According to the Legislative Budget Board (LBB), SB 840 is not expected to have a significant fiscal impact on the State of Texas. The agencies involved—including the Office of Court Administration, the Attorney General, and the Comptroller of Public Accounts—anticipate being able to absorb any administrative or enforcement-related costs associated with implementation using existing resources.

The bill could have indirect implications for state finances through its potential effect on local property tax values. By easing zoning restrictions and reducing development-related fees and regulatory burdens, SB 840 may encourage additional mixed-use and multifamily residential development. This, in turn, could raise local taxable property values. However, the LBB notes that the resulting changes to property valuations and any impact on state contributions through the public school finance formulas are unlikely to be significant.

At the local level, the bill could affect municipalities that currently impose regulations or fees that would be preempted under SB 840. These cities may experience a reduction in revenue tied to development fees, parkland dedication charges, or traffic impact studies. While this could represent a fiscal constraint for some municipalities, particularly those heavily reliant on development-related revenue, the LBB does not quantify these impacts, and no local cost estimates are provided. Nonetheless, cities may also see long-term fiscal benefits through increased development activity, higher tax bases, and revitalization of underused commercial properties.

SB 840 has undergone substantial revision since its original filing in the Senate, where its broad preemption of municipal and county authority and its rigid zoning mandates raised valid concerns about infrastructure strain and the erosion of local control. At that time, Texas Policy Research recommended a NO vote, citing risks to water systems, transportation networks, and grid reliability in the absence of local mitigation tools such as traffic studies, impact fees, and density controls.

However, the House Committee Substitute meaningfully narrows the scope and impact of the legislation. The revised version applies only to municipalities (not counties) over 150,000 in population within counties exceeding 300,000 residents—dramatically limiting the number of jurisdictions affected. Moreover, it adds thoughtful geographic exceptions for heavy industrial zones, military bases, and designated accident potential areas. Most critically, it restores key local government powers: cities may still apply health and safety regulations, enforce environmental protections, and implement voluntary incentive-based programs like density bonuses.

Equally important, data from the U.S. EPA and peer-reviewed academic studies indicate that mixed-use developments tend to reduce vehicle miles traveled and traffic impacts due to internal trip capture and transit-oriented design. These findings challenge the assumption that such developments necessarily strain infrastructure and validate the bill's provisions that waive traffic impact studies and limit excess parking mandates. In effect, the bill removes outdated regulatory tools while relying on more accurate modern land-use data, encouraging infill development that is environmentally and economically efficient.

From a liberty standpoint, SB 840 now strikes a more appropriate balance. It protects the rights of property owners and developers to pursue lawful, market-driven projects while scaling back only the most discretionary and often politicized local zoning barriers. It reduces regulatory burdens, promotes free enterprise, and helps alleviate Texas’s housing shortage—all without expanding the scope of state government or increasing taxpayer liability. The revised enforcement provisions also appropriately reduce state overreach by eliminating punitive powers originally assigned to the Attorney General and focusing instead on judicial remedies for actual violations.

In sum, the concerns that justified a NO recommendation in the Senate version have been sufficiently mitigated or resolved in the House Substitute. Combined with new empirical evidence supporting the development model and sustained fiscal neutrality for both state and local governments, Texas Policy Research recommends that lawmakers vote YES on SB 840 as a liberty-aligned, housing-friendly reform tailored to Texas’s urban growth challenges.

• Individual Liberty: The bill enhances individual liberty by reducing government interference in how property owners may use land within existing commercial zones. By removing arbitrary zoning barriers and discretionary permitting processes, the bill empowers individuals to make housing and investment decisions with fewer political or bureaucratic hurdles. For example, owners of underused office buildings can convert them to housing without facing excessive regulatory delays, thereby advancing their freedom to use their property as they see fit.
• Personal Responsibility: By encouraging redevelopment and infill housing, the bill creates opportunities for individuals and communities to take responsibility for addressing the housing shortage through market-based solutions. Rather than relying on expanded government subsidies or interventionist housing policies, the bill fosters conditions where private actors can meet demand. It also enables people to live closer to jobs and services, encouraging self-sufficiency and reducing car dependency, especially in mixed-use environments.
• Free Enterprise: This is the bill’s most significant contribution. The bill removes regulatory burdens that often prevent developers from pursuing projects that are economically viable but politically constrained by municipal zoning rules. The bill eliminates unnecessary traffic studies, restrictive parking requirements, and costly discretionary processes that act as barriers to entry. In doing so, it restores fairness and predictability to the development process, encouraging innovation, competition, and responsiveness to market signals—all hallmarks of a thriving free-enterprise system.
• Private Property Rights: The bill affirms that lawful landowners—especially in areas already zoned for commercial or mixed use—should not be subjected to overly restrictive, subjective, or politically motivated regulations. By ensuring that property owners can develop or convert their land for residential use without needing special approvals or zoning changes, the bill protects the core tenet that individuals have the right to control, enjoy, and derive benefit from their property.
• Limited Government: The bill limits the scope of local government power where it has been used to inhibit housing development and enforce exclusionary zoning practices. It curtails overregulation without creating new bureaucracies or expanding state control. While the bill does preempt some local authority, it does so in a narrowly tailored manner that addresses demonstrated regulatory overreach and avoids sweeping mandates. Moreover, municipalities retain the ability to regulate health, water quality, and short-term rentals—preserving essential local functions.

• HB 3404 (Same As)