Overall Vote Recommendation

Yes

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

SB 2137 proposes changes to the rules governing the allocation of low-income housing tax credits by the Texas Department of Housing and Community Affairs (TDHCA). Specifically, the bill amends Section 2306.67022 of the Texas Government Code to prohibit the department from including educational quality criteria of nearby public school campuses in either the threshold requirements or the scoring system of its Qualified Allocation Plan (QAP). Under current practice, TDHCA’s QAP often factors in the academic performance of schools in the attendance zone where a housing development is proposed, which can significantly influence the competitiveness of applications.

The bill introduces temporary provisions—set to expire on September 1, 2027—aimed at removing this practice to assess its impact. During this period, TDHCA is also mandated to conduct a study on the effects of removing educational quality metrics from the QAP and report its findings to the Legislature by November 1, 2027. The changes will apply only to applications submitted during the 2026 and 2027 allocation cycles, thereby creating a time-limited pilot framework.

In summary, SB 2137 seeks to broaden access to low-income housing tax credits in areas that may have previously been disadvantaged due to lower-performing schools. The legislation emphasizes a more inclusive approach to housing development siting while ensuring oversight through a mandated study of outcomes before a long-term policy decision is made.

The original version of SB 2137, as filed by Senator Menéndez, and the later committee substitute version of the bill share the same core policy intent: temporarily removing educational quality metrics from consideration in the allocation of Low-Income Housing Tax Credits (LIHTC) by the Texas Department of Housing and Community Affairs (TDHCA). However, the key differences lie in the scope of legislative sponsorship, level of detail, and presentation of the bill’s components.

In its original version, SB 2137 is narrowly focused. It simply prohibits the TDHCA from using public school educational quality—either as a threshold requirement or as a scoring factor—in Qualified Allocation Plans (QAPs) for the 2026 and 2027 cycles. The bill includes a temporary sunset clause (expiring September 1, 2027) and mandates that TDHCA conduct a study on the effects of the change, reporting findings by November 1, 2027. This version provides a concise, targeted adjustment to housing tax credit policy, aimed at expanding access to housing in areas served by lower-rated public schools without broader contextual elements or explanatory additions.

The Committee Substitute, by contrast, includes additional sponsors from both chambers, indicating broader bipartisan support and collaborative development. While the substantive policy remains nearly identical, the committee substitute presents a more fully developed policy rationale and administrative context. It may also reflect refined language and format conforming more closely to legislative drafting conventions, as is typical for substitutes that emerge from committee deliberation. Though both versions restrict educational quality considerations, the substitute formalizes the intent as a temporary, testable change and strengthens oversight by requiring a legislative report—adding administrative clarity.

In essence, the main difference is that the original bill establishes a simple directive, while the Committee Substitute refines and expands that directive with additional detail, collaboration, and procedural formality. The Committee Substitute represents a more polished and strategically viable legislative vehicle, but the underlying policy change remains consistent between the two versions.

Author

Jose Menendez

Co-Author

Carol Alvarado

Borris Miles

Sponsor

Charles Cunningham

Ray Lopez

Sheryl Cole

Shelley Luther

Cassandra Garcia Hernandez

Contact the Author

Sen. Jose Menendez

Capitol Phone:

(512) 463-0126

Capitol Office:

EXT E1.610

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

According to the Legislative Budget Board (LBB), SB 2137 would have no significant fiscal impact on the State of Texas. The primary reason for this is that the changes proposed—namely, the prohibition on considering the educational quality of public schools in the allocation of low-income housing tax credits—do not require new appropriations or major restructuring within the Texas Department of Housing and Community Affairs (TDHCA). The agency is expected to implement these changes using its existing administrative resources.

The bill also requires TDHCA to conduct a study and submit a report to the Legislature on the effects of this policy change. According to the fiscal note, these responsibilities can be absorbed within the department’s current budget and staffing levels, meaning no additional funding or personnel would be necessary. This reflects the expectation that the scope of the study will not exceed what is manageable within the agency’s normal operational capacity.

At the local government level, the fiscal note similarly finds no significant impact. Because the bill affects only how the state agency evaluates applications for tax credits—without imposing new mandates, costs, or duties on cities, counties, or school districts—there is no anticipated burden on local government finances.

Overall, the fiscal implications of SB 2137 are minimal, making it a policy-driven initiative rather than one with substantial budgetary consequences.

Vote Recommendation Notes

SB 2137 promotes a more equitable and practical approach to allocating Low-Income Housing Tax Credits (LIHTC) by temporarily removing the requirement that proposed development sites be evaluated based on the educational quality of nearby public schools. This change addresses a critical barrier that has restricted affordable housing development in high-demand urban areas, especially those where school accountability ratings have been inconsistent or unavailable—an issue made worse by disruptions caused by the COVID-19 pandemic. By prohibiting the Texas Department of Housing and Community Affairs (TDHCA) from using school quality as a threshold or scoring factor in its 2026 and 2027 Qualified Allocation Plans, the bill provides a measured opportunity to test whether these educational criteria are unnecessarily exclusionary.

From a liberty principles perspective, this bill supports Individual Liberty and Free Enterprise by removing administrative constraints that limit where low-income Texans can live based on arbitrary or outdated school performance data. It enhances Personal Responsibility by empowering individuals and families to make their own housing decisions without being penalized for choosing to live in areas with struggling or unrated schools. Additionally, the legislation promotes Limited Government by constraining bureaucratic overreach and allowing the housing market to respond more directly to demand.

The bill is also prudent in its structure—it is time-limited, expiring in 2027, and includes a mandated study by TDHCA to assess the policy’s effects. This ensures legislative oversight and data-driven policy evaluation. The fiscal impact is minimal, with no significant costs expected to state or local governments, and implementation can be absorbed within existing agency resources.

In sum, SB 2137 addresses a well-documented policy flaw, respects liberty-centered values, and is structured to test reform without committing the state to long-term changes prematurely. Texas Policy Research recommends that lawmakers vote YES on SB 2137.

Individual Liberty: By removing school performance as a factor in the eligibility and scoring of Low-Income Housing Tax Credit (LIHTC) applications, the bill expands the freedom of low-income individuals and families to choose where to live without being restricted by educational ratings outside their control. This promotes autonomy in housing decisions and reduces discriminatory effects of opaque or outdated bureaucratic criteria, particularly in underserved or urban areas.
Personal Responsibility: The bill respects the capacity of families to assess their own needs—including trade-offs between housing affordability and school quality—rather than allowing the state to make that judgment for them through its allocation criteria. It affirms the principle that individuals should be empowered to make choices that best suit their circumstances, not be constrained by one-size-fits-all policy assumptions.
Free Enterprise: SB 2137 removes an artificial constraint on the affordable housing development market. By decoupling tax credit eligibility from school performance metrics, the bill gives developers more flexibility in identifying and responding to market demand, especially in high-need urban areas. This improves competitive access to tax credits and removes regulatory bias that favors only certain neighborhoods.
Private Property Rights: While the bill does not directly change property rights, it reduces regulatory burdens that have prevented property owners and developers from utilizing land in areas associated with low-rated or unrated schools. This shift allows broader use of private property for housing development in accordance with market demands and community needs.
Limited Government: The bill imposes a clear limitation on the Texas Department of Housing and Community Affairs (TDHCA), preventing it from using educational criteria that may unfairly exclude developments from eligibility. By narrowing the scope of agency discretion and requiring a legislative report to assess the outcome, SB 2137 reinforces accountability and restrains bureaucratic overreach.

Related Legislation

HB 3753 (Same As)

View Bill Text and Status