A new state law may finally close a loophole that allowed developers to avoid paying millions in property taxes. The loophole threatened to increase your tax burden, while reducing affordable housing.
A huge new apartment complex in Stone Oak was purchased late last year by the town of Pleasanton, through that city’s Housing Finance Corporation.
Pleasanton and other cities and counties have been teaming up with developers to purchase properties and attempt to take them off Bexar County’s tax rolls.
“The folks left holding the bag is our community and it’s our community is that suffers,” said Pete Alanis, Executive Director of the San Antonio Housing Trust.
Alanis says some cities and counties are abusing a system designed to increase low income housing.
“This is bad for the housing industry, right, what this does is it gives affordable housing a bad name, when you are doing things that are not transparent and not kosher,” Alanis said.
If a city or county wants to create low income housing it can create a Housing Finance Corporation or HFC. That allows it to buy property and make it tax exempt
It then partners with a developer and with the money they save on taxes, they can reduce rent for low income units.
But some HFCs have purchased property far from the city or county that created them, to get tax exemptions without having to lower rents.
That practice has earned them the nickname Traveling HFCs.
“What these Traveling HFCs are doing, is they’re coming in and buying up properties, but not providing an appropriate amount of affordability within the properties,” Alanis added.
Examining Bexar Appraisal District records we found more than 20 apartment complexes recently purchased by Traveling HFCs from Cameron County, Maverick County, Pleasanton, Pecos, and the tiny South Texas Communities of Edcouch and La Villa.
The chief appraiser told the I-Team the properties had been made tax exempt or were in the process, potentially wiping out more than $12 million in tax revenue for local schools and services.
However, the appraisal district held up approval until the legislature passed House Bill 21 this past session. The law now prohibits cities and counties from buying properties outside their own communities.
We contacted the city of Pleasanton and the other local governments, but they did not respond. Some of them have been sued by Texas counties because of their Traveling HFCs.
“I’m glad the state is cleaning up those issues,” Alanis said.
The law still allows Traveling HFCs to buy properties in other cities if they get permission from local government, meet affordability requirements and undergo audits each year.
