A program intended to provide affordable housing for families in Texas is wide of the mark, according to State Representative Gary Gates (HD28). Gates owns apartment complexes and serves as the Vice Chair of the House Committee on Urban Affairs.
Prior to the last legislative session, a little-known quasi-governmental entity called a Public Facility Corporation (PFC) drew controversial headlines for its large tax exemptions for private developers who were supposed to be providing income-restricted housing in exchange for the tax benefit, according to the Texas Housers.
Based on reporting in the Texan, the Houston Housing Authority in Harris County authorized “PFCs with 99-year tax exemptions - removing at least $5 billion in local property valuation from the tax rolls - with some apartment buildings only reserving 10 percent of units for low-income households.”
In response, the legislature passed House Bill 2071 (HB2071). Governor Abbott signed the bill into law on June 18, 2023.
In an interview with the Lone Star Standard, Representative Gates (a co-sponsor on HB2071) said the same developers “are now using a different section code that we did not address which allows them to do the exact same thing” and the problem is growing in Gates’ view.
“In 2020 there were 30 of these deals,” Gates said. “There were probably a hundred when we were in session in 2023 and now there are another 300 of these in the approval process.”
With the law changed on PFCs, the new vehicle being used is called a Housing Finance Corporation (HFC).
Based on information from the city of Austin, its Housing Finance Corporation (AHFC) was created in 1979 as a public, nonprofit corporation. Its mission is to “generate and implement strategic housing solutions for the benefit of low- and moderate-income residents of the city of Austin.”
While some HFCs provide other programs such as grants or loans, the programs that Gates is concerned about are the PFC-style tax exemptions, where a private developer is given a long-term exemption from local taxes to provide income-restricted housing.
“The true crisis in Texas is families can’t afford homes. Most of these projects do nothing to provide two bedrooms or three bedrooms for families,” according to Gates.
“I hear these people say we’re trying to provide units for teachers and firefighters and police and that is just not happening,” Gates said.
He says the developers are able to meet the income requirements and make healthy profits by building mostly efficiency units and one-bedrooms.
In addition, Gates says the taxes waived on the developments force local governments to raise taxes on “everybody else” in order to provide for the increased services for new residents. He said there is no central reporting system or audits of the public benefits.
“I am putting a letter together with Chairman Lozano and we will put incredible pressure on the Speaker to do an interim study in the Urban Affairs Committee to take a closer look into this issue,” said Gates.
“Next session, because we have a lot more outcry from city officials, I think we’re going to be able to address it comprehensively,” Gates said.
Gates was first elected to serve Texas’ House District 28 in 2020. He is a member of the House Appropriations Committee, Vice-Chair of the House Committee on Urban Affairs and a member of the Resolutions Calendars Committee.
