CORPUS CHRISTI, Tx — The Corpus Christi City Council voted unanimously Tuesday to approve a resolution declaring controversial workforce housing deals worth $350 million as "apparently illegal."
The resolution, which passed after council members amended language from "illegal" to "apparently illegal," calls on the Corpus Christi Housing Authority to remedy what the city considers violations of the Texas Open Meetings Act and other state laws in approving the purchase of 13 high-end apartment complexes between July 2024 and March 2025.
"If we're saying it's illegal, I mean we're...I'm not a court of law," said Councilwoman Carolyn Vaughn during Tuesday's meeting. "There's a difference between I don't like it and it's illegal."
An assistant city attorney defended the city's position, stating: "I do recognize that the city council is not a court of law, but...the violations of state law are blatant where and the exhibits attached to the resolution illustrate that."
Gary Allsup, CEO of the Corpus Christi Housing Authority, addressed the council, maintaining that the authority's actions were legal.
"State statutes are very clear indicating that it is a legal action by the housing authority," Allsup said, citing similar programs in other Texas cities. "Recently, a judge has made a determination that neither the state nor the school district have standing to challenge the constitutionality of the statutes under which the housing authority acquired those properties."
When questioned by Councilman Eric Cantu about whether the housing authority consulted with the city before proceeding, Allsup said, "If the question is, did we discuss this with the city prior to taking any actions, the answer is no."
However, Allsup insisted the deals were properly posted for public meetings. "It was posted. It was done at an open meeting in compliance with all of our requirements," Allsup said.
A KRIS 6 News investigation found the housing authority may have failed to provide adequate public notice before approving the deals. Meeting agendas provided minimal information—for example, the February 21 agenda listed only "Consider Resolution for MOU - Shadow Bend" without additional details, and proposed agreements were not made publicly available before meetings.
According to the City Council resolution, the housing authority's notices "failed to adequately inform the public that some action would be considered regarding the purchase of real estate for the housing project."
Corpus Christi City Attorney Miles Risley emphasized the importance of compliance. "That's why you see so much detail on our agendas is because we are extra careful to avoid committing illegal acts by violating the Open Meetings Act," he said.
Councilwoman Kaylynn Paxson questioned the effectiveness of the workforce housing program, noting that many of the acquired properties were already at or near maximum occupancy.
"My question was if all these if these properties are being purchased with the intent of opening up housing opportunities for people who need them across a broad range of incomes, how many of those is that is it actually meeting?" Paxson said. "What I was told, it's not really, it's not pushing the envelope."
Councilman Gil Hernandez, while opposing the word "illegal" initially, criticized the lack of communication: "The failure to communicate with what was happening to us...I didn't hear about it until just recently."
Councilman Everett Roy proposed the compromise amendment, stating: "I think the message is more important...I'd like to make a motion to amend that...it appears illegal and further action may be required by the city."
Workforce Housing Background
The controversial program allows the housing authority to acquire apartment complex land at no cost, then immediately lease it back to the original owners while claiming 100% property tax exemption. In exchange, complexes must designate 50% of units for residents earning 80% or less of area median income, with 10% reserved for those at 60% AMI.
Documents obtained by 6 Investigates reveal potential benefits to property investors rather than workforce families. An analysis of the Azure Apartments deal projects annual tax savings of $564,636 and a net cash flow increase of $408,459 in year one, with a ten-year benefit to investors totaling $11.4 million.
Multiple Legal Violations Alleged
The City's resolution outlines several alleged violations beyond the Open Meetings Act:
- Bylaw Violations: The resolution states that under CCHA bylaws, "The CEO may not enter into contracts for the purchase or sale of Real Property without specific Commission Resolution so authorizing," yet the CEO proceeded without proper authorization.
- Texas Local Government Code Violations: The agreements allegedly violate Section 392.055 because they "do not limit all units of the Apartment Complexes to rent only to persons of low income."
- Constitutional Violations: The city contends the structure violates Article III, Section 52 of the Texas Constitution, which prohibits lending public credit to private entities.
- Failure to Meet Industry Standards: The resolution notes the authority "failed to ensure that the agreements for the Apartment Complexes met industry best practices" and that "the Apartment Complexes provided rent at levels below 80% AMI prior to the transactions with the CCHA, and such transactions did not create any new affordable housing for low-income persons."
Public Opposition Mounts
During public comment, Rachel Caballero, president of the Corpus Christi Taxpayers Association and a resident of one of the affected apartment complexes, sharply criticized the deals.
"What is really happening is that we have developers who are trying to escape from their tax burdens," Caballero said. "We are now in a position where we are losing taxes available to this community as taxpayers. This is irresponsible for people that are claiming to be on the clock 24/7."
Del Mar College Regent David Loeb previously told KRIS 6 News that removing property from tax rolls means "every government that gets the tax revenue from those properties now either has to increase the tax rate for everybody else, or cut services—police, firefighters, school teachers."
Housing Authority Pauses New Deals
Unified opposition from local government entities led the housing authority board to halt additional deals in May. Mayor Paulette Guajardo appointed three new board members—former Mayor Joe McComb, former City Council Member Greg Smith, and West Oso ISD counselor Judith Gonzalez-Rodriguez—who joined existing commissioners in voting to pause $235 million in pending acquisitions.
While the board's May vote stopped new acquisitions, it doesn't affect the $350 million in properties already purchased. The Nueces County Appraisal District has not yet granted tax exemptions for these properties.
Critics argue the program fails to address the community's most pressing housing needs. The housing authority has more than 30,000 people on its Section 8 waiting list, yet Allsup acknowledges the workforce housing initiative won't help them.
"Affordable rental housing need is by far the greatest among households making 50% of area median income and below, especially 30% and below. These are the populations that housing authorities were created to serve," Ben Martin previously told KRIS 6 News, Research Director for Texas Housers.
What's Next
Tuesday, Risley said the dispute could end up in litigation. "There really could be an action to have a judge declare that these are illegal and a violation of the Open Meetings Act...It may be that we will be going to ask a judge to declare these actions by the [housing authority] to be illegal," he said.
If the deals are ultimately found to violate the Open Meetings Act or other state laws, they could be declared void, potentially unwinding the entire program.
The Corpus Christi Housing Authority is a governmental body created and authorized by state law to develop and operate housing for low-income families. It operates as a separate entity from the City of Corpus Christi, though its board of commissioners is appointed by the mayor.
