A plan to exempt developers from property taxes for including some affordable housing in multifamily developments is surviving under the scrutiny of the Texas Legislature, albeit with some restrictions.
The measure to limit tax exemptions for utility companies has strong support from state lawmakers.Gov. Greg Abbott opted not to veto House Bill 2071 by the June 18 deadline, making the bill automatic, according to the Austin Business Journal report.
Public entities such as housing authorities and municipal utility districts have the authority to create PFCs, and while the tool has been available since 1999, its use has recently exploded in Texas. There have been 225 PFC transactions in the state over the past three years, compared to 30 in the previous five years.
Previously, developers and homeowners could enter into a PFC agreement that would exempt multifamily property taxes for 75 years or more in exchange for keeping 50 percent of units affordable for those earning 80 percent of the area’s median income .
The PFC tax holiday has been shortened to 30 years for existing multi-family dwellings and 60 years for new construction. The legislation also reportedly requires that 10 percent of units in PFC communities be reserved for tenants who earn within 60 percent of the area median income, which was $66,180 for a family of four in Travis County last year.
Some opponents of the bill called the PFC a money grab for developers, while others warned that the reforms could jeopardize the scheme entirely by hindering financing and equity funding. Proponents say PFCs are necessary to keep up with the steady flow of new residents in Texas.
Ben Martin, research director for the Texas Housing Association, a low-income housing advocacy nonprofit, was disappointed the bill didn’t take further steps to stimulate affordable housing, but said “it’s better than nothing.”
“We want to see this tool successfully produce much-needed income-restricted units in Texas,” Martin told the outlet. “At the end of the day, if we’re not producing low-income units, what are we doing here?”
— Quinn Donoghue
