SB 840 could be the most sweeping change to the ability for certain cities to regulate the development of multifamily ever passed by the Texas Legislature. It is likely to have significant effects on the number of sites that can be developed as multifamily, and it is certain to trigger reactions from the cities to which it is applicable, create infrastructure issues, heighten the significance of vested rights issues, spur the adoption of multiple local regulations intended to address its impact, and many yet-to-be-determined responses from cities.
The bill will have direct and indirect impacts on sites already rezoned, in pre-development stages, under construction, and fully stabilized. At Winstead, we are at the forefront of the law and are fielding daily calls on its impacts in a multitude of differing scenarios. Developers with counsel who deeply understand the law and potential legal structures and strategies that can be paired with it will have a meaningful advantage in the pursuit of entitlements, and there will likely be a significant advantage to moving quickly before and after the bill becomes effective.
Fundamentally, the bill applies to ground-up multifamily projects as well as conversions of existing commercial buildings into multifamily. Some key components of the bill from a developer and developer’s counsel perspective are:
- The bill is only effective in a city of at least 150,000 people.
(See Texas Cities by Population) - The bill applies to sites zoned for commercial uses AND sites already zoned for multifamily uses.
- The bill applies to sites located within PDs, overlays, or other specialized districts, even if they were recently created for a project.
- Projects that fall within these regulations cannot be required to seek a variance or appear before an elected or appointed body, and the development approvals (site plan, etc.) must be issued administratively.
The major changes to development regulations include:
- Cities must allow multifamily development to be at a density that is the GREATER of: (1) the highest multifamily density “allowed in the municipality,” or (2) 36 units per acre.
[Note: in almost all cities, this provision will mean a density greater than 36 units per acre; in the City of Plano, for example, this could mean an allowed density of 175 units per acre.] - Cities must allow multifamily to be developed to a height that is the GREATER of: (1) the highest height allowed for a commercial building “on the site,” or (2) 45 feet.
[Note: Unlike density, the maximum height is affected by the zoning of the site in question under this provision. Further, many sites, like those zoned MF-2 in the City of Dallas, will automatically receive an increase in height to 45 feet.] - Cities may not require a setback that is greater than the LESSER of: (1) the largest setback required of a commercial building “on the site,” or (2) 25 feet.
[Note: This provision has significant implications for regulations like the residential proximity slope in the City of Dallas.] - Cities may not require parking at a ratio greater than 1 space per dwelling unit.
- Cities may not require structured parking or nonresidential/retail uses within the project.
- Cities may not restrict “the ratio of total building floor area…in relation to the lot area of the development.”
[Note: This eliminates maximum FARs and regulations that require a minimum lot area per dwelling unit.]
The potential scenarios in which the bill has significant implications are limitless. Significant examples of affected cities include:
- PD 193 LC, O-2, and MF-3 sites in the City of Dallas would no longer have a maximum FAR for multifamily uses. Existing maximum FARs on these sites are 4.5 and 4.0.
- Sites zoned MF-1 and MF-2 in Dallas would allow four stories with significantly reduced or no impact from the residential proximity slope and a maximum required parking of 1 space per unit.
- Sites zoned RMF-22 in Arlington would allow for 36 units per acre rather than 22 and not be required to go through a lengthy public hearing process for development plan approval.
- Sites that allow office and commercial uses in the Las Colinas area of Irving would allow multifamily development at potentially significant heights and densities.
There are some exceptions to the law, and as mentioned at the outset, we anticipate near immediate local legislative responses from the cities to which this law will be applicable.
We are committed to monitoring those developments closely and will continue to keep our clients apprised.
CONTACT:
Tommy Mann I 214.745.5724 I tmann@winstead.com
Tommy Mann represents developers and land owners in securing entitlements and the formation of public/private partnerships for new development. Additionally, he regularly advises lenders and equity investors on entitlements.
Tommy is known for his ability to lead teams of developers, architects, engineers, and other professionals through complex political and legal issues. He forms coalitions of support for projects first and foremost, and he is regularly commended by elected officials and clients for his skill in overcoming substantial political opposition through oral advocacy at public hearings.
He has extensive experience across the full spectrum of development types, including data centers, industrial, multifamily, office, retail, and large-scale, mixed-use projects. This experience includes urban infill locations as well as North Texas’s rapidly growing suburban cities.
