Starter Homes Live in Texas, Die in Arizona

Happy Tuesday, and welcome to another edition of Rent Free. This week's stories include:
A win for starter homes in Texas…
…and a defeat for them in Arizona
A new constitutional challenge to affordable housing fees in Denver
A veto of a rent-recommendation algorithm ban in Colorado
After suffering a near-death experience last week, Texas' Senate Bill 15, a.k.a. the Texas Starter Homes Act, has passed the Legislature and now goes to Gov. Greg Abbott's desk.
The bill would prevent larger cities in larger counties from requiring that homes sit on lots larger than 3,000 square feet in new subdivisions of at least five acres.
Proponents argue the bill will enable the construction of more inherently affordable owner-occupied housing in cities that currently require much larger minimum lot sizes.
"Texas is the first state to take seriously the idea that a basic starter home, without any subsidy, is usually affordable to people making average or below average incomes, [and] should be available throughout the state," says Salim Furth, a researcher at George Mason University's Mercatus Center.
Minimum lot size bills have been one of the more controversial and less successful YIMBY reforms in state legislatures. Texas' bill is one of the first to make it over the finish line.
The initial version of S.B. 15 would have capped minimum lot sizes at 1,400 square feet, which mirrors unzoned Houston's minimum lot sizes.
That version passed the Senate back in March but was watered down in negotiations between the House and Senate during last-minute considerations of the bill.
The legislation survived an effort by Texas House Democrats to effectively gut the legislation.
Rep. Ramon Romero Jr. (D–Fort Worth) briefly succeeded in amending the bill to only require that cities create a starter home zoning district with the smaller minimum lot sizes. The amendment would not have required cities to actually apply this new zoning district to existing land or to new subdivisions.
This would have effectively made S.B. 15 a voluntary paperwork exercise.
Romero, who also briefly managed to kill S.B. 15 via a procedural move in the House earlier in May, has criticized the idea that allowing smaller homes on smaller lots would yield more affordable homes.
"It's already been proven that just because you have smaller (homes) does not immediately equate to more affordable (homes)," he said to The Texas Tribune last month.
(One study of minimum lot size reductions in Houston, Texas, facilitated an "unprecedented" increase in the rates of infill housing construction in single-family neighborhoods.)
That gutting amendment was stripped out of the bill in last-minute negotiations between the House and the Senate, meaning that S.B. 15 will have some teeth, provided that Abbott signs it into law.
While the bill does not apply to existing residential areas, Furth says it will provide developers a lot more flexibility when constructing new subdivisions, where most new housing in Texas is being built.
"Most single-family home production in Texas is done in non-residential or extremely large lots. A normal Texas subdivision is going to be five-plus acres, and maybe 100 acres," he tells Reason. "This will allow [builders] to include small homes in that mix and make sure there's a variety of price points and variety of styles."
Meanwhile, in Arizona, a near-identical Starter Home Act is effectively dead in the Legislature.
Similar to Texas' S.B. 15, Arizona's S.B. 1229 initially would have prevented cities from requiring homes in new five-acre-plus subdivisions to sit on lots of 1,500 square feet or more. It also would have prohibited cities from dictating home designs and aesthetic features.
As in Texas, the bill was amended to raise its minimum lot size cap to 3,000 square feet. That helped get the legislation out of the Senate on a 16–13 vote, with Republicans and Democrats on each side of the vote.
Two House committees also approved the bill in March and early April. But it then stalled over what proponents say was persistent opposition from the Arizona League of Cities and Towns and Gov. Katie Hobbs' office.
Hobbs vetoed a very similar starter homes bill last year, citing concerns that that bill didn't explicitly carve out areas near military bases or explicitly include fire safety standards.
The governor's concerns were incorporated into S.B. 1229. Yet the League, a taxpayer-funded association that lobbies on behalf of local governments, still opposed the measure's limits on local land use regulation.
The League had pushed for amendments to S.B. 1229 that would have dramatically limited its scope by imposing price and income limits on new starter homes and requiring that buyers live in the homes for 15 years.
These demands were a nonstarter with proponents of S.B. 1229, and negotiations on a compromise measure broke down earlier this spring.
"Our last meeting was about an hour and a half in the governor's office. I could tell [the governor's staff] were not going to come over to our side at all. They were literally letting the League [of Cities and Towns] run the table," Sen. Shawna Bolick (R–Phoenix) tells Reason.
With the threat of Hobbs' veto hanging over S.B. 1229, the bill was never brought up for a floor vote.
Despite the failure of the starter homes bill, Arizona did pass a handful of other housing reforms. That includes House Bill 2928, which expands last year's statewide legalization of accessory dwelling units in cities to unincorporated county land as well. The state also passed a bill allowing for third-party plan reviews of single-family projects.
A homebuilder in Denver is suing the city over what it says are unconstitutional affordable housing fees being slapped on two of its pending residential projects.
