Housing Tax Fight in San Antonio

Housing Tax Fight in San Antonio SAN ANTONIO, TX - A battle over tax breaks for affordable housing developers has divided the board of directors at the Bexar Appraisal District and spurred speculation the agency's director could be forced out of his job. Chief Appraiser Michael Amezquita faces increasing pressure from the housing groups and local officials who are pressing him to grant more than three dozen of the lucrative property tax exemptions, which he revoked last year.

But Amezquita contends some housing developers are abusing the tax incentive and fail to offer below-market rents. "They rent to poor people, but they're not giving them a break in the rent," Amezquita said. "If I get fired for doing the right thing, that is not going to make these properties any more eligible" for the exemptions.

The rift among the five-member appraisal board, which can hire or fire the chief appraiser, coincides with the December election of ? two new trustees who are skeptical of Amezquita's tough approach to the exemptions.

The new members, Bexar County Tax Assessor-Collector Sylvia Romo and Tomas Uresti, a board member of the Harlandale Independent School District, also have expressed concerns with other aspects of how Amezquita heads the agency. Elected officials of local government entities within the appraisal district elect the board members.

So far, the new board members haven't sought Amezquita's removal. But Amezquita and others believe that's where the disagreement may be headed. "As far as them demanding that we need to replace Mr. Amezquita, that has not occurred yet - not just yet," said board Chairman David Carpenter, a former city councilman who casts himself in the middle ground of the dispute. "You've got a lot of political types who want to see these exemptions (granted), and that puts him in a very precarious position."

Since he assumed office in 2003, Amezquita has won high marks from some as an effective reformer. Most notably, he corrected longstanding troubles with the district's valuation procedures that caused several school districts to miss the mark in setting their property values, according to the Texas comptroller's office.

He also has gained statewide recognition for fighting to change state law that allows buyers of high-end homes and businesses to dodge higher tax bills by hiding purchase prices.

Amezquita's supporters acknowledge he takes aggressive stands on some issues and manages in a style that makes some bristle.

"When he came in, I told him he was either going to be the worst thing that ever happened to the appraisal district or the best. And I think he's the best," Bexar County Judge Nelson Wolff said. "I know he's controversial. I know. But I think he's done a very good job."

Questions about whether affordable-housing properties qualify for the exemption boil down to differing interpretations of complex tax codes and state laws. The outcome is high stakes.

The 42 developments that were denied exemptions last year carry a total appraised value of $336.8 million. That amounts to about $9.3 million in annual tax revenue.

Those numbers, and a concerted lobbying effort by the housing groups, captured the attention of influential local officials. Mayor Julián Castro, City Manager Sheryl Sculley, City Attorney Michael Bernard and state Rep. Jose Menendez have intervened on behalf of the groups in a flurry of letters, phone calls and meetings with Amezquita.

City officials and the housing groups argue that without the exemptions, the projects will lapse into foreclosure and force low-income tenants out of their homes. If the projects collapse financially, Sculley warned in a letter in February, about $11.6 million of city investments in community development block grants and loans would be lost.

Amezquita believes many of the groups, called community housing development organizations, or CHODOS, serve as legitimate nonprofits and offer much-needed affordable housing. But he contends that some groups cloak themselves as charitable organizations, charge rents that are too high and use the exemptions to reap profits.

"I would look the other way all day long if there were poor people being served," he said. "There is no charitable function."

Castro agrees with a crackdown on projects that don't merit the tax break. His concern is that the appraisal district has swept too many legitimate groups into the fight.

"Right now, perhaps the application of the law is not clear and there's a bit of throwing the baby out with the bath water," Castro said. "There certainly needs to be an effective evaluation process as to who meets what standard and who doesn't. But complete roadblocks should not be thrown up just because someone is doing affordable housing."

Appraisal officials emphasize that only about a third of all the affordable-housing complexes in the county lost the exemption.

Deputy Chief Appraiser Mary Kieke said vague state laws make it difficult to draw legal distinctions between the legitimate and the questionable developments.

Unless the appraisal district holds all housing groups to the same standards, she said, the agency risks weakening its legal position in the fight against those who abuse the system.

