Nueces County may join opposition to potential property tax exemptions

Yahoo

27-05-2025

Nueces County may join other taxing entities in publicly opposing potential property tax exemptions related to a workforce housing program and a large electric provider — which, if granted, would likely impact property tax revenue collected for the public coffers.
Among items on the Nueces County Commissioners Court's May 21 agenda is a closed-door discussion with attorneys on the Corpus Christi Housing Authority's and CPS Energy's 'tax-exempt issue, and all related matters.'
The court could take action after that discussion, potentially echoing the objections of Del Mar College and the city of Corpus Christi.
The court hadn't received preliminary projections of how much the potential property tax exemptions could affect the budget, but officials are 'doing everything we can as fast as we can to figure out how to put a stop to this,' said Nueces County Commissioner Brent Chesney on May 16, describing the implications as 'far-reaching.'
No one wants to take legal action in the matter, he added, but that may be necessary to protect the interest of the county and residents.
'It's just too big a deal; you can't just lay down on it,' Chesney said. 'You have to go fight and figure this out because it's millions of dollars out of taxpayers' pockets.'
Both the Corpus Christi City Council and Del Mar College Board of Regents made formal overtures May 13 to potential legal action related to a new workforce housing program spearheaded by the housing authority.
The college's board additionally took a position of opposition against possible property tax exemptions related to the purchase of two power plants by CPS Energy, a San Antonio-based utilities provider.
As part of a new workforce housing program, the housing authority acquired at least 13 apartment complex properties, according to officials, with others potentially pending acquisition.
It amounts to at least $330 million taken off the tax rolls, according to preliminary appraisal values. Appraised values as of mid-May are not yet certified and are subject to change.
Acquiring the properties makes them tax-exempt, Corpus Christi Housing Authority CEO Gary Allsup told the Caller-Times on May 14.
As part of an agreement between the apartment complex owners and the governmental agency, the participating apartment complexes must make about half of their unit inventory available for workforce housing, he said.
It's a mechanism that will fill a crucial gap in housing options for a segment of the population that is 'caught in the middle,' Allsup has said.
In the case of housing, 'workforce' means individuals and families whose income is moderate — too high for low-income housing eligibility but not high enough to make market-rate housing affordable.
The federal government's definition of what qualifies as affordable is a household spending no more than 30% of its income on utilities, combined with either rent or mortgage.
The program, as crafted, is not directed toward low-income housing.
The acquisitions, in part, involve the housing authority becoming an owner of the property's grounds, as well as a 'small-portion owner in the actual improvements to the property,' Allsup said.
Of the workforce units, 40% are intended for households bringing in 80% or less of the area median income, and 10% are set aside for households earning 60% or less of the area median income, he said.
Rent for units reserved for workforce housing are then adjusted to a price that is considered affordable for those income levels, he said.
Critics have questioned whether the program meets legal and propriety standards and whether it meets the mission of the housing authority. They have also raised concerns about the impacts on the property tax revenue.
Opponents have asserted that property tax exemptions would take off the tax rolls properties appraised in the millions of dollars, subsequently pulling millions of dollars of otherwise expected property tax revenue.
Del Mar College officials have estimated that should properties be found tax-exempt, it would mean about $1.1 million in lost property tax value, while city representatives have put that number at about $3.5 million.
The city, which had previously cited a projected deficit of about $7 million in its 2026 budget, has said if the housing authority's acquisitions were taken off the tax rolls, the deficit would reach about $10.5 million.
May 13, the Del Mar College Board of Regents approved college representatives and legal experts to take the 'necessary and appropriate action, including the engagement of outside counsel, to protect and pursue the college's legal status and potential claims' related to the potential property tax exemptions for the housing authority's acquired apartment complex properties.