Denver's Linkage Fee ordinance requires residential projects of 10 units or less to either set aside units to be rented or sold at below-market rates or pay per-square-foot "linkage" fees.
When local builder redT Homes sought approval for two projects, a four-unit single-family home development and a two-duplex project, the city said it would need to pay linkage fees of $45,000 and $25,000 on each respective project.
A string of U.S. Supreme Court decisions has established that the Fifth Amendment protects property owners from having to turn over money or property when applying for a development permit, unless there's some nexus between those exactions and the actual impact caused by the permitted project.
Denver claimed when passing its linkage fee ordinance in 2016 that new development raises economic activity and, therefore, raises demand for work-force housing.
redT counters that its planned homes are making housing more affordable, not less, by expanding overall housing supply. By charging it an affordable linkage fee anyway, Denver is charging it for an impact it's not having. That, it argues, violates the Fifth Amendment's protections against "unconstitutional conditions."
redT Homes is suing Denver in the U.S. District Court for the District of Colorado.
"These affordable housing fees almost by definition fail" the Supreme Court's test for unconstitutional conditions, says David Deerson, an attorney with the Pacific Legal Foundation, which is representing redT Homes.
"A fundamental law of economics is that an increase in supply tends to lower prices. Denver can't force developers like redT Homes to pay fees to solve problems that not only are they not creating, they're already solving," he says.
A favorable federal court ruling for redT Homes could have major implications for housing development nationwide.
Like Denver, hundreds of jurisdictions have adopted similar "inclusionary zoning" policies that require housing developers to include below-market-rate units in their projects or pay in-lieu affordable housing fees.
And like Denver's linkage fees, a similar constitutional argument can be made that inclusionary zoning's affordable housing mandates take developers' property to mitigate an impact they're not having.
Developers and property rights advocates have periodically challenged inclusionary zoning laws in court, typically with little success.
In 2019, the Supreme Court declined to hear a challenge to Marin County, California's inclusionary zoning policy that the California Supreme Court had upheld. (The Pacific Legal Foundation also litigated that case.)
The Supreme Court's 2024 decision in Sheetz v. County of El Dorado established that fees and permit conditions imposed on whole classes of projects by legislatures must still have some connection to those projects' impacts.
The Sheetz decision was a narrow one. It didn't directly deal with inclusionary zoning. But it did widen the universe of permit conditions that can be challenged as "unconstitutional conditions."
Potentially, a new inclusionary zoning case with a new set of facts might pick up this Court's interest and result in a decision that puts some guardrails on affordable housing mandates and fees.
On pure policy grounds, inclusionary zoning acts as a tax on development, reducing production and raising costs. Ending these policies could unlock a lot of potential new projects.
Colorado Gov. Jared Polis has vetoed a bill that would have banned the use of rent-recommendation software.
Proponents of the bill argue that this software facilitates price-fixing among landlords by sharing nonpublic data on prices and vacancies between competitors.
Colorado, along with a number of other states and the U.S. Department of Justice, is currently suing rent-recommendation software provider RealPage for antitrust violations.
Polis said in a veto letter, posted online by Colorado Public Radio, that while he shares concerns that this software could be used to drive up prices, the measure was overly broad.
"We should not inadvertently take a tool off the table that could identify vacancies and provide consumers with meaningful data to help efficiently manage residential real estate to ensure people can access housing," said the governor in his veto letter.
"This bill may have unintended consequences of creating a hostile environment for providers of rental housing and could result in further diminished supply of rental housing based on inadequate data," he wrote.
The governor said he would prefer for state and federal lawsuits to play out. He said he'd be open to a future bill that made a distinction between collusive and noncollusive uses of nonpublic competitor data.
Read Reason's past coverage of the RealPage controversy here.
New York City's rent-stabilized housing stock is in increasing financial distress, thanks to rising operating costs and the city's suppression of rent increases. To remedy the situation, New York assembly member, and New York City mayoral candidate, Zohran Mamdani is proposing to remedy the situation by freezing rents.
Los Angeles Times covers the California Legislature's efforts to exclude urban infill housing from the state's notoriously burdensome environmental review process. Organized labor is cool on the effort, altruistically asking, "What's in it for us?"
The biggest opponents of a public housing redevelopment project in New York City? The [wrong link here] of multimillion-dollar homes nearby.
The Connecticut Legislature has passed a major housing bill that requires localities to zone for more affordable housing, increases density near transit stops, and pares back minimum parking requirements.
The post Starter Homes Live in Texas, Die in Arizona appeared first on Reason.com.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Yahoo

