Closing the Traveling HFC Loophole

HB21-Gates

TREC Position: Opposed HB 21 / Favored alternative b ill to address traveling HFCs

Result: Approved

What It Does: This bill closes the “traveling HFC loophole,” through which housing finance corporations were able to grant tax exemptions to developers on projects located outside their jurisdictions, without appropriate local approval or rent reductions. Additionally, the bill imposes new affordability, rent reduction, voucher acceptance, and audit requirements, and phases out tax exemptions for these developments unless they have received local approval.

Why It Matters: The bill’s strict new requirements on affordable housing developments in Texas create uncertainty that could hinder financing and stall even well-established local HFC-supported projects. While TREC supports closing the HFC loophole, we have concerns the bill’s retroactive affordability rules and annual 50 percent rent reduction test undermine predictable financing. 

Minimum Residential Lot Size

SB15-Bettencourt

TREC Position: Supported

Result: Passed

What It does: This bill prohibits large cities from requiring residential lots to be larger than 1,400 square feet, or 20 feet by 60 feet, and caps minimum density at 31.1 units per acre. It also prevents cities from imposing excessive design requirements or parking on “small lots (4,000 square feet or less), including setbacks, covered parking, height caps, and wall articulation.

Why It Matters: These reforms make it easier to create additional housing inventory.

Commercial-to-Residential by Right

SB840-Hughes

TREC Position: Supported

Result: Passed

What It Does: This bill requires cities with 150,000-plus residents and counties of 300,000-plus residents to allow mixed-use multifamily developments by-right in office, commercial, retail, or warehouse zones, and limits restrictive regulations on density, height, setbacks, parking, flood area, traffic, utilities, and design.

Why It Matters:  This bill makes housing development easier, through conversions and new development, by allowing multifamily and mixed-use projects in commercial zones without the delays that accompany rezoning, removing key local barriers and enabling greater density.

Third-Party Review

HB23-Harris

TREC Position: Opposed

Result: Failed

What It Does: This bill, which failed to pass, would have allowed developers to use third-party reviewers for the entire permitting process throughout the development process. TREC flagged undefined reviewer credentials and conflicts of interest, an unenforceable 15-day city notice requirement, and potential oversights in planned developments as issues that need to be addressed or clarified in statute.

Why It Matters: HB 23 would require cities to accept third-party reviews for plans, plats, permits, and potentially certificates of occupancy without guaranteeing municipal oversight. In Dallas, where over 1,200 PDs create complex, site-specific regulations, this raised serious concerns about review accuracy, legal liability, and the city’s ability to catch errors before construction is complete. While TREC supports the concept of third-party review, the bill lacked safeguards to ensure quality, accountability, and alignment with local development standards. TREC is preparing to provide feedback in the interim to support a bill with more safeguards next session.

The ‘YIGBY’ Bill

HB3172-Gates

TREC Position: Opposed

Result: Failed

What It Does: This bill would have allowed multifamily and mixed-use developments on religious land by right.

Why It Matters: Under this bill, religious organizations could develop housing on church-owned land without rezoning, giving them a unique advantage by allowing market-rate multifamily projects without any requirement to include affordable units.