Claims that city building regulations limit affordable housing are once again surfacing in the legislative process.  On May 3, the Senate Intergovernmental Relations Committee met in Dallas to consider the following interim charge:

Study the impact that regulatory requirements have on development, construction, sale and resale of housing. Consider how regulatory loads affect the ability of the housing market to return to normal economic levels, and focus on the impact on the sale of new and used homes. Include costs and benefits of individual categories or types of regulations to allow a better assessment of ways to improve the affordability of housing.

Several witnesses testified that municipal regulations affect the price of housing in Texas.  For example, a representative of the Texas Association of Builders (TAB) stated that – nationally – the cost of regulations make up 25 percent of the cost of a new home. (Note:  a 2003 TML survey showed that municipal building fees made up less than two percent of a monthly mortgage payment on an average home in Texas.)  He testified that zoning has been the biggest cost issue on the local level. He also complained that flat impact fees hit low-cost homes the hardest.

The chair of the committee asked the TAB representative if the state should interject itself in trying to determine what any city should do in terms of regulations. His answer was “yes.” Similarly, a representative from the Texas Association of Realtors noted that new regulations impinge upon property rights and raise costs.

Cities were well represented at the hearing.  Frisco Mayor Maher Maso and Frisco Director of Planning and Development John Lettelleir testified on behalf of TML.  Among other things, the mayor testified that his city’s regulations add an average of $23 to the monthly payment for a new home in Frisco, but that those regulations have long-term savings (energy savings, resale value, etc.) that are much greater.

Chief Building Official Jim Olk, City of Farmers Branch, testified on behalf of the Building Officials Association of Texas. He reported on the results of a recent survey conducted among municipal building officials. The survey revealed that in 65 percent of the responding cities, building permit fees don’t cover the cost of issuing the permit, and that 80 percent of the cities hadn’t covered the cost of issuing permits in the past six years.

The committee will meet again later this year on the issue, and TML staff will be participating throughout the process. 

TML member cities may use the material herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League.

Back to Legislative Update Index