People who qualify for these units will have their rents capped at 30% of their income. Current residents who already qualify will see the rent reduction when they renew their lease. This will come out to around $222 in savings a month or $2,659 a year.
The Dallas Housing Finance Corp. partnered with the real estate development firm Opportunity Housing Group to buy the North Dallas property. The firm focuses on providing mixed-income and workforce multifamily housing across the country.
One reason this deal is so attractive is that it's providing almost instant affordability. Other affordable housing deals often involve developers rehabilitating an older property or building a new one in exchange for tax credits. These projects can take a lot of time and are constrained by factors like supply-chain shortages.
The Dallas City Council approved the deal in September, but the acquisition of the property didn’t close until this month. The affordable units will be targeted toward teachers, first responders and nurses.
The cost, nearly $83 million, is funded by city-issued housing bonds. Those bonds are backed by the property’s revenue and appreciation. Dallas isn’t on the hook for those bonds, but it will lose some tax revenue from the property as part of the deal. The property will be taken off the tax roll for the next 75 years.
While the deal has been applauded by some, including Jaynie Schultz, the City Council member for this part of town, it still has its critics.
Cara Mendelsohn, the council member representing District 12, doesn’t like the loss in tax revenue. “The 75-year tax abatement means no revenue for the city to provide services like police, libraries and parks, and those services for a property not expected to still be standing 75 years later,” Mendelsohn said. She also doesn’t like how the deal doesn’t create any new housing. Depending on whether any of the affordable units are vacant at The Briscoe, it will be reducing rent only for current residents.
Mendelsohn also said it would make more sense to focus on lower affordability levels for people making in the range of 30-50% of the area median income. That kind of housing seems to have disappeared in Dallas, she said.
Lisa Marshall has seen firsthand in Dallas as she attempts to rehouse residents who have been displaced by soaring rents. Marshall started an advocacy group called Fighting Homelessness and has recently been working with residents on fixed incomes who had to leave an apartment complex in Oak Cliff after it was purchased by investors and rents increased. Those residents make closer to 30% of the area median income.
“This is still not addressing the 30% [area median income],” Marshall said. “It’s great that we are helping teachers and police officers. But those teachers have to teach children who are struggling with housing security because they are in the lower percentage that we are not addressing – those that make below the poverty [threshold] and on fixed incomes.”
But Kyle Hines, assistant director of the city’s Department of Housing and Neighborhood Revitalization, said more deals are in the works that could provide even more affordability. Hines is also the general manager of the Dallas Housing Finance Corp. He said the group is working on closing another deal next week on a 125-unit property called The Dylan. According to Hines, 40% of those units are set to be reserved for people making 80% of the area median income, and 10% will be reserved for people making 60% of the area median income.
While Hines said the city hopes to work even more affordability into these deals, they won’t be the sole savior in Dallas’ affordability crisis. He said there are other tools the city has to provide housing to people in even lower income brackets, like Dallas’ Low-Income Housing Tax Credit properties. “It takes everything,” Hines said. “Just one of these tools isn’t going to help.”
The tax exemption and ability to pay for The Briscoe deal with housing bonds is what makes it possible, Hines said, particularly in the northern part of the city where land is more expensive. The bonds in the deal are issued to qualified investors who bought them with the agreement that they would make their money back from the revenue generated by the property in a set amount of time. If they don't, they can reclaim the property and sell it to make their money back, Hines said. In that case, all the units would likely go back to market rate and the city would lose that affordability.
“Without a property tax exemption, none of this gets done." – Kevin Hines, Dallas Housing Finance Corporation
However, Hines said that's unlikely to happen for a number of reasons. He said investors would likely work with the city on extending the term of the bonds instead of reclaiming and selling the property. He explained that this is because investors won't want to deal with having to sell the property. Additionally, doing so would put it right back on the tax roll, causing investors to lose out on the tax exemptions.
“Without a property tax exemption, none of this gets done,” Hines said. “It just doesn’t work.”
Over the next 15 years, the city will lose some $9 million in property tax revenue from the site. To Hines, that’s nothing compared to what he says the city will gain from the deal.
“The benefits for the city far outweigh what we’re giving up in taxes,” Hines said. To him, the $21 million in rent savings in that time and the fact that the city is the sole owner of a development worth nearly $100 million make it worthwhile.
Hines suggested that the city, developers and nonprofits will need to do everything they can and look for new approaches like this if they want to put a dent in Dallas' affordability crisis. “We’re pulling out all the stops to make sure we can provide affordable housing here," he said