The Cameron County Housing Finance Corporation lawsuit was filed by Williamson County on March 4, 2025, alleging the South Texas agency was buying apartment complexes hundreds of miles from its home jurisdiction and using its tax-exempt status to pull them off local tax rolls without local consent. A judge granted a temporary restraining order the next day, and within weeks the Texas Legislature passed House Bill 21, which Governor Greg Abbott signed on May 28, 2025, to shut down the practice statewide.
The Practice That Triggered the Suit
Cameron County, at the southern tip of Texas on the Mexican border, created its housing finance corporation in 1979 under Chapter 394 of the Texas Local Government Code. Properties the corporation owns are exempt from property tax. In recent years, the corporation began partnering with private developers to acquire apartment complexes far outside Cameron County. The developers would lease the properties back and pay the corporation roughly 15 percent of what they would otherwise have owed in local taxes.
The corporation reportedly bought property in Euless, about 536 miles from Cameron County, and properties linked to it also surfaced in Irving. Housing finance corporations based in Pecos, Pleasanton, La Villa, and Maverick County ran similar deals.
Williamson County’s Claims
The case, Williamson County, et al. v. Cameron County Housing Finance Corporation, No. 25-0488-C425, was filed in the 425th Judicial District Court of Williamson County. It centered on two Round Rock apartment complexes:
- Siena Round Rock Apartments at 6531 County Road 110, a 160,070-square-foot complex built in 2023 and appraised at about $37.7 million, which the corporation purchased in February 2025.
- The Sommery at 5540 Sofia Place, a 315,884-square-foot complex built in 2023 and appraised at about $63.9 million, which the corporation was expected to acquire.
Combined appraised value came to roughly $101.5 million. Williamson County alleged the exemption would cost local taxing entities about $2.4 million a year: $1.2 million to the Hutto Independent School District, $360,000 to Williamson County, and $580,000 to the Siena municipal utility districts. In exchange, the private developers would pay the corporation a combined total of about $356,000 based on 2024 tax data.
County officials argued the corporation had no business operating in Williamson County and that the arrangement violated the spirit of the Texas Housing Finance Corporations Act. Williamson County Judge Bill Gravell asked Attorney General Ken Paxton to open an investigation. Commissioner Russ Boles said he contacted Cameron County commissioners and corporation board members and got no meaningful response, though Cameron County Judge Eddie Treviño Jr. indicated he would not intervene. Officials also said the corporation was seeking exemptions on six to eight additional developments inside Williamson County.
The Restraining Order
On March 5, 2025, the day after the suit was filed, a judge granted Williamson County a temporary restraining order halting the corporation’s purchases and preventing further removal of properties from local tax rolls. A hearing was set to consider a permanent injunction, with a trial on the merits scheduled for April 2025.
The Attorney General Review Running in Parallel
The underlying legal question was already before the Attorney General when Williamson County sued. In October 2024, the chairs of the Texas House Committee on Urban Affairs, Representatives J.M. Lozano and Gary Gates, submitted opinion request RQ-0566-KP asking whether a housing finance corporation formed by one local government could develop residential property outside that government’s boundaries, and whether such development qualified for a full tax exemption.
Their letter pointed to Texas Local Government Code § 394.903(a), which says a residential development covered by the chapter “must be located within the local government.” RQ-0566-KP was closed without a formal opinion and folded into an identical pending request, RQ-0587-KP. While the review stayed open, the Attorney General’s office announced it would not approve any housing finance structure in which a corporation owned residential property outside its sponsoring local government’s boundaries, citing “concerns as to the legality of such structures.”
House Bill 21
Representative Gary Gates and Senator Paul Bettencourt filed companion bills to rewrite the Texas Housing Finance Corporations Act. HB 21 passed the House 113–15 and the Senate 30–1, with Senator Sarah Eckhardt casting the only no vote. Governor Abbott signed it on May 28, 2025.
The law reshaped how these corporations can operate:
- A housing finance corporation must now get approval from the governing body of any jurisdiction where it wants to develop residential property outside its home territory. Existing out-of-jurisdiction exemptions have until January 1, 2027, to secure that local approval.
- At least 10 percent of units must be set aside for residents earning 60 percent of area median income at rents 60 percent below market, and 40 percent of units must serve residents earning 80 percent of area median income. Existing properties have until 2035 to comply, or sooner if sold or refinanced.
- Properties must apply at least 50 percent of annual tax savings toward reducing rents.
- Annual independent audits must be filed with the state housing agency, with full compliance required by 2027.
Mark Yates, executive director of the Cameron County Housing Finance Corporation, said developers and financing companies sought out the corporation because they could not work with their own local housing authorities.