The Texas Workforce Housing Coalition (TWHC) and Post WB Apartments, LLC have filed a lawsuit against the Bexar Appraisal District. The legal action challenges the constitutionality of House Bill 21 (HB21), which was passed earlier this year. According to the lawsuit, HB21’s implementation could worsen Texas’s affordable housing crisis and lead to widespread evictions among middle- and working-class families, including essential workers like teachers and nurses.
Previously, under Texas Local Government Code § 394, known as “Old Chapter 394,” real estate developers were encouraged to partner with publicly-sponsored Housing Finance Corporations (HFCs) to provide affordable housing in exchange for a full property tax exemption. This arrangement attracted significant investment into long-term affordable housing projects across Texas.
However, HB21 has altered these laws retroactively, affecting contracts established under Old Chapter 394. Although HB21 will not impact existing developments until January 1, 2027, appraisal districts have started reversing prior approvals based on claims that such deals were never legal.
“The State of Texas 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 from under those developers,” said Trey Cox, a partner at Gibson Dunn & Crutcher and lead attorney in the case. He added that the unconstitutional application of HB21 threatens affordable housing availability for essential workers.
The plaintiffs are seeking a court declaration that HB21 violates the Texas Constitution and affirming that Old Chapter 394 allowed HFCs to own property outside their jurisdictions. They argue that retroactive law changes could deter future investments in Texas due to uncertainty over contract stability.
In related actions, TWHC recently filed a petition to intervene in Williamson County’s lawsuit against Cameron County Housing Finance Corp. This suit questions CCHFC’s authority to acquire property outside its county or obtain tax exemptions there. A ruling against CCHFC could affect TWHC members’ contractual rights under Old Chapter 394.
Gibson Dunn & Crutcher LLP and Chasnoff | Stribling LLP represent TWHC in these matters.