Three Public Facility Corporation Projects Approved Following Another Debate Over Whether They’re Good Deals

A Child Poverty Action Lab report released in July identified trouble brewing in the Dallas rental market, but you wouldn’t know it by the number of apartment projects approved on an almost-weekly basis by the Dallas City Council. 

The CPAL report issued the following findings: 

• The City of Dallas has a 33,660 rental unit supply gap for its lowest-income households making at or below 50 percent Area Median Income (AMI), which is $44,500 for a family of four. There is currently no supply gap for households making above 50 percent AMI. 
• Without intervention, the gap is projected to grow to 83,500 rental units for households at or below 50 percent AMI by 2030. The gap doesn’t stop there, however, and will extend to households at or below 80 percent AMI, which is $71,200 (in 2021 dollars) for a family of four, in the years ahead. 
• Families with four or more people are particularly vulnerable: there are 50 three-bedroom units affordable for every 100 households of four-plus people at or below 50 percent AMI, and by 2030, there will be just 15 three-bedroom units affordable for every 100 households. 

Public Facility Corporation Projects

Three projects were approved Wednesday under the city’s Public Facility Corporation financing structure. The developers enter a 75-year lease agreement with the Dallas PFC, and the projects will be exempt from all ad valorem taxes in exchange for mixed-income units. 

District 12 Councilwoman Cara Mendelsohn said she supports affordable housing but the projects miss the mark of what is actually needed. 

“What I really want to point out is, No. 1, our estimated taxes that are foregone are expressed only as a 15-year period for a 75-year deal,” she said. “The lowest level of AMI that we have [in the Bishop 8th project] is 60 percent. What we see in the [CPAL report] is that we actually have a surplus at the 60 percent level of units and a surplus at the 80 percent level. What we’re missing is 30 percent and under and 50 percent and under. This project doesn’t get us where we need to be. It literally is not meeting the need that Child Poverty Action Lab has shown us is present.”

Revenue generated by the projects goes back to the PFC to be used for affordable housing, City Manager T.C. Broadnax said. In many cases,  if the city is not providing incentives, the affordable housing wouldn’t get built. 

“We have this discussion every time a PFC item comes up,” he said. “The fundamental theme is that Child Poverty Action Lab has obviously shared the need for affordable housing. This council has leveraged and talked about affordable housing in many of your conversations. We need affordable housing. The dollars created from the PFC go back into affordable housing, which in some cases would not have to come from a bond program, and/or from the general fund, and/or from future tax abatements and other kinds of things. The [PFC] was created to do exactly what it’s doing.” 

Bishop 8th

Bishop 8th is a mixed-income, multifamily development at 505 and 510 West 8th St . BV Acquisitions LLC is developing 226 one-bedroom units and six studio units. 

At least 94 of the 232 units will be available to rent to households earning less than 80 percent of AMI, 24 units will be available for households earning less than 60 percent of AMI, and 114 units will be leased at market rate rents

Estimated revenue foregone is about $1.1 million over 15 years, but the project will generate $4.5 million for the city over the same time period. 

District 1 Councilman Chad West said there are some good new developments in Bishop Arts and also some “big boxy, really ugly new apartments as well.” 

“I wanted to be sure that if the city is going to be providing a Public Facility Corporation tax abatement — of course we’re going to be getting affordable housing in exchange for that—- this is an opportunity to make sure we have some good designs,” West said. 

Developer Ben Breunig with BV Acquisitions assured the council that he is committed to a first-class project with great masonry materials and amenities. 

Coombs Creek Alta Vista

Coombs Creek Alta Vista is planned for 3400 West Illinois Ave. 

Developer Marcer Group, LLC is planning 210 residential units, including 48 studios, 116 one-bedroom units, 34 two-bedroom units, and 12 three-bedroom units. 

At least 82 units will be available to rent to households earning less than 80 percent of AMI, 23 units will be available to households earning less than 60 percent of AMI, and 105 will be leased at market rate. 

Estimated revenue foregone is $84,464 over 15 years but the project will generate $4.4 in lease revenue and $5.3 million in rental savings for the city over the same time period. 

Mendelsohn questioned the low number of units dedicated to households earning 30 percent or 50 percent of AMI. 

“This is a very bad financial deal for the city and our resources could be used to create housing that meets the needs as identified by Child Poverty Action Lab,” she said. 

The Cedars

The Cedars is a mixed-income, multifamily development at 2000 and 2220 South Ervay St.

Savoy Equity Partners, LLC is building 377 residential units including 57 studio units, 226 one-bedroom units, 76 two-bedroom units, and 18 three-bedroom units. 

At least 155 units will be available to households earning less than 80 percent of AMI, 39 units will be available to households earning less than 60 percent of AMI, and 183 units will be leased at market rate. 

Estimated revenue foregone is $700,377 over 15 years. It will bring in about $7.8 million over the same time frame, city officials said. 

Earlier in Wednesday’s council meeting, a $65 million project management contract was approved for redevelopment of the Kay Bailey Hutchison Convention Center Dallas. Officials said The Cedars project would provide much-needed affordable housing for the area. 

The convention center project “will bring thousands of jobs to The Cedars neighborhood,” said District 2 Councilman Jesse Moreno. 

“I wholeheartedly support this,” he said. 

Mendelsohn argued that such a project would be built in this location without the incentive of a tax abatement. 

PFC projects are money-makers, District 11 Councilwoman Jaynie Schultz pointed out. 

“Let’s be very clear about that, as well as providing additional housing that we would not have gotten,” she said.