CORPUS CHRISTI, Tx — The Corpus Christi City Council has unanimously passed a resolution authorizing active opposition to what they term "improper and/or illegal use of property tax exemptions" by the Corpus Christi Housing Authority (CCHA), its affiliates, and connected entities.
During Tuesday's council meeting, City Attorney Miles Risley took a strong stance against CCHA's actions, stating: "It may be illegal. We're looking into that, but it's definitely improper."
City Manager Peter Zanoni highlighted the potential financial impact, saying: "The City of Corpus Christi, based on what we know today, it could have an impact on our budget of $3.5 million in lost revenue initially, and it could go up to $7 million if all the transactions take place."
Zanoni said city administration and council had no involvement in authorizing these transactions, "Nobody in the city authorized those transactions. The City Council didn't vote on them, we were unaware of it."
The city became aware of these transactions only when reviewing its taxable values for the upcoming fiscal year.
In direct contradiction to CCHA CEO Gary Allsup's statement to 6 Investigates that the tax impact was merely a "rounding error," Zanoni said, "Hundreds of millions potentially is taken off our tax rolls and that's a lot of money, $3.5 million and up to $7 million out of the general fund is a tremendous financial impact. It's not a rounding error, it's big money in real money."
Del Mar College has also taken action, with its regents unanimously authorizing the "College President and General Counsel to proceed with taking necessary and appropriate action, including the engagement of outside counsel" to protect the college's interests in this matter. The college estimates a potential loss of $1.1 million in tax revenue from properties already purchased by CCHA.
Wednesday, Mayor Paulette Guajardo also announced she had appointed three people to the CCHA board.
Background on CCHA's Property Acquisitions
The controversy centers around the Corpus Christi Housing Authority's rapid acquisition of 13 high-end apartment complexes valued at approximately $350 million within a five-month period. These properties include The Villas on Ocean Drive, The Icon on Saratoga, and South Lake Ranch on Rodd Field, representing a significant shift in the housing authority's operational approach.
Allsup has described this as a "workforce housing initiative" intended to provide housing for middle-income workers such as teachers, firefighters, and police officers. Allsup maintains that the initiative is both legal and beneficial, stating: "This is a new opportunity to provide housing for those folks that need it. It is for new families. It is for those folks who are caught in the middle. Too many times, we do things for ultra-low income."
Allsup argues that this program addresses a critical gap in the housing market, though he acknowledges it will not help the 30,000 people currently on the Section 8 waiting list for low-income housing assistance. He told KRIS 6 News, "The federal government is never gonna give me anywhere near enough resources to try to deal with that through Section 8 housing. So, one of the things we try to do is determine other ways that we can provide value to the community."
Financial Structure and Tax Implications
The apartment deal structure is complex: the housing authority acquires land at no cost, immediately leases it back to the original owners, and then claims a 100% tax exemption. To qualify for the program, apartment complexes must set aside 50% of their units for people earning 80% or less of the area's median income, with 10% designated for those at 60% of AMI.
Regarding the financial mechanism, Allsup said, "We are now the owners of the property, so they receive a development tax break on the property tax. In exchange, the properties commit 50% of their units to affordability for those in the middle—those folks that make too much to be on low-income anything but not really enough where they can go out and start buying houses."
The $350 million in properties acquired so far represents a potential property tax bill of approximately $7.4 million that would not reach local government coffers.
Allsup estimates that the housing authority will receive between $900,000 and $1 million annually from these deals in the form of land leases, and said that the initiative "is not about financial gain."
The housing authority's plans extend beyond the current properties. Allsup has indicated potential acquisition of 20-21 total properties, including discussions with Cameron County Housing Finance Corporation about taking over additional properties in Nueces County. This could potentially increase the total value to over $800 million removed from tax rolls, translating to approximately $17.5 million in annual property taxes that would never reach local government coffers.
Criticism and Concerns
David Loeb, a former Corpus Christi City Councilman and current Del Mar College regent, has strongly criticized the approach: "$350 million is a gigantic series of real estate transactions in this community. The tax incentives are designed to help nonprofits and governments actually build housing for very low-income people. They're not designed so that fancy apartment complexes on Ocean Drive do not have to pay taxes."
Loeb warned of broader implications, "Property that's taken off the 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."
Ben Martin, Research Director for Texas Housers, a nonprofit focused on low-income housing, expressed concerns about the program's effectiveness, "Especially affordable rental housing is by far the greatest among households that are making 50% of area median income and below, and especially 30% of area median income and below. These are the populations that housing authorities in particular were created to serve."
Russ Boles, a Williamson County Commissioner who has been battling similar deals with the Cameron County Housing Finance Corporation, was blunt in his assessment: "The people that need help with lower rents, these projects aren't delivering to these folks. It is, I mean, it's just tragic. It's a money grab."
Despite Allsup's claims of providing affordable housing, a review of online listings for these apartment complexes suggests that many units are still being advertised at market rates.