25 minutes ago

• Yahoo

What the business world has to like (and not) in the Senate version of Trump's 'big, beautiful bill'

The business community has some clear wins in a Senate version of President Trump's "big, beautiful bill" but it isn't getting everything it wants. The Senate's Finance Committee's 549-page blueprint contains significant changes, especially on taxes, Medicaid funding, and clean energy. One proposal was quickly embraced by the business community: a Senate-side push to make corporate tax deductions permanent around things like interest payments and new capital investments. But a less popular idea is the survival of the so-called revenge tax that would allow the government to levy new duties on foreign nations and their businesses. That idea was introduced in the House version and sparked fears of reduced foreign investment. The version released last Monday pares back the tax but doesn't eliminate it entirely, as corporate lobbyists had asked. Specific industries also have plenty at stake from Senate changes if they make it into law. Businesses that work in clean energy will have more time to adjust to the phase-out of Biden-era credits. Restaurants and gig economy companies have more limited tax breaks for tips and overtime. Healthcare providers will also have to adjust to even steeper cuts to Medicaid's provider tax structure — perhaps the most surprising and significant overall change in the Senate version. What the Senate version of the bill doesn't appear to have — as Elon Musk and others had pushed for — is a significant change in the final price tag. Both versions are expected to add trillions of dollars to the debt. The Senate version also raises the debt ceiling by $5 trillion, compared with $4 trillion in the House version. The bill does have one clear cost-saving measure: slashing the annual deduction for individual state and local taxes (SALT) from $40,000 to $10,000. But that provision is described even in the bill's official summary as "the subject of continuing negotiations," with defenders of the deduction pledging to restore the full credit forthwith. The Senate version earned a quick flurry of Republican pledges — from fiscal hawks to defenders of those SALT deductions to those who object to the Medicaid cuts — to vote no if the final version isn't changed to their liking. "We're not seriously addressing our long-term deficit and debt," Sen. Ron Johnson of Wisconsin told reporters soon after the unveiling, reiterating that he remains a no. The back and forth comes just weeks ahead of Republicans' self-imposed deadline to get the bill to the president's desk by July 4. Senate Majority Leader John Thune has said sticking to that timeline means Senate passage by the end of this coming week. Ed Mills of Raymond James offered in a note that "we continue to view the July 4 target as ambitious" — suggesting that SALT and Medicaid provisions in particular could be under continued debate in the days ahead. Here is a closer look at some of the major business world changes being proposed by the Senate: A key focus for business owners is a series of tax deductions that will reinstate credits for corporations around things like property depreciation, capital investments, new factory construction, interest expenses, and research and development costs. These provisions were present in the House version but only temporarily. Permanency was a key Senate priority once they took over, even as it is expected to increase the price tag. The bill "powers the economy by permanently extending critical pro-growth provisions and introduces new incentives for domestic investment, providing certainty for American job creators to spur domestic economic activity and invest in their workers," offered Senate Finance Committee Chairman Mike Crapo as he unveiled these provisions. The Senate version also enhances credits for "opportunity zones," which provide tax relief in rural and distressed communities. The bill also includes Trump's campaign promises of no taxes on tips and overtime, but in a more limited form. Employees would be able to deduct up to $25,000 annually for tips and overtime, in contrast to the House's approach of 100% deductibility under certain income limits. The Senate blueprint also includes a rollback of clean energy credits for things like solar panels and electric vehicles. The changes in the Senate would make that phaseout slower — zeroing out some key credits by 2028 — but with a bottom line that Republicans across the spectrum are united in eliminating these benefits entirely. Amy Hanauer, executive director of the left-leaning Institute on Taxation and Economic Policy, reacted to the released proposal by saying that "the emerging clean energy economy will be curtailed and for what?" "Our communities will be worse off as a result of this legislation,' she added. On the fossil fuel side, the Senate bill continues to include changes to make permitting less laborious, open up new lease sales, and reverse a fee on excess methane emissions. The Senate bill also includes a controversial plan to limit the ability of states to regulate artificial intelligence. The Senate's provisions are less airtight, stopping short of the outright ban proposed by the House, but are expected to remain a point of contention and potentially an issue for the Senate parliamentarian, given the Senate's complex reconciliation rules. Other changes in the bill appear to cut against business interests at least slightly. The Senate bill makes permanent the so-called pass-through deduction — formally called a 199A deduction for small businesses — but at the current rate of 20%. The House version also had permanency, but at a higher rate of 23%. Meanwhile, a clear focus of business lobbyist ire has remained in the bill, but in a slightly diminished form: the so-called revenge tax. This idea would allow a president to punish companies and countries if they adhere to foreign laws that policymakers find objectionable. In Trump's case, things like the digital services taxes that often hit tech companies overseas. The Senate version, in a nod to the flurry of concerns, set a maximum rate of 15% and delayed implementation until 2027 but kept the concept intact. In addition to that tax, the SALT and Medicaid changes are likely to be most in focus in the days and weeks ahead. Tobin Marcus of Wolfe Research noted Tuesday morning that "SALT changes underscore the reality that this is another step forward in negotiations, not the final answer." He added that "we still view late July as the real deadline." This story has been updated. Ben Werschkul is a Washington correspondent for Yahoo Finance. Click here for political news related to business and money policies that will shape tomorrow's stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Miami Herald

