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Bee Cave council bans public facility and housing finance corporations inside city limits
Summary
The Bee Cave City Council unanimously approved Ordinance No. 559 to prohibit public facility corporations (PFCs) and housing finance corporations (HFCs) within the city, citing concerns those entities can remove property from local tax rolls and reduce municipal control over development.
The Bee Cave City Council on Feb. 11 unanimously approved Ordinance No. 559, which prohibits the creation or operation of public facility corporations (PFCs) and housing finance corporations (HFCs) within the city limits.
City staff presented the ordinance as a measure to preserve the city’s appraisal role and maintain local control over development financing. The staff report said the ordinance would prevent outside entities from acquiring local property and removing it from the city’s tax rolls without the council’s approval.
The City Attorney described how PFCs and HFCs can be used in practice: municipalities or small special-purpose entities create such corporations, and developers can use them to hold property that becomes tax-exempt, then lease it back to developers. The attorney said legislation in 2023 addressed some of these practices but that loopholes remain, and the ordinance gives Bee Cave a seat at the table for future projects.
Council members framed the ordinance as a tool to protect the city’s tax base while clarifying that passing it does not mean the council opposes workforce housing. Council member Willett cited recent news coverage describing “traveling” HFCs and PFCs that acquire property outside their jurisdiction and described the resulting loss of tax revenue for the affected municipalities. Other council members reiterated that the measure is intended to require local discussion and review before a PFC/HFC could operate in Bee Cave.
The motion to approve Ordinance No. 559 passed unanimously with five affirmative votes from Mayor King and council members Kit Crumley, Heights, Sobraco and Willett.
City staff said the ordinance is intended to give the council the authority to approve or deny the use of these financing entities in the city, not to categorically oppose housing projects funded by other means.
