AUTHORITY TO REGULATE HOME-BASED BUSINESSES.

(a) In this section:

(1) "Business" has the meaning assigned by Section 1.002, Business Organizations Code.

(2) "Home-based business" means a business that is operated:

(A) from a residential property;

(B) by the owner or tenant of the property; and

(C) for the purpose of:

(i) manufacturing, providing, or selling a lawful good; or

(ii) providing a lawful service.

(3) "No-impact home-based business" means a home-based business that:

(A) has at any time on the property where the business is operated a total number of employees and clients or patrons of the business that does not exceed the municipal occupancy limit for the property;

(B) does not generate on-street parking or a substantial increase in traffic through the area;

(C) operates in a manner in which none of its activities are visible from a street; and

(D) does not substantially increase noise in the area or violate a municipal noise ordinance, regulation, or rule.

(b) The governing body of a municipality may not adopt or enforce an ordinance, regulation, or other measure that:

(1) prohibits the operation of a no-impact home-based business;

(2) requires a person that operates a no-impact home-based business or that owns the property where the business is operated to obtain a license, permit, or other approval to operate the business; or

(3) requires a person that operates a home-based business or that owns the property where the business is operated to:

(A) rezone the property for a non-residential use; or

(B) install a fire sprinkler protection system if the residence where the business is operated consists only of:

(i) a single-family detached residential structure; or

(ii) a multi-family residential structure with not more than two residential units.

(c) Subject to Subsection (b), the governing body of a municipality may:

(1) require that a home-based business be:

(A) in compliance with federal, state, and local law, including:

(i) a municipal fire and building code; and

(ii) a municipal regulation related to:

(a) health and sanitation;

(b) transportation or traffic control;

(c) solid or hazardous waste; or

(d) pollution and noise control;

(B) compatible with the residential use of the property where the business is located; and

(C) secondary to the use of the property as a residential dwelling; and

(2) limit or prohibit the operation of a home-based business that:

(A) sells alcohol or illegal drugs;

(B) is a structured sober living home; or

(C) is a sexually oriented business as defined by Section 243.002.

(d) This section does not prohibit:

(1) a person from enforcing a rule or deed restriction imposed by a homeowners' association or by other private agreement; or

(2) a municipality from adopting or enforcing an ordinance regulating the operation of a short-term rental unit.