STRATEGIC PRIORITY: Growing
AGENDA DATE: June 11, 2025
COUNCIL DISTRICT(S): 8
DEPARTMENT: Department of Housing and Community Development
EXECUTIVE: Robin Bentley
______________________________________________________________________
SUBJECT
Title
Authorize (1) the City Manager to negotiate and execute a conditional grant agreement and a development agreement with Innovan Neighborhoods, LLC and/or its affiliates ( Applicant), each approved as to form by the City Attorney, in an amount not to exceed $8,000,000.00 for the development of 6601 South Lancaster Road, a 188 single-family mixed-income homeownership housing development (Project) located at 6601 South Lancaster Road Dallas, Texas 75241 (Property); (2) conveyance of the Property to the Applicant and/or affiliate(s) subject to restrictive covenants, a right of reverter with the right of reentry and recording of all necessary documents pursuant to Texas Local Government Code Chapter 272.001(g) and applicable law and regulations; and (3) the establishment of appropriations in an amount not to exceed $1,494,276.00 in the Mixed Income Housing Development Bonus Fund - Not to exceed $8,000,000.00 - Financing: Housing and Neighborhood Infrastructure (H) (2024 General Obligation Bond Fund) ($2,880,000.00), ECO (I) (2017 General Obligation Bond Fund) ($1,000,000.00), Economic Development and Housing Development Program Fund (2012 General Obligation Bond Fund) ($1,100,000.00), Mixed Income Housing Development Bonus Fund ($1,494,276.00), and ARPA Redevelopment Fund ($1,525,724.00)
Body
BACKGROUND
On July 1, 2020, a 1,000-Unit Housing Challenge memorandum entitled “Mixed-Income Housing Challenge to Transit Oriented Developments for Post-COVID-19 Economic Development Recovery Efforts” was issued by the chairpersons of the Housing and Homelessness Solutions Committee, Transportation and Infrastructure Committee, Economic Development Committee, and Workforce, Education, and Equity Committee of the Dallas City Council. On January 12, 2021, after identifying developable City-owned sites, the City issued a Request for Proposal through Solicitation No. BYZ2-00015558 for City-owned properties.
The Applicant submitted an application for 6601 South Lancaster Road and received the highest score. On May 26, 2021, by Resolution No. 21-0928, the Applicant and its affiliates were awarded an opportunity to develop the site and executed a Right of Entry agreement under the 1000-Unit Housing Challenge.
The Applicant submitted a proposal in response to the City’s Notice of Funding Availability (NOFA), as amended, to receive a gap financing loan to support the construction of up to 188 single-family homeownership mixed-income housing units known as the 6601 South Lancaster development. The NOFA was issued by the Department of Housing and Community Development (Housing) in accordance with the City’s Comprehensive Housing Policy (CHP), as restated in the Dallas Housing Policy 2033 (DHP33) and Dallas Housing Resource Catalog (DHRC).
Housing administers programs to appropriately incentivize private investment for the development of quality, sustainable housing that is affordable to the residents of the City. Specifically, Housing administers the New Construction and Substantial Rehabilitation Program, which where necessary, seeks to provide financial assistance to new developments or substantial rehabilitation of existing developments. All projects seeking financial assistance are required to submit a Notice of Intent to apply for financial assistance through NOFA to develop affordable homeownership and rental housing. As outlined in the NOFA, multiple sources of funding are available. However, proposed projects must meet specific thresholds to qualify for the use of a specific funding source.
The NOFA scorecard criteria for multi-family rental developments include the following:
|
Scoring Criteria |
Maximum Points |
Awarded Points |
|
Project Attributes |
21 |
2 |
|
Equity & City Initiatives |
47 |
30 |
|
Readiness |
56 |
41 |
|
Developer Experience and Capacity |
27 |
21 |
|
Bonus Points |
18 |
6 |
|
Penalty for Nonperforming Previously Funded Projects |
-10 |
0 |
|
Total |
169 |
100 |
The proposed 6601 South Lancaster Road development received a fundable score of 100 of 169 points.
Housing proposes to authorize the NOFA funding request totaling $8,000,000.00 comprised of $4,980,000.00 in 2024, 2017, and 2012 General Obligation Bond Funds and $3,020,000.00 in Mixed Income Housing Development Bonus Fund and ARPA Redevelopment Fund for infrastructure, hard construction (e.g., vertical construction such as framing, roofing, carpentry), capital expenditures, and other costs as allowed by the funding source and the DHRC.
The Applicant is a Texas-based developer, owner, and asset manager dedicated to advance community-anchored real estate development through innovative, collaborative solutions. As a partner of Matthews Southwest, Innovan Neighborhoods leverages a 30-year track record of an international, full-service private real estate company alongside community development strategies to build and strengthen neighborhoods in concert with community stakeholders, with its core vision being to transform neighborhoods by addressing residents’ interconnected needs for physical, social, and economic stability while maintaining and celebrating a community’s unique culture.
The Applicant proposes to develop 188 mixed-income single-family units on 16+ acres within the South Lancaster neighborhood. The 188 units will be comprised of 70 two-bed two and a half bath townhomes, 99 three-bed two and a half bath townhomes, and 19 four-bed three and a half bath single-family detached homes units ranging from 1,150-1,1910 square feet. This development targets both market-rate and income restricted homebuyers, where 76 units will be sold to households with incomes at 80-100% Area Median Income (AMI), and the remaining 112 units will be sold at market rate with 2027 projected per-unit sales price range from $290,760.00 - $355,374.00.
