With leadership changes across Texas, from city managers to the state capitol, and the position of Texas House Speaker yet to be determined until January 14, it is shaping up to be an interesting 89th Session for the Texas Legislature.
As of mid-December, some 2,000 bills had already been filed ahead of the Texas Legislative session opening in January. The bills then get referred to a committee to see if there is a consensus to proceed to a hearing on the bill. Next, the bills go to the house floor. There are 76 votes needed to get a bill past the house before it goes through the same process in the senate before they reach the governor’s desk for final approval.
Below are some of the issues and legislative priorities for the housing industry.
Texas Housing Inventory is Still 300,000 Homes Short
Though Texas sits at the forefront of national housing inventory growth, with its 15 major cities adding over 642,000 units from 2005 to 2023 per a recent StorageCafe report, multiple sources say there’s a critical shortage driving up home prices and rents.
Meanwhile, the latest Census data shows Texas remains the top state for net domestic migration as the state’s population continues to boom. Nearly 612,000 people moved to Texas last year, while about 478,000 moved out for a net gain of 134,000.
Our state’s population growth has positive benfits, yes. But the rapid growth puts pressure on our infrastructure. Many suburban Texas cities are struggling to balance home construction with demands for roads, water systems, energy and broadband to accommodate all the newcomers.
Texas is expected to have plenty of cash to fund any new mandates. State Comptroller Glenn Hegar projected the state will have a $20 billion surplus at the start of the 2025 session.
The power grid still remains a hot topic after the 2021 winter storm.
Texas grid operator ERCOT is predicting an 80% chance of blackouts if there’s another severe winter storm this year. And while business relocations are generally a boon for the Texas economy, major chip plants and data centers headed to Sherman and Austin put even more pressure on the grid as huge energy consumers. Electric vehicles add another layer to the challenge. Some builders have begun installing backup power batteries in new homes to address electric insecurities.
The U.S. Department of Energy announced it will put $360 million toward a project to create a new link between the Texas power grid, which operates independently from its neighbors, and other grids in the Southeast. Energy experts say such interconnections would reduce the risk of big blackouts and potentially drive down the cost of energy. But it’s important to many Texans that grid remains independent from the national grid and would not be subject to any federal oversight. Thus, the interconnection proposed by Pattern Energy’s Southern Spirit Transmission line would not fully unite the Texas grid, managed by the Electric Reliability Council of Texas, with neighboring grids.
In Texas, four similar interconnections already exist that allow limited amounts of energy to cross state lines. But these direct current ties are different from more robust interconnections that most states share. Texas state officials have long opposed those connections, known as “synchronized” connections, because of the likelihood that they would lead to greater federal oversight of the state’s power grid.
The Plan for the Grid Link
If extreme weather drives up demand or knocks out power generation on one side of the energy bridge, the Southern Spirit Transmission line would be designed to allow enough electricity to flow back and forth to power about three-quarters of a million homes. But many landowners in Louisiana oppose the project’s use of eminent domain. Utilities in Louisiana and Mississippi also fear the new transmission line could mean competition in their states’ energy markets.
If it’s completed, advocates say the Southern Spirit Transmission could also help decarbonize the grid, by bringing more inexpensive renewable energy from Texas into neighboring states. Grid operators and energy experts say the rapid growth of solar power and grid-scale batteries have significantly helped energy storage resources in Texas. On hot, sunny days, the very conditions that bring higher energy use are the same conditions that produce solar power. That solar energy is used to fill large batteries that discharge power back to the grid. And as the sun goes down, Texas often enjoys strong evening winds that bring wind power online.
Post-2000 Building Codes Are Already Efficient, Safe and Resilient Enough, says NAHB.
When states were slow to adopt the 2021 IECC, the feds gave incentives for adopting it under the Inflation Reduction Act. The 2021 codes call for significant increases in the minimum insulation requirements, changes to the air leakage test thresholds, and requirements to achieve “additional efficiency” through the selection of “packages.”
Now after recent weather disasters, the Federal Emergency Management Agency (FEMA) says the incentives were not enough. FEMA blames storm damage to home on the need to adopt more these more stringent building codes. NAHB responded by saying FEMA’s demands are “oversized, unwarranted and would needlessly raise housing costs.”
NAHB applauds offering a wider range of options for builders to achieve compliance, calling it a sensible move that helps control unnecessary cost increases.
Rather than arbitrarily continuing to make codes more and more stringent, new code editions should focus on acknowledging the resiliency of current codes and ensuring proper enforcement. Indeed, the 2024 IECC is anticipated to achieve incrementally higher energy savings than the 2021 edition while offering substantially more flexibility.
NAHB makes a valid point in stressing to FEMA that a better priority would instead be on retrofitting and preparing older homes to withstand natural disasters. A full 130 million homes of the nation’s housing stock of 137 million were built before 2010, NAHB members noted in their testimony to Congress.
The latest Census data shows Texas remains the top state for net domestic migration as the state’s population continues to boom. Nearly 612,000 people moved to Texas last year, while about 478,000 moved out for a net gain of 134,000.
TAB and Texas 2036 urge state lawmakers to prioritize water infrastructure spending.
“No issue affects the future of our building industry more than water,” Texas Association of Builders CEO Scott Norman warns. “Texas has been discussing water shortages for decades with little progress.”
House Bill 1400 would create a Groundwater Science Research and Innovation Fund that would fund activities to improve groundwater science, improve efficiency of groundwater use and protect groundwater quality.
Texas relies on groundwater from aquifers for about 55 percent of its water supply. As the population grows and the climate changes, groundwater will make up an even larger piece of the pie. Texas voters created a $1 billion fund in 2023 to develop more water resources for the state, including desalination of brackish groundwater.
But during 2023, Texas regulators notified 34 local authorities—from El Paso to Houston—that newly identified contamination could impact their public drinking water. An additional 289 property owners were notified that groundwater contamination may impact their private wells.
Our state’s population growth has positive benefits, yes. But the rapid growth puts pressure on our infrastructure. Many suburban Texas cities are struggling to balance home construction with demands for roads, water systems, energy and broadband to accommodate all the newcomers.
Without Billions of Investment in Infrastructure Texas Remains Vulnerable
Texas 2036, a non-partisan Texas public policy thinktank, commissioned a report by the Center for Energy Studies at Rice University’s Baker Institute. Findings estimate that if a years-long drought similar to that of the 1950s happened, Texas could endure $160 billion in annual GDP losses. Without significant infrastructure investments, the potential vulnerability could see 800,000 jobs lost, and an exodus of hundreds of thousands of people leaving for other states.
Some states are already envisioning a future where some 20 million Americans will relocate to “Receiving Cities” in the Midwest, Northeast, and the northern Great Plains.to escape extreme heat, drought, sea-level rise and natural disasters such as tropical storms, flooding, and wildfires.
Over the next 50 years the state will need to invest $59 billion in new water supplies, $74 billion in fixing deteriorating water systems, and $21 billion in fixing broken wastewater systems. State and federal funding are expected to provide $40-45 billion of that. But a long-term gap of more than $110 billion remains, according to the Rice report findings.
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INDUSTRY NEWS CONTINUES…Other Issues Up for Debate During the 89th Session:
- A fierce debate over state-mandated reforms to city zoning restrictions is likely.
- Texas Insurance Premium Increases Outpace the Rest of the Country
- Educating young people about the career opportunities in construction.
While the Texas industry is squarely focused on the actions of the 89th Legislative Session, Eyes Are Also on Washington
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