HB718

Regular Session

Relating to prohibiting a public institution of higher education from partnering with certain private entities for the construction of a student housing facility.

CriticalImmediate action required

High Cost

Effective:2025-06-20

Enforcing Agencies

Public Institutions of Higher Education (University Systems) • Texas Higher Education Coordinating Board (oversight)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: June 20, 2025 (Immediate effect due to supermajority vote).
Compliance Deadline: Immediate. Any contract executed on or after June 20, 2025, is subject to this prohibition. If you are currently negotiating a deal expected to sign this summer, you must clear or bond around liens now.
Agency Rulemaking: While the Texas Higher Education Coordinating Board (THECB) has oversight, individual University Systems (UT, A&M, etc.) will likely issue immediate internal procurement updates. Expect new addenda to RFPs within 30 days.

Immediate Action Plan

1. Conduct an Immediate Lien Search: Run a search on your contracting entities today. Identify every open lien or pending nonpayment claim.
2. Bond or Contest: For every item found in step 1, either secure a payment bond or file a formal legal response contesting the claim.
3. Update Bid Packages: Draft an "Affidavit of Non-Disqualification" to include proactively in all university RFP responses submitted after today.
4. Review Bonding Capacity: Verify with your surety agent that you have sufficient capacity to bond around potential disputes without tapping out your limits for performance bonds.

Operational Changes Required

Contracts

University Agreements (Upstream): Expect new "Representations and Warranties" clauses in Master Service Agreements (MSAs) requiring you to attest to a lack of disqualifying liens. Breach of this provision will likely trigger "Termination for Cause."
Subcontractor Agreements (Downstream): You must strengthen indemnification clauses. If a subcontractor files a lien that disqualifies you from a university project, your contract must provide a mechanism to recover lost profits and damages from that subcontractor.

Hiring/Training

Procurement & Legal Teams: Must implement a "Lien Sweep" protocol. Before any bid submission, staff must verify the entity’s legal standing regarding nonpayment claims.
Project Managers: Train PMs to elevate subcontractor payment disputes to Legal immediately. Informal email disputes are no longer sufficient; a formal "good faith contest" is now a compliance requirement.

Reporting & Record-Keeping

Affidavit of Eligibility: Prepare a standard sworn statement for bid packages attesting that the entity has no pending actions or liens for nonpayment.
Contest Documentation: Create a "Contest File" for every disputed claim. You must be able to produce formal legal correspondence or court filings proving a claim is being contested in good faith to avoid disqualification.
Bond Verification: Maintain digital copies of all payment bonds ready for immediate submission to procurement officers.

Fees & Costs

Bonding Premiums: Budget for increased surety costs. You may need to secure payment bonds specifically to "bond around" liens to maintain bid eligibility.
Legal Spend: Anticipate higher legal fees to formalize disputes. You cannot simply ignore a vendor claim; you must legally contest it to preserve your ability to bid.

Strategic Ambiguities & Considerations

Definition of "Pending Action": The statute does not explicitly define if a "pending action" requires a filed lawsuit or if a formal demand letter triggers the ban. Guidance: Adopt a conservative approach. Treat any formal demand or filed lien affidavit as a trigger requiring a bond or formal contest.
Subjectivity of "Good Faith": The law allows an exception for "good faith contests" but leaves the determination of that validity to the University. A procurement officer could subjectively decide your contest lacks merit and disqualify you.
Scope of "Partnering": While the language targets Public-Private Partnerships (P3), the prohibition on "partnering... for construction" is broad. Guidance: Assume this applies to all prime construction contracts (Design-Bid-Build, CM-at-Risk), not just developer-led P3 models.

Need Help Understanding Implementation?

Our government affairs experts can walk you through this bill's specific impact on your operations.

