PILLAR: Vibrant
AGENDA DATE: September 9, 2026
COUNCIL DISTRICT(S): 14
DEPARTMENT: Office of Housing and Community Empowerment
PRIORITY: N/A
______________________________________________________________________
SUBJECT
Title
Authorize acquisition by the Dallas Housing Finance Corporation of The Hartford, an existing historic office building located at 400 North St. Paul Street, Dallas, Texas 75201 for development of affordable housing - Estimated Revenue Foregone: General Fund $584,861.00 (Estimated taxes to the City over 15-year period; see Fiscal Information)
*In alignment with Dallas Housing Resource Catalog.
Body
BACKGROUND
Hartford Living LLC, a Texas limited liability company (Applicant), submitted an application to the Dallas Housing Finance Corporation (DHFC) requesting that the DHFC partner with Applicant or its affiliate for the acquisition, redevelopment, and operation of The Hartford, an existing historic office development which is located at 400 North St. Paul Street, Dallas, Texas 75201 (Project).
The DHFC will own the site and improvements while contracting with the Applicant who will act as the project administrator. Pursuant to the Texas Housing Finance Corporation Act, Chapter 394 of the Texas Local Government Code (Act), a Housing Finance Corporation may issue bonds to acquire affordable housing, and a multifamily residential development owned by a Housing Finance Corporation is eligible for an exemption from all ad valorem taxes, subject to the requirements of the Act.
The Project is currently not a residential development. However, upon acquisition by the DHFC and redevelopment by the Applicant, the Project will contain 217 residential units. At least 10.00% of the units will be reserved for residents earning at or below 60.00% Area Median Income (AMI), 49.00% of the units will be reserved for residents earning at or below 80.00% AMI, and the remaining units will be reserved for residents earning at or below 140.00% AMI.
Bluelofts, Inc., a Texas corporation founded in 2018 with a vision to help revitalize urban communities by converting empty office buildings into housing, will be a co-developer of the Project. Their partnerships in various cities address three key community issues: insufficient affordable housing, underutilized downtown office space, and economic downturns. They are experienced in providing workforce housing with over 1,000 units in development at or below 80% AMI.
The Project consists of 217 multifamily residential units configured in a continuous fourteen-story wraparound building. The unit mix includes 9 studio units, 157 one-bedroom units, and 51 two-bedroom units. The Project site is Downtown Dallas and is located in the downtown central business district. The Project is transit-oriented (approximately 472 feet to the Dallas Area Rapid Transit (DART) St. Paul station and approximately half a mile from the DART Pearl/Arts District station) and in close proximity to retail and recreational opportunities. Residents and employees alike benefit from its walkability to Pacific Plaza, Klyde Warren Park, the Arts District, Uptown, and Main Street Garden Park.
Upon acquisition, the unit mix and rental rates will be the lesser of the Texas Department of Housing and Community Affairs (TDHCA) published income-restricted rents or market rents. The suggested Project rents are as follows:
|
AMI & Unit Mix |
|
Unit Type |
AMI |
Units |
Proposed Rent |
|
Studio/efficiency |
60.00% |
1 |
$1,029.00 |
|
Studio/efficiency |
80.00% |
4 |
$1,440.00 |
|
Studio/efficiency |
140.00% |
4 |
$1,600.00 |
|
1BR |
60.00% |
16 |
$1,093.00 |
|
1BR |
80.00% |
72 |
$1,533.00 |
|
1BR |
140.00% |
69 |
$1,850.00 |
|
2BR |
60.00% |
5 |
$1,271.00 |
|
2BR |
80.00% |
23 |
$1,799.00 |
|
2BR |
140.00% |
23 |
$2,600.00 |
The rents for individuals and families earning less than 80.00% AMI are meant to provide housing to the “missing middle” of the market: residents that earn above low-income housing tax credit income restrictions of 60.00% AMI but would be cost burdened by market rents. These incomes range from approximately $50,880.00 to $95,940.00 in the city based on family size and represent a wide variety of employment sectors including, but not limited to, teachers, first responders, government employees, health care providers, etc. The rents for 60.00% to 80.00% AMI are included to satisfy the income requirements of the Act. The market rents are anticipated to grow much faster than the income-restricted rents over the next 15 years, resulting in exponential rental savings to residents earning less than 80.00% AMI. The DHFC also can sell, refinance, or deepen affordability any time after year 10, thus realizing what is likely to be a substantial appreciation in value of the Project even earlier.
