STRATEGIC PRIORITY: Housing & Homelessness Solutions
AGENDA DATE: January 22, 2025
COUNCIL DISTRICT(S): 2
DEPARTMENT: Department of Housing and Community Development
EXECUTIVE: Robin Bentley
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SUBJECT
Title
Authorize approval of the (1) City Council of the City of Dallas, to act as the applicable elected representative, as defined by Section 147(f)(2)(E) of the Internal Revenue Code of 1986, as amended (Code), of the issuance of multifamily housing mortgage revenue bonds (Bonds) issued by the City of Dallas Housing Finance Corporation (DHFC or Issuer) in one or more series of tax-exempt bonds in an amount not to exceed $18,000,000.00; proceeds of the Bonds will be loaned to LIH Paradise Gardens Preservation, LP, an affiliate of LEDG Capital, LLC (collectively referred to as Borrower) to finance a portion of the cost of the renovation of units for an affordable multifamily complex to be known as Paradise Gardens located at 1500 North Garrett Avenue, Dallas, Texas 75206 (Development); and (2) application of the Texas Housing Finance Corporations Act, Chapter 394, Local Government Code (Act), to the property on which the Development will be constructed and the use of proceeds of the bonds issued by the DHFC pursuant to the Act to finance and construct the Development; a public hearing with respect to the Bonds and the Development was held on October 11, 2024 after reasonable public notice was published in a newspaper of general circulation in the City of Dallas all in compliance with Section 147(f) of the Code - Financing: No cost consideration to the City
Body
BACKGROUND
Borrower has submitted to the Dallas Housing Finance Corporation (DHFC), a proposal for the redevelopment of Development and subsequently enter into a long-term lease for the Development. The redevelopment plan includes acquire and renovate all 113 units, built in 1932. The units are comprised of 96 one-bedroom and 17 two-bedroom units. The scope of the rehab will be a comprehensive interior renovation of common areas and unit interiors, mechanical systems (Heating, Ventilation and Air Conditioning [HVAC]), elevators, roof repairs, common grounds/landscaping, exterior doors, fences and parking lot repairs. The rehab scope will be focused on in-unit improvements that more directly benefit residents and avoid issues typical of wood-framed older properties.
Total development costs are estimated to be approximately $34,078,746.00 which includes the acquisition price for the land. The construction budget is estimated to be approximately $5,284,299.00 which is $46,354.00 per unit. The rehabilitation of Paradise Gardens will provide modern, high-quality updates to both in- unit and exterior features.
The full scope of work will include but is not limited to:
• New asphalt shingle roofing
• New windows and doors at all dwelling units
• HVAC replacement/upgrades in all units
• New flooring at all dwelling units
• Replacement of all unit kitchen cabinets, countertops, appliances, and plumbing fixtures
• Repainting of unit interiors
• Parking lot improvements
• Repair/replacement of drywall, baseboards as needed
• Replacement of all dwelling unit bathroom cabinets, countertops, and finishes
• New exterior paint
• Accessibility upgrades including making four units fully handicapped accessible
• Repair/replacement of accessible path of travel
• Landscaping improvements
Planned rehab includes light tenant-relocation during rehab. The project team is committed to minimizing the disruption and hardship this temporary relocation will cause and will work with households to ensure they are well informed and well supported during their relocation. A Relocation Coordinator will work directly with households to ensure that counseling and advisory services are offered to residents in an efficient manner by a familiar face. Renovations will be completed under occupied renovation with displacement only between the hours of 8:00 a.m. to 5:00 p.m. If for any reason the unit is not secure by 5:00 p.m., the household is provided with a meal allowance of up to $59.00 per person in the household and overnight lodging in a local hotel facility.
The Borrower will also work with the Office of Emergency Management & Crisis Response for security input/upgrades, community activities, and incorporate best practices of Crime Prevention Through Environmental Design. Additionally, the Borrower will provide modern security features to include a full camera system, controlled access, a community crime watch program, and participation in National Night Out to ensure a safe living environment for all residents and staff.
On January 9, 2024, the DHFC authorized a preliminary inducement resolution declaring intent to issue $18,000,000.00 in private activity bonds for a loan to Borrower to provide financing for the Development. On August 21, 2024, the Texas Bond Review Board issued a bond reservation to the DHFC for the Development in an amount not to exceed $18,000,000.00.
Since the Development is located within the city of Dallas, Section 147 (f) of the Internal Revenue Code requires that in order for the bonds to be tax exempt, the City Council, the applicable elected representative of the City of Dallas, must approve the issuance of the bonds by the Issuer following a public hearing. The City of Dallas is not asked to issue bonds. The Bonds shall not be a debt, liability, or an obligation of the City nor shall any of the City’s assets be pledged for payment of the Bonds. The City’s name will not appear on the bonds. The approval being requested is only for the purpose of complying with federal law and with regard to tax exempt debt.
The Tax Equity and Fiscal Responsibility Act (TEFRA) hearing notice was published in the Dallas Morning News on October 4, 2024. On October 11, 2024, the public hearing was held with no outside participants in attendance, and thus, no comments made. Under applicable federal income tax law, the TEFRA approval may only be valid for a one-year term. It is anticipated that the tax-exempt bonds to fund a portion of the costs for the Development will close on or about February 13, 2024.
The Texas Housing Finance Corporations Act, Chapter 394 of the Texas Local Government Code requires that the City of Dallas approve the issuance of bonds by the DHFC and their use to finance the construction and development of affordable housing.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On January 9, 2024, the DHFC authorized a preliminary inducement resolution declaring intent to issue $18,000,000.00 in private activity bonds for a loan to Borrower to provide financing for the Development.
The Housing and Homelessness Solutions Committee was briefed by memorandum regarding this item on December 10, 2024. <https://cityofdallas.legistar.com/View.ashx?M=F&ID=13608494&GUID=59BF0C4F-BD64-430E-A54E-C9D714E0BEB0>
On January 22, 2025, the City Council will hold a public hearing and following, consider and vote on the adoption of a Resolution of No Objection related to the Development and Borrower’s Application to the Texas Department of Community Affairs for 4% Non-Competitive Low Income Housing Tax Credits.
FISCAL INFORMATION
No cost consideration to the City.
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