In Opinion No. KP-0219, Texas Attorney General Ken Paxton recently addressed questions related to the ability of a county to utilize its property tax revenues to fund and support affordable housing programs. Below is a summary of key determinations:

  • A county may expend public funds to facilitate affordable housing programs when it serves a predominately public purpose.

The Texas Constitution dictates that a county’s use of property tax revenue must meet a public purpose test. Under this test, a county may expend public funds only when doing so serves a legitimate public purpose and the public is clearly benefited.  A county may use its funds to support an affordable housing program, even if that expenditure results in an incidental private benefit (such as a benefit derived by a developer).

  • Whether an expenditure for a particular affordable housing program satisfies the public purpose test is primarily determined by the county commissioners’ court.

Competing interests abound in any use of public funds, and this is particularly true when it comes to affordable housing programs. It is the responsibility of the county commissioners’ court to determine whether a proposed use of county funds satisfies the constitutional public purpose test. This determination, however, is subject to judicial review.

For affordable housing developers working with counties to seek support and funding for their properties, this Attorney General opinion may provide some comfort regarding the county’s use of its funds.