The deal structure includes a traditional mortgage with the proposed sources and uses:
|
Proposed Sources |
Amount |
|
Equity |
$ 5,260,094.00 |
|
Construction Loan |
$ 48,000,000.00 |
|
NOFA Gap Funding |
$ 6,000,000.00 |
|
Equity from Land Value Appraisal |
$ 5,500,000.00 |
|
LIHTC Purchaser Contribution |
$ 661,193.00 |
|
Bridge Loan |
$ 29,059,007.00 |
|
Total |
$ 94,480,294.00 |
|
|
|
|
Proposed Uses |
Amount |
|
Land Cost |
$ 16,160,000.00 |
|
Non-Cash Adjustment for Land |
$ 5,500,000.00 |
|
Hard Costs |
$ 56,533,658.00 |
|
Soft Costs |
$ 12,191,545.00 |
|
Financing Costs |
$ 4,075,091.00 |
|
Total |
$ 94,460,294.00 |
The DHFC shall be entitled to receive an acquisition fee equal to 0.75% of the acquisition price of the Project at Closing. The DHFC as ground lessor shall be entitled to receive an annual lease payment under the ground lease (the Annual Lease Payment), which shall be payable as the first item in the cash flow waterfall under the partnership agreement, after payments on any loans or outstanding debt, and that is in addition to the upfront lease payment. The initial Annual Lease Payment ($130,000.00) shall increase by 3.00% annually. In the event that net cash flow is insufficient in any year to pay the full amount of the Annual Lease Payment, the amount unpaid shall accrue without interest and be payable in subsequent years. The general partner, a to-be-formed limited partnership, and Special LP, a special limited partner of the partnership designated by the Applicant or its affiliate, shall each be entitled to receive a partnership management fee in the initial amount of $10,000.00 and increasing by 3.00% per year for its services in connection with management of the partnership.
The 15-year estimate of foregone taxes to the City is $584,861.00. The affordable housing rental savings provide the City with public benefits that outweigh the foregone revenue. This acquisition and financial structure also allows the DHFC to immediately own and provide affordable housing in a walkable high-opportunity area near jobs, transit, parks, retail, and other amenities.
The DHFC’s estimated revenues were calculated by the DHFC’s partnership legal counsel and financial advisors. Market rent and sales comps were analyzed to ensure the project costs were reasonable for the market. DHFC financial advisors also confirmed that, but for the ad valorem tax exemption and the issuance of tax-exempt bonds, the Project would not be economically feasible with the affordable housing income restrictions.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On November 12, 2024, the DHFC Board of Directors adopted a resolution authorizing the negotiation and execution of a Memorandum of Understanding with the Applicant for the acquisition, financing, and operation of the Project.
The Housing and Homelessness Solutions Committee was briefed by memorandum regarding this matter on August 24, 2026. <https://dallascityhall.com/government/citymanager/Documents/Council%20Materials/G.%20DHFC%20The%20Hartford.pdf>
The City Council was briefed by memorandum regarding this matter on September 3, 2026. <https://dallascityhall.com/government/citymanager/Documents/FY25-26%20Memos/September%209,%202026,%20Office%20of%20Housing%20and%20Community%20Empowerment%20City%20Council%20Agenda%20Items.pdf>
FISCAL INFORMATION
Estimated Revenue Foregone: General Fund $584,861.00 Estimated taxes to the City over a 15-year period beginning in FY 2026-27 (tax year 2026).
The following is an estimate of the tax revenue the City of Dallas is projected to forgo. These projections are based on the current taxable value of the property. For DHFC projects, the values are calculated by DHFC staff at this time.
|
Actual Taxes |
|
Current Year |
Year 15 |
Year 30 |
|
$29,249.00 |
$584,861.00 |
$1,391,533.00 |
MAP
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