Pecos Housing Finance Corporation, a Texas Nonprofit Corporation and Cara Turn, Maribel Alvarez, and Irene Dominguez, in Their Official Capacities as Board Members of Pecos Housing Finance Corporation v. City of Haltom City, Texas

Opinion

ACCEPTED 15-25-00112-CV FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS 7/2/2025 4:39 PM CHRISTOPHER A. PRINE CLERK FILED IN 15th COURT OF APPEALS AUSTIN, TEXAS 7/2/2025 4:39:56 PM CHRISTOPHER A. PRINE Clerk July 2, 2025

Hon. Christopher A. Prine Clerk, Texas Fifteenth Court of Appeals P.O. Box 12852 Austin, Texas 78711

Re: Court of Appeals No. 15-25-00111-CV, Pecos Housing Finance Corporation, Pleasanton Housing Finance Corporation, Maverick Housing Finance Corporation, and La Villa Housing Finance Corporation v. City of Arlington

Court of Appeals No. 15-25-00112-CV, Pecos Housing Finance Corporation, a Texas Nonprofit Corporation and Cara Turn, Maribel Alvarez, and Irene Dominguez, in Their Official Capacities as Board Members of Pecos Housing Finance Corporation v. City of Haltom City, Texas

Dear Ms. Prine:

Appellants provide the following response to this Court’s June 25 letter requesting information pertaining to its jurisdiction over these appeals.1

A. Background

Appellant Pecos Housing Finance Corporation (“Pecos”) is a housing finance corporation (“HFC”) established to coordinate and facilitate affordable housing for Texas residents, pursuant to the Housing Finance Corporation Act, TEX. LOC. GOV’T CODE § 394.001 et seq. (“the Act”). Pecos serves a “public purpose” and “performs an essential governmental function on behalf of and for the benefit of … this State.” Id. at § 394.002(c)(1)-(3). To fulfill this purpose, HFCs like Pecos enter into public-private real estate partnerships to facilitate the development of low-income housing within the

1 Appellants intend to file a motion to consolidate these appeals, along with No. 15-25-00113-CV, pending this Court’s jurisdictional determination.

AMANDA L. REICHEK ~ 214.382.3039 ~ AREICHEK@TILLOTSONLAW.COM

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“local government,” and as a result, HFC-owned properties and the income derived therefrom are tax-exempt. Id. at § 394.903(a); § 394.905. 2

The orders challenged in these appeals resulted from efforts by three municipalities – Fort Worth, Arlington, and Haltom City – to prevent Pecos and other so-called “traveling HFCs” from operating within these cities, which they describe as “a widespread problem across the state” that has led to “the loss of millions of dollars in real property value from the local tax base.” 3 According to Appellees, the Act limits Pecos and other HFCs to operating only within the boundaries of the local governments that approve the incorporation of the HFC; and to the extent the Act permits an HFC to operate outside these boundaries, it is unconstitutional. Appellants assert that HFCs may operate outside the boundaries of their sponsoring governments under the unambiguous language of the Act. The trial court temporarily enjoined Pecos from purchasing or approving the purchase of real property within these cities’ boundaries, or requesting, approving, or obtaining tax exemptions for any real property located within these cities’ boundaries. These orders are before this Court, along with the trial court’s denials of Appellants’ pleas to the jurisdiction.

Notably, these are just two of at least fourteen similar lawsuits pending across the state, implicating the jurisdiction of no fewer than five regional intermediate courts of appeal. See, e.g., City of Euless v. Cameron County Housing Finance Corp., Mark A. Yates, Ga vino Sotelo, Eduardo Campirano, Louie Tijerina, and Cyndi Wyche, in their Official Capacities as Board Members of the Cameron County Housing Finance Corp., and Tarrant Appraisal District, Cause No. 348-365230-25, pending in the 236th Judicial District of Tarrant County; Harris County Municipal Utility Dist. No. 390 v. Pleasonton Housing Finance Corp. and Roland Altinger, in his Official Capacity as Chief Appraiser of the Harris Central Appraisal District, Cause No. 2025-33133, pending in the 165th Judicial District of Harris County; City of San Marcos and Hays County, Texas v. Pecos Housing Finance Corp. and Pleasonton Housing Finance Corp., Cause No. 25-1185-DCB, pending in the 207th Judicial District of Hays County; Williamson County, Siena Municipal Utility Dist. No. 1 and Siena Municipal Utility Dist. No. 2 v. Cameron County Housing Finance Corp., Cause No. 25-0488-C425, pending in the 425th Judicial District of Williamson County; City of Missouri City v. Pleasonton

2 On May 28, 2025, Gov. Greg Abbott signed HB 21 into law, amending the Act effective immediately. See Housing Finance Corporations; Authorizing a Fee, 2025 Tex. Sess. Law Serv. Ch. 208 (H.B. 21) (VERNON’S), attached hereto as Exhibit A. The properties at issue in these appeals were acquired prior to these amendments. 3 See Plaintiff City of Arlington’s Third Amended Petition and Application for Temporary Restraining Order and Injunctive Relief, at 1, 5 (Exhibit B); City of Fort Worth’s Fourth Amended Petition in Intervention and Application for a Temporary Restraining Order and Injunctive Relief, at 2, 7 (Exhibit C); [Haltom City’s] First Amended Application for Temporary Injunction and Response to Defendants’ Plea to the Jurisdiction, at 1, 7 (Exhibit D).

