Dallas City Council

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December 13, 2023

District: 11

• 168-Unit Multifamily | 14119 Montfort Dr | Approved

District: 7

• 164 Unit Senior Housing | 9220 Ferguson Rd | Approved

Citywide

• Development Services Fee Increases | Deferred

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DISTRICT: 11

Cypress Creek 14119 Montfort Dr

Far North Dallas | 168 Units | Approved

Local developer Zachary Krochtengel faced some interesting concerns regarding city funding and affordability requirements for its $58M Cypress Creek project.

The 168-unit mixed income plan was originally approved for $4.1 million in ARPA funds. The developer came back requesting an additional $7.6 million in CDBG-DR funds due to increased construction costs, for a total of $11.7 million in city funding. As Council Member Mendelsohn noted, this amount raised eyebrows coming atop LIHTC tax credit equity:

While the project passed in a 14-1 vote, several Council members including Council Member Mendelsohn raised concerns about the unit mix not fully matching affordable housing needs. With family-sized units considered a top necessity, Mendelsohn worried about the imbalance.

Krochtengel defended the project as sorely needed affordable housing:

He also cited issues like drainage relocation and permitting delays as major obstacles, especially for infill development.

The $58M Cypress Creek project was approved for $11.7M in City funding despite concerns from Council Member Mendelsohn over unit mix and not fully meeting affordable housing needs. Developer Zachary Krochtengel cited obstacles like drainage, permitting delays, and tight deadlines.

Developer: Zachary Krochtengel LinkedIn

Resolution: 123-3043

DISTRICT: 7

Estates at Ferguson 9220 Ferguson Rd

White Rock Hills | 5.7 Acres | 164 Senior Units | Approved

By substituting multiple new City financing sources for the HOME and CDBG-DR funds, Generation Housing Partners’ $45M+ development was saved from missing federal funding deadlines and move forward on schedule.

The City Council previously approved $8.6 million in federal HOME and CDBG-DR funds for the Estates at Ferguson, a 164-unit affordable senior housing project. However, Generation faced challenges meeting strict federal deadlines for securing tax credits and bond financing, which risked loss of the project.

To address this, the Council is now amending the prior approval to provide $8.2 million in non-federal funds, allowing the developer to meet financing deadlines and move forward with the project on schedule. The non-federal funds will come from the City's Mixed Income Housing Development Bonus Fund as well as 2012 Bond funds.

Federal deadlines that created timing challenges:

1. Tax Credit Deadline:

• The developer applied for and received 4% Low Income Housing Tax Credits from the Texas Department of Housing and Community Affairs (TDHCA).

• There is typically a 180-day deadline to close the housing tax credit financing per TDHCA requirements.

2. Bond Financing Deadline:

• The developer also received a reservation of private activity bonds from the Texas Bond Review Board.

• There is a 180-day deadline to close the bond financing and submit final bond documents to the Bond Review Board.

3. Federal Funds Approval:

• The initial $8.6 million in HOME and CDBG-DR federal funds from the City required extended review and approval from the federal agencies before they could be utilized.

• This federal approval process would not have completed in time for the tax credit and bond financing deadlines.

So essentially the multiple overlapping 180-day federal deadlines from the tax credits, bonds, etc. could not align with the slower timeline for federal fund approval from the City, putting the project at risk.

The change in funding sources addresses timing issues with federal funds while maintaining the project's affordable housing goals.

Project Details:

Generation Housing Partners received modifications to standards primarily related to setbacks, density, height, design standards, and parking in order to develop the church site with 164 units of retirement housing under MF-2(A).

• Located at 9220 Ferguson Rd in Dallas

• 164 affordable units for seniors

• 50% and 60% AMI rents ranging from $913 to $1,315

• Total project cost ~$45.6 million

• Set to begin construction in January 2024, complete May 2025

• 20 year affordability restrictions will remain

Previous Financing Stack

HOME Funds: $4.6M
CDBG-DR Funds: $3.9M

Updated Financing Stack

Construction Loan: $15.4M
Tax Credit Equity: $16.4M
City MIHDB Loan: $7.6M
City Bond Funds: $0.65M
County ARPA Funds: $2.5M
Agency Fees: $0.3M
Deferred Fees: $2.8M

Developer: Generation Housing Partners, Adrian Igesias LinkedIn

Case Report: Z223-122(MP)

Development Services Fee Increases

Citywide | Deferred

Overview

• The ordinance makes amendments to City Codes to move and adjust development services fees. The changes are estimated to increase Building Inspection Fund revenues by $22,171,984.

• The new fees were delayed being implemented from December 13, 2023 to January 24, 2024 after concerns were raised by stakeholders who felt they did not have adequate time to evaluate the fees.

• Additional stakeholder input will be gathered before the fees are reconsidered.

Multifamily Plan Review Fees

• The ordinance adds a new multifamily plan review fee of $0.045857 per square foot of building area or $150, whichever is greater (Section 303.5.1.3). This is in addition to other applicable fees.

• After plans have been reviewed and a permit issued, any plan revisions that require additional review will incur an addendum fee of $100 per hour per trade (Section 303.5.1.3).

New Multifamily Construction Fees

• The base multifamily new construction fee increases from $225 to $652 per dwelling unit (Table A-II). This does not apply to accessory structures.

Key Takeaways

• New multifamily construction and plan review fees are increasing significantly. Stakeholders have raised concerns over the size of the fee increases and will have additional opportunities to provide input before the new fees are reconsidered and potentially implemented.

There was some discussion about the fee changes during the City Council session:

• Council Member Willis noted that while the City needs to work towards full cost recovery, the stakeholders should be given time to evaluate the fees and provide feedback, especially given their patience with the City on permitting issues.

• Council Member West agreed and said it would be helpful for industry to point out which fee increases are most problematic so they can be evaluated further.

• Mayor Pro Tem Atkins emphasized the need for the fees and cost recovery for the enterprise fund, but also the need to be transparent with stakeholders.

• Council Member Mendelsohn asked why these fees were not evaluated on the regular 3-year schedule as outlined in the Financial Management Performance Criteria. The Chief Financial Officer confirmed it should be examined annually.

• There was discussion about the significant size of the fee increases, with recognition that it is partly because fees have not been updated since 2015.

• Council Member Blackmon said that with increased fees, the City must meet expectations on customer service and faster permitting times.

In summary, the Council members generally recognized the need for increased fees but want to ensure proper stakeholder input and meet service level commitments with the added revenue.

Ordinance No. 19455, as Amended

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