Affordable housing developers sue over new Texas law
Texas’ new affordable housing law, House Bill 21, is facing a lawsuit from developers who argue the measure is unconstitutional and threatens working-class housing. The Texas Workforce Housing Coalition and Post WB Apartments sued the Bexar Appraisal District, claiming HB 21 unfairly rewrites the rules for housing finance corporations (HFCs) and retroactively alters contracts made under the old law, Chapter 394. Previously, developers partnering with HFCs could receive full property tax exemptions in exchange for renting to low- and moderate-income tenants, but HB 21 tightens requirements and applies them to both new and existing deals. Plaintiffs warn that appraisal districts are using the law to overturn prior approvals, creating instability in affordable housing investments.
HB 21, signed by Gov. Greg Abbott in May, was designed to rein in so-called “traveling” HFCs, which partnered with developers across jurisdictions to secure exemptions without providing local benefits. The new law mandates stricter standards: local government approval for every HFC project, at least half of units reserved as affordable, rent cuts tied to tax savings and annual independent audits. Existing projects must comply by 2027 for audits and 2035 for affordability requirements. While lawmakers argue the reforms protect communities and ensure real affordability, developers warn the retroactive changes jeopardize billions in past investments and undermine trust in Texas’s housing policies. Multiple lawsuits are now pending over the law’s legality and impact on future development.
