North Texas Cities Slow New Multifamily Housing Law Through 'Unnecessary Mandates'

A new state law designed to spur multifamily housing development has delivered underwhelming results in North Texas, as many municipalities have regulated projects to the point that they can't get off the ground. 

Senate Bill 840 allows multifamily development by right in any commercially zoned areas of the state’s largest cities, but it has not met industry expectations. When it became law in September, developers were ready to densify existing mixed-use projects and convert underperforming office buildings. However, precious little new development has broken ground in the ensuing months. 

The lack of significant development tied to the law has left developers frustrated and state legislators promising to revisit the bill next year, according to Trey McGhin, a principal at the land brokerage and investment firm Dosch Marshall Real Estate.

“Some of the municipalities that it applies to have manipulated the language to … interpret it in a way that they can block deals from happening,” McGhin said. 

Those strategies have included increasing design standards, intensifying infrastructure requirements and making design guidelines stricter to prevent projects from moving forward.  

But not all North Texas cities have saddled developers with unreasonable requirements. Dallas officials have gone all in with the law, and Plano’s director of planning said it is having a positive impact in that city. 

Addressing A Need

Under Senate Bill 840, developers have the right to add multifamily housing in any areas zoned for commercial property without the need for public hearings or other zoning processes. However, the law applies only to cities with populations greater than 150,000 in counties with more than 300,000 residents. 

More than half of the 19 cities currently affected by the law are in Dallas-Fort Worth, where fierce pushback against multifamily has happened for years. Austin, San Antonio and a handful of other major cities also fall under the law.

The law was designed to address the state's worsening housing shortage, but many North Texas cities have added extra layers of regulation to slow its use. 

Multifamily construction activity has decreased in DFW for 11 straight quarters as the metro works through an oversupply issue. The region had just over 43,000 units under construction during the first quarter, and Colliers' latest DFW multifamily market report forecasts that figure to continue dropping in the quarters ahead.

Nearly 26,000 multifamily units were permitted in DFW last year, which was a slight increase over 2024, according to a report from the National Association of Home Builders. Across the state, permits issued for new multifamily units increased by less than 2% last year. 

The law has been effective in North Texas cities that haven’t added excessive regulations by allowing developers to create new projects at sites that had long been stagnant, McGhin said.

Dallas has "fully embraced" the new state law, said Andreea Udrea, deputy director of zoning for the city’s Planning and Development Department. Since multifamily was allowed by right years ago, Dallas has always been set up to absorb apartment units wherever commercial is allowed.

"We're still discovering, ‘This is how we're going to apply it in the city of Dallas,’ but the principle that we use is the intent of the law, which is to supply more housing,” Udrea said.

In addition to Dallas, DMRE has successfully brokered land deals for multifamily projects in Plano. McGhin said the city has many commercial sites that the law could help activate. 

In April, Rosewood Property Co. updated plans for 45 acres of its Heritage Creekside mixed-use development in Plano, removing a planned office building and replacing it with additional residential units. 

Plano has received 40 formal inquiries about multifamily projects related to SB 840, Director of Planning Christina Day said. It has three projects totaling 827 units under review.

"There's definite interest out there," Day said of the law. 

Local Control

While utilizing the law has been fairly easy in Plano, McGhin said cities like Frisco, Irving, Arlington and Grand Prairie have "found loopholes" to prevent the level of multifamily development initially anticipated.

Frisco requires ground-floor retail, Arlington wants multifamily buildings to meet a six-story height minimum, and Grand Prairie insists on an Olympic-size swimming pool with each apartment project. 

The city of McKinney requires apartments in business districts to be designed to complement nearby offices or retail. Developers are also required to include amenities like pools, dog parks and landscaped areas next to single-family homes, according to the city website. 

“They have done everything in their power to bend themselves into a pretzel to prevent that law from being effective,” The NRP Group Vice President of Development Nick Walsh said during Bisnow’s Dallas-Fort Worth Multifamily Annual Conference on May 12.

Plano officials passed some potential limitations to the law tied to its comprehensive plan, which Day acknowledged developers could perceive as hindrances to development. 

“We're exploring what's best for Plano long term,” Day said. “That process is in the works to implement a more long-term solution.”

City officials also plan to post notices at SB 840 projects letting residents know the projects are “allowed due to state law” and not under city jurisdiction.

While many developers held off on pursuing projects because the law seemed “too good to be true,” McGhin said some of the companies that went all in have been frustrated by the lack of results. 

"Now that we've kind of written off the cities that aren't willing to play ball on it, there's definitely a level of excitement with going to the cities that will," McGhin said.

Looking Ahead

Due to the lack of significant development through the law, efforts are underway to have the Texas Legislature revisit the bill during its next session.  

That session is set to begin in January, and the Texas Affiliation of Affordable Housing Providers trade association reported that both the House and the Senate have committees studying the rollout of SB 840.  

The Senate Local Government Committee was directed to report on the law’s implementation and make recommendations to strengthen property rights in regard to Texas housing affordability. The House Land and Resource Management Committee is also monitoring implementation efforts across the state. 

The bill's primary author, Texas Sen. Bryan Hughes of Mineola, said the law has created thousands of new homes despite some local governments adding “costly and unnecessary mandates” that make development harder.  

“When cities impose outlandish requirements like Olympic-sized pools or dog spas before housing can be built, they drive up costs and put homeownership even further out of reach for Texas families,” Hughes told Bisnow. “We'll be back next session to strengthen SB 840.”