Going into the 2023 Texas Legislative session, the state’s $27 billion budget surplus has a lot of tongues wagging. However, it’s too soon to tell what kind of impact, if any, those extra funds will have on real estate-related issues such as property taxes and housing affordability.
Both issues remained at the forefront of our daltxrealestate.com coverage in 2022, and you can bet we’ll be watching when the 88th Texas Legislature convenes on Jan. 10 in Austin.
From $27 Billion to Just $12.5 Billion
Go ahead and forget that $27 billion number, by the way. The Legislative Budget Board voted in December to allow just $12.5 billion to be dispersed from the rainy day fund, less than the amount pledged for tax relief by Gov. Greg Abbott during his successful re-election campaign.
Lt. Gov. Dan Patrick also has advocated for a big chunk of the surplus to go toward property tax relief, but the state is also facing rural hospital closures, threats to the electric grid, and debates on public school security.
The Dallas Builders Association already has started meeting with state legislators and preparing plans to advocate for housing this session.
Director of Government Affairs David Lehde said in late December the Dallas BA had not prepared a list of bills they’re advocating for or against, but they do have specific issues they’re watching.
“This session, we will look for opportunities to address items that the state legislature has control over regarding housing affordability,” Lehde said. “This includes process delays and regulations that make building more expensive and, consequently, housing less attainable. The specifics will come into greater focus as the legislature convenes.”
The session runs through May 2023.
Five Bills to Watch
More than 1,100 bills have already been filed, ranging from tax exemptions for diapers and baby wipes to border security measures.
Property tax relief was among Lt. Gov. Patrick’s list of legislative priorities released in late 2022.
According to the Texas Tribune, “Texans pay among the highest property taxes in the nation because they are the primary funding mechanism for the state’s public schools and because Texas doesn’t have an income tax.”
Some Dallas residents were grateful to get the largest city tax rate decrease in 40 years, but still contested their bills and bemoaned the housing affordability crisis.
Five bills to watch include:
- House Bill 32 — Introduced by Rep. Giovanni Capriglione, R-Southlake, would place limits on how much appraisal districts can raise a single-family home’s value.
- House Bill 84 — Introduced by Rep. Diego Bernal, D-San Antonio, would require appraisers to only value a home based on the value of neighboring homes, addressing displacement in gentrifying neighborhoods.
- House Bill 29 — Introduced by Rep. Andrew Murr, R-Junction, would abolish the maintenance and operations tax for school districts, used to pay teacher salaries.
- House Bill 1056 — Introduced by Rep. Gina Hinojosa, D-Austin, would create a registry for financial institutions and investment firms that lease residential real property.
- House Bill 1057 — Introduced by Rep. Gina Hinojosa, D-Austin, would prevent institutional investors from buying homes until 30 days after they’ve been listed for sale.
Bills, Bills, Bills
Dallas city leaders are keeping an eye on legislation that regulates public facility corporations. Several multi-family developments were approved in 2022 through the Dallas PFC financing structure, an opportunity for developers to build affordable housing that’s taken off the tax rolls for 75 years. Without the PFC model, such housing isn’t getting built at all, advocates have said.
A problem arises, however, when entities like Texas Essential Housing PFC, a corporation not associated with a particular municipality, develop tax-free projects across the state, independent of government oversight.
Dallas Assistant Director of Housing and Neighborhood Revitalization Kyle Hines addressed such corporations during a December city council meeting.
“The articles and some of the things you will read about the PFCs are on our legislative agenda,” Hines said. “For PFCs to be able to come into another city that’s not even in their jurisdiction with no oversight from elected officials, that’s what’s happening. Our council and our board are supporting legislation to be able to change that so we don’t have that issue. It’s a serious problem.”
District 12 Councilwoman Cara Mendelsohn has spoken out against PFCs and asked that the matter of unregulated entities like Texas Essential Housing be placed on the city’s priority list for this session.
“It’s happening in my district, and I think it’s horrible,” she said.
The Texas House Committee on Urban Affairs reviewed the matter of “availability of workforce housing and how it is incentivized” during a June meeting.
In a separate discussion at a recent Metroplex Mayors meeting, Sen. Nathan Johnson, D-Dallas, and Rep. Carl Sherman, D-DeSoto, discussed the importance of maintaining municipal autonomy or local control, according to Ken Malcomson, president and CEO of the North Dallas Chamber of Commerce.
“It clearly was music to the ears of the audience,” he said.
Stay tuned to daltxrealestate.com for the latest from the Texas Legislature.
