The Real Estate Council’s Linda McMahon On Affordable Housing: ‘We’ve Got The Pipeline; We Just Need The Money’

The Dallas Housing Opportunity Fund has a pipeline of shovel-ready affordable housing deals in place but needs investor funding to take them to the finish line, officials told members of the Dallas City Council’s Economic Development Committee earlier this month.

Linda McMahon, president and CEO of The Real Estate Council, reviewed during a Dec. 4 committee meeting the Dallas Housing Opportunity Fund.

The Dallas City Council offered $6 million of seed funding to launch the DHOF in 2021, McMahon said. As managers of the fund, TREC and the Local Initiatives Support Corporation agreed to raise an additional $40 million and build 1,500 units of affordable housing by 2031.

Projects have to be in Dallas and offer at least half of the rents at an affordable rate, remaining affordable for 15 years, explained Ben Glispie, director of affordable housing for LISC Strategic Investments. Since the grant agreement was entered, two new investors have signed on and the DHOF has raised $17.5 million. Five deals have closed and the fund has put $22 million into deals that are currently under construction, Glispie said during the Economic Development Committee meeting.

What Can The City Council Do to Support the Dallas Housing Opportunity Fund?

District 1 Councilman Chad West said that, in his opinion, housing is the biggest challenge in Dallas.

“We’ve got to take it seriously as a city, and we’ve got to work with our staff and our industry partners,” he said. “What can we do as a council to help you?”

The answer, simply, is money, McMahon said.

“I do think there is this misunderstanding of what we’re trying to accomplish with affordable housing and the fact that this is mixed-income,” she said. “The hardest challenge we have is mostly in fundraising. We have no problems getting deals because there are a lot of opportunities that frankly don’t have financing and this is the perfect vehicle for that. So what we’ve told investors, which are mostly major financial institutions, is this is a project-ready fund [that can] close projects quickly, because our process is pretty streamlined.”

Investors are looking for a higher return than what the DHOF can provide, McMahon added.

“We haven’t really gotten any support from the philanthropic community in Dallas,” she said. “They just don’t find this to be an attractive investment for them at this particular time. From the large bank perspective and some of the smaller bank perspective. It’s the return … So I guess the answer to your question is if you want to help develop affordable housing in Dallas, we need you to invest in this fund.”

West offered a call to action to charitable trusts, foundations, and corporations that are concerned about the need for more housing.

“This is an opportunity to invest and there is a return on your investment — not just capital in terms of housing for people, but also you get your money back and you make interest,” he said.

Bond Funds For Housing

West suggested that perhaps 2024 bond funds could go toward the DHOF

“One of the critiques of the money in our bond that’s proposed for housing is that there are no shovel-ready projects identified and that there hasn’t been a track record of pushing out money for housing,” he said. “If we had $20 million, or what have you, that’s allocated in the bond for housing, it could be poured into the LISC trust for housing projects.”

McMahon said that’s absolutely a legal option.

“As you can see from the pipeline of opportunities, there are quite a few deals that are ready to go, but because of the interest rate environment and the lack of capital available from banks, they don’t have the ability to close,” she said. “The firestorm of increasing construction costs and increasing interest rates has caused a real gap in projects that are ready to move forward. And this is the answer. And again, we have closed more deals faster. We closed deals faster than they ever saw any other fund close deals in the country when they started these funds up. The deals are here, and they’re ready to close. So… we’ve got the pipeline; we just need the money.”

District 6 Councilman Omar Narvaez and Deputy Mayor Pro Tem Carolyn King Arnold supported the fund as a tool to move affordable housing forward at a rapid rate.

“I would love to see this project get stronger so we can give housing support to those who need it,” Arnold said. “We need more housing, we know that, but what can we do better to get those philanthropic dollars to be interested in the quality of life and the equity in this city as we preach it?”

District 7 Councilman Adam Bazaldua pointed out that while it may not be appealing to philanthropic groups to write a check to the Dallas Housing Opportunity Fund, it’s greatly needed and one of the only ways the work is going to get done.

McMahon agreed.

“The biggest investment we can make in the future of this city is more housing,” she said. “We can’t grow our economy unless we have a place for people to live. The biggest thing you can do for a family is give them a job and give them a place to live that’s stable that they can stay in. And so our investment in more housing is critical to the future of this city.”