Euless loses 2 percent of revenue to controversial tax break approved in faraway county

EULESS – The Oak Park Apartments in Euless have been around since 1978.

In March of last year, the property they sit on was bought by an entity known as the Cameron County Housing Finance Corporation, but the City of Euless didn't discover that until July, when it received its annual tax rolls and noticed it was suddenly exempt from paying any taxes at all.

"My initial reaction was to grab my phone and Google where Cameron County was," Deputy City Manager Chris Barker said.

He found it more than 500 miles away.

"My second reaction was why is a housing authority in Brownsville, Texas exempting a property in Euless," he said.

Under Texas law, housing finance corporations -- created by cities or counties -- can buy properties, exempt them from taxes, and then allow private companies to build or own developments on them.

The general expectation is that they do within their own boundaries, for example, to incentivize the creation of affordable housing. 

But this housing was already there.

And the tax exemption? It cut roughly half a million dollars a year from the city's revenue and $1.6 million a year in tax revenue combined for the city, Tarrant County, HEB ISD, JPS Health Network, and Tarrant County College.

For Euless, the loss equates to about 2 percent of its annual income or the equivalent to charging every single-family home in the city an extra $27 in taxes.

In a statement to CBS News Texas, the Cameron County HFC wrote, "It speaks to this shortage of affordable housing statewide that interested out-of-town developers seek out CCHFC to partner in creating affordable housing for qualifying households in the absence of a local Housing Finance Corporation option.  When that happens, we follow state law and all appropriate guidelines, and we strive to move forward in a manner that benefits both the project's community and our own."

What Euless didn't lose in this deal, though, was the cost of serving the complex's hundreds of residents.

"Everything from police and fire protection to parks, library, etcetra," Barker said. "If somebody who lives there experiences a heart attack for example, the city still runs an ambulance."

In fact, police are there virtually every day.  Last year, they responded 490 calls with firefighters responding to another 68, services now all paid for by the city's other residents.

We first reported on Cameron County's HFC in December.

Despite a stated mission of improving affordable housing within Cameron County, it has projects across North Texas in Dallas, Fort Worth, McKinney, Irving, Lewisville and – yup – Euless, along with another dozen cities across the state.

Mark Yates, the HFC's executive director, explained to Cameron County commissioners about its a money-making strategy.

"We provide a tax-exempt entity," he said.

"You give them, you give them the shelter, the tax shelter, so that they don't… so that they're able to operate or invest in this housing project and not be taxed on it," Cameron County Judge Eddie Trevino said.

"Yea," Yates said.

"And then what does the finance corp get out of that?" asked Trevino.

"We get a certain amount of fees," Yates said.

 Yates told commissioners the Cameron County HFC normally collects 15 percent of whatever tax savings developers get.

For the Euless deal, that would equate to about a quarter million dollars a year with a private developer getting the rest.

As for the local community, Yates says it gets an investment in affordable housing.

"In all cases we negotiate with the developer for a strong public benefit component that includes lower rents and upgrades to the property. Many of those affordability levels are required by law, but some we negotiate with developers to exceed the requirement," said the CCHFC's statement. 

It's unclear, though, what oversight exists to ensure that happens.

"We have no control over the affordable housing component of that," said Barker.

Yates has also implied in the past there's some community input on its deals.

"If the community strongly disagrees to what we're doing, we probably don't work there," he told commissioners.
  The city of Euless said it never notified about the deal, much less given a chance to object. 

"We've never been approached by the Cameron County Housing Authority. There were no conversations with us in any way shape or form" said Barker.

Barker says he's since tried contacting the HFC.

"Looked up the number on their website, called and left a message," he said.

It's no surprise he's still waiting.  The address and phone number on its website, we found, are outdated.

After seeing our report on Cameron County's HFC, Euless officials say the story was emailed to every state lawmaker representing the city, calling the HFC's deals "a huge drain of tax dollars from the North Texas region" and urging them "to remedy this situation."

More than half of all homes in Euless, after all, are in multi-family complexes.

So while losing one from the tax rolls makes an impact, the idea of losing them all is frightening.

"If you took this to the extreme, it could cause a pretty significant shift in that tax burden," said Barker.

In its statement, the CCHFC says, "While the long-term benefits are substantive, we appreciate that the short-term impact on property taxes can present a challenge for local communities. We are ready to work with those communities to lessen those challenges until those benefits from these projects materialize."

Euless' city manager says the city has yet to hear from the HFC. 

Cameron County Housing Finance Corporation's full statement:

"There is a serious shortage of affordable housing in all of Texas and it's not likely to improve without some positive action. Affordable housing provides shelter, supports financial well-being, and offers dignity. We are proud to invest in high-quality single and multi-family affordable homes.

"While the long-term benefits are substantive, we appreciate that the short-term impact on property taxes can present a challenge for local communities. We are ready to work with those communities to lessen those challenges until those benefits from these projects materialize.

"In addition to providing residents of Oak Park with homes priced at affordable rents, CCHFC is using the money we earn to help people in the Rio Grande Valley who are among the poorest in Texas. We invest in a program that helps reduce the cost of a home loan making their American Dream possible for those with low incomes. We use some funds to repair homes and keep the weather out. We provide scholarships for high school students whose studies will help improve housing opportunities and we are investing in rebuilding an apartment complex in Laguna Vista that serves those who cannot afford to live in communities where they work.In short, these projects provide benefits across the board and across the state of Texas.  Yes, there are property tax exemptions for developers. But the benefits for renters and communities far outweigh those and help cities and our area, too."