It has become increasingly apparent that the cost of housing is rising at an alarming rate. Young Texans cannot become homeowners, and current homeowners are burdened by massive property tax bills that come from aggressive tax rate adoption, excessive debt, and the abuse of nonvoter-approved debt instruments like certificates of obligation. While this might be acceptable in California, it is unacceptable in Texas.
At the heart of the affordability problem is the lack of housing stock. It’s simple economics: When supply is low and demand is high, prices go up. Government action makes this problem worse by tacking on extra costs, adding delays, stifling innovation, and catering to NIMBY concerns. As a result, the prices increase and put pressure on every Texan. Without bold and meaningful change in the upcoming legislative session, this problem will only worsen.
That’s why the Texas Public Policy Foundation, along with coalition partners, have identified four reforms that should be passed to promote free-market housing policy and provide much-needed relief to everyday Texans. Those include easing the “Tyrant’s Veto” (aka valid petition reform); allowing for office-to-home conversions; making it easier to transition from commercial-to-residential development; and making commonsense changes to municipal lot size requirements.
Tyrant’s Veto
Current statute allows for owners of 20% of the land near a proposed rezoning site to bring a petition to reject the rezoning effort. Because this policy empowers a small number of landed individuals to delay, or even halt entirely, proposed zoning changes, this is often referred to as the Tyrant’s Veto. The only way to override such a petition is through a 3/4s vote from the city council. According to research from Salim Furth of the Mercatus Center at George Mason University, “6 of the 16 petitions in Dallas and Austin we examined could have been triggered by a single protesting neighbor’s signature,” and in 2022, “a mere 1.4 percent of the city’s population was enough to force the supermajority at city council per the valid petition law.” The tyranny of a minority should not prevent the increase of the housing supply.
To uphold the constitutional guarantee of a republican government and protect efforts to create an environment more suitable to affordable housing, the state legislature should reform the valid petition process. Reforms would include increasing the threshold of land owned to initiate a valid petition to 60% and lowering the threshold needed to override the petition by a city council from 3/4s to a simple majority of 50% plus 1.
Office Conversions
Absent externalities, property owners should be able to build and develop land they own without bureaucrats making it hard or impossible. With that view in mind, this proposal would make it possible to build residential units on existing property zoned for commercial use. The problem this reform seeks to address relates to the use of zoning laws to create artificial limitations and make it overly difficult to build certain types of units in certain areas. This difficulty means building affordable housing near job centers is much more complicated and costly. Again, a lack of supply pushes prices up, and this bill will help bring more supply online in places closest to the city center.
Commercial-to-Residential
The Commercial-to-Residential Development proposal aims to allow housing development on land solely zoned for commercial use. This is another example of how unnecessary city processes make building new housing expensive or impossible. If this property rights-centric reform becomes law, not only would property owners be able to change the nature and use of their property without unnecessary government interference, but it would also make it easier to add to the existing housing stock and bring more units online, thereby increasing density in significant fashion.
Opt-In Minimum Lot Size
The last reform would allow neighborhood property owners to vote to willingly reduce their lot size to allow the development of detached single-family townhomes. This bill does not force the neighborhoods into anything but allows a neighborhood to vote on decreasing the minimum lot size requirement. The gist is this: large minimum lot size requirements lead to an increase in the price of housing and the inability to develop affordable townhomes.
Previous efforts to impose these reforms at the state level met pushback from homeowners feeling like their agency would be usurped by the state. Allowing neighborhoods to opt-in gives the people most affected a choice between retaining the character of their community and creating an environment more conducive to the development of more affordable housing. This proposal is another way of increasing housing development, which increases the supply and lowers costs while considering the wishes of the community.
These proposals all aim at one thing: increasing the supply of housing. The housing crisis is expensive for every Texan and is caused by unnecessary city laws and ordinances. By reeling in the power of city governments and helping make housing development more straightforward and affordable, Texans could see a giant step toward solving the housing problem.