The Three Reports Every Developer Checks Before Buying Land in Texas

In Texas land development, the acquisition decision is rarely the most consequential decision a developer makes. The more consequential decisions are made in the weeks before acquisition — during the due diligence process in which a developer determines whether a parcel can be developed at all, and under what conditions.

At Collective Acre, three reports form the core of that pre-acquisition due diligence. Each one addresses a distinct category of risk, and each one has the potential to fundamentally alter — or eliminate — the economic rationale for a proposed transaction. These reports are not proprietary tools accessible only to large institutional developers. They are publicly available documents that any informed investor can access and interpret.

Report 1: FEMA Floodplain Maps

The Federal Emergency Management Agency (FEMA) administers the National Flood Insurance Program (NFIP) and publishes Flood Insurance Rate Maps (FIRMs) that identify Special Flood Hazard Areas (SFHAs) — geographic zones with a statistically significant probability of flooding in any given year. Land classified within a 100-year floodplain carries a 1% annual probability of flooding; land within a 500-year floodplain carries a 0.2% annual probability.

For developers, the presence of a floodplain on a prospective parcel raises several critical questions. Land within an SFHA may be unbuildable, or may require the completion of a CLOMR — a Conditional Letter of Map Revision — before development can proceed.

A CLOMR is a formal FEMA determination that, if a proposed project is built as designed, the affected land can be removed from the Special Flood Hazard Area designation. The process requires the engagement of a licensed civil engineer, submission of detailed hydraulic modeling to FEMA, and a review period that typically spans six to twelve months or longer. A CLOMR does not revise the flood map immediately — a final Letter of Map Revision (LOMR) is issued only after the project has been constructed to the approved specifications.

The practical implication for developers is straightforward: a parcel partially encumbered by a floodplain is not necessarily a dealbreaker, but it demands a clear-eyed assessment of how much of the parcel is buildable, what the cost of floodplain reclamation will be, and whether the city will accept a CLOMR application before the acquisition closes.

Report 2: City Limits and Extra-Territorial Jurisdiction

The second report a developer must review before acquiring land in Texas is a jurisdictional determination — specifically, whether the subject parcel falls within a city's corporate limits, within its Extra-Territorial Jurisdiction (ETJ), or entirely outside municipal authority.

This distinction carries profound implications for the entitlement process. Land within a city's corporate limits is subject to the city's zoning code, building code, and permitting requirements. The developer must work within the city's regulatory framework, engage its planning and zoning commission, and ultimately seek city council approval for any rezoning or conditional use permit.

Land within the ETJ — the area outside city limits over which a municipality exercises limited planning authority — occupies a more complex regulatory position. In most Texas cities, the municipality retains authority over subdivision platting within the ETJ, while the county exercises authority over most permitting and building code compliance. Interlocal agreements between cities and counties can further modify this division of authority in ways that are not always apparent from a review of the city's official documents alone.

Land outside both city limits and the ETJ is subject to county jurisdiction — which typically means fewer regulatory requirements but also less infrastructure support, fewer public utilities, and different financing mechanisms for development costs.

Before acquiring any Texas parcel, a developer must determine precisely where the property falls within this jurisdictional matrix, and must investigate the specific interlocal agreements — if any — that may affect the applicable regulatory framework.

Report 3: Certificates of Convenience and Necessity (CCNs)

The third report addresses what is arguably the most operationally consequential element of land due diligence in Texas: the identification of the water and sewer service provider that holds exclusive rights to serve the subject parcel.

The Public Utility Commission of Texas (PUCT) administers Certificates of Convenience and Necessity — legal instruments that grant retail public utilities the exclusive right to provide water and sewer service within a defined geographic area. The Texas Water Code requires CCN holders to provide continuous and adequate service to all areas within their certificated boundary. Critically, a landowner or developer has no legal authority to select an alternative provider — the CCN holder is the mandatory provider, regardless of the developer's preferences or the provider's pricing.

The CCN determination has direct financial implications. If the CCN holder's nearest existing infrastructure is located at a significant distance from the subject parcel, the cost of extending service falls primarily on the developer. Water main extensions in Texas cost $50 to $200 or more per linear foot; sewer extensions can cost considerably more when terrain constraints require lift stations or force main construction.

Additionally, a CCN holder may have imposed a moratorium on new service connections — a condition that can render a parcel effectively undevelopable without legal proceedings before the PUCT to modify or remove the CCN. Identifying this condition before acquisition is essential; discovering it after closing can transform a viable development opportunity into a protracted and costly legal dispute.

The PUCT maintains a publicly accessible CCN Viewer at puc.texas.gov that allows any user to identify the CCN holder for a specific Texas parcel. This tool requires no registration and no fee. Its use as a standard component of pre-acquisition due diligence is, in our view, indispensable.

The Interdependence of the Three Reports

What makes this three-report framework particularly valuable is not merely the information each report provides in isolation, but the way in which the three interact with one another. A parcel's floodplain status affects where sewer lines can be routed and whether a CCN holder will commit to extending service. A parcel's jurisdictional position determines which authority governs the platting process and whether a CLOMR application must be filed with city or county approval. A CCN holder's service boundary may influence which jurisdiction has the strongest incentive to annex a parcel.

Experienced developers evaluate these three reports together — not sequentially — because the risk picture that emerges from their interaction is invariably more nuanced than any single report reveals on its own.

The cost of conducting this due diligence is minimal. The cost of failing to conduct it — and discovering a floodplain encumbrance, a jurisdictional ambiguity, or a CCN moratorium after a transaction has closed — can be measured in months of delay and millions of dollars in remediation costs.

Conclusion

The three reports described in this article — FEMA floodplain maps, city limits and ETJ determinations, and CCN certificates — represent the foundation of rigorous land due diligence in Texas. They are not the totality of the analysis required to make a sound acquisition decision, but they are the non-negotiable starting point.

At Collective Acre, these reports are reviewed on every parcel we evaluate — without exception. We encourage any investor considering a land acquisition in North Texas to adopt the same discipline. The information is publicly available. The cost of accessing it is negligible. The cost of overlooking it can be substantial.