HOUSTON, Texas — Texas lawmakers are scrutinizing Housing Finance Corporations (HFCs) for granting unwarranted property tax exemptions to apartment complexes outside their jurisdictions.
Critics argue that the program has been exploited to grant exemptions to apartment complexes outside HFC jurisdictions, often without ensuring significant affordability for tenants.
State Representative Gary Gates, a Houston-area property owner, is at the forefront of calls for reform.
Gates plans to introduce legislation aimed at overhauling the system, citing instances where HFCs have allegedly misused their authority.
He has also requested an opinion from the Texas attorney general to potentially invalidate exemptions he claims were granted improperly.
Gates argues that these deals unfairly eliminate local property taxes and prefers addressing the issue even if it causes temporary confusion.
State Senator Paul Bettencourt shares Gates’ concerns, asserting that HFCs operating beyond their jurisdictions undermine local governance and public policy.
Bettencourt advocates for immediate action to curb the practice, which he says negatively impacts local tax revenues.
Initially, the program aimed to make rental housing more affordable. However, some properties receiving exemptions, such as The Pines at Woodcreek in Humble, Texas, charge rents comparable to market rates—approximately $1,200 per month.
Despite benefiting from full tax exemptions, these properties often pay fees to the HFCs while avoiding local property taxes, leaving counties like Harris without revenue from such projects.
Craig Berger, CEO of Avid Realty Partners and owner of The Pines at Woodcreek, defends the program, stating that tax relief attracts investors and stabilizes financial operations without pressuring rental rates.
Berger contends that the exemptions allow properties to offer quality housing at reasonable prices for working-class residents.
Critics like Gates argue that the system disproportionately benefits developers rather than tenants. He claims that developers use the tax write-offs to boost profits without significantly lowering rents, describing the arrangement as a loophole.
Mike Nichols, director of the Houston Housing and Community Development Department, highlights flaws in the current legislation, which he says allows HFCs to operate without proper oversight.
Nichols calls for clearer rules to prevent exemptions that do not align with the program’s original goals.
