CORPUS CHRISTI, Tx — In a major shake-up Friday, the Corpus Christi Housing Authority voted to reject several tax-exempt development deals tied to a controversial workforce housing initiative — a move that signals a broader shift in priorities and closer scrutiny of leadership.
Critics argued the deals benefited developers more than working families. “These transactions were done in the dark,” said City Attorney Miles Risley. “You sold your tax exemptions, harmed local tax entities, and delivered little public benefit. We’re asking you to rescind them.”
In a sharp pivot, the board approved a new direction: focusing on public-private partnerships and direct housing support. Plans include expanding the authority’s rental portfolio, forming a long-term partnership with Habitat for Humanity, and funding a city-led housing study to better assess local needs.
“This money is finite,” said Corpus Christi City Planning Director Jennifer Buxton. “So let’s make sure we’re putting it into the right things.”
Board members also greenlighted a new rental voucher program, modeled after Section 8, that will direct $500,000 in rent support to middle-income families.
But other issues remain unresolved. A debate over whether CEO Gary Allsup should retain the authority to spend up to $250,000 without board approval was tabled for a later date. Allsup defended his purchasing authority and listened as his nearly $800,000 compensation was publicly questioned.
“How does this help the people?” one resident asked. “That’s a lot of money. With everything he makes, it's almost a million dollars a year. The CEO should resign… we need leaders who care about people who need help.”
Another resident echoed the concern. “He’s making nearly a million dollars a year to serve the underserved. How does that benefit anyone but himself?”
In a final move, the board voted to bring in outside legal counsel to examine whether already-approved tax exemptions can be rescinded — signaling a broader reckoning with how the agency operates and whom it serves.
Friday's meeting comes just three days after the Corpus Christi City Council unanimously declared the housing authority's $350 million in workforce housing deals "apparently illegal," alleging multiple violations of state law in the acquisition of 13 high-end apartment complexes between July 2024 and March 2025.
The workforce housing 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.
Critics argue the program primarily benefits property investors rather than addressing the community's housing needs. Documents obtained by 6 Investigates reveal significant financial advantages for property owners. 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.
"What is really happening is that we have developers who are trying to escape from their tax burdens," Rachel Caballero, president of the Corpus Christi Taxpayers Association and a resident of one of the affected complexes, told the City Council during Tuesday's public comment period. "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."
City Alleges Multiple Violations
The City Council's resolution outlined several alleged violations of state law. 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.
"The violations of state law are blatant where and the exhibits attached to the resolution illustrate that," an assistant city attorney told the council Tuesday.
CEO Gary Allsup has maintained that the authority's actions were legal, citing similar programs in other Texas cities. "State statutes are very clear indicating that it is a legal action by the housing authority," Allsup said at Tuesday's council meeting. He also stated that a judge recently determined "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 this week 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," he said.
Widespread Opposition
The controversy has united local government entities. Del Mar College, the City of Corpus Christi and Nueces County have all opposed the deals, citing lost tax revenue that must be made up by other taxpayers or through service cuts.
"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," Del Mar College Regent David Loeb previously told KRIS 6 News.
The opposition led to a pause in new acquisitions in May after 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. The board voted to halt $235 million in pending acquisitions, though that pause doesn't affect the $350 million in properties already purchased.
Critics also 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, Research Director for Texas Housers, previously told KRIS 6 News.
Councilwoman Kaylynn Paxson questioned the program's effectiveness Tuesday, noting that many 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."
City Attorney Miles Risley indicated Tuesday that 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.
