Harris County officials are moving forward with a policy that will consider property tax exemptions for affordable housing owners after commissioners voted unanimously on the measure July 18.
Why it matters
An existing Texas tax code already provides exemptions to certain organizations that meet strict low-income housing requirements. But each local governing jurisdiction has to not only approve the tax exemption, but also specify the allowed threshold amount, said Mary Lawler, the CEO of Avenue, a Houston-based nonprofit affordable housing builder.
Lawler told commissioners that while the state provides qualified organizations with a 50% exemption for the appraised value of the property, the three largest counties in Texas don’t have the option available—including Harris County.
“We are struggling right now with rising costs for our apartments and our ability to keep our rents affordable to working families and seniors who are really in need,” she said.
The “crushing expense” that has been challenging for the nonprofit that oversees nearly 1,000 affordable housing units in Harris County, Lawler said, is property taxes.
“Our mission is to keep these apartments affordable to low-income families and seniors, and it’s just been harder and harder for us,” she said. “Getting some relief on property taxes will be a big help for us.”
Precinct 2 Commissioner Adrian Garcia said at the July 18 meeting that the county’s affordable housing tax exemption policy had been defunct for more than 10 years.
“We have a housing crisis,” Garcia said. “It’s because the market is pricing [them] out in spite of being what [they] are, and that’s affordable housing.This particular item finally sets the policy so that we can navigate this in a very structured way.”
How we got here
In April, Harris County commissioners directed several county departments, including the Community Services Department, to establish a policy related to the approval of tax exemptions for certain low-income housing projects under Texas Tax Code 11.1825.
The department has developed specific criteria and guidelines since then and presented its preliminary policy to commissioners at the July meeting, according to agenda documents. The finalized affordable housing tax exemption policy is projected for completion by the end of August, CSD interim Executive Director Thao Costis said.
“It is a priority, and we are working to address it,” Costis told Community Impact.
The bigger picture
Once completed, according to CSD’s agenda document, the policy could make it more financially feasible for certain organizations to add affordable housing units to the county’s housing stock.
- Adding more affordable housing for Harris County’s growing population is one of the county’s needs addressed in its 2021 Housing Needs Assessment study entitled “My Home is Here.”
- The study projects almost 200,000 new households will be formed who earn less than 120% median household income, or $75,000 per year.
According to preliminary policy documents, which are still undergoing changes, the policy for approved property owners could include:
- 50% of the appraised value of the property could be eligible for property tax exemptions.
- The Harris County Office of Management and Budget must first determine whether the amount of exemptions doesn’t exceed allocated amounts for that fiscal year.
- Under the policy, the organization receiving the property tax exemption must rent or offer to rent the applicable square footage of dwellings to those eligible no later than three years after the property is acquired.
The impact
The incoming policy will have a fiscal impact on Harris County’s general funds that will vary each fiscal year based on determinations made by the budget office, according to agenda documents.
For this fiscal year, OMB Executive Director Daniel Ramos said his office is trying to get the application process up and running. Ramos asked commissioners at the July meeting for the authority to include it in the base budget.
“It won’t have a budget impact moving forward if we’re able to time the application process correctly,” Ramos said. “We can evolve the process from here. But for this year, we’re trying to default to the 50% just to get the process up and running.”
Quote of note
While this proposed county policy is just one portion of Avenue’s financial responsibilities, not including city taxes, Lawler said once the policy actually passes, every bit helps.
“We are super excited about it and very grateful that the commissioners have approved the program initially,” Lawler said.