33 minutes ago

• Miami Herald

Donald Trump's SNAP Benefit Cut Plans Suffer Blow

A plan by Republicans to shift a portion of federal food stamp costs to state governments suffered a major setback after the Senate parliamentarian found it would violate chamber rules. The blocked provision was an attempt to reduce federal spending on the Supplemental Nutrition Assistance Program (SNAP), affecting more than 40 million low-income Americans who rely on food aid. The shift would have transferred major SNAP costs to the states, requiring them to pay at least 5 percent—and potentially more—of benefit costs, which analysts warned could result in significant cuts to nutrition support. The parliamentarian's decision places additional pressure on the bill's champions to find alternative means to fund tax cuts without imperiling food assistance, Medicaid, or other federal support programs. The provision, a cornerstone of Republican efforts to offset the costs of President Donald Trump's multitrillion-dollar tax and spending legislation, has been ruled inadmissible under Senate rules, sending GOP leaders scrambling to revise the mega bill. The ruling, issued by Senate parliamentarian Elizabeth MacDonough, came as the package prepared for a vote. While her opinions are advisory, they are rarely ignored in lawmaking practice. Republican lawmakers are now searching for new savings as they continue to advance Trump's legislative priorities despite the setback. MacDonough declared the SNAP cost-sharing plan noncompliant with the chamber's budget reconciliation rules, specifically the Byrd Rule, which bars certain policy measures from being attached to budget bills. The proposal would have shifted billions of dollars in SNAP costs from the federal government to the states, creating a new fiscal obligation for state governments and threatening coverage for millions. House Passes Bill with GOP SNAP Cuts The House passed the broader tax and spending package along party lines in May 2025, including a provision to require states to fund at least 5 percent of SNAP benefits and more for high error rates. The House-passed measure's SNAP provision was projected to save about $128 billion. Republican leaders had hoped these savings would help offset the bill's $4.5 trillion in tax cuts and new spending. Other Key Provisions Beyond SNAP, the package includes an extension and expansion of individual and business tax cuts, new work requirements for Medicaid recipients, cuts to federal health and nutrition programs, increased military and border security funding, and the elimination of taxes on tips for service workers. GOP Paths Forward Republican leaders, including Senate Agriculture Committee Chair John Boozman of Arkansas, said they were exploring options to keep the legislation on track while still delivering savings elsewhere. Options range from modifying the disputed SNAP provision to removing it entirely or risking a procedural vote requiring 60 votes—an unlikely scenario in the current Senate. Impact on SNAP Recipients The plan would have expanded work requirements to older adults (up to age 65), a component that remains in the bill for now. Democrats and anti-hunger advocates warned of significant harm to those in need, with more than 3 million individuals projected to lose food stamp access based on Congressional Budget Office estimates. Additional Rulings Expected The Senate parliamentarian is also expected to rule on other elements in the bill, including limits on immigrant eligibility for nutrition aid and changes to federal agencies, with further decisions likely to shape the final legislation. Minnesota Senator Amy Klobuchar, the top Democrat on the Senate Agriculture, Nutrition and Forestry Committee, said: "We will keep fighting to protect families in need," opposing shifts in SNAP costs to states, which she said would result in significant benefit cuts. Arkansas Senator John Boozman, chair of the Senate Agriculture Committee, said Republicans are "exploring options" to comply with Senate rules, while supporting those reliant on SNAP. Senate Republicans are expected to revise the bill to comply with the parliamentarian's rulings or drop the contested SNAP provisions. Further decisions from the adviser on other elements of the megabill are anticipated before any final Senate vote. This article contains reporting from The Associated Press. Related Articles When Are July 2025 SNAP Payments Coming?Republicans Out Of Step With Voters On Medicaid FundingNew York State Facing Lawsuit Over SNAP BenefitsSNAP Recipients Get Extra Money This Month in California 2025 NEWSWEEK DIGITAL LLC.

Fox News

an hour ago

• Fox News

'Baby steps': Leader Thune details his work to corral Republicans behind Trump's legislative vision

