Dallas Approves Tax-Exempt Housing Deal Near Medical District Despite Pushback
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Dallas City Council members once again signed off on a new affordable housing deal to support the construction of mixed-income housing near the Dallas Medical District, keeping up the city’s purportedly unbroken track record on such projects.
GoodHomes Communities, a real estate investment firm that specializes in redeveloping underperforming hospitality or senior properties into workforce housing, wants to convert the now-closed extended stay Sonesta Hotel at 6950 N Stemmons Fwy with the help of the Dallas Public Facility Corporation, a city-affiliated nonprofit used to help finance mixed-income housing projects. The proposal has faced resistance from some pockets in the community, as well as a handful of officials critical of how frequently the city authorizes tax abatements.
Staff acknowledged on Wednesday that the city council has voted in favor of every DPFC deal that has come before them since the non-profit organization was established in 2020.
In practice, the structure allows a city entity to take ownership of a property and lease it back to a developer, removing it from the tax rolls for decades in exchange for setting aside a portion of units at below-market rents.
This approach has drawn increasing scrutiny at City Hall, particularly as Dallas faces tighter budget conditions.
Council Member Cara Mendelsohn (District 12), who has cautioned against forgoing property tax revenues via the city’s PFC, criticized the GoodHomes project for how its income-restricted units measure up against other parts of the Dallas market.
“This is not a good deal for our taxpayers… There are a lot of different ways we can help encourage and support affordable housing. This isn’t it,” Mendelsohn said. “Just taking something off the tax rolls for a generation is bad fiscal management, especially when we know we have other kinds of housing that are available that need our encouragement and dollars to come to fruition.”
Under the proposal, 65 out of 142 units are reserved for people earning 60% or less than the area median income, with rents starting around $1,233 for a one-bedroom. By comparison, rents for the same 60% AMI demographic in Northeast Dallas are under $1,000 per month.
Only seven units in the GoodHomes proposal are set aside for low-income renters — starting at $659 — and the rest would remain at market rates, starting at $1,450.
As previously reported by CandysDirt.com, the debate comes as Dallas is building its FY 2026-2027 budget amid declining sales tax revenues and several years of property tax relief. Public safety already would claim half of new revenues under Proposition U.
The project had already been sent back to staff in February over concerns about community support, with some nearby neighborhoods opposing the inclusion of low-income units.
A couple months later, a revised proposal shortened the potential tax-exempt period from 75 years to 45 years and increased the share of market-rate units. Still, opposition held. The Arlington Park community maintained its opposition, and the West End Neighborhood Association withdrew its previous support.
“This area is a legacy area, primarily African-American, older individuals who enjoy the quality of life that they are familiar with,” said Council Member Jesse Moreno (District 2), who represents the area, “and for those reasons, I will continue to stand with the community and oppose this project.”
Moreno introduced a motion to deny the tax abatement, but it failed in a 4-11 vote with Mendelsohn, Mayor Eric Johnson, and Bill Roth (District 11) joining Moreno in opposition. A subsequent motion by Chad West (District 1) to approve the project passed 10-4, with Gay Donnell Willis (District 13) not present.
Supporters argued the project addresses a broader housing shortage.
“We have a clear need and a commitment to furnishing housing because of the lack of housing stock that we have, and I believe this speaks to the diverse income needs that exist within our housing stock,” said Council Member Adam Bazaldua (District 7).
Staff and consultants briefed the city council last week on the state of housing affordability in Dallas. Their data suggests the city is significantly underbuilt when it comes to workforce housing, short an estimated 46,000 units for households earning at or below 50% AMI.
“Today, the property is a shuttered motel. What will replace it is regulated mixed-income housing serving long-term residents,” said Daniel Matian, managing director at GoodHomes. “This is workforce housing for people already working in the corridor: nurses, police officers, airport and airline staff, hospitality workers, and warehouse employees. Bringing working families into stable housing strengthens a neighborhood and supports continued investment in the Medical District.”
The project is valued at $18.5 million, of which $11.6 million is for the purchase of the site.