All homes in this development will be two-story with over 600 parking spaces, that allow for at least two parking spots per unit via one and two-car garages, dedicated driveway spaces, and ample guest parking options. Over 10% of the site is dedicated to open space, from a community hill to a walking trail, the applicant will also be providing an Amenity Center that includes a gathering place for residents to entertain, host events, and take care of pets in a communal environment. Additional onsite investments include parks, lighting, walking paths and open space area. The off-site infrastructure investments include partnership with the City of Dallas in upgrading the Crouch Road alignment and drainage, signalization of Crouch/Lancaster, and dedicating land for a right-hand turning lane. The proposed development is conveniently situated within three miles of Dallas University of North Texas (UNT), Dallas County Community College, UNT Dallas Area Rapid Transit (DART) station, and multiple city parks. It is also located along a high frequency DART bus route and will conveniently provide a DART bus shelter accessible to all its residents.
Total development costs are anticipated to be approximately $49,789,912.00 which includes the acquisition price for the land. The hard cost construction budget is anticipated to be $28,035,512.00 which is $149,125.06 per unit.
The anticipated financing sources and uses are as follows:
|
Proposed Financing Sources |
Amount |
|
Developer Equity |
$ 8,229,900.00 |
|
Land Equity |
$ 1,089,000.00 |
|
City of Dallas 2012, 2017, and 2024 Bond Funds Grant |
$ 4,980,000.00 |
|
City of Dallas Loan |
$ 3,020,000.00 |
|
Dallas County Funds |
$ 12,600,000.00 |
|
Construction Loan |
$ 19,871,012.00 |
|
Total |
$ 49,789,912.00 |
|
Proposed Uses |
Costs |
|
Acquisition |
$ 1,719,531.00 |
|
Hard Construction Costs |
$ 28,035,512.00 |
|
Soft Costs & Financing Fees |
$ 6,860,504.00 |
|
Developer Fees |
$ 2,289,065.00 |
|
Infrastructure |
$ 10,885,300.00 |
|
Total |
$ 49,789,912.00 |
The development is currently under review by the Office of Equity and Inclusion Fair Housing Division. Staff recommends approval of this item as it furthers the mixed-income housing goals of the DHP33 and the Housing Action Plan by expanding homeownership opportunities, located in Equity Strategy Target Area C, and meets the threshold requirements of the NOFA, and the financial gap has been confirmed by third-party underwriting.
Staff confirmed that this Project would not be feasible but for the City’s participation and that the Project furthers the goals of the DHP33. Staff recommends approval of this item to allow this mixed-income housing development to move forward.
ESTIMATED SCHEDULE OF PROJECT
Begin Construction January 2026
Complete Construction June 2030
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On May 11, 2022, the City Council amended the Mixed Income Housing Development Bonus Fund to add additional development bonus options, a fee-in-lieu of on-site provision to fulfill requirements of the bonus, establish the Mixed Income Housing Development Fund, and clarified administrative procedures and definitions of MIHDB program, by Resolution Nos. 22-0743, 22-0744, and 22-0767 and Ordinance Nos. 32195 and 32210.
On February 28, 2024, the City Council authorized the transfer and reallocation of American Rescue Plan Act (ARPA) Funds from the U.S. Department of Treasury for the Coronavirus Local Fiscal Recovery Fund to the ARPA Redevelopment multi-year fund to provide assistance with completing projects by Resolution No. 24-0315.
The Housing and Homelessness Solutions Committee was briefed by memorandum regarding this matter on May 27, 2025. <https://dallascityhall.com/government/citymanager/Documents/Council%20Materials/Upcoming%20Agenda%20Item%20-%206601SLancaster.pdf>
FISCAL INFORMATION
|
Fund |
FY 2025 |
FY 2026 |
Future Years |
|
Housing and Neighborhood Infrastructure (H) (2024 General Obligation Bond Fund) (Proposition H) |
$2,880,000.00 |
$0.00 |
$0.00 |
|
ARPA Redevelopment Fund |
$1,525,724.00 |
$0.00 |
$0.00 |
|
Mixed Income Housing Development Bonus Fund |
$1,494,276.00 |
$0.00 |
$0.00 |
|
Economic Development and Housing Development Program Fund (2012 General Obligation Bond Fund) |
$1,100,000.00 |
$0.00 |
$0.00 |
|
ECO (I) (2017 General Obligation Bond Fund) |
$1,000,000.00 |
$0.00 |
$0.00 |
|
Total |
$8,000,000.00 |
$0.00 |
$0.00 |
M/WBE INFORMATION
In accordance with the City’s Business Inclusion and Development Policy adopted on September 23, 2020, by Resolution No. 20-1430, as amended, the M/WBE participation on this contract is as follows:
|
Contract Amount |
Procurement Category |
M/WBE Goal |
|
$8,000,000.00 |
Construction |
32.00% |
|
M/WBE Subcontracting % |
M/WBE Overall % |
M/WBE Overall Participation $ |
|
32.00% |
32.00% |
$ 2,560,000.00 |
|
• This contract meets the M/WBE goal. |
|
• Innovan Neighborhoods, LLC - Local; Workforce - 100.00% Local |
OWNER/DEVELOPER
Innovan Neighborhoods, LLC
Maggie Parker, President
MAP
Attached