Texas Workforce Housing Coalition Files Lawsuit Alleging HB21 is Unconstitutional

The Texas Workforce Housing Coalition (TWHC) and Post WB Apartments, LLC, have filed a lawsuit against the Bexar Appraisal District. They assert that the recent implementation of House Bill 21 (HB21) violates the Texas Constitution and threatens the state's affordable housing landscape.

The lawsuit was filed in response to HB21's reform of Texas's longstanding affordable housing framework. The lawsuit challenges the retroactive application of the law, which plaintiffs argue undermines billions of dollars made in investments under the Texas Local Government Code § 394, known as "Old Chapter 394."

This statute allowed real estate developers to partner with Housing Finance Corporations (HFCs) and receive full property tax exemptions in exchange for providing affordable housing for low-income Texans.

The plaintiffs argue that HB21 unlawfully alters previously agreed-upon contracts by revoking tax exemptions and deeming prior deals invalid.

While the law does not fully implement until January 2027, appraisal districts like Bexar have already begun to reverse previously approved tax exemptions. The plaintiffs claim these reversals are unconstitutional and destabilizing.

"This is a fundamental violation of the rule of law," said Trey Cox, lead attorney from Gibson Dunn & Crutcher. "The state promised one thing to developers, who invested billions, and is now rewriting the rules after the fact. The Ultimate victims will be the working-class families who may face eviction as affordable housing dries up across Texas."

TWHC is also seeking to intervene in a Williamson County case that targets Cameron County Housing Finance Corporation. This lawsuit highlights the growing legal conflict over HFC's authority and HB21's effects.