Real estate and politics mixed in the Texas Legislature this session, as lawmakers pushed measures related to property taxes, affordable housing, zoning, foreign buyers and corporate ownership of single-family homes.
Here are the items that won approval, and some that didn’t.
Homestead exemption
Texas voters will consider two constitutional amendments this November concerning property taxes. One would increase the homestead exemption from school district property taxes to $140,000. The proposal passed through both chambers unanimously.
Business personal property
Another, House Joint Resolution 1, would raise the property tax exemption for personal property used for business purposes. Due to its focus on business, the measure weathered considerable controversy in the capitol. Lt. Gov. Dan Patrick, president of the Senate, preferred bills that favored homeowners rather than businesses. Following its passage, Patrick publicly criticized Governor Greg Abbott and the House for allocating tax benefits to income-producing property instead of residential property.
THC ban
SB 3, another Patrick priority, will ban certain consumable hemp products unless Abbott vetoes it. If SB 3 takes effect, Texas will prohibit the sale of hemp snacks and drinks containing any cannabinoid other than cannabidiol (CBD) or cannabigerol (CBG). Abbott hasn’t issued any decisive statements on the bill, but Patrick said last month that he placed “total confidence” in the governor’s judgment.
Without a veto, SB 3 is expected to end an industry that occupies about 17 million square feet of Texas retail space.
“Traveling” HFCs
Under House Bill 21, which passed and took effect immediately, Housing Finance Corporations must meet stricter requirements to own property outside the bounds of the city or county that sponsors them. HFCs can only partner on developments in another city or county with permission from every affected local government. In addition, HFCs must set aside at least half of all units as affordable for low-income families, and rent reductions must equal at least 50 percent of the tax savings HFCs receive.
Opponents, including the Texas Association of Local Housing Finance Agencies, called the law overbroad. “What they call accountability in that bill is more likely a deal-killer,” the association’s Todd Kercheval told The Real Deal last month.
“Traveling” HFCs allowed local governments, often small towns, to sponsor HFCs that partnered with developers to receive full property tax exemptions for multifamily investments around Texas, usually in big cities, without reducing rent or securing approval from local authorities.
YIMBY power
Even though Texas has several of the nation’s hottest homebuilding markets, there is still a housing shortage here. Lawmakers took several measures aimed at suppressing the shortage.
One of them, Senate Bill 15, required cities to allow smaller residential lots, forbidding any local requirement that lots exceed 3,000 square feet in subdivisions of at least 5 acres.
Foreign buyers
SB 17, dubbed the Adversarial Land Ownership Act, forbids any individual, company or government body from certain countries from purchasing real property in Texas. Citing the findings of the national intelligence agencies, Texas specifically designated China, Russia, Iran and North Korea as countries that pose a national security risk. Aside from immigrants from those countries who have become American citizens or lawful permanent residents, no person or organization headquartered in such a country can purchase real property in Texas. SB 17 passed to the governor’s desk on June 1.
Epic City
Rep. Candy Noble’s response to the Muslim-centered North Texas development known as Epic City, HB 4211, was sent to the governor on June 1. To reserve a lot in the upcoming development, investors must purchase a stake in the developing company, Community Capital Partners, which grants them a 15 percent discount on lot prices. Noble’s bill requires residential property companies to inform investors that buying an interest in the company isn’t the same as buying residential property itself.
Not this time
Many eye-catching reforms proposed ahead of the session generally didn’t make it far.
Rep. Cody Vasut’s attempt to eliminate the property tax entirely; Rep. Carl Tepper’s proposal to cap residential appraisal increases at 2.5 percent per year; Rep. Jeff Barry’s proposal to make permanent the 20 percent cap on commercial property appraisal increases; Sen. Juan Hinojosa’s proposal to limit corporate ownership of single-family homes; and Sen. Nathan Johnson’s proposal to offer developers low-interest loans for affordable housing all died in committee.
SB 188, which would have given Elon Musk’s SpaceX greater authority over the beach around its launch site, passed the Senate but did not make it to the House floor for a vote.
Dallas Mavericks owner Las Vegas Sands, which spent on gambling legalization ad campaigns in Texas this year, met disappointment. Reps. Sam Harless and Charlie Geren filed constitutional amendments to allow sports wagering and casino gambling, but neither came up for a vote in committee.
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