USA – TEXAS Law and Practice Contributed by: Taylor Cooksey, David Brooks, Serena Kramer and Philip Kinkaid, Cokinos | Young
floodplain management, that intersect with local zon - ing. Controls over the design and method of construction are administered and enforced by a combination of state laws, local ordinances and private restrictions. Municipalities may regulate building design through zoning ordinances. This can include aesthetic stand - ards and construction methods, though the focus is on land use. Construction methods can be indirectly affected by requiring infrastructure such as roads, drainage and utilities to meet required specifications. Cities may adopt versions of national building codes, with permitting and inspection requirements to ensure compliance with codes and ordinances. Certain his - toric buildings or historic districts may require special approvals regarding renovations. 4.2 Development Process, Challenges and Enforcement Development entitlements in Texas are governed by local government regulations, primarily at the munici - pal or county level, depending on the project’s loca - tion. Typically, the process includes securing approv - als such as zoning and subdivision changes, permits, plats and site development plans, including address - ing specific concerns expressed by the agencies or public (public hearings are often required). The appeal process depends on the type of decision, the jurisdic - tion and the specific issue involved. Zoning decisions can be appealed to the local board of adjustment. If administrative remedies are exhausted or unavailable, judicial relief can be sought in Texas courts. In Texas, it is possible to enter into agreements with local or governmental authorities, agencies and util - ity suppliers to facilitate development. These agree - ments help to ensure compliance with regulations, secure infrastructure support by reimbursing certain infrastructure costs via tax credits or abatements, and address community or environmental impacts. Exam - ples include: • development agreements with municipalities or counties; • utility service agreements with municipalities, water districts or private utility companies; • impact agreements with municipalities or counties;
• economic development agreements; • Municipal Utility District agreements; • Industrial District agreements; and • transportation agreements.
Restrictions on development are enforced in Texas through a combination of local zoning ordinances, building codes and state regulations. Because of Tex - as’s decentralised approach, allowing municipalities to tailor regulations to their specific needs, enforce - ment can vary significantly from location to location. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Any type of entity may hold real estate in Texas. This section describes the entities typically used in Texas to directly acquire ownership of a parcel of land – ie, the “titleholder entity”. Please see 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity for a description of the entities that are typically used as investment structures for real estate acquisitions, and which, in turn, own the titleholder entity. Commercial real estate in Texas is typically acquired and held in a new, single-asset limited liability com - pany (LLC), to protect the buyer’s existing assets from environmental or other liabilities of the purchased property (a new “series” of a “series LLC” may also be used, but this is less common). The LLC is disre - garded as a separate entity for federal tax purposes. Significantly less often, a limited partnership (with an LLC or corporation acting as its general partner) is used to hold title. Operating companies (as opposed to real estate inves - tors) will sometimes acquire a new property directly in an existing entity that owns other assets. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Although title to Texas real estate is typically acquired and held in a single-asset LLC, the investment or oper - ating “vehicle” that owns such titleholding entity can take many forms. The most common in Texas are the:
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