Texas House OKs bill to prohibit cities from charging ‘linkage fees’

The Texas House has voted to put off limits a potential source of revenue for Austin and other Texas cities attempting to address issues of housing affordability.

House Bill 1449, sponsored by state Rep. Ron Simmons, R-Carrollton, would prevent Texas cities from charging so-called “linkage fees” on new construction to help pay for affordable housing. Under the bill, a city may not levy a fee “on new construction for the purposes of offsetting the cost or rent of any unit of residential housing.”

No Texas city currently charges linkage fees. But Austin Mayor Steve Adler has said he thinks municipalities should have them as a potential tool, and an Austin city task force cited the fees last month as a pillar in a plan to raise $600 million over 10 years to help buy and preserve affordable housing for minorities.

The idea of linkage fees is that they’re a mechanism to “link” new development with a means of solving some of the community problems it can create, such as gentrification. Such fees are used in parts of California, Colorado and other states.

But some industry groups are opposed to linkage fees, saying they will exacerbate housing-affordability issues by driving up housing costs for everyone. Among other organizations, the Texas Association of Builders has come out strongly in favor of the effort to prohibit linkage fees in Texas.

The House gave HB 1449 final approval on a 102-38 vote Wednesday afternoon. No Republicans voted against it.

The bill now will be sent to the Senate. A companion bill — Senate Bill 852, sponsored by state Sen. Jane Nelson, R-Flower Mound — is in the Senate Business and Commerce Committee but hasn’t had a hearing.

An Austin municipal task force, created by Adler in November to address issues of institutional racism in the city, released dozens of proposals last month, including a recommendation that $600 million over 10 years be put into a fund to provide affordable housing for minorities squeezed out of their homes and neighborhoods by rising property values and high taxes.

Under the plan, money for the fund primarily would come from linkage fees of $2 per square foot on new construction in the city.

“Based on current projections and 2015 data, if Austin were to implement a linkage fee of $2 per square foot, it could raise $60 million annually for the fund, which could create 400 housing units at $150,000 each, ” the task force’s report states. It subsequently recommends that Austin set a goal of raising $600 million for the fund over 10 years, based on the revenue projection from linkage fees.

Still, task force members and Adler previously have said other tools exist to raise the money if state lawmakers end up removing linkage fees as an option.

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