Dallas Appraisal District challenges tax exemptions on affordable housing projects

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(The Center Square) – The Dallas Central Appraisal District is challenging the tax-exempt status of more than 100 affordable housing projects across North Texas, escalating a legal and political fight over House Bill 21.

Last week, DCAD sent notices to Housing Finance Corporations that operate outside their home counties. The district now claims those corporations were never allowed to own property outside their local areas, reversing years of established practice.

Developers and housing groups say the move is illegal and will hurt working-class families.

“The facts tell a different story,” the Texas Workforce Housing Coalition said in a statement. “For years, DCAD and appraisal districts across Texas issued written predetermination letters confirming both the legality of these ownership structures and their tax-exempt status. Developers relied on those approvals to build thousands of affordable homes for working Texans.”

The group said DCAD’s action “is not only legally groundless – it is dangerous,” adding that “by weaponizing HB 21 against the very developers who stepped up when others would not, DCAD threatens to destabilize the entire affordable housing sector.”

HB 21, passed in May, changes the Texas Housing Finance Act and limits HFCs to projects within their home jurisdictions. 

The law delays enforcement until 2027, but developers argue appraisal districts are acting early and violating the Texas Constitution’s ban on retroactive laws.

Developers and attorneys have called on DCAD to reverse course and “honor the commitments that put roofs over thousands of Texas families’ heads,” the Texas Workforce Housing Coalition wrote.

In September, the Texas Workforce Housing Coalition and Post WB Apartments LLC sued the Bexar Appraisal District in Cameron County District Court. 

The lawsuit says the state “lured billions of dollars worth of investments from real estate developers to build affordable housing for working class Texans with the promise of favorable tax treatment only to now pull the rug out.”

Legal experts say HB 21 and DCAD’s interpretation threaten both housing supply and investor confidence.

“HB 21 changes the economics of projects conceived and financed years ago,” Ike Brannon wrote in RealClear Markets. “Billions of dollars are now at risk, as are thousands of homes for working-class Texans.”

Chuck Meyer, a Texas attorney who writes about constitutional law, wrote for Texas Politics that the bill’s retroactive reach “shreds valid contracts between HFCs and private businesses” and erodes “Texas’s reputation as a state where business and law are taken seriously.”