AMANDA L. REICHEK ~ 214.382.3039 ~ AREICHEK@TILLOTSONLAW.COM

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Housing Finance Corp. and Board Members of the Pleasanton Housing Finance Corp in their Official Capacities, Cause No. 25-DCV-328899, pending in the 240th Judicial District of Fort Bend County; City of Missouri City, Texas v. Maverick County Housing Finance Corp. ad the Borad Members of the Maverick County Housing Finance Corp. in their Official Capacities, Cause No. 25-DCV-325392, pending in the 268th Judicial District of Fort Bend County; City of Lewisville v. Cameron County Housing Finance Corp., Pecos Housing Finance Corp., and Don Spencer, in his Official Capacity as Chief Appraiser of the Denton County Tax Appraisal Dist., Cause No. 25-4665-367, pending in the 367th Judicial District of Denton County, Texas; Town of Little Elm v. Pleasonton HFC, Pecos HFC, Don Spencer in is Official Capacity as Chief Appraiser of Denton County Appraisal District, Cause No. 25-5634-367, pending in the 367th Judicial District of Denton County; City of Carrollton v. Pecos Housing Finance Corp., Shane Docherty, in his Official Capacity as Chief Appraiser of the Dallas Central Appraisal Dist., Cause No. DC-25-07935, pending in the 101st Judicial District of Dallas County; City of Rowlett and Garland Indep. Sch. Dist. v. Pleasonton Housing Finance Corp., Cause No. DC-25-077781, pending in the 191st Judicial District of Dallas County; City of Richardson v. Collin Central Appraisal Dist., Garland Housing Finance Corp., and Cameron County Housing Finance Corp., Cause No. 219-03593-2025, pending in the 219th Judicial District of Collin County; Montgomery County Municipal Utility Dist. No. 46 v. Maverick County Housing Finance Corp., Cause No. 25-06-09304, pending in the 284th Judicial District of Montgomery County.

B. These appeals are brought by or against the state or a board, commission, department, office, or other agency in the executive branch of the state government.

The Fifteenth Court of Appeals has exclusive intermediate appellate jurisdiction over civil matters brought by or against the state or a board, commission, department, office, or other agency in the executive branch of the state government … TEX. GOV’T CODE § 22.220(d)(1).

The Texas Supreme Court recently addressed the scope of this provision in Baumgardner v. Brazos River Auth., 2025 WL 1779081 *1 (Tex. June 27, 2025). Finding the river authority to be a political subdivision4 rather than a state agency, the Court determined the appeal did not fall within this Court’s exclusive jurisdiction. Id. at *3-5. Key to the Court’s holding was the limited geographic reach of the river authority. Id. at *3, 5. Citing Monsanto Co. v. Cornerstones Mun. Util. Dist., 865 S.W.2d 937, 940 (Tex.

4 Although considered political subdivisions, this Court has exercised jurisdiction over appeals brought by or against municipalities. See, e.g., City of Austin v. Mario Ponce et al., Case No. 15-24-00076; City of Rio Vista v. Johnson County Special Utility District, Case No. 15-24-00065-CV.

AMANDA L. REICHEK ~ 214.382.3039 ~ AREICHEK@TILLOTSONLAW.COM

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1993), the Court observed “[a] political subdivision has jurisdiction over a portion of the State; a department, board or agency of the State exercises its jurisdiction throughout the State.” Baumgardner, 2025 WL 1779081 *5. Although HFCs are created by local government, TEX. LOC. GOV'T CODE § 394.002(d), at all times relevant to these appeals there was no limit to the geographic reach of their operations. See also TEX. GOV’T CODE § 394.002(b)(1) (“the creation of a housing finance corporation is for the benefit of the people of the state, …”). Moreover, HFCs are empowered to delegate to the Texas Department of Housing and Community Affairs (indisputably a state agency) the authority to act on its behalf in the financing, refinancing, acquisition, leasing, ownership, improvement, and disposal of home mortgages or residential developments, making HFCs more akin to a state agency than a political subdivision. Id. at § 394.032(e).

