Sen. Bettencourt Moves to Halt Public Facility Corporation Abuse, Ripping Billions Off Tax Rolls

HB 2071 adds guardrails for the Public Facility Corporation exemption tool; it passed the TX Senate 27-4

Texas Insider Report: AUSTIN, Texas – Senator Paul Bettencourt (R-Houston) passed committee substitute to House Bill 2071, by Representative Jacey Jetton, (R-Katy) out of the Texas Senate with bipartisan support on Friday, May 19, 2023. Senator Bettencourt’s floor amendment, added to HB 2071 on the Senate floor, ensures the Public Facility Corporation (PFC) affordable housing tool authorized by this legislature, provides needed housing while stopping the current abuses which place an inappropriate tax burden on surrounding homeowners and businesses.

“Property owners and private equity groups have raced to remove property taxes from existing multi-family developments using this tool, costing cities, counties, school districts and special purpose districts BILLIONS in property taxes,” said Senator Bettencourt.

“HB 2071 slams on acquisition guardrails for PFC deals moving forward,” added Senator Bettencourt.

The PFC tax exemption tool was created with the intent of allowing charitable organizations the ability to develop affordable housing as a public benefit. However, the PFC tool has been abhorrently abused by for-profit developers, who are profiting through the acquisition of valuable properties and making them tax exempt.

Many of these deals produce no actual affordable housing units, and oftentimes leave smaller taxing jurisdictions surprised when valuable property is suddenly made tax exempt without notice or the approval of to the taxing unit’s governing body.

“The testimony I heard in my Senate Local Government Committee hearings on PFCs was downright disturbing. The Williamson County Treasurer, Scott Heselmeyer talked about the city of Jarrell not knowing that money was being ripped off their tax rolls!

"Then, Mayor Hughson of San Marcos testified about a luxury apartment complex in Hays County that paid $366,000 in property taxes in 2021, turned into a PFC with a 99-year lease, and are claiming a total property tax exemption of $463,000 for 2022.

"Whoever out there has been benefiting from abusing this, you’re are on notice — stop these abuses NOW!”
exclaimed Bettencourt.

Below are some of the guardrails included in HB 2071 to stop the PFC exemption tool from being abused:
  • A PFC development must be located within the jurisdictional boundaries of the sponsoring entity.
  • A development must hold a public hearing at a meeting of the authority’s governing body to approve the development.
  • A PFC MUST be approved by a majority vote of the city council or commissioner’s court.
  • Rent restrictions enacted based on family size adjustment.
  • Income restrictions enacted based on family size adjustment.
HB 2071 will head back to the Texas House of Representatives to House Author Rep. Jetton (right,) for concurrence before being sent to the Governor to be signed into law.

“It took 3 years of collecting actual PFC horror stories, holding hearings to identify problems, and passing HB 2071 and other reforms to HALT these PFC abuses,” concluded Senator Bettencourt.