Chalk one up for municipal prerogatives.

Last week, a federal appeals court in Texas affirmed a 2009 district court ruling that found in favor of the city of Kyle, Texas, which seven years ago passed an ordinance that established minimum standards for residential construction as a way to control its growth.

In its ruling, the Fifth Circuit Court of Appeals also rejected legal challenges to that ordinance by NAHB and the National Association for the Advancement of Colored People (NAACP), which had filed the appeal. The court asserted that neither trade group had the standing to contest the ordinance—which they claimed discriminated against lower-income minority home buyers and violated the Fair Housing Act of 1968—because neither could prove that its members had been harmed by it.

David Bird, an attorney with the law firm Reed Smith, which represented interests that suppported the city before the Fifth Circuit, believes the appeals court’s ruling “vindicates” Kyle and could serve as a precedent for other towns and cities that make changes in their zoning and building codes.

“The significance of this decision for other municipalities,” he told BUILDER last Friday, “is that ordinances shouldn’t be challenged unless there’s a plaintiff who can show real injury.” Even though the appeals court did not grant the city’s request for legal fees, Bird thinks the court’s ruling on plaintiffs’ “standing” could make it “less likely that municipalities are subjected to these kinds of suits, which are time-consuming and expensive.”

When contacted by BUILDER, the NAHB declined to comment on the ruling and said it would not be issuing a statement.

Kyle, which is located about a half-hour’s drive south of Austin, revised its zoning ordinance in 2003 to slow down its burgeoning population growth. The rezoning increased the minimum size of a new home by more than 14% to 1,600 square feet. It increased minimum lot sizes by 20% to 8,190 square feet. Garages had to be at least 480 square feet. And the exteriors of all new homes had to be 100% masonry.

In November 2005, in anticipation of legal challenges and costs, the city revised the ordinance again by raising fees for building permits by 25%. And the city wasn’t wrong as that month the trade groups filed suit, alleging that the revisions would jack up the price of a starter home by nearly two-fifths to $138,000, and push lower-income residents—including Hispanics, who at the time made up 57% of Kyle’s population—out of the housing market.

Charges of discrimination rankled Kyle’s city manager, Tom Mattis, who noted that the city’s mayor at the time was African-American, and that all of its neighborhoods were “ethnically diverse.”

NAHB reportedly spent $15,000 for a study and lobbying that purported to show how builders and buyers would be negatively impacted by the ordinance.

A federal district court, in a March 2009 decision, rejected these legal challenges on the basis that neither plaintiff had presented sufficient evidence that the city’s rezoning either had discriminated against minorities or was injurious to builders. The appeals court, in its affirmation, wrote of the NAHB’s claims and survey: “Plaintiffs have not identified any specific projects that the HBA had to put on hold or otherwise curtail in order to respond to the revised ordinances.”

John Caulfield is senior editor for BUILDER magazine.

Learn more about markets featured in this article: Austin, TX.