We just got the following from Councilwoman Lily Bao’s Communications Director.
(Plano’s Political Pit Bull’s analysis is at the bottom.) “Plano City Council to take up the issue of the conversion of taxable multifamily properties into tax-free lifetime entities through the legal loophole of adopting a tax-free agency as a fractional development partner. Councilwoman Lily Bao places the issue on the council agenda for their March 16th meeting to support House Bill 1604 tightening the loophole, which threatens the tax base of City and School district funding for Plano, Collin County and statewide taxing entities. Councilwoman Lily Bao attended a meeting of the non-profit Plano Housing Authority on Friday September 4th on an afternoon at the start of Labor Day weekend, at it she learned that Plano Housing Authority planned to participate in a new state housing initiative that would allow an apartment developer to convert his project to a totally property tax-free asset by drawing in the local affordable housing authority with a microscopic ownership share and allow it to be free of City, County, School District and College District taxes for its entire useful life. It’s an apparent loophole that “affordable” housing advocates are utilizing to enhance developer’s property values by millions, for for-Profit-majority owners, while escaping property taxes wholly for the entire lifetime of the property. A giveaway that is built into State law Sec. 303.042(f) penalizing school districts and especially high-value property communities like Plano and PISD. To aggravate matters thoroughly, in high-land value suburbs, the apartments don’t even provide the advantage of affordability. As an example, in Plano the eligibility for assisted housing would be placed at 80% of the average family income or approximately ($83,000 x.80) $66,400 and the apartment rent would have to fit into 30% of gross income. At a peak this would mean (66,400 x .30= $19,920 annually) or a limit of $1660. per month rent. Hardly “affordable” but very lucrative for the for-profit out-of-town development partners trafficking in this questionable conversion, and leaving millions in added value to be distributed in the form of service fees and maintenance set asides, all because no property taxes are owed. [Councilwoman] Lily Bao views this loophole as a fraud on the taxpayers, the schools, the county and as a councilwoman a fraud on the city treasury. As a person whose name Bao means “protect”, she was rightfully offended, but offended for the people of Plano. To bring matters home, an aging apartment complex at 7301 Alma Rd. called “The Alexan” had its sale fall through prior to closing to one developer, only to re-emerge with a new name as a quick sale to another known for affordable housing conversions and it joins three other projects being similarly converted to delete these properties as contributors to the city services and schools they will utilize.” · Link to House Bill 1604….....https://legiscan.com/TX/text/HB1604/id/2275850 · The following are projects as of December 3rd for Plano Public Facility Corporation resolutions: 1.Enclave at Legacy 2.Fountains at Steeplechase 3.Fairfield Legacy 4.Alexan at Plano Central(renamed JAIDA) https://documentcloud.adobe.com/link/review?uri=urn%3Aaaid%3Ascds%3AUS%3Ad16057a9-c8e8-4425-9fd6-8401bc696e68#pageNum=1 · The Following is a study by the University of Texas School of Law “Public Facilities Corporation and the Sec.303.042(f)Tax break for apartment developments, a boon for affordable housing or windfall for apartment developers?” 2020-ECDC-PFC-Report.pdf (utexas.edu) From the Executive summary of the study….”To receive the exemption, a private apartment developer transfers land to a public facility corporation (PFC) set up by a local government entity---such as a public housing authority, county, or city ---which then leases the land and any buildings on the land(including those built in the future) back to a limited partnership controlled by the developer. The local government entity gets paid to participate in the venture. Other local government—such as school districts—have no say over these tax breaks to for-profit apartment developers even though the tax breaks directly impact these other entities property tax base and bottom line.” Also from the study:
PPPB’s analysis: Just in case you are confused by what you have read, please allow your lovable Pit Bull to simplify things for you. The owner of an apartment, condo, or townhouse development can sell less then 1% of their property to Plano Housing Authority. After the sale is final, that entire property becomes property tax exempt forever. In other words their property tax bill is now zero, nothing, zilch. However, the people living in these places will still require city resources, which they will not have to pay for. If children live in these developments, those children will get to go to school for free. Now, who do you think gets the wonderful task of paying for all of this free stuff? The property tax paying homeowners, that is who. Who is the big winner in this scheme? Big wealthy developers of course. They make out like bandits while taxpayers get screwed. The Housing Authority also does well in this gimmick. This is why economic fascism (public-private partnership) is evil. The wealthy and “public entity” succeeds, while the common person suffers the exuberant tax burden. PPPB does not think this is what the TX Legislature originally intended when it passed this amendment in 2015. However, every new law always has unintended consequences, and those consequences always cause suffering. House Bill 1604 attempts to fix the tax free windfall. Please read it and let your state representative know how you feel about the bill. Also, let the Plano City Council know if you want them to support HB1604 by Tuesday, March 16, 2021. If you would like to speak at the March 16th meeting go to https://plano.zoom.us/webinar/register/WN_KQGiTb4JRgmLm6oZ82vEUw Thank you Councilwoman Bao for bringing this issue to our attention. This is Plano’s Political Pit Bull Signing Off
4 Comments
Denise Midgley
3/13/2021 05:19:59 pm
Thank you Political Pitbull for bringing this to our attention.
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Marsha Bux
3/14/2021 08:50:47 am
Is there no end to this?? Homeowners get a raw deal & the developers make out like bandits - again!
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Sherti Hines
3/14/2021 05:14:40 pm
As we age,as we use up iour savings or retirement to not even be able to afford the lifestile we did have,as we have many job losses and financial difficulties during Covid, we are still going to be saddled with the $ increase that passed vote locally for the aqusition and building new infrastructure in the northern part of Collin County where we will probably not be driving only because wording purposefully was written to mislead the voters. Very effective many figured out- too late.
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Karen Denham
3/31/2021 08:45:55 am
Thank you for enlightening us to this! Disgusting...
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