Legislation that aims to root out corruption associated with a widely used property tax break was passed by the Texas Senate Thursday and now heads to the governor’s desk for approval.

House Bill 2071, authored by Rep. Jacey Jetton, a Republican from Fort Bend County, is one of a dozen bills that seeks to add guardrails to the state’s public facility corporations statute, approved by the legislature in 2015 as a way of incentivizing the creation of more affordable housing.

After years of battling to reform the program, Jetton’s bill passed 115-20, signaling widespread consensus among lawmakers that misuse has gotten out of hand.

“It takes lots of perseverance to reform any abused property tax shelter, and PFCs were a tough nut to crack — literally!” bill sponsor Sen. Paul Bettencourt said in a tweet. “Billions of dollars of property value had already vanished from tax rolls across the state, and renters had little relief.”

PFCs grant up to 99 years of a property tax exemption for owners who agree to set aside at least 50% of their units as affordable. Rep. Gary Gates estimated that 225 PFC deals removed more than $10B from property tax rolls since 2020.

Critics of the program said a lack of oversight allows for-profit developers to realize the tax break while sidestepping affordability requirements.

“The beneficiaries of these tax exemptions tend to be developers, and to a certain extent, the public facilities, and that is not at all what I believe you intended,” Rod Bordelon of the Texas Public Policy Foundation said during a Senate Committee on Local Government hearing in April.

Jetton’s bill closes important loopholes in the statute, including one that allowed PFCs to be approved without the consent of the local taxing jurisdiction. New rent and income restrictions are also included to ensure projects are achieving the intended goal of adding more affordable units.

Supporters of the program agreed something should be done to prevent corruption but hoped the legislature wouldn’t throw the baby out with the bathwater.

“There have been very concerning abuses, and I will tell you, our members have been among the first to speak out and say, ‘This needs to be fixed,’” said Roger Arriaga, executive director for the Texas Affiliation of Affordable Housing Providers. “We don’t want to risk this valuable tool being thrown out because of these abuses by a small number of players.”

Bills like Jetton’s are a fair compromise compared to previous versions that included restrictions that would have killed many PFC deals on a cost basis, said David Noguera, the city of Dallas’ director of housing and neighborhood revitalization.

“In general we support this bill MUCH more than the previous version with all the other amendments that were tacked on,” Noguera said in an email.

The 88th legislative session comes to a close on May 29. Gov. Greg Abbott has until June 18 to sign or veto bills.