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Early last year, The Texas Speaker of the House Dade Phelan (R-Beaumont) and Lt. Gov. Dan Patrick (R-Austin) announced interim charges to House and Senate committees, including a number that examined issues of importance to the affordable housing industry. Both the Texas House Committee on Urban Affairs and the Texas Senate Committee on Local Government were assigned housing-related interim charges. Interim charges are directives to committees to study specific policy issues and make recommendations back to the legislature in advance of the 2023 Legislative Session. These studies often become the basis for future legislation.

The Texas Senate Committee on Local Government, chaired by state Sen. Paul Bettencourt of San Antonio, held a hearing on September 13 concerning their affordable housing interim charge. In December 2022, the committee released its 87th Legislative Session Interim Local Government report and recommendations. Click here to see the committee’s recommendations for their affordable housing interim charge.

The Texas House Committee on Urban Affairs, chaired by state Rep. Philip Cortez of San Antonio, held a hearing on July 14 concerning their workforce housing interim charge. In November 2022, the committee released its 87th Legislative Session Interim Urban Affairs report and recommendations. Click here to see the committee’s recommendations for their workforce housing interim charge.

Texas Senate – Local Government Committee Recommendations

Interim Charge 4 (Affordable Housing)

Study issues related to affordable housing, homelessness, and methods of providing and financing affordable housing. Make recommendations to improve transparency and accountability, as well as to better utilize existing federal, state, and local programs.

  • The Legislature should consider eliminating the ad valorem tax exemption offered in Sec. 303.042(f), Texas Local Government Code.
  • The Legislature should consider passing legislation providing that an exemption under 303.042, Texas Local Government Code (Taxation) for a multifamily residential development which is owned by a public facility corporation (PFC) applies only if the PFC has entered into a memorandum of understanding with the governing bodies of local government units with the authority to levy ad valorem taxes on the property.
  • The Legislature should consider passing legislation to increase transparency and accountability measures related to tax exemptions offered under Sec. 303.042, Texas Local Government Code.
  • The Legislature should consider passing legislation requiring cities to allow third party review of preliminary plans, building permits, site plans, subdivision plans, and inspections, with the choice of whether to use third party review belonging to the applicant, and with the ability of the city to audit third party reviews.
  • The Legislature should consider passing legislation strengthening personal property rights, which are the bedrock of free market exchange and economic development, by identifying specific instances of local overregulation to cull. This will preserve the economic freedom of homeowners and home builders to meet the needs of the Texas housing market.
  • The Legislature should consider passing legislation prohibiting special districts and any corporations acting on their behalf from owning or investing in affordable housing properties outside of the district’s boundaries.
  • The Legislature should consider passing legislation requiring all affordable housing projects to be approved by the local taxing units in which the property is located, disallowing the approval by a taxing unit from another jurisdiction.

Texas House – Urban Affairs Committee Recommendations

Interim Charge 2 (Workforce Housing)

Evaluate the availability of workforce housing to support the dynamic economic growth of the state. Study the use of public-private partnerships and other tools to incentivize the development of housing that meets Texas’ expanding workforce demands. Develop and include measures to ensure accountability and transparency associated with these tools.

The Texas housing market and home prices are influenced by a very complicated mixture of population trends, economic factors, and federal, state, and local government policy. Texas is facing a workforce housing problem that many consider a crisis. The current post-pandemic economic volatility only increases the uncertainty in the housing market.

Because of the complexity of the influencing factors, the housing industry’s importance to the Texas economy, and the employment issues the lack of housing will create for some vital industries, the Legislature should appoint a broad commission of state and local government lawmakers, state and local housing officials and workforce development officials, and leaders of various industries, especially the home building and service industries, to comprehensively assess the regulatory and tax environment that contribute to the increasing gap between housing prices and average wages.

Texas’ appropriations for affordable housing are insufficient to address the problems of families with incomes below eighty percent of the average median income in their area. The Legislature should consider appropriating additional money to assist families who earn between 60 and 120 percent of AMI, find housing, including utilities, that does not require more than 30 percent of their income. One option the Legislature should consider is establishing a $50 million revolving fund for the construction and rehabilitation of workforce housing, especially if construction worker training can be included.