Mike Alston
An attorney for the 10-story Market Center downtown said the development did not violate terms of its PILOT tax break when it converted three floors to hotel use.
Mike Alston told members of the city's HEB board on Wednesday that the property tax assessment should not be changed.
However, Donna Williams, city economic development director, said PILOTs "are not for hotels."
Mayor Andy Berke and County Mayor Jim Coppinger earlier wrote Market Center saying it had violated the PILOT and should not get the full tax break.
Attorney Alston said under the new arrangement that guests on the three floors play hotel/motel taxes to the city and county.
He said the development has always had the required 25 units set aside for lower income. He said 22 of those were filled last month and it is now 21. He said it is to the firm's advantage to work to fill those because they cannot be used otherwise.
Officials did not indicate an issue with the Maclellan Apartments, which also got a PILOT, allowing two of its units to be used for short term vacation rentals.
In other action, the HEB board approved a grant to Adamson Development for a project on Cheek Street that Ms. Williams said will furnish much-needed affordable housing.
The group will receive a $240,000 grant that is forgiven after 20 years. It is investing some $1.2 million.
There will be 12 one- and two-bedroom units with six for affordable housing.