Real estate ideas to watch in the 2023 Texas Legislature

Texans view state legislative sessions a lot like colonoscopies: unavoidable, hopefully unremarkable, and ideally passing as quickly as possible.

Next week, Texas state legislators will migrate to Austin for the 88th legislature, a flurry of activity that by law cannot last longer than 140 days. The legislators will consider a bevy of proposals, many of them focused on real estate. The legislature will not meet in regular session again until 2025, increasing the pressure as a horde of lobbyists and legislative activists descend on the capitol building in downtown Austin.

With big changes and bottom lines at stake, these are the bills real estate should look out for:

Foreign buyers

Sen. Lois Kolkhorst, R-Brenham, filed a bill aiming to bar government officials and companies headquartered in China, Iran, North Korea or Russia from buying property in Texas. The proposal was spurred by a Chinese company’s purchase of 130,000 acres near Laughlin Air Force Base in South Texas for a wind farm. National Republicans, including U.S. Sen. Ted Cruz of Texas, introduced a bill to bar these countries from purchasing land near military areas, citing cybersecurity concerns.

China held 383,935 acres of agricultural land across the U.S. Iran-based entities owned 4,300 acres, while Russians and North Koreans held almost none, according to a 2021 report on foreign ownership of agricultural land. Texas farmland experienced the greatest increase in foreign ownership that year, with 549,000 acres selling to non-Americans.

“Texas has the largest amount of foreign-held U.S. agricultural land,” Kolkhorst told The Real Deal. “Given the strong private property rights so vital to our state and nation, we can ill afford these rights being used against us by our adversaries.”

Farms and taxes

Elsewhere in farmland, Rep. Andrew Murr, R-Kerrville, filed a bill to review the state’s process for agricultural land tax appraisals. Murr, who owns a title company, is calling for a temporary joint committee to prepare a report on the state’s appraisal process.

Price transparency

In every recent legislative session, some brave soul has proposed a bill to make real estate sale prices public. Those proposals have never made it out of legislative purgatory, but Rep. Diego Bernal, a Democrat from San Antonio, hopes to break that pattern.

Bernal’s HB 234 would mandate sales price disclosure for all commercial and industrial property sales. There’s no reason to expect the bill to fare any better than its predecessors, and the usual opponents have lined up against it.

One of the most powerful lobbying forces in Texas real estate, Texas Realtors, opposes all sale price disclosure bills, calling them an “unnecessary invasion of privacy” and arguing they could provide data to support a real estate sale transfer tax, another no-no.

Housing

Bernal also filed HB 289, which would require public housing authorities to apply tenant rental payments to their rent tabs before applying them to things like maintenance or utilities.

Franchise tax

Rep. Craig Goldman, R-Fort Worth, filed a bill to repeal the Texas franchise tax, which levies any entity doing business in the state. As a real estate investor, Goldman should know firsthand the number of shell companies and holding entities real estate businesses create for their assets.

Goldman is not the first to target the franchise tax in a state government known for its business-friendly approach. The tax has already been the subject of of at least two special sessions of the legislature, two Texas Supreme Court decisions and three special-purpose committees, according to the Texas Comptroller.

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Meanwhile

Lt. Gov. Dan Patrick, who serves as president of the Texas Senate, released his legislative priorities in April. The 22-page document makes no mention of real estate and includes just one item about housing, in which Patrick asks the local government committee to “study issues related to affordable housing, homelessness, and methods of providing and financing affordable housing.”

Follow the money

Texas Realtors has yet to release its priorities for the session. But the organization’s political action committee reported $1 million in expenditures between Oct. 26 and Nov. 25, and $9.8 million in cash on hand, in its most recent filing with state campaign finance authorities. The PAC contributed to players across the political gamut, from mayors and state representatives up to Gov. Greg Abbott and the lieutenant governor, whose own PACs each received $50,000 from the Realtors.

Texas Realtors focused on 19 policy priorities that would have changed the way the state appraises property, taxes real estate sales, and delegates land use power to local authorities, during the 2021 session. The association also focused on real estate-related subjects like water and transportation infrastructure.