C. This Court has jurisdiction to consider these appeals “as provided by law.”

This Court also has jurisdiction over any other matter as provided by law. TEX. GOV’T CODE § 22.220(d)(2). As the Texas Supreme Court made clear in In re Dallas Cnty., 697 S.W.3d 142, 146 (Tex. 2024) and Kelley v. Homminga, 706 S.W.3d 829, 834 (Tex. 2025), this Court was created to adjudicate matters that implicate, or that the Legislature has defined as critical to, the State’s interests. The Legislature was clear on the importance of HFCs to achieving the goal of providing low-income housing to Texans: “the corporation, as a public instrumentality and nonprofit corporation, performs an essential government function on behalf of and for the benefit of the general public, the local government, and this state.” TEX. LOC. GOV’T CODE § 394.002(c)(3) (emphasis added). There can be no question that Pecos’s alleged “misuse and abuse” of the Texas Housing Finance Corporation Act is a matter that is critical to the State’s interests within the common-law holding of Kelley. See Exhs. B-D.

Moreover, as noted supra, similar lawsuits are pending across the state. Those appeals should be heard by the same intermediate court of appeals as a matter of judicial economy. This, too, was a justification for the establishment of this Court: “[u]nder the current judicial system, appeals in cases of statewide significance are decided by one of Texas’s 14 intermediate appellate courts. These courts have varying levels of experience with the complex legal issues involved in cases of statewide significance, resulting in inconsistent results for litigants. …” See Senate Research Center, Bill Analysis, Tex. S.B. 1045, 88th Leg., R.S. (2023) (discussing background of the bill) (emphasis added).

AMANDA L. REICHEK ~ 214.382.3039 ~ AREICHEK@TILLOTSONLAW.COM

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D. These appeals are matters in which a party to the proceeding has challenged the constitutionality of a state statute.

Finally, this Court has jurisdiction over matters in which a party to the proceeding files a petition, motion, or other pleading challenging the constitutionality or validity of a state statute or rule and the attorney general is a party to the case. TEX. GOV’T CODE § 22.220(d)(2).

Appellee City of Fort Worth has alleged that, to the extent Pecos’s actions are authorized by the Act, the Act violates Article VIII Section 11 of the Texas Constitution. See Exhibit C at 9. It also seeks a declaratory judgment that Article VIII, Section 11 of the Texas Constitution “limits counties’ ad valorem taxation authority to ‘property within their respective boundaries’ and that Defendants' scheme violates Constitutional limits on the scope of Texas counties’ taxing authority.” Id. at 9-10. Appellee Haltom City has similarly alleged that Pecos’s actions (which were authorized by the Act) “violate the Texas Constitution’s rules against extra-jurisdictional taxation by seeking to impose a system of taxation on properties located outside the boundaries of Reeves County where Pecos City is located.” See Exhibit D at 12. Haltom City further alleges that “[i]f [the Act] could be read to empower Pecos HFC to take properties outside of Reeves County off the tax rolls of other counties, this would violate the Texas Constitution’s limits on the scope of Texas counties’ taxing authority.” Id.

On June 30, 2025 this Court notified the Office of the Attorney General of these Constitutional challenges. To the extent this Court determines that it does not have jurisdiction pursuant to TEX. GOV’T CODE § 22.220(d)(1) or (d)(3), Appellants respectfully request that the Court await the Attorney General’s decision whether to join this appeal before ruling on its jurisdiction.

Thank you for your attention to this matter.

AMANDA L. REICHEK ~ 214.382.3039 ~ AREICHEK@TILLOTSONLAW.COM

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Respectfully Submitted:

/s/ Amanda L. Reichek Jeffrey M. Tillotson Texas Bar No. 20039200 jtillotson@tillotsonlaw.com Amanda L. Reichek Texas Bar No. 24041762 areichek@tillotsonlaw.com Kathryn E. Yukevich State Bar No. 24133390 kyukevich@tillotsonlaw.com TILLOTSON JOHNSON & PATTON 1201 Main Street, Suite 1300 Dallas, Texas 75202 Telephone: (214) 382-3041 Facsimile: (214) 292-6564

Blake W. Stribling Texas Bar No. 24070691 bstribling@chasnoffstribling.com Daniel J. Lecavalier Texas Bar No. 24129028 dlecavalier@chasnoffstribling.com CHASNOFF STRIBLING, LLP 1020 N.E. Loop 410, Suite 150 San Antonio, Texas 78209 Telephone: (210) 469-4155

ATTORNEYS FOR APPELLANT PECOS HOUSING FINANCE CORPORATION

AMANDA L. REICHEK ~ 214.382.3039 ~ AREICHEK@TILLOTSONLAW.COM

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CERTIFICATE OF SERVICE

I certify that a true and correct copy of the foregoing document was served by email to counsel herein on July 2, 2025.

/s/ Amanda L. Reichek Amanda L. Reichek

AMANDA L. REICHEK ~ 214.382.3039 ~ AREICHEK@TILLOTSONLAW.COM

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Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Envelope ID: 102720196 Filing Code Description: Other Document Filing Description: Correspondence with Court Status as of 7/2/2025 4:45 PM CST

Case Contacts

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