Many of the groups lost the exemptions because they failed to rent to enough low-income people or charged rents that were too high. In other cases, the nonprofit groups don't directly own the properties. Instead, the apartment complexes are mostly owned by a limited partnership, which is only partly owned by the nonprofit group.

"Oftentimes, sadly, these guys just aren't sufficiently aware of what it takes to comply and we have to walk them through compliance," Kieke said.

A turning point in the dispute came last month at the first meeting of the new board. About a dozen housing groups spoke out against the district.

Since then, appraisal officials have reached out to more of the groups to help them qualify for the exemption. Many of those are expected to regain the tax breaks through negotiations with the district, Kieke said.

Whether those efforts will smooth concerns in political circles and on the board of directors remains unclear.

From Amezquita's perspective, interference by some politicians hasn't been helpful, and he suspects the housing groups played a role in the election of incoming board members Uresti and Romo.

In December, attorney Michael Eaton, who represents American Opportunity for Housing, warned in a letter to the appraisal district that he and his client "have been aggressively pursuing political solutions to the current rash of unreasonable and unlawful" actions by the district.

Eaton predicted the agency soon would change its position on the exemptions and said he'd drop the issue soon "given anticipated policy and personnel changes."

Eaton said his letter referred to nothing more than a conversation between a board member and a local attorney that seemed to result in some compromise.

The policy and personnel changes, he said, were a reference to shifts at the housing group - not the appraisal district. But it's no secret that American Opportunity officials were among those at the forefront of the lobbying effort, he said.

"You have literally thousands of units of affordable housing in San Antonio that at this very minute are at risk of foreclosure because of the appraisal district's wrongful actions," Eaton said. "And if that doesn't warrant going to politicians and asking them to put political pressure on, I don't know what does."

In January, Uresti bolstered Amezquita's suspicions by asking former board chairman J. Keith Hughey to let the new members vote on whether to renew Amezquita's contract.

Hughey refused, because outgoing board members, who are familiar with a chief appraiser's performance, typically make that decision.

Uresti and Romo object to any suggestion that they've aligned themselves against Amezquita. "This isn't a witch hunt," said Uresti, brother of state Sen. Carlos Uresti.

But both Romo and Uresti question Amezquita's tough approach to the exemptions and raise concerns about other aspects of how he runs the office. The struggle over the exemptions was one of the key reasons Uresti said he sought a seat on the board.

"I have a very big interest in affordable housing, because I was born in San Antonio at the San Juan homes," he said. "So it's very important to me that the affordable-housing developers do obtain their exemptions because it helps thousands of people."

Uresti and Romo also favor hiring an outside attorney to review the legal complexities of the housing exemptions. Uresti wants to bring in an attorney with "a more open view" so board members can give Amezquita fresh input.

"We're going to give him the correct tools" to make decisions about the exemptions, Uresti said. "But if he's given everything he needs and doesn't want to do the job, the next step is termination."

Romo decided to run for the board after growing frustrated with her role as a nonvoting member, which comes with her position as tax assessor-collector. She said she wanted to bring more accountability to the board.

She questions Amezquita's interpretation of the law on the exemptions, and she views his requirements for audits and annual applications from the groups as an overreach.

"They don't have to qualify every year, and yet he's forcing them to do that," she said. "He's definitely stepping outside of his role."

Her office works closely with Amezquita, but their sometimes contentious relationship and a lack of communication have hampered cooperation between the two, she said.

For example, when Amezquita's office implemented a new computer system a few years ago, some financial figures didn't square with those in her own system. The two offices clashed over how to reconcile the numbers.

By contrast, board members Hughey and Jim Martin expressed confidence in Amezquita's handling of the housing groups and give him positive job reviews.

"The appraisal district under Michael Amezquita has become an exemplary organization, and I would dare say we are the best metropolitan district in the state," said Hughey, a management consultant. "We couldn't say that six or seven years ago before he came."

For now, Amezquita's future at the district seems closely to tied to the outcome of the battle with the housing groups. Carpenter acknowledges much hinges on his efforts to find a middle ground.

Carpenter views Amezquita's fight with the housing groups as "a bump in the road" in an otherwise successful tenure at the district. "He's done a great job," Carpenter said. "But one issue has taken people out before. You know how that goes."
Source: mysanantonio.com

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