Board Member: Public Facility Corporation Projects Can Offer Public Benefit for Dallas
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By Alan Tallis
Special Contributor
In a little more than a year of working in collaboration, city staff and the Board of Directors of the Dallas Public Facility Corporation (DPFC) have approved close to $1 billion in new Class A multi-family housing.
The number of apartment homes totals 4,195 units consisting of one-, two-, and three-bedroom floor plans. The apartment communities under development will feature upgraded finishes and pool, recreation, and workout facilities.
These developments are specifically designed to create affordable housing opportunities primarily for workers earning at or below 80 percent of the Area Median Income. Known as “workforce housing” these projects assist our first responders, teachers, and others by providing housing at costs within their income range. A portion of the units are offered at either market rental rates, or subsidized rentals for low-income qualified tenants. Each project requires approval by the Dallas City Council of a property tax abatement, the amount of which is a determining factor in the mix of rental subsidies.
Noteworthy is the fact that although a tax abatement is offered, each project is owned by the DPFC and leased to the developer at negotiated lease payments. Additionally, DPFC receives fees in connection with project origination and sales commissions should the project be sold prior to the expiration of the leasehold which typically is for a term of 75 years.
The estimated net income for 2023 is $2.5 million.
As the number of developments grow, so will income, which could be available to the city for investment in other public facilities benefiting the purposes of the DPFC.
In many respects, the mission of the DPFC is not well understood. I offer the following answers in response to many of the questions frequently asked.
- The PFC’s mission is to provide affordable workforce housing to Dallas County residents with qualifying incomes at various levels at or below the area’s Annual Median Income (AMI).
- The majority of projects (all Class A apartment communities) contain a unit mix for which individuals or families with earnings at or below 80 percent, 60 percent, and as low as 30 percent of AMI as well as a designated number of units that lease at market rental rates.
- Projects developed under the PFC are not Section 8 housing.
- Apartment communities developed through the PFC are owned by the PFC and leased to the developer usually for a term of 75 years. Why 75 years? Typically, a longer-term lease is needed to support project financing.
- PFC assumes no development risk and has no responsibility for any costs to the improvements.
Do projects endure for 75 years?
The lease provides for a capital needs assessment every seven years with the requirement that capital improvements be made based on the needs assessment. Failure to comply would allow the PFC to terminate the lease and resell the project to a new owner.
Ownership of the project remains with the PFC. At the expiration of the lease (at the end of the term or sooner by virtue of default) the PFC can resell the project. Noteworthy, is it is understood that real estate values escalate and double every six to 10 years.
Are there financial incentives for the city?
The PFC receives a development fee, a rebate of a portion of the sales tax attributable to the project costs, and annual lease payments which escalate. The PFC will earn a 2 percent commission each time there is a sale of the project. Funds received by the PFC are available for public-purpose projects recommended by the PFC and approved by the Dallas City Council.
All PFC projects approved to date have kitchens with granite countertops, upgraded appliances, a community swimming pool, a clubhouse, workout facilities, and, in some cases, a dog park.
What is the benefit to the city in providing tax abatements to these apartment communities?
It satisfies a need to provide affordable housing within the city to attract and retain a qualified workforce. The development of a Class A project, if successful, stimulates and fosters other development in the area thus enhancing the tax base.
What is the impact on school funding if a tax abatement is granted?
Simply, none. Schools are funded by the state based on the student census. All school taxes are collected by the state and placed into a fund for disbursement.
The investment by the city in tax-abated projects not only has social benefits, the creation of affordable housing to attract and retain a competitive workforce, but also financial benefits including a stream of income and retention of ownership of the project.
One good example is the proposed Cypress Creek development at Forest Lane and Central Expressway. The vacant parcel is currently assessed on the tax rolls at around $2.5 million, thus paying property taxes of around $45,000 annually. The development fee on that project alone is $1.1 million; then add in the other fees and lease payments. Certainly, basic mathematics suggests that is a win for the city in an area that could well benefit from a Class A apartment community.
Alan Tallis is a member of the Dallas Public Facility Corporation board. You can contact him at [email protected].
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If I have ever read a bias article to favor the government and wealth developments against the will of the people this is one.
Don’t know if he was paid or convinced in some way but this article is very twisted. The author apparently has no concept of was the structure and needs of and urban city is.
The will never put this project in Lake Highlands because it without rage that community because they know better. This project is dumped in the minority community because they do not have the power or resources to fight it.
The is no economic growth or businesses to support this project.
It will overcrowded the area, grain the resources in District 10 and put and undue burden on and already stressed area.
Crime is at it’s highest in that area so dumping more poverty housing serves what purpose?
We need to control the overflow we already have in District 10 not bump more poverty housing, disguise as “affordable” housing.
80,000 white folks at one time used to voting District 10, we’re now down to 6,000 in the last election. It called “white flight,” perhaps cause by their unwillingness to give a person-of-color, such as myself to stop the overflow. They government is dumping poverty housing and losing good high-end residents.
Soon District 10 will resemble Chicago or rundown places in California.
The more dollars stores and fastfood restaurants.
We don’t need this we need to get rid of the lazy councilman and anyone associated him, elect and minorities who is willing to lean up District 10 and block the kinds of poverty housing or tell the white folks to pack up and leave now before the time comes when they cannot sell there houses at a good price or the are shot in it.
Instead of dumping this here, how about building up south Dallas and putting it there. Don’t those people need improvement as well? if it is such a great project.
Please excuse the typos and grammar my last article, I am at my doctors office and click published while trying to edit and Cindy did not give me an option to edit.
The message is in the content.
What a horrible place for affordable housing. The area is surrounded by convenience stores and fast food, not exactly a wholesome area for kids to play. This is basically an office freeway site never intended for apartment families.