Plano seeks specifics on tax-exempt affordable housing projects: Who's really benefitting?

A city’s battle over an affordable housing program is now making its way through Collin County District Court.

The city of Plano and Plano ISD filed a petition late Tuesday afternoon requesting proof that more than a dozen apartment communities that enjoy 100% tax exemptions are holding up their end of the deal in providing income-restricted units to qualified individuals.

“We recognize there are affordability needs in the community,” said Plano City Manager Mark Israelson. “That’s the reason it’s really important to make sure that this works and delivers on what it’s supposed to do.”

Israelson says his office has been seeking detailed information from Plano Housing Authority’s public facility corporations, or PFCs. These are non-profit corporations designed to provide affordable housing in a community.

According to the housing authority, since 2020 the Plan PFC has completed a total of 14 developments, 13 in Plano and one in Lewisville.

The agreement requires developments to set aside at least 50% of units for income-restricted tenants making less than 80% of the area median income [approximately $80,000 in Plano] and in exchange receive 100% property and sales tax exemptions. The rest of the available units are rented out at market value.

“100% of the property comes off the property tax rolls,” said Israelson. “That’s for the length of the contract and some of these are very long contracts.”

It is tax money that is not going to schools, the police department, streets and city services, he added.

The PFC developments in Plano have a total of 4,143 units with 2,286 considered "affordable," according to PHA.

The housing authority says a recent study found the city needs 22,000 affordable housing units.

In Tuesday’s court petition, the city’s attorney stated: "The city tries to determine how much affordable housing the PFCs have provided and receives insufficient information."

The city, it states, is interested in learning how much affordable housing the PFC developments were providing, in part, because of the lucrative tax exemptions the program gives to private for-profit developers.

“We’ve asked a lot of questions and we haven’t gotten all the answers we’re looking for,” said Israelson. “We are going to the court system for their permission to ask specific questions. Again, it’s more of a fact-finding mission.”

The city and school district want representatives with PFCs to be subpoenaed and deposed.

The petition states: "While each of these reports claims the PFC development has been in compliance with affordability requirements, they leave questions unanswered about how this determination is made. The reports leave unclear whether tenant incomes were independently verified/reviewed or if the reports simply rely on data provided by developers’ property management companies."

Dave Young, Executive Director of the Plano Housing Authority provided NBC 5 with a statement insisting it has been transparent with the city’s inquiries, providing annual compliance reports even when state law did not require it.

Young released a statement that read in part:

"All PFC activity has been completed and transacted in accordance with the State law in effect at the time of the transaction activity. Texas House Bill 2071 has since been enacted which modifies future transactions.

The City Manager for Plano has submitted Public Information Act (PIA) requests starting May 2023.  Multiple PIA requests have been made by the City Manager, and each one has been responded to, with information being delivered each time in accordance with Texas law.  A signed delivery receipt was collected for each and every one of the PIA requests.  To date, a total of over 1,600 files have been delivered, totaling over 2.5 GB of data. 

Plano Housing Authority has made a strong effort to establish a working relationship with the City of Plano leadership to have an open line of communication.

Plano Housing Authority has strived to address the compelling need for affordable housing in the City of Plano as established by the Housing Study.  The mission of the Plano Housing Authority is to provide safe, decent, and affordable housing.  Plano Housing Authority is proud of the partnerships that have been created to provide this affordable housing."

The city of Plano is not alone in its struggle for clarity.

The Texas State Legislature passed House Bill 2071 in the regular session.

It now gives cities approval power and a seat at “the negotiation table” over future projects and how they are managed.

Young stresses PHA understands that failure to comply with the existing agreements ‘would mean a loss of property tax abatement and a huge, devastating loss to families who have no place to live in an affordable environment…  Our reputation is at stake  - but most importantly working folks, elderly on fixed income, and kids are all involved.  They have to be protected.’

Young concedes it is possible a tenant, who has not or no longer qualifies, lives in a unit designated for "income restricted tenants" but says "state Law says the tenant can continue to occupy that unit. The intention was never to displace someone. The normal process would be that if a family makes more then the lease would not be renewed.  As far as the possibility that an existing tenant could be in the unit, then yes, that is possible."

The district court case now awaits a response from PHA and PFCs.