Print Close By Alex Miller Published June 22, 2025 FIRST ON FOX: Senate Majority Leader John Thune is weathering headwinds in his own conference over outstanding concerns in President Donald Trump's "big, beautiful bill" that threaten to derail the legislation, but he's taking it in stride and standing firm that the megabill will make it to the president's desk by July 4. "We have to hit it, and you know whether that means it's the end of next week, or whether we roll into that Fourth of July week," the South Dakota Republican told Fox News Digital during an interview from his leadership suite. "But if we have to go into that week, we will," he continued. "I think it's that important. And you know what I've seen around here, at least in the past, my experience, if there's no deadline, things tend to drag on endlessly." TOP TRUMP ALLY PREDICTS SENATE WILL BLOW PAST 'BIG, BEAUTIFUL BILL' DEADLINE Senate Republicans have been working on their version of Trump's mammoth bill, which includes priorities to make his 2017 Tax Cuts and Jobs Act permanent, sweeping changes to healthcare, Biden-era energy credits and deep spending cuts, among others, since the beginning of June. Now that each portion of the bill has been released, Thune is eyeing having the bill on the floor by the middle of next week. But, he still has to wrangle disparate factions within the Senate GOP to get on board with the bill. "It is a work in progress," Thune said. "It's, you know, sometimes it's kind of incremental baby steps." A cohort of fiscal hawks, led by Sen. Ron Johnson, R-Wis., are unhappy with the level of spending cuts in the bill. Some Senate Republicans want to achieve at least $2 trillion in spending cuts over the next decade, but Johnson has remained firm in his belief that the bill should go deeper and return to pre-COVID-19 pandemic spending levels. Others, including Sens. Susan Collins, R-Maine, Josh Hawley, R-Mo., and Lisa Murkowski, R-Alaska, are upset with tweaks to Medicaid, and the impact those changes could have on rural hospitals and working people on the healthcare program's benefit rolls. 'IT JUST BAFFLES ME': SENATE REPUBLICANS SOUND ALARM OVER MEDICAID CHANGES, SPENDING IN TRUMP MEGABILL Thune has to strike a precarious balancing act to sate the concerns of his conference, given that he can only afford to lose three votes. It's a reality he acknowledged and described as trying to find "the sweet spot" where he can advance the bill back to the House. He's been meeting with the factions individually, communicating with the White House and working to "make sure everybody's rolling in the same direction." "Everybody has different views about how to do that, but in the end, it's cobbling together the necessary 51 votes, so we're working with anybody who is offering feedback," he said. Collins and others are working on the side to create a provider relief fund that could offer a salve to the lingering issues about the crackdown on the Medicaid provider rate tax in the bill. The Senate Finance Committee went further than the House's freeze of the provider tax rate, or the amount that state Medicaid programs pay to healthcare providers on behalf of Medicaid beneficiaries, for non-Affordable Care Act expansion states, and included a provision that lowers the rate in expansion states annually until it hits 3.5%. "We're going to do everything