State Rep. Paul Dyson, R-Bryan, has filed a bill that would place a four-year moratorium on impact fees in housing construction in the state of Texas.
Dyson filed House Bill 5489 earlier this week. The bill calls on no new impact fees to be levied in the state of Texas until the end of August 2029.
If the bill passes and goes into effect, it will mean that impact fees could not be included in the cost of construction of residential buildings. Dyson believes the bill would help lower the cost of housing in Texas.
"During the campaign, housing affordability was a big topic. We've been talking about it for a while across the state of Texas," Dyson told The Eagle on Thursday. "With Texas' growth, we are running out of housing and so it was one of those things where I wanted to focus on what can the state of Texas do to help with that housing affordability crisis."
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Having the moratorium go until August 2029 would allow the Legislature to have two years of data on how the moratorium was working when it convenes for the 90th legislative session in 2027.
"The idea of the moratorium was it's not a permanent removal of impact fees," Dyson said. "It's the idea of this is a crisis we are going through and let's see what we can do in four years. It was strategic to pick those four years because we'll be back in session in two years and we can look back and see if we need to adjust it or if it's just something that's not working and so you could remove that moratorium in that next session if we we're not seeing a decrease in house prices."
Impact fees are used by cities across Texas but most communities don't use them. Large cities such as Houston and San Antonio don't have impact fees while others like Austin and Fort Worth do. Most of the 16 other cities in Texas that do impose impact fees are suburbs of the larger cities.
"I began to look into impact fees more and realized that government fees is a lot of times one of the first places you can cut to help decrease cost of a product or of a service," Dyson said. "Here that would be housing. It could be substantial when you see what these impact fees are in some locations. We want to try and incentivize development and building."
College Station began charging impact fees in the latter part of 2016. These fees were used for water, wastewater and roadways. College Station City Council member Bob Yancy is supportive of Dyson's bill, which came out of conversations held between Yancy and Dyson during Dyson's District 14 campaign last fall. Yancy believes impact fees are curtailing College Station's growth.
"I think impact fees are at the heart of the housing crisis that we are having in College Station," Yancy said. "From a housing affordability standpoint and a housing availability standpoint and from a neighborhood integrity standpoint I believe we've exacerbated a housing crisis."
Bryan has never implemented impact fees for new construction. Instead the city uses other areas of revenue to pay for improvements.
"The city is fortunate to have a balanced budget that allows current funding sources to address infrastructure needs," Bryan Mayor Bobby Gutierrez said in a statement. "This ability also better enables developers to keep new homes at a more affordable price point."
Both cities experienced an increase in new single-family homes and multi-family homes in 2024. College Station issued permits for 665 new single-family homes in 2024, up from 469 in 2023. There were also 764 permits issued for multi-family homes in 2024, up from 277 in 2023.
"I think cities are predicated on the law of large numbers," Yancy said. "It's when we're all working together to pay for our infrastructure and our growth that we succeed as a city. Everyone that has owned a home since before 2016 had their infrastructure paid for by spreading that expense out over all taxable properties. I believe it should be the same way going forward."
Bryan issued permits for 728 new single-family and 431 multi-family homes in 2024. In 2023, Bryan issued permits for 715 new single-family homes, down from 846 in 2022.
Yancy looks at Bryan's growth and sees the benefits that could be had in College Station if there is a moratorium on impact fees. Yancy also noted that College Station had several decades of growth before the impact fees were started nine years ago.
"I'm proud of what [Bryan] has accomplished in their housing market, and I want us to do the same," Yancy said. "I understand why my colleagues want to assess these fees. You could have the best policy in the world, but if its real-world impact is detrimental to your city, which I believe this is, then it needs to be revisited."
Texas issued 15 percent of all housing permits in the United States in 2024 according to data from realtor.com. According to the Texas A&M Texas Real Estate Research Center, the state had issued around 20,000 more permits than Florida.
The Texas Real Estate Research Center also found 136,374 single-family building permits were issued from January to October 2024.
Dyson is hopeful his bill will pass and provide an opportunity for every community in the state to lower the cost of new home construction.
"I think it will decrease the cost of housing on two fronts," he said. "First of all, because a government fee which is an upfront fee that a home buyer is going to have to pay for a new built home will be removed. Also I think it's going to incentivize more development. With more inventory we should see those housing prices come down because right now that's one of the big issues we have is we don't have enough inventory."
Dyson's bill is working its way through the machinery of the legislative process. If it makes its way through the House and Senate, it goes to Gov. Greg Abbott's desk to sign. If that happens, it would go into effect Sept. 1.
"We are keeping an eye on legislative developments and will assess any necessary next steps as they arise," Gutierrez said.
Yancy appreciates the effort Dyson has undertaken to file the bill and get things rolling on this issue.
"I commend Paul for filing the bill," Yancy said. "If this bill passes, I believe that building activity will significantly increase in those communities that are assessing impact fees. Were this bill to pass, I think you're going to see a significant uptick in housing starts."
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