Dallas CPC + PFC

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December 5-7, 2023

Citywide

• PFC Bonds for LIHTC | City of Dallas | Discussion

District: 10

• First PFC Acquisition | 11700 Audelia Rd | Deferred

District: 8

• 18-Unit Mixed-use | NEC of S Lancaster Rd & Simpson Stuart Rd | Approved

You saved: 6h 37m (PFC 1h 16m, CPC 5h 21m)

PFC Bonds for LIHTC

Citywide

The PFC can issue private activity bonds on behalf of private, for-profit developers seeking to develop affordable housing projects using the LIHTC program.

There are two main types of LIHTC deals - 4% and 9%. 9% deals receive a more competitive, limited tax credit allocation and usually require less debt financing. 4% deals require that at least 50% (and up to 55%) of project costs are financed through tax-exempt bonds.

Issuing Bonds

• To issue tax-exempt private activity bonds, the PFC must first get an allocation or reservation of volume cap from the Texas Bond Review Board.

• There is $1 billion reserved for Public Facility Corporations in 2023 through the application lottery. Comparatively, there is only $200 million reserved for all Housing Finance Corporations (HFC) across Texas, making it more likely for developers to successfully obtain bonding authority working with a PFC.

Financing Structure

• On a hypothetical $80 million project, if the PFC issued $40 million (50% of costs) in tax-exempt bonds, they could receive a 1% issuer fee of $400,000. The would also receive:

  • $2.5 - $3.3 million in developer fees (30-40% share of estimated 15% developer fee).

  • $400,000 - $600,000 in general contractor fees.

• As the owner of the land leased to the developer, the PFC benefits from property tax exemption on both land and improvements.

• The PFC can also provide additional subsidies to buy down rents and increase affordability.

Compliance & Controls

• Average affordability is 60% AMI across all units, with ability to go down to 30% AMI for a subset of units.

• Numerous compliance requirements around tenant qualifications and reporting protect public interest. The equity investor, lender, federal guidelines via housing department, and PFC via land lease all retain oversight ability.

DISTRICT: 10

Riviera Apartments 11700 Audelia Rd

Audelia | 244 Units | Withdrawn (Developer)

The Riviera Apartments project proposal aims to set ambitious new affordable housing records through an innovative acquisition partnership between Savoy Equity Partners and AIDS Services of Dallas (ASD). The agreement would utilize creative financing to secure housing with unprecedented affordability. It would also be the first acquisition by the PFC.

Specifically, Savoy and ASD have proposed the Public Facility Corporation (PFC) induce tax-exempt bonds financing up to $55,000,000 to fund purchase of the property. In return, 75% of the units would be restricted at 60% of Area Median Income (AMI) - the deepest affordability for any PFC project to date. The developer also pledged to dedicate over 15% of total project costs to completing renovations and upgrades.

This complex bond conduit model typically falls under the purview of the Housing Finance Corporation (HFC), not PFC. So when presented on a tight timeline, some Board directors initially balked, feeling disrespected and lacking adequate time to evaluate the unfamiliar financing structure.

Yet Savoy responded with patience. The extensive renovations and depth of affordability spoke to their commitment to community needs. And adjusting timelines and explain the nuances of financing showed could help find a solution.

The developers subsequently withdrew the proposal from the December 5th meeting agenda, moving it to a later agenda as a lender application. It’s left to be determined whether this acquisition will push boundaries for affordable housing and the PFC.

Project Manager: Savoy Equity Partners, Barrett Linburg LinkedIn

Nonprofit: Aids Services of Dallas (ASD), Traswell C. Livingston III

DISTRICT: 8

6730 Lancaster NEC of S Lancaster Rd & Simpson Stuart Rd

South Dallas | 0.32 Acres | 18 Units | Approved

On December 7, 2023, the Dallas City Plan Commission greenlit zoning changes allowing redevelopment of the aging property into modern housing catering to University of North Texas Dallas.

CBG met extensively with community groups while making plans to upgrade the existing Apollo Motel structure. They aim to retain its retro character while turning the motel into an 18-unit community tailored for UNT Dallas undergraduates, especially international students.

The developer volunteered numerous restrictions and enhancements. These include added landscaping, height limits of 2 stories/30 feet, restricting units to 18, and designating public open space. The new student housing will also meet sustainability standards and provide ample tenant parking.

Discussion at the meeting surfaced ideas like improving pedestrian links to the nearby DART station. With integrated security featuring UNT Dallas police, the reimagined project expects to positively transform a long-problematic vacancy into an asset embracing university ties.

Developer: CBG Building Company, Andrew Ramler LinkedIn

Representative: Paul Carden

Case Report: Z223-254(LG)

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