grading system for improvements provided by new development [19]. However, the decision to designate these areas as DDZs did not incorporate or acknowledge the pre-existing residents, who were then pushed out of the neighborhood by an over 100% increase in property taxes from 2000 to 2005 [20] [21]. While the city of Austin prioritized the preservation of central areas of single-family housing in the name of historical, environmental, and cultural conservation, an opposite sentiment prevailed in areas dominated by Black populations, who were originally obligated to reside there due to segregationary policies. The change in East Austin’s demographics is further corroborated by a census of District One, where the African American population declined by 14.5% from 2000 to 2010 [22]. Outdated zoning policies and failed projects like the Smart Growth initiative created an opportunity in the early 2010s for Austin to adopt more modern zoning plans. In this time period, the project closest to fruition was CodeNEXT, a plan aimed at rethinking and revitalizing Austin zoning by facilitating a greater mix of land uses between commercial and residential zones, reducing or eliminating parking minimums, simplifying development standards, and, again, reducing urban sprawl [23]. Although the project stalled because it failed to meet the bureaucratic requirement to inform every property owner of the changes to the zoning policy, it primed the Austin City Council for its most recent zoning changes [24].

Currently, major changes to zoning policies have transformed the landscape of property development, affecting homeowners and developers in numerous capacities. Policies mirroring CodeNEXT were passed by the Austin City Council in 2023, permitting up to 3 housing units on smaller lots for single-family housing zones and removing required parking spots to allow for high-density construction [25]. In 2025, to incentivize further development, the Density Bonus Program was passed to ensure more middle-market housing, modifying compatibility and height requirements if developers maintain 12% of the property as income-restricted housing [26]. This action was supported in the Texas legislature with the passage of Senate Bill (SB) 840 in 2025, which delineates the ability to rezone existing buildings for multi-family housing, decreases parking requirements, loosens height and build restrictions, and waives certain required fees in cities with a population over 150,000 [27]. By removing administrative obstacles associated with rezoning, the bill expedites development [28]. 

Village of Euclid v. Amber Reality Co. has permitted the institutional design of Austin zoning to target East Austin to accommodate the city’s growth. Euclid established public welfare as a sufficient reason to change zoning policy; however, it did not establish boundaries to define what constitutes public welfare. This degree of flexibility was provided so as not to attach a broad constitutional rule to zoning, but rather to be addressed individually. Demonstrated by Nectow v. City of Cambridge, the circumstances under which constitutional arguments would hold are unique and limited. In theory, this would allow each municipality to determine what zoning policies best suit the entire community, but, in practice, this has not been the result. In Austin, it was first used to segregate the Black population to East Austin, then, at each turn of development, East Austin filled the gaps. The allocation of industrial plants, space for highway systems, and, its largest role, housing development for a growing Austin. The effects of each of these decisions compounded to make East Austin vulnerable. Industrialization led to property devaluation, and the community dealt with the effects of pollution. The diminished property value made the area accessible to developers, who spiked property taxes and pushed the local community out, causing gentrification. This history leaves East Austin primed for this pattern to continue as encroaching developers take advantage of recent legislative changes.

Developers have the resources to benefit from the minimally restricted access to property in East Austin, resulting from recent zoning changes, and can facilitate rapid development. This supports the likelihood of property becoming monopolized, allowing developers to control housing costs. The incentivization of middle-market housing does not sufficiently address the economic and gentrification risks that will result. Despite dealing with the effects of discriminatory zoning, East Austin maintained a vibrant community. Now, it is time for elected officials to consider the effects of Euclidean zoning and afford this community the same privilege of conservation given to central Austin by reassessing zoning policies with a community-centered approach, rather than releasing control to housing corporations.

---

[1] Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926).

[2] Michael Realbuto, Examples of Police Power in Real Estate and Legal Insights, MROD (Aug. 14, 2024), https://www.mrod.law/2024/08/14/the-distinction-between-the-governments-police-power-and-the-power-of-eminent-domain/.

[3] see [1].

[4] see [1].

[5] see [1].

[6] see [1].

[7] see [1].

[8] Nectow v. City of Cambridge, 277 U.S. 183 (1928).

[9] see [8].

[10] Koch & Fowler, A City Plan for Austin, Texas (1928), https://www.kxan.com/wp-content/uploads/sites/40/2024/04/Austin-1928-Master-Plan-PDF.pdf.

[11] see [10].

[12] Katherine Gregor, Austin Comp Planning: A Brief History, The Austin Chronicle (Feb. 5, 2010), https://www.austinchronicle.com/news/austin-comp-planning-a-brief-history-11746944/.

[13] Jene Shepherd, Looking Back to Look Forward: The 1928 Master Plan, United Way For Greater Austin (Mar. 30, 2021), https://unitedwayaustin.org/looking-back-to-look-forward-the-1928-master-plan/.

[14] People Organized in Defense of Earth and Her Resources (PODER), CodeNEXT: Contributing to the Legacy of Austin’s Racism in Land Development Planning (Jan. 2018), https://www.austintexas.gov/sites/default/files/files/Planning/CodeNEXT/CodeNEXT-Legacy-of-Austins-Racism-in-LDC.pdf.

[15] Kaylie Hidalgo, Keep Austin…White? How Equitable Development Can Save Austin, Texas from its Racist Past and Homogenized Future, 9 Tex. A&M J. Prop. L. 109 (2023).

[16] City of Austin, Austin Tomorrow Comprehensive Plan (1980), https://bartoncreektimestream.org/events/1980-01/austin-tomorrow-master-plan/SupportingDocument5.pdf

[17] see [16].

[18] Joel Barna, The Rise and Fall of Smart Growth in Austin (2002), https://offcite.rice.edu/2010/03/TheRiseAndFallOfSmartGrowthInAustin_Barna_Cite53.pdf

[19] see [18].

[20] How Developers and Environmentalists Made Peace in the ’90s and Charted a Course for Austin’s Growth, KUT Radio, Austin’s NPR Station (July 13, 2023), https://www.kut.org/austin/2023-07-13/how-developers-and-environmentalists-made-peace-in-the-90s-and-charted-a-course-for-austins-growth.

[21] Crossing Over: Sustainability, New Urbanism, and Gentrification in Austin, Texas, Southern Spaces, https://southernspaces.org/2015/crossing-over-sustainability-new-urbanism-and-gentrification-austin-texas/ (last visited Mar. 10, 2026).

[22] see [21].

[23] Daniel Herriges, Austin’s Bad Party: The Failure of CodeNEXT, Strong Towns Archive (Sept. 19, 2018), https://archive.strongtowns.org/journal/2018/9/19/austins-bad-party-the-failure-of-codenext.

[24] Understanding Austin’s Zoning/Rezoning Process | AustinTexas.Gov, https://www.austintexas.gov/page/understanding-austins-zoningrezoning-process (last visited Mar. 10, 2026).

[25] Austin, Texas, Ordinance No. 20231207-001 (2023).

[26] City of Austin, Density Bonus 90 (DB90): Applicant Guide (Feb. 20, 2025), https://www.austintexas.gov/sites/default/files/files/Housing/HDA/Developer%20Incentives/DB90-Applicant-Guide-2.20.2025.pdf.

[27] S.B. 840, 89th Leg., Reg. Sess. (Tex. 2025).

[28] SB 840: A Game-Changer for Multifamily Development and Land Use in Texas Cities – Zoning Regulation Reform, HUNTON, https://www.hunton.com/insights/legal/sb-840-a-game-changer-for-multifamily-development-and-land-use-in-texas-cities-zoning-regulation (last visited Mar. 10, 2026).