AGENDA CAPTION:
Title
Consider approval of Resolution 2026-75R, approving a settlement agreement with Pecos Housing Finance Corporation under which the corporation’s multifamily apartments in San Marcos, Kyle and Hays County will to be subject to ad valorem property taxes; authorizing the City Manager, or her designee, to execute the settlement agreement on behalf of the city; and declaring an effective date.
Body
Meeting date: May 5, 2026
Department: City Manager, City Attorney
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Background Information:
Pecos Housing Finance Corporation is a corporation created by the City of Pecos, Texas for the purpose of developing multifamily apartments in cities outside of its municipal boundaries. The corporation opened up multiple apartment complexes in locations throughout the state, including in San Marcos and the City of Kyle.
The corporation sought tax-exempt for the apartments in San Marcos and Kyle, thus depriving the City, the City of Kyle and Hays County of ad valorem tax revenue, but enabling the City of Pecos to benefit financially through agreements between it and the corporation which it created.
San Marcos, Kyle and Hays County filed a lawsuit challenging the legality of granting tax exempt status to the corporation. The District Court ruled in favor of San Marcs, Kyle and Hays County, meaning the corporation’s apartments are not exempt from property taxes. The corporation appealed this decision.
Under the terms of this settlement agreement, the corporation agrees to drop its appeal and to pay $10,000.00 in attorney fees incurred by San Marcos, Kyle and Hays County.
The result of this settlement is that San Marcos, Kyle and Hays County will now receive property taxes from the corporation’s apartments in our respective jurisdictions.
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Recommendation:
Staff recommends approval.