House Bill No. 878 seeks to regulate residential land use and accessory dwelling units (ADUs) in Texas, particularly in municipalities with populations of 85,000 or more located in counties with populations of one million or more. The bill introduces new provisions in the Local Government Code, specifically adding Subchapter D under Chapter 211, which prohibits municipalities from enforcing certain lot size requirements, such as requiring residential lots to be larger than 2,500 square feet or imposing density restrictions that result in fewer than 31.1 units per acre. It also establishes regulations for small lots, including setback requirements and restrictions on parking and open space. Additionally, the bill adds provisions under Chapter 249 that define and regulate ADUs, preventing political subdivisions from enacting measures that restrict their construction, such as owner occupancy requirements or excessive setback rules.

The legislation mandates that applications for ADUs be processed ministerially without discretionary review, requiring a decision within 60 days, after which an application is deemed approved if no decision is made. It clarifies that existing historic preservation rules, deed restrictions, or homeowners' association rules remain in effect and may limit or prohibit ADU construction. The bill also allows for the construction of multiple ADUs on larger lots, limits fees associated with ADUs, and permits the application of short-term rental regulations to these units. Enforcement provisions are included, allowing the attorney general to address suspected violations, with penalties related to ad valorem tax rates for non-compliant political subdivisions. The act is set to take effect on September 1, 2025, with certain provisions effective from September 1, 2027.

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