Tarrant County is attempting to force out-of-county Housing Finance Corporations to pay tens of millions of dollars in property taxes by challenging their tax-exempt status through the county’s appraisal review board, according to information released by the county.
The county alleges these corporations, which are nonprofits owned by local governments aimed at promoting affordable housing, have illegally claimed tax-exempt status on $974 million worth of property across 28 sites in the county.
Regina Calderon, the county's communications director, said the local government code "is designed to allow an HFC to operate housing within their own boundaries tax free." But the "HFCs are operating housing outside of their boundaries while still claiming exemption from local ad valorem taxes."
Properties owned by HFCs are generally considered public property and granted tax exemption in exchange for offering affordable housing to the community, according to the Texas Local Government Code.
Recently city officials in Arlington and Fort Worth have spoken out against HFCs that come from outside their city limits, saying they have cost the cities millions in tax revenue, according to the Fort Worth Report.
Arlington sued and won a temporary restraining order against a HFC from Pecos, Texas earlier this year, giving them a big initial win in the on-going court case, according to CBS News. Fort Worth joined in on the case, citing multiple examples of traveling HFCs in their city.
Joe Don Bobbitt, chief appraiser for the Tarrant Appraisal District, is also being sued by Arlington and Fort Worth, alongside the traveling HFCs, to prevent him from approving any tax exemptions for the HFCs.
Bobbitt's lawyers have argued the case against Bobbitt should be dismissed because the city did not first go through the appraisal review board, according to court documents. They argue the case could only go to the Texas district court if the cities appealed the review board's decision.
While no official dates have been set for the hearings, Tarrant County will challenge the HFCs through that review board process.
Arlington Mayor Jim Ross told KERA News TAD attorneys argued against the cities in court.
"My attorneys were shocked to see that TAD was there speaking out in favor of the traveling HFCs," Ross said.
But Bobbitt's attorney, Jim Evans, said the district does not take a position on traveling HFCs, rather they just believe the cities have not gone through the proper process.
"We believe TAD should be the initial entity determining the exemptions, as provided by the Property Tax Code, not a court," Evans said.
There are at least seven out-of-county HFCs that own properties in Tarrant County. One such property is an apartment complex worth over $80 million in Fort Worth called The Sovereign, which has a taxable value of $0. That apartment is owned by Maverick County Housing Finance Corporation, which is governed by Maverick County over 400 miles from Fort Worth.
Fort Worth also claimed this property and others were not providing enough affordable housing to be eligible for a tax exemption, according to court documents.
The county said it would “seek not only to remove the ‘public property’ exemption for this year but also for any of the past five years for which an exemption may have been incorrectly granted.”
“These travelling HFCs, typically from cities or counties hundreds of miles away, generate income by leasing the property to Tarrant County citizens and then send these earnings back to their home government,” according to a press release. “This scheme funnels money away from Tarrant County that would otherwise support local schools, roads, and other governmental operations.”
The Texas Association of Local Housing Finance Agencies spoke against traveling HFCs in a statement earlier this year, asking HFCs to cease “participation in the financing and ownership of all out of jurisdiction multifamily developments until the issue is addressed in the upcoming 89th legislative session.”
The legislature did just that this year by passing Texas House Bill 21, which was signed by Gov. Greg Abbott on May 28 – the same day the county announced their effort to challenge the HFCs.
The bill will still allow HFCs to set up housing developments outside of their home jurisdiction, but they’ll now need to get approval from that location’s government.
Local governments who have jurisdiction over the HFCs being challenged by Tarrant County will have the opportunity to appear at future review board hearings.
Dylan Duke is KERA's summer 2025 SPJ news intern. Got a tip? Email Dylan Duke at dduke@kera.org.
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