The City Council took similar action the same day, producing a resolution approving city management to 'to use all administrative, legal, and legislative means to prevent the improper and/or illegal use of property tax exemptions by the Corpus Christi Housing Authority, affiliates, and entities connected thereto.'
Allsup said May 14 that 'there continues to be a misunderstanding of what the law is and under what programs that this is done for.'
'There's certainly not anything that's improper, and nothing illegal, in the way that these deals have been done,' he told the Caller-Times. 'It's been very transparent.'
Although an official analysis was not immediately available as of May 19, a Caller-Times review of preliminary appraisal district records suggests the amount in lost property tax revenue for the county may be more than $800,000.
Chesney told the Caller-Times that the acquisitions and contemplated property tax exemptions would 'damage people everywhere under this disguise of calling it 'low-income housing.''
'All we're trying to do is stop the bleeding since the issue has been brought to our attention,' Chesney said.
With an anticipated parallel effect, the purchase of two power plants — the Barney M. Davis and Nueces Bay generation plants — may take millions of dollars off the tax rolls, officials have said.
The two power plants combined are appraised at about $151 million, according to preliminary assessments.
Because CPS Energy is considered a governmental entity — it is municipally owned by the city of San Antonio — those two properties, previously on tax rolls, may be accepted as tax-exempt, local officials said.
Addressing the Board of Regents May 13, Del Mar College Chief Financial Officer Raul Garcia estimated removal of the plants from the tax rolls would translate to about $500,000 in lost property tax revenue.
CPS Energy's 'vision for delivering modern, affordable, reliable and sustainable energy services may have been the key factors behind this acquisition,' he said.
The board mirrored its action related to property tax exemptions on the housing authority's acquired properties, approving the enlistment of outside legal counsel to look into potential property tax exemptions for CPS Energy's two power plants.
In a news release issued May 2024, CPS Energy had announced the closing of the sale of the natural gas power plants, previously owned by Talen Energy Corp.
The document shows CPS Energy also closing a sale of a natural gas plant in Laredo.
'This action supports CPS Energy's generation plan, approved in 2023 by its Board of Trustees, to power the greater San Antonio community into the future by securing an additional 1,710 MWs that are available immediately,' the news release states. 'The addition of these units aligns with the generation plan, which includes the retirement of older coal and gas units and the addition of a blend of more efficient gas generation along with solar, wind, and energy storage.'
Rudy D. Garza, president and CEO of CPS Energy, is quoted in the news release as saying the acquisitions represent a step in the entity's 'growing role as a regional energy utility, providing additional resiliency and reliability for our customers.'
"This acquisition adds critical capacity to our generation portfolio to continue to reliably serve one of the fastest-growing regions in the nation,' he stated. 'Our customers will benefit from these investments for decades to come."
In addition to San Antonio, CPS Energy also provides services to 'portions of seven adjoining counties,' according to the news release.
Chesney contended that should property tax exemptions be awarded, it would prove to benefit only San Antonio.
'If someone's going to try to take money out of the Nueces County taxpayers' pockets and give it to the city of San Antonio, in the case of CPS, or give it to developers who are developing apartment complexes — that's not right,' he said.
In a message to the Caller-Times on May 20, CPS spokeswoman Dana Sotoodeh wrote that 'CPS Energy is a municipally owned utility, owned by the City of San Antonio, and is a tax-exempt entity.'
'When the plants in Corpus Christi were acquired last year, those facilities were no longer subject to property taxes,' she wrote. 'We are collaborative partners with the communities in which we operate. We look forward to continuing our conversations with local leaders and working together productively.'
It was not immediately clear as of the morning of May 20 whether city officials intended to take a position on the purchases of the power plants, or if money would be allocated for legal counsel. It was not addressed in the May 13 meeting.
Early, non-certified appraisal records indicate the city's portion of taxes, if the plants are found tax-exempt, would be at least $400,000.
For the county, the unofficial number would likely be at least $396,000, according to district documents.
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This article originally appeared on Corpus Christi Caller Times: Nueces County may join opposition to potential property tax exemptions