The scaled-back final version of an Indiana Statehouse bill addressing housing regulations was not as bad as some local leaders feared.
Still, they say they have concerns about “unfunded mandates” for local governments and the implications for local control.
House Enrolled Act 1001, authored by State Rep. Doug Miller, R-Elkhart, initially would have allowed single-family homes to be built in areas zoned residential to move forward without a public hearing and accessory dwelling units to be automatically approved, unless a local unit of government opts out by adopting an ordinance. Additionally, the initial bill would’ve prohibited a local unit of government from regulating design elements for residential structures, like color, type of roof, location, the number and types of rooms, and the minimum square footage, and also restricted a government unit’s ability to impose or increase fees related to building approvals and permits after Dec. 31, 2026, unless governments opted out.
The scope of the final bill passed by state lawmakers last week is narrower. Out were the requirements that would’ve allowed single-family homes in areas already zoned residential to move forward without a public hearing and allowed accessory dwelling units to be automatically approved unless a government opts out. Prohibitions on regulating design elements for residential structures were also removed.
Reporting requirements and fee changes were among the provisions that remained in the final bill. Changes to stormwater and floodplain regulations were also added. The bill awaits Gov. Mike Braun’s signature.
The final HEA 1001
Among the provisions that are in HEA 1001 are requirements for counties, cities and towns to file two annual housing reports with the Indiana Housing and Community Development Authority starting in January 2027.
The first is a housing progress report that includes the number of proposed, approved and denied housing units; the net new housing created after accounting for demolitions, conversions and combined units; the number of units entitled, platted, permitted or issued a certificate of occupancy; and the number of days spent processing housing applications. The second report is a housing status report that includes the average and median home sales prices and year-over-year changes; the median rent and year-over-year changes; the number of units built and occupied by type; and the share of new units affordable at different income levels.
After these reports are submitted to the IHCDA, the authority is required to publish an annual statewide summary.
There are also limits on local fees for residential developments starting in January 2027, though the scope is smaller. Development-related fees can only be charged by local governments in amounts necessary to cover administrative costs. These fees are now restricted to increasing once every five years, and can only increase up to the combined Consumer Price Index increase for the period. The fee revenue is also required to be placed in special, non-reverting funds, whereas under the current law, there is no specific fund requirement. If a local government misses the required permitting deadlines outlined in state law, it must refund or forfeit the fees collected.
This is not the only permitting change. Ministerial permits, like improvement location permits, have to now be issued within 12 business days when all requirements are met. All applications have to be reviewed for completeness within 30 days and governments have to approve or deny complete applications within 90 days, with extensions allowed only in limited cases.
Impact fees will also have new restrictions. New standards for impact zones focus on their functional relationship, benefit and contiguity, with the proximity to utilities and being within five miles of major infrastructure also required to be considered after June 30 of this year. Before adopting or increasing a fee, local governments have to have public hearings and post detailed summaries of fees online.
All local governments will be required to hold a public hearing by Jan. 1, 2027, to review their unified development ordinances with the goal of boosting housing supply in mind. Governments are tasked with considering, as examples, parking minimum reductions, allowing more housing variety and using tax abatements or land donations to encourage housing production. They’d also have to submit a report and any ordinance changes to the executive director of the Legislative Services Agency.
HEA 1001 also updates stormwater and floodplain regulations, including limiting stormwater basin requirements. The bill also assigns the topic of affordable housing built by religious institutions to an interim study committee; the original bill allowed developers to build affordable housing on land owned by religious institutions, as the institution maintained ownership of the property.
Locals still concerned
Local government officials in Johnson County and across the state were greatly concerned that the original version of HEA 1001 would take away some of their zoning authority and erode home rule.
While the changes are not as substantial in the final bill, the leaders of Franklin, Greenwood and Johnson County all told the Daily Journal they’re still not happy.
“It’s not as bad as it started out being, but it’s still a bunch of unfunded, mandated reporting,” said Franklin Mayor Steve Barnett. “And to me, that tells me that they’re not done yet.”
The new reports required to be complied by local governments are an additional workload and cost. Barnett said it might be a good time for Franklin to implement a landlord/renter registration program with a fee to pay for it.
“These legislators, they do this all the time on different stuff. … They mandate things without a way to pay for it,” he said.
Johnson County Commissioner Brian Baird, the immediate past president of the Indiana County Commissioners association, doesn’t understand why one of the reports goes to the LSA, a division of the general assembly, rather than an executive branch agency. To his knowledge, the county doesn’t send any other reports directly to the LSA, he said.
“The only reason that reporting would go to the LSA is basically so [lawmakers] can use that against us, saying that we don’t provide enough of what they call ‘affordable housing,’” Baird said. “And I’ve yet to get anything that tells me a definition of affordable housing coming out of their mouths.”
Baird, who used to be a builder, says the county’s permitting is not driving home prices in the county. It’s the builders and real estate agents, and Baird believes the changes are being pushed by builders’ associations, he said.
“I can’t help that, our permitting can’t help that. That’s what the builders are bringing to us to build,” Baird said. “So to say that it was our fault that affordable housing is not being built, we’re open [to proposals."
Greenwood Mayor Mark Myers is concerned about the effects bringing down prices could have on the quality of homes. He’s also concerned about the reporting requirements, saying the city would probably have to hire a dedicated person to track the data and compile the report.
“That’s really kind of a big burden on us since they’re already cutting our budget in other ways,” Myers said.
Myers says the ideas in the housing bill have come up before and will again. In the past, it was thought of as a conflict because the bill author was a builder, but now “Pandora’s Box” has been opened, he said.
“[Miller] can come back every year and try to make it more lenient towards the [developer] and take rules away from us,” Myers said.
Barnett emphasized how concerning the changes in the original bill were to him. The final version of HEA 1001 preserves the ability for the public to comment on things like the proposed Arbor Homes and Innovation Park projects, but that wouldn’t have been the case under the original bill, he said.
“[Residents] need to realize that if the legislature were to get their way, they wouldn’t have that,” Barnett said. “They wouldn’t be able to come and voice their opinion. They were taking all that away, where the cities and towns do not have an option to tell people what they want in their communities.”
The home rule debate
For Barnett, “it’s heartbreaking” lawmakers would even consider legislation like HEA 1001 because of home rule — the long-standing legal principle allowing local governments to manage local affairs like zoning, public safety and infrastructure without needing explicit state permission.
Barnett is a “firm believer” that anyone who voted in favor of the bill is “ignorant of what home rule means,” he said
“I know the state doesn’t want the federal government telling them what to do. Cities and towns don’t want the state government trying to dictate what they have to do,” Barnett said. “All of us live in our communities, we don’t need state legislators telling us what we need to do.”
Barnett and Baird believe the home rule debate will continue to pop up.
“We have to deal with these unique situations. [State lawmakers] continually battle to take that ability away from us, to try to make us all one combined thing,” Baird said.
Baird says there are local lawmakers who are “making terrible, terrible decisions for the people of these unique, distinct areas,” and are doing it under pressure from state leadership. While they shouldn’t have to tolerate this, they also need to step out and say they won’t, he said.
“Instead of being part of the problem, be part of the difference,” Baird said.
No matter what comes next, Baird said leadership in Johnson County is going to continue to fight for what’s right for the county and for its “unique distinctness.”
“We’re going to fight for that right to be able to … help the people in this county get what we want to get, who we want to be and how we want to live,” Baird said.
But to do so, officials need their residents and communities behind them, talking to legislators, telling them they want local control. Officials want residents to be involved and their input — on all issues, not just this one, he said.