Tarrant County’s Bid to Revoke Housing Tax Exemptions Denied
The Tarrant Appraisal Review Board, in a 2-1 decision on July 15, 2025, denied requests from Tarrant County and five cities, including Arlington, to revoke tax exemptions for six out-of-county housing finance corporations (HFCs) operating apartment complexes in Tarrant County. These “traveling” HFCs, based outside the county but owning properties within it, claimed exemptions worth $1.8 million in taxes on 28 properties valued at $974 million in 2025. The decision preserves the exemptions, as they were approved before Texas House Bill 21, signed into law on May 28, 2025, which now requires local government approval for such out-of-jurisdiction operations.
Details of the Dispute
Tarrant County, along with Arlington, Fort Worth, Grand Prairie, Mansfield, and North Richland Hills, argued that these HFCs, often tied to distant cities or counties, do not provide sufficient affordable housing to justify their tax-exempt status. The county claimed the corporations own the properties in name only, leasing them to private developers who set market-rate rents, thus undermining the public benefit required for exemptions. Some properties were purchased for as little as $10 cash and “other good and valuable considerations,” raising concerns about their legitimacy. The Tarrant Appraisal District (TAD), represented by attorney Jim Evans, maintained that the exemptions were legal under the pre-House Bill 21 statute, a position the Appraisal Review Board upheld.
Arlington separately challenged two of the same HFCs plus a public facility corporation, but all three requests were denied unanimously, 3-0. Euless also challenged one HFC independently, resulting in a split-vote denial. The board’s rulings mean the exemptions remain valid for 2025, as they were granted before the new law took effect, preserving $1.8 million in tax revenue that would have supported local schools, roads, and services.
Legal and Legislative Context
House Bill 21, signed by Governor Greg Abbott, closed a loophole allowing HFCs to operate tax-exempt properties outside their home jurisdictions without local approval. Tarrant County attorneys, led by Christopher Kratovil, argued that these exemptions were never legal, even before the new law, as the HFCs failed to meet affordable housing requirements. However, TAD’s attorney, Jim Evans, countered that the prior statute permitted such exemptions, and the board’s 2-1 vote aligned with this interpretation. Tiffany Bull, representing Grand Prairie, argued that the board was not bound by TAD’s interpretation, given the legislative clarification, but the majority disagreed.
The county and cities have not yet decided whether to appeal the decision, which would involve further legal action through the Texas district court. The properties in question, including high-value complexes like The Sovereign in Fort Worth, owned by the Maverick County Housing Finance Corporation 400 miles away, continue to operate tax-free, sparking debate about fairness in Tarrant County’s tax system.
Impact on Tarrant County
The upheld exemptions represent a significant loss of potential revenue for Tarrant County, where property taxes fund critical services like education and infrastructure. The 28 properties, with a combined taxable value of $974 million, would have generated $1.8 million in taxes for 2025 alone. County officials expressed concern that these “traveling” HFCs funnel earnings back to their home jurisdictions, depriving Tarrant County of funds for local needs. The issue has drawn attention to broader property tax challenges, with Tarrant County recently increasing its homestead exemption to 20% to ease the burden on homeowners…