Bureaucratic Bottleneck: The Woes of Texas Developers

With commercial developers reporting monthslong waits for basic permits, the Texas Legislature approved House Bill 14 (HB 14). The law took effect on September 1, 2023 and allows third parties to review or inspect development documents, including plats, plans, or development permits related to the development or improvement to land.

Intended to allow developers to more quickly build neighborhoods, homes, and apartments, HB 14 has potentially dramatic implications for developers and residents alike. But it’s not without controversy. Cities are still figuring out how to implement it, and many developers don’t even know it exists.

We’re here to help.

When can I use a third-party reviewers or inspector?

If the regulatory authority fails to issue an approval, conditional approval, or disapproval, within 15 days after the date required by the Texas Local Government Code, you may use a third-party reviewer or inspector.

For example, Section 212.009 of the Code requires municipal authorities to approve, conditionally approve, or disapprove plats or plans within 30 days. If that doesn’t happen, then after 15 days, you can obtain a third-party review.

The third-party reviewer or inspector is required to provide their findings in a notice to the regulatory authority within 15 days of completing their review or inspection. The regulatory authority may specify a format for this notice.

Whom can I hire as a reviewer?

1. A person employed by the regulatory authority to review development documents;

2. A person employed by another political subdivision to review development documents; or

3. A Texas-licensed engineer (excluding the applicant for the permit or a person whose work is the subject of the application).

Whom can I hire to perform inspections?

1. A person certified by the International Code Council to inspect buildings;

2. A person employed by the regulatory authority as a building inspector;

3. A person employed by another political subdivision to inspect buildings; or

4. A Texas-licensed engineer (excluding the applicant for the permit or a person whose work is the subject of the application).

Supporters say HB 14 will streamline the homebuilding process

Supporters champion this bill as a solution to what they consider the bureaucratic bottleneck of the permitting process. Review of site plans consumes the most time in the permitting process, adding up to 5% of the final price tag of the home for every 3- to 5-month delay. Long regulatory processes drive up home prices and rents for residents.

For example, in Austin, the building code gives reviewers four months to complete permit reviews. Still, the average project spends an additional 3.5 months in review before receiving its site plan approvals, according to a study by the University of Texas at Austin.

By alleviating these delays and their associated costs, the hope is that HB 14 will help ease Texas’ housing affordability crisis.

Opponents argue the bill will slow down the development process

Opponents lament the fact that the bill fails to clarify whether a third-party review can circumvent a regulatory authority’s decision. Nor does it clarify whether the third-party reviewer can be held accountable if their decision conflicts with the regulatory requirements.

And because the bill requires city councils to consider appeals of any adverse permitting decision, municipalities fear that managing this appeals process will create a significant burden.

Looking ahead

No matter what, this bill will have a significant impact on a city planning department’s process for reviewing land development applications. And by allowing developers to overcome delays occasioned by understaffed or over-tasked building inspection departments, it has the potential to accelerate permit review.

How cities or counties may blunt HB 14’s impact remains to be seen, but the clear intent is to allow third-party review or inspection if the city or county cannot respond to applications or requests in a timely manner.

Also yet to be seen is how third-party reviewers and inspectors will respond. Will they willingly serve as agent for purposes of regulatory review and approval? What fees will they charge? What form will third-party reviews take? And will the industry be able to accommodate this additional work and deliver their reports or inspections in a timely manner?

Only time will tell.

Cobb & Johns are Special Forces for Complex Property and Government Disputes.