SPUR, Texas—Nearly two years ago, this town of cotton farmers and cattle ranchers in the rolling plains of West Texas declared itself the tiny house capital of America.

The hope was to reverse a long population decline by luring devotees of the growing movement of eco-conscious, do-it-yourself builders who like to live in very small houses. Town officials thought their official proclamation and elimination of nearly all building restrictions would attract the kind of adorable abodes featured on television shows like HGTV’s “Tiny House Hunters.”

Some newcomers had other ideas. In the town of about 1,000 residents located 75 miles east of Lubbock, talk soon began to surface about plans to build yurts, straw dwellings and even underground dugouts resembling something out of “Lord of the Rings.”

That was too much for the tradition-minded folks of Spur. In March, the town council hired a building inspector and passed an ordinance that requires designs to be submitted for approval.

Spur also stipulated that tiny houses be connected to the electrical grid, water supply and sewer system. Before that, the only rule was that houses on wheels be put on concrete foundations because Spur is in tornado country.