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Texas’ Inclusionary Zoning Ban Is Not Applicable to Rental or Land Bank Properties–It Simply Prohibits Establishing A Maximum Sales Price

When mixed-income housing is discussed, people often lament that Texas has banned inclusionary zoning by statute.  As UT Law Professor Heather Way pointed out several months ago in Which Way, and Texas Housers repeated, the inclusionary zoning ban in Texas is actually fairly limited.  The statute prohibits a municipality from establishing a maximum sales price for a housing unit or building lot.

  • It does not affect rental properties.
  • It does not affect income requirements for purchasers/renters.
  • It does not apply to properties that are part of the land bank.

It simply prohibits establishing a maximum sales price.

As part of its overall goal to enhance rental housing options, the Neighborhood Plus plan includes a policy to expand affordable housing options and encourage its distribution throughout the city and region (NP 6.2).  As the City of Dallas continues to determine what actions it will take to meet this goal, it should be mindful of the limited scope of the statutory prohibition regarding maximum sales prices.

The full text of Texas Local Government Code § 214.905 is reprinted below for convenience.

Sec. 214.905.  PROHIBITION OF CERTAIN MUNICIPAL REQUIREMENTS REGARDING SALES OF HOUSING UNITS OR RESIDENTIAL LOTS.

(a)  A municipality may not adopt a requirement in any form, including through an ordinance or regulation or as a condition for granting a building permit, that establishes a maximum sales price for a privately produced housing unit or residential building lot.

(b)  This section does not affect any authority of a municipality to:

(1)  create or implement an incentive, contract commitment, density bonus, or other voluntary program designed to increase the supply of moderate or lower-cost housing units; or

(2)  adopt a requirement applicable to an area served under the provisions of Chapter 373A, Local Government Code, which authorizes homestead preservation districts, if such chapter is created by an act of the legislature.

(c)  This section does not apply to a requirement adopted by a municipality for an area as a part of a development agreement entered into before September 1, 2005.

(d)  This section does not apply to property that is part of an urban land bank program.

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