we can to make sure that, for example, rural hospitals have some additional assistance to sort of smooth that transition," Thune said. BLUE STATE REPUBLICANS THREATEN REVOLT AGAINST TRUMP'S 'BIG, BEAUTIFUL BILL' IF SENATE CHANGES KEY TAX RULE Thune, who is a member of the Finance panel, noted that "we all agree that the provider tax has been gamed" and "abused" by blue states like New York and California, and argued that the changes were done to help "right the ship" in the program. "I think that's why the sort of off-ramp, soft-landing approach [from] the Finance committee makes sense, but these are substantial changes," he said. "But on the other hand, if we don't start doing some things to reform and strengthen these programs, these programs aren't going to be around forever, because we're not going to be able to afford them." The Senate's product won't be the end of the reconciliation process, however. The changes in the bill will have to be green-lit by the House, and one change in particular to the state and local tax (SALT) deduction cap already has a cohort of blue state House Republicans furious and threatening to kill the bill. The Senate's bill, for now, left the cap unchanged at $10,000 from the policy ushered in by Trump's first-term tax cuts, a figure that Senate Republicans view as a placeholder while negotiations continue. Indeed, Sen. Markwayne Mullin, R-Okla., is working with members of the SALT caucus in the House to find a compromise on the cap. But the appetite to keep the House-passed $40,000 cap isn't strong in the Senate. "The passion in the Senate is as strong as it is in the House against changing the current policy and law in a way that… favors high-tax states to the detriment and disadvantage of low tax states," he said. "And so it's the emotion that you see in the House side on that particular issue is matched in the Senate in a different direction." Meanwhile, as negotiations continue behind the scenes on ways to address issues among Senate Republicans, the Senate Parliamentarian is currently chunking through each section of the greater "big, beautiful bill." The parliamentarian's role is to determine whether policies within each section of the bill comport with the Byrd Rule, which is the arcane set of parameters that govern the budget reconciliation process. Thune has made clear that he would not overrule that parliamentarian on Trump's megabill, and re-upped that position once more. The reconciliation process gives either party in power the opportunity to pass legislation on party lines and skirt the Senate filibuster, but it has to adhere to the Byrd Rule's requirements that policy deals with spending and revenue. CLICK HERE TO GET THE FOX NEWS APP However, he countered that Senate Republicans planned to take a page from Senate Minority Leader Chuck Schumer, D-N.Y., when Democrats rammed former President Joe Biden's agenda through Congress. "The Democrats with the [Inflation Reduction Act] and [American Rescue Plan Act], for that matter, they dramatically expanded the scope of reconciliation and what's eligible for consideration," he said. "So, we've used that template, and we're pushing as hard as we can to make sure that it allows us to accomplish our agenda, or at least as much of our agenda as possible, and fit within the parameters of what's allowed," he continued. Print Close URL