House Passes Dallas BA Priority Legislation
HB 852, a Dallas BA and Texas Association of Builders priority bill, passed the Texas House of Representatives on Tuesday by a vote of 126-9. The bill prohibits municipalities from using the valuation or cost of a residential dwelling to determine the amount of permit or inspection fees charged. The bill also prevents municipalities from requiring disclosure of the sales price, contract price, or other method for determining or estimating the value or cost of a residential dwelling.
Despite being required by the Texas Constitution, most Texas municipalities do not base the amount owed for building permit or inspection fees on the municipality’s cost to perform these inspections. Instead, fees are typically calculated based on the cost or estimated value of the home itself.
The cost to build the home is either provided to the municipality through mandatory disclosure of its construction cost, contract or sale price. In some cases, building permit or inspection fees are compiled via a chart promulgated by the International Code Council using estimated national construction cost averages. An increase in the figures on the chart is often used as an occasion for the municipality to increase its fees even when the municipality’s cost to provide these services remains unchanged.
Requiring disclosure of the cost to build a home or its contract or sales price is likely to result in a fee that is an unauthorized occupations tax because these figures do not bear a reasonable relationship to the municipality’s cost of performing the services covered by the fee. Disclosure of these figures to taxing authorities increases the property tax burden on all Texans. This, combined with higher regulatory fees, creates a barrier to housing affordability and reduces the opportunity for homeownership.
HB 852 now moves on to the Senate for consideration. It’s companion bill, SB 855 unanimously advanced through Senate committee two weeks ago.