City Staff Calls Shoreline Apartments ‘a Win’ for Housing, Lochwood Residents Say They’ll Continue Fight

“We don’t talk about project financing” was the drumbeat of often-heated discussions during a nine-month-long zoning process, but the topic of a 75-year tax exemption is now on the table as The Standard Shoreline proposal is slated for a Dallas City Council vote next month. 

The City Plan Commission approved Ojala Holdings’ rezoning request on Sept. 15 that gave a green light for The Standard Shoreline, a 60-foot-tall apartment tower on Garland Road northeast of Easton Road — but residents in the nearby Lochwood neighborhood said they plan to continue fighting the development.

District 9 Plan Commissioner Michael Jung led the discussion at the CPC meeting, noting that he suggested developers try to renegotiate the sale price with Shoreline City Church so it would be economically feasible to build a three-story structure rather than the four-story building that ultimately was presented. The developers were unsuccessful in renegotiating the price, Jung said. 

“The question is not three stories versus four stories,” the commissioner said at the meeting. “The question is four stories versus denial.” 

It was suggested by supporters of the 282-unit apartment complex during the hearing that neighbors were using the building height as a red herring to deflect away from a real issue — that Lochwood residents don’t want affordable housing in their neighborhood. 

Lochwood residents say that’s false. 

“If this complex was 100 percent market-rate, we would still oppose a 60-foot, four-story complex,” states the Lochwood Neighborhood Association website. “Affordability is not an issue. How this complex is financed with tremendous city tax abatements, managed and overseen, not compliant with key items in the [Garland Road Vision] study, and enormously sized are just a few of the issues why we oppose. It’s not over. Council ultimately decides whether or not this is approved.”

The Standard Shoreline Project Financing

Assistant Director of Housing and Neighborhood Revitalization Kyle Hines said Dallas is, for the first time, using a financing structure available through the Texas Local Government Code on Public Facility Corporations.  

Through the PFC structure, the city leases tax-exempt land to a developer for 75 years in exchange for at least 50 percent of the units being offered to tenants earning less than 80 percent of the area median income. The Shoreline project proposes 51 percent affordable units. 

To receive the exemption, a private apartment developer transfers land to a public facility corporation (PFC) set up by a local government entity — such as a public housing authority, county, or city — which then leases the land and any buildings on the land (including those built in the future) back to a limited partnership controlled by the developer. The local government entity gets paid to participate in the venture.

University of Texas School of Law Entrepreneurship and Community Development Clinic

A 2020 report issued by the University of Texas School of Law Entrepreneurship and Community Development Clinic states that at least 30 apartment complexes in Texas have been acquired, developed, or are in active development under the tax-exempt structure since 2016. 

“Housing authorities, cities, and counties report an ongoing onslaught of proposals by apartment developers to convert existing apartment complexes as well as develop new apartment complexes under this structure in order to obtain the Section 303.042(f) exemption,” the report states. “To date, these projects have been concentrated in the state’s largest cities (especially San Antonio and Houston) but are spreading into suburban areas and smaller cities.”

Although the Shoreline project is the first under the PFC model in Dallas, city leaders have looked to San Antonio to guide the process, Hines said. 

“There’s a perception that we’re going out in the wilderness with this, but it’s customary throughout the state; it just hasn’t been done in Dallas,” Hines said. “We’re able to see best practices in San Antonio, and we’ve been able to adjust the plan. Our terms are top of the market.” 

For example, the financial structure was originally built around a single person making $77,000 a year, rather than a family of four. 

“A single person making $77,000 doesn’t need that kind of [lower] rent,” Hines said. “We’re making sure we get the right tenants in there.” 

They’ve also spread out the affordable units throughout the complex rather than concentrating them in one area. 

Affordable housing is defined as a household that pays no more than 30 percent of its annual income on housing. Therefore, a single person still has to make about $43,000 a year to qualify for an “affordable” $1,200-a-month apartment.

Ojala developers have referred to their project as a Class A project offering “attainable” housing to working people such as teachers and public servants. An average entry-level teacher salary in Texas is about $41,000, according to Salary.com. 

If the project is approved by the Dallas City Council next month, the city would get an annual lease payment of $250,000, and the property goes off the tax rolls. 

“With the kind of Dallas real estate market people want to be in, we can command that type of structuring,” Hines said. “This development has a pretty high construction cost. There has to be some way to make them whole because they’re not getting the same amount of money they would if all the units were market rate. We want to make sure the developer is not underfunded, but we also don’t want to overfund them. We’ve found a sweet spot here.”

It also offers a chance for Dallas to provide much-needed affordable housing in the high-opportunity Garland Road corridor, Hines added.

“It’s a great win for the city,” he said. “This is our way of providing affordable housing.”

PFC meetings are open to the public, as are meetings of the housing committee, city council, and plan commission. 

“I don’t think I’ve ever seen public engagement like there has been on this project,” Hines said of the Shoreline case. 

The plan commission only considers matters of land use, therefore the financial structure of the project was not up for discussion during the Sept. 15 meeting. The issue will, however, be a factor in the Dallas City Council hearing next month. 

Lochwood Neighborhood Response

Lochwood resident Jessica Mannon said the City Plan Commission’s process fell short of the rigorous examination neighbors expected. 

“Commissioner Jung said he originally asked for three stories, and not four,” Mannon said. “Ojala said it would not be ‘financially possible,’ but to the neighbors’ knowledge, Ojala was never required to follow up on this assertion to provide any financial modeling to demonstrate this was anything other than an assertion that their profit margins will be better with four stories,” Mannon said. “Commissioner Jung, by his own words, took Ojala at their word, and employed a ‘four stories or nothing’ analysis to come to his decision. We rely on Commissioner Jung to help us decide on the best use for land, not the easiest use, and we’re disappointed in [the] outcome.”

Lochwood Neighborhood Association Communications Director Thomas Buck also issued a statement. 

“This is just a part of the process, and while we are not happy nor agree with the CPC recommendation, we can now include other, important reasons to oppose when talking with Council Member [Paula] Blackmon, and the rest of the council members prior to the next hearing,” he said. 

Blackmon did not respond to a request from CandysDirt.com for comment on the Shoreline proposal. 

Lochwood residents also have pointed out that some council members have accepted campaign contributions from individuals or associations who may have an interest in their vote on a particular matter. City code requires that council members disclose conflicts of interest and recuse themselves from any discussion on such a matter.