Schedule Consultation

Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

Legislative Timeline

This bill's path through the Texas Legislature

TopicsEducation Education--higher Education--higher--general Housing Housing--finance Housing--general State Agencies, Boards & Commissions Purchasing Purchasing--general Contractors' Liens

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 718

By: Bell, Cecil

Higher Education

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Currently, private entities who have pending action or liens for nonpayment of a contractor, subcontractor, or vendor are not prohibited from partnering with public institutions of higher education in Texas for the construction of student housing facilities. The bill author has informed the committee that there are bad actors among student housing developers whose failure to pay at the end of the project is a practice, and they are bolstered by the fact that the institutions are in such desperate need of housing that the revenue from the project will not be impacted once certificate of occupancy is received. H.B. 718 seeks to purge bad actors from the process and strengthen opportunities for good contractors by prohibiting a public institution of higher education from partnering with certain private entities for the construction of a student housing facility.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 718 amends the Education Code to prohibit a public institution of higher education from entering into a contract to partner with a private entity to construct a student housing facility if the entity has a pending action or lien against the entity or entity's property relating to a claim for nonpayment of a contractor, subcontractor, or vendor. The bill applies only to a contract entered into on or after the bill's effective date. A contract entered into before the bill's effective date is governed by the law in effect on the date the contract was entered into, and the former law is continued in effect for that purpose.

EFFECTIVE DATE

September 1, 2025.

House Authors

Rep. Cecil BellRepublican · Primary Author

Senate Sponsor

Sen. Tan ParkerRepublican · Primary Sponsor

Bill Text(with markup)

H.B. No. 718

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to prohibiting a public institution of higher education
	from partnering with certain private entities for the construction
	of a student housing facility.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subchapter Z, Chapter 51, Education Code, is
	amended by adding Section 51.9273 to read as follows:
	Sec. 51.9273. CERTAIN PARTNERSHIPS TO CONSTRUCT STUDENT
	HOUSING FACILITIES PROHIBITED. (a) In this section, "institution
	of higher education" has the meaning assigned by Section 61.003.
	(b) An institution of higher education may not enter into a
	contract to partner with a private entity to construct a student
	housing facility if the entity has a pending action or lien against
	the entity or entity's property relating to a claim for nonpayment
	of a contractor, subcontractor, or vendor. This section does not
	apply to a claim for nonpayment if the entity:
	(1) has provided a payment bond to cover the claim; or
	(2) contests in good faith the validity or accuracy of
	the claim.
	SECTION 2. Section 51.9273, Education Code, as added by
	this Act, applies only to a contract entered into on or after the
	effective date of this Act. A contract entered into before the
	effective date of this Act is governed by the law in effect on the
	date the contract was entered into, and the former law is continued
	in effect for that purpose.
	SECTION 3. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 24, 2025

TO:	Honorable Terry M. Wilson, Chair, House Committee on Higher Education

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB718 by Bell, Cecil (Relating to prohibiting a public institution of higher education from partnering with certain private entities for the construction of a student housing facility.), As Introduced

No significant fiscal implication to the State is anticipated.

It is assumed that any costs associated with the bill could be absorbed using existing resources.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:

710 Texas A&M University System Administrative and General Offices, 717 Texas Southern University, 719 Texas State Technical College System Administration, 720 The University of Texas System Administration, 758 Texas State University System, 768 Texas Tech University System Administration, 769 University of North Texas System Administration, 781 Higher Education Coordinating Board, 783 University of Houston System Administration, 966 Howard College, 978 San Jacinto College

LBB Staff:

JMc, FV, LBO, GO

Related Legislation

Explore more bills from this author and on related topics

Frequently Asked Questions

Common questions about HB718

What does Texas HB718 do?

Effective June 20, 2025, Texas public universities are statutorily prohibited from entering into student housing construction contracts with private entities carrying unresolved liens or pending nonpayment actions. This legislation creates a strict "clean hands" eligibility standard; general contractors and developers with open disputes regarding subcontractors or vendors will be disqualified from bidding unless they possess a payment bond or formally document a good faith contest. Implementation Timeline Effective Date: June 20, 2025 (Immediate effect due to supermajority vote).

Who authored HB718?

HB718 was authored by Texas Representative Cecil Bell during the Regular Session.

When was HB718 signed into law?

HB718 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce HB718?

HB718 is enforced by Public Institutions of Higher Education (University Systems) and Texas Higher Education Coordinating Board (oversight).

How urgent is compliance with HB718?

The compliance urgency for HB718 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB718?

The cost impact of HB718 is estimated as "high". This may vary based on industry and implementation requirements.

What topics does HB718 address?

HB718 addresses topics including education, education--higher, education--higher--general, housing and housing--finance.

Legislative data provided by LegiScanLast updated: November 25, 2025

Need Strategic Guidance on This Bill?

Need help with Government Relations, Lobbying, or compliance? JD Key Consulting has the expertise you're looking for.