Pleasanton Housing Finance Corporation, a Texas Nonprofit Corporation and Ismael Gallegos, Joey MacOn, Mark Pinkston, Zachary Pawelek, Scott Ferguson, Lilian Cashmer, and Brandon Hicks, in Their Official Capacities as Board Members of Pleasanton Housing Finance Corporation v. City of Lake Worth, Texas
15-25-00110-CV
Tex. App.Jul 2, 2025Background
- Chapter 394 authorizes local governments to create housing finance corporations (HFCs) to facilitate affordable housing; HFC-owned residential developments and related income are tax-exempt under the Act.
- Several ‘‘traveling’’ HFCs (including Pleasanton HFC and co‑appellants) have acquired or seek to acquire multifamily properties located far outside their sponsoring municipalities and to obtain full ad valorem tax exemptions for those properties.
- Multiple Texas cities (Fort Worth, Lake Worth, Arlington, Missouri City, etc.) sued to stop those out‑of‑jurisdiction acquisitions and tax‑exemption claims; trial courts have entered temporary injunctions restricting HFC purchases and tax‑exemption requests within those cities’ boundaries.
- Appellants contend Chapter 394 permits HFCs to operate statewide (and thus the Fifteenth Court of Appeals has jurisdiction); municipalities contend the Act limits HFC activity to the sponsoring local government and assert constitutional and statutory challenges to the exemptions.
- Related procedural issues: (a) whether the Fifteenth Court has exclusive intermediate appellate jurisdiction over these appeals; (b) whether appraisal districts have immunity or may be sued under Tex. Tax Code § 43.01; (c) whether Tax Code administrative remedies are exclusive.
- The Legislature enacted HB 21 (effective May 28, 2025) amending Chapter 394 to add express geographic limits and compliance/audit requirements; applicability to pre‑existing acquisitions and exemptions is partly transitional and contested.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of Chapter 394: may an HFC acquire property outside its sponsoring local government? | Cities: § 394.903 and related provisions limit HFC residential developments to the sponsoring local government; traveling HFCs violate the statute and the Texas Constitution (extra‑jurisdictional taxation). | HFCs/Appellants: Chapter 394 is intended to benefit the State; HFCs may operate beyond sponsor boundaries under the Act’s plain text and statutory purpose. | Trial courts in several suits have temporarily enjoined HFCs from purchasing or obtaining tax exemptions for properties within plaintiffs’ city boundaries; appellate resolution pending. |
| Jurisdiction of the Fifteenth Court of Appeals over these appeals | Appellants: HFCs perform an essential state governmental function; Fifteenth Court has exclusive intermediate appellate jurisdiction under Tex. Gov’t Code § 22.220(d)(1)–(2) and Kelley/In re Dallas County precedents support state‑interest jurisdiction. | Cities: These are disputes with political subdivisions concerning local property and taxation; Baumgardner (river authority = political subdivision) suggests limited appellate jurisdiction when matters are local. | No appellate ruling yet on this Court’s jurisdiction; parties have submitted competing jurisdictional briefs to the Fifteenth Court. |
| Appraisal district immunity and availability of suit against TAD | Cities: Tex. Tax Code § 43.01 authorizes a taxing unit to sue an appraisal district to compel compliance — this waives immunity and supports judicial relief. | TAD: As a political subdivision, it asserts governmental immunity and may argue administrative remedies are exclusive. | District courts have entertained suits; whether immunity is waived under § 43.01 is litigated but several authorities and the City argue § 43.01 constitutes an express waiver. Final ruling pending. |
| Exhaustion of Tax Code administrative remedies | TAD: Plaintiffs must exhaust statutory appraisal/protest procedures (Tax Code) before seeking declaratory or injunctive relief. | Cities: Taxing units are not typical protesting taxpayers; Tax Code appeals (Sec. 41.03) do not cover a municipality’s challenge to a traveling HFC exemption and Sec. 43.01 permits suit. | Trial pleadings argue administrative exclusivity does not bar the claims; courts have not issued final decisions on exhaustion in these cases. |
Key Cases Cited
- Monsanto Co. v. Cornerstones Mun. Util. Dist., 865 S.W.2d 937 (Tex. 1993) (distinguishes political subdivisions from state agencies by geographic reach).
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (elements and standard for temporary injunction).
- In re Dallas Cnty., 697 S.W.3d 142 (Tex. 2024) (intermediate‑court jurisdictional principles; courts created to resolve state‑interest cases).
- Kelley v. Homminga, 706 S.W.3d 829 (Tex. 2025) (clarifies scope of appellate jurisdiction for matters implicating state interests).
- Walker v. U.S. Dep’t of Housing & Community Dev., 326 F. Supp. 2d 773 (N.D. Tex. 2004) (construed § 394.903 to limit residential development to the housing authority’s jurisdiction).
- City of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009) (availability of prospective declaratory and injunctive relief against public officials acting ultra vires).