Council Approves 3 New Apartment Developments Under Public Facility, Housing Finance Structures

During the “silly season” of campaigning to keep their elected city council seats, Dallas officials are giving passionate speeches from the horseshoe about the causes they believe in. 

District 12 Councilwoman Cara Mendelsohn has already won — she’s running unopposed — but she’s doubling down during every agenda meeting about the Public Facility Corporation projects that take housing developments off the tax rolls for 75 years. 

Despite Mendelsohn’s protests, the majority of council members have voted in favor of at least 20 PFC projects, arguing that the value added by affordable housing outweighs any potential tax-revenue loss. 

It also locks in affordability for areas that could be at risk of displacement in the future, Councilman Chad West pointed out.

“And developers aren’t building it for free,” he said.

West Technology Boulevard

The council approved Wednesday a two-phase mixed-income affordable multi-family complex, The Park at Northpoint.

Dallas PFC will purchase the property at 9999 West Technology Blvd. with up to $10 million in Community Development Block Grant funds and will enter into a 75-year ground lease with the developer.

Deputy Mayor Pro Tem Omar Narvaez, who is running against Tony Carrillo, Monica R. Alonzo, and Sidney Robles Martinez, said this is an exciting development for the area.

“This is adjacent to a lake,” he said. “There’s already a trail system. There are restaurants and a school close by. There are parks. There’s everything that you need. Mixing in residential is going to be the key factor for us to start redeveloping this area.”

A similar project in the area, The Palladium, was fully leased immediately, Narvaez added. 

Mendelsohn asked what the expected value of the developed property would be. 

Assistant Director of Housing and Neighborhood Revitalization Kyle Hines, who is leaving the City of Dallas, introduced his successor Darwin Wade and the two attempted to calculate the value on the spot. The project’s development cost is about $200 million, Wade said. 

“We are happy to have this project in our pipeline,” he said. “I think it’s going to be great for our city.” 

Revenue Foregone

When approving past PFC projects, the council has been given an estimate of “revenue foregone” over at least a period of 15 years, but such a figure was not included with the Park at Northpoint project, Mendelsohn pointed out. 

“It seems inappropriate for us to be approving an item where we don’t even know what our revenue foregone would be,” she said. “Generally we’re talking about hundreds of thousands of dollars a year, and over 75 years, millions and millions of dollars.”

Developer Jake Brown of LDG Development said his lease payment to the Dallas PFC would exceed the current property tax bill.

Director of Housing and Neighborhood Revitalization David Noguera said Mendelsohn was requesting a hypothetical number. 

“We can do the math and assume what the property taxes would have been when this project is complete. It’s 2.6 percent of $200 million,” he said. 

Noguera later added that the revenue foregone would be about $4 million per year.

PFC and HFC Projects

District 11 Councilwoman Jaynie Schultz, who is running for re-election May 6 against CandysDirt.com publisher Candace Evans, said the PFC project could be a catalyst to revitalize the West Technology Boulevard area. 

West, who is running against Albert Mata and Mariana Griggs, said it’s a win anytime density can be produced without displacement. 

“Here you’ve taken a building that’s no longer functional and you’re converting it and using it,” he said. “I think that’s creative.” 

A second PFC project approved Wednesday was met with similar resistance from Mendelsohn. On this particular project, Larkspur Fair Park, the councilwoman took issue with the variance of just $6 in the rent payment for an “affordable” studio apartment versus a market-rate studio. 

The estimated revenue foregone for the 290-unit development at 3525 Ash Lane is about $361,000 over a 15-year period. 

City Manager T.C. Broadnax pointed out that in some cases, lots can sit vacant for up to 50 years when the council doesn’t offer development incentives.

“The tool we’re using, the PFC, is to accomplish the council’s stated goals,” he said. 

In addition to the PFC projects, the council approved Wednesday one project under the Housing Finance Corp. structure. 

Housing Finance Corporation projects provide tax-exempt mortgage revenue bonds and other support for the acquisition, construction, or substantial rehabilitation of multi-family housing. 

Public Facility Corporation projects come with a 75-year lease, during which time the developer gets a 100 percent break on property taxes. The city, in return, gets affordable housing units and the developer can still make a profit. The lease can be renegotiated over time, and the city generates income through annual lease payments.

Both corporations are governed by council-appointed boards.

The estimated foregone revenue for Fitzhugh Urban Flats at 2707 North Fitzhugh Ave. is about $11.76 million over a 15-year period. 

“The entire focus of the Dallas Housing Finance Corporation should be creating new units,” Mendelsohn said. “The strategy of acquisition of existing units where we’re giving up so much revenue and we’re not actually creating anything is problematic to me.

“In general, I believe I have voted for almost every Dallas Housing Finance Corporation project, however, that’s when they’re creating new housing,” Mendelsohn continued. “I think the public benefit of giving up that tax exemption is worthwhile in that situation. When we’re just shuffling the deck so we’re taking market rate and making it partially affordable, I don’t see the public benefit.”