By Right Is Not the Same as By Default: Texas SB 840, One Year In
By Hari Nathan Kalyan, Managing Attorney, Warren Kalyan.
Five Key Takeaways
SB 840 makes multifamily by right in Texas's 19 largest cities. Qualifying commercially zoned land no longer needs a rezoning or a city council vote for apartments or mixed use projects.
Statutory floors override city caps. Density floors of 36 units per acre, height floors of 45 feet, and limits on parking, floor area ratio, and retail mandates all constrain what a city can require.
Nearly 8,400 apartments moved forward in the first year. That is roughly one in five multifamily units permitted statewide, even as overall Texas multifamily permits fell.
Suburbs are pushing back with compliant sounding ordinances. Extra story minimums, amenity mandates, and industrial use redefinitions are testing the law's limits, and the state is watching closely.
Enforcement has real teeth. An adversely affected owner can sue for declaratory or injunctive relief and recover attorney's fees, with appeals routed exclusively to the Fifteenth Court of Appeals.
If you own a tired strip center, a half empty office building, or a warehouse tract in one of Texas's biggest cities, the law changed under your feet on September 1, 2025. Senate Bill 840 and its companion, Senate Bill 2477, stripped a large amount of zoning discretion from big city councils. On paper, apartments and mixed use projects are now allowed by right on most commercially zoned land. In practice, the first year has been a running fight between the state and a handful of suburbs, and that fight now shapes which deals pencil.
What the Law Actually Does
SB 840 applies to cities with more than 150,000 people that sit wholly or partly in a county with more than 300,000 people. That is roughly the 19 largest Texas cities, including Dallas, Fort Worth, Houston, Austin, Arlington, Plano, Frisco, Irving, and El Paso.
In those cities, multifamily and mixed use residential are permitted by right in any district that already allows office, commercial, retail, warehouse, or mixed use. No rezoning. No variance. No conditional use permit. No comprehensive plan amendment. If your submittal complies, the permitting authority has to approve it administratively, and the city council does not get a vote.
The statute also sets floors that cities cannot dip below. Density cannot be capped under the greater of 36 units per acre or the highest residential density allowed anywhere in that city. Height cannot be capped under the greater of 45 feet or the tallest commercial height already allowed on your site. Cities cannot require more than one parking space per unit, cannot require a multilevel parking garage, cannot impose a floor area ratio cap, and cannot force you to include retail or office space.
Conversions get their own package of relief. If your building is at least five years old and you convert at least 65 percent of the building and at least 65 percent of each occupiable floor to residential use, the city cannot demand a traffic study, cannot demand parking beyond what already exists on the site, cannot make you oversize utilities past minimum capacity, and cannot impose design standards stricter than the International Building Code minimums it already adopted. New impact fees on conversion sites are generally off the table.
There are real carveouts. Land that allows heavy industrial use, land within 1,000 feet of an existing heavy industrial use or site, and land within 3,000 feet of an airport or military base are all excluded. Historic district and short term rental rules survive. And private deed restrictions still bind you, which matters more than most owners expect.
Why This Matters Right Now
The numbers came in this summer, and they are not small. A bipartisan coalition that backed the bills, including Texans for Reasonable Solutions, the American Enterprise Institute, and Texas Appleseed, counted at least 8,400 apartments moving forward under SB 840 in its first year. That is roughly one in five multifamily units permitted statewide over that period. Statewide multifamily permits actually fell about 10 percent, yet permits rose in the 19 cities SB 840 touches.
One example tells the story. Neighborhood groups fought the redevelopment of Pepper Square, an aging North Dallas shopping center, for years, then sued after the council approved it. SB 840 passed and the lawsuit went moot. About 1,000 apartments are going in.
What the Cities Did Back
Several Dallas Fort Worth suburbs responded with ordinances that comply with the letter of the statute while making projects hard to build. Irving now requires eight occupied stories, plus a gym, a dog park, and a remote work space. Arlington set a six story minimum in nonresidential districts and requires electric vehicle charging at 15 percent of required parking. Plano tied eligibility to minimum heights running as high as 120 feet. Grand Prairie requires a pool with at least 13,448 square feet of surface area. Frisco created a heavy industrial use, defined word for word from the statute and permitted in every commercial district, apparently to trigger the 1,000 foot industrial exclusion citywide. Dallas and Fort Worth went the other way. Dallas is treating the statute as preemptive and will give owners written guidance on how SB 840 applies to a site. Fort Worth passed a resolution affirming compliance.
The state noticed. At a July 20, 2026 House Land and Resource Management Committee hearing, the chair signaled he would push legislation in January to stop the workarounds. On July 31, 2026, Governor Abbott accused cities of skirting the law and said he would seek authority to withhold sales tax revenue from noncompliant cities.
Practical Takeaways for Owners and Operators
Check eligibility before you spend money. Confirm your city is covered, confirm your district allows a qualifying commercial use, and run the exclusion buffers. For a conversion, verify the five year age and model the 65 percent thresholds building wide and floor by floor.
Pull your title commitment early. In El Paso, roughly 36 percent of the newly eligible lots carry private deed restrictions barring apartments. SB 840 does nothing about those.
Design to the statutory floors, then keep a second set of plans. If a city imposes a condition the statute forbids, you want an alternative ready rather than a six month redesign.
Document everything in writing. The enforcement teeth are real. An adversely affected person can sue for declaratory or injunctive relief, and a prevailing claimant gets mandatory attorney's fees and costs. Under SB 2477, conversion violations also expose the city to economic damages. Venue is the county where the property sits, and appeals run exclusively to the Fifteenth Court of Appeals. A clean paper trail is what makes that leverage usable.
Watch the vested rights question. Section 4 of SB 840 applies to a project initiated on or after September 1, 2025, and the statute never defines project or initiated. Chapter 245, meanwhile, lets a permit holder take advantage of regulatory changes that enhance or protect a project. Expect that intersection to get litigated.
Build the delay into your model. Even when you are right, a permitting fight costs carry and moves your returns.
Where This Is Heading
The 2027 session will revisit this, and the current posture suggests the Legislature tightens rather than loosens. Until then, the practical answer is the one that has always worked in Texas land use: know your entitlements cold, put your position in writing, and be willing to enforce it.
Our team at Warren Kalyan works with owners, developers, and operators on entitlement diligence, conversion feasibility, permitting disputes, and the deal documents that keep a project alive while a city makes up its mind.
Weighing a by right multifamily or conversion project in Texas?
Initial consultations are no charge. Senior attorney access from day one.
hello@warrenkalyan.com | (512) 347-8777 TX | (212) 516-6513 NY | warrenkalyan.com | @warrenkalyan
General information only, not legal advice for your specific situation.