STRATEGIC PRIORITY: Growing
AGENDA DATE: April 23, 2025
COUNCIL DISTRICT(S): 13
DEPARTMENT: Department of Housing and Community Development
EXECUTIVE: Robin Bentley
______________________________________________________________________
SUBJECT
Title
Authorize the Dallas Public Facility Corporation to (1) acquire, develop, and own 5550 LBJ, a mixed-income multifamily development to be located at 5550 Lyndon B. Johnson Freeway, Dallas, Texas 75240 (Project); and (2) enter into a seventy-five-year lease agreement with High Street Residential, Inc. or its affiliate, for the development of the Project - Estimated Revenue Forgone: General Fund: $170,331,504.00 (see Fiscal Information)
Body
BACKGROUND
The City of Dallas (City) is authorized by the Public Facility Corporation Act, Chapter 303 of the Texas Local Government Code, as amended (the Act) to create a Public Facility Corporation for the purposes established in the Act, including the financing, acquisition, construction, and leasing of public facilities under the Act. On June 24, 2020, by the City Council authorized the creation of the Dallas Public Facility Corporation (DPFC) pursuant to the Act to further the public purposes stated in the DPFC’s Articles of Incorporation and Bylaws Resolution No. 20-1035, which were subsequently amended by Resolution No. 22-1194 (Bylaws). Section 6.2 of the DPFC’s Bylaws requires City Council approval by written resolution prior to entering into any agreement that would result in a property tax exemption. Per Section 7.3 of the Bylaws, any public facility related to multifamily residential development of the DPFC shall not proceed unless (1) the development of the public facility could not be feasible but for the DPFC’s participation, and (2) the development of the public facility is in furtherance of the City of Dallas’ Housing Policy 2033 (DHP33) and the Dallas Housing Resource Catalog (DHRC).
High Street Residential, Inc. (Applicant), a Delaware corporation authorized to transact business in the state of Texas, submitted an application to the DPFC for the development of 5550 LBJ, a 399-unit mixed income multifamily development to be located at 5550 Lyndon B Johnson Freeway, Dallas, TX 75240 (Project). The development is new construction and the DPFC will own the site and improvements and lease the Project back to the Applicant or its affiliate. Pursuant to the Act, any public facility owned by a public facility corporation is exempt from all ad valorem taxes. To qualify as a public facility pursuant to the Act, a multifamily property must reserve at least 40% of the units for residents earning at or below 80% of the Area Median Income (AMI) and at least 10% of the units for residents earning at or below 60% of the AMI. The Project will reserve 5% of the units at below 50% AMI, 5% of the units at below 60% AMI, 40% of the units at below 80% AMI, and the remaining units will be at a fair market rate.
On February 25, 2025, the DPFC Board of Directors adopted a resolution authorizing the negotiation and execution of a term sheet for 5550 LBJ in partnership with High Street Residential, Inc. The Applicant is a Delaware corporation authorized to transact business in the state of Texas. This Applicant is Texas-based with real estate development and multifamily construction experience. In the last ten years they have developed ten multifamily projects in the Dallas Fort Worth metroplex with a $670,000,000.00 footprint.
The Project will be located at the South-East corner of the intersection of Dallas North Tollway and Interstate 635 on 4.4 acres that is currently a vacant office building. Once acquired, Applicant will be required to secure the property no more than 60 days after closing and provide security until completion of the Project. Amenities will include a clubhouse, dog park, green space, a pool, fitness center and is accessible to Dallas Area Rapid Transit bus stops. The Project is zoned for multifamily development without any opposition. The Applicant has scheduled a meeting with a local neighborhood association to receive input on the Project. The Applicant will work with the Office of Emergency Management and Crisis Response throughout the planning and design process for security input, community activities, and incorporate best practices of Crime Prevention Through Environmental Design.
The anticipated unit mix and rental rates are as follows:
|
AMI |
Unit Type |
Units |
% of Units |
Rent |
|
50% |
Efficiency |
3 |
.75% |
$ 966.00 |
|
50% |
1BR |
13 |
3.25% |
$1,035.00 |
|
50% |
2BR |
4 |
1.% |
$1,241.00 |
|
50% TOTALS > |
|
20 |
5% |
|
|
60% |
Efficiency |
3 |
75% |
$1,159.00 |
|
60% |
1 BR |
12 |
3% |
$1,242.00 |
|
60% |
2 BR |
5 |
1.25% |
$1,489.00 |
|
60% TOTALS > |
|
20 |
5% |
|
|
80% |
Efficiency |
24 |
6% |
$1,546.00 |
|
80% |
1 BR |
101 |
25.3% |
$1,656.00 |
|
80% |
2 BR |
35 |
8.77% |
$1,986.00 |
|
80% TOTALS > |
|
160 |
40% |
|
|
Market |
Efficiency |
30 |
7.5% |
$1,650.00 |
|
Market |
1BR |
126 |
31.6% |
$1,995.00 |
|
Market |
2BR |
43 |
10.77% |
$2,875.00 |
|
MARKET TOTALS > |
|
199 |
50% |
|
The rents for individuals and families earning between 60% and 80% AMI provides affordable housing for the “missing middle” of the housing market: residents who earn above low-income housing tax credit income restrictions of 60% AMI but would be cost-burdened by market rents. Household incomes between 60% and 80% AMI range from approximately $54,560.00 to $77,900.00 in the City, based on family size, and reflect average incomes for a variety of employment sectors, such as teachers, first responders, government employees, and health care providers. The rents for individuals and families earning at or below 60% AMI are included to provide deeper affordability at this property with incomes ranging from $40,920.00 to $58,440.00, depending on family size.
Total development costs are anticipated to be approximately $111,931,580.00 which includes the acquisition price for the land. The development budget less soft/financial costs are anticipated to be approximately $93,327,921.00, which is $233,904.56 per unit. The proposed sources and uses are as follows:
|
Proposed Financing Sources |
Amount |
|
Mortgage Loan |
$ 61,562,369.00 |
|
Developer/Investor Equity |
$ 50,369,211.00 |
|
Total |
$111,931,580.00 |
|
Proposed Uses |
Amount |
|
Development Costs |
$ 71,388,177.00 |
|
Land Acquisition |
$ 21,939,744.00 |
|
Soft Costs/Other Costs |
$ 18,603,659.00 |
|
Total |
$111,931,580.00 |
The Project will be owned by the DPFC and leased to the Applicant and other potential owners for a period of 75 years. In consideration for the DPFC’s participation in the Project, the DPFC is estimated to receive $544,294,124.00 in revenues over the 75 years of the lease. Potential proceeds to the DPFC include (1) a $250,000.00 structuring fee paid at closing; (2) General Contractor Fee of $921,531.00, half paid at closing ($460,766.00) and half paid at CO ($460,766.00); (3) lease payments starting at $231,855.00 and increasing by 3% annually upon stabilization ($54,464,387.00 over 75 years); (4) 20% of net profits after repayment of debt, equity, and preferred equity returns upon first capital event of the Project; and (5) 2% of gross profits on all future capital events. In the event of a sale during the life of the Project, DPFC will continue to receive the annual lease payments. Upon completion of the 75-year lease, DPFC will own the Project free and clear.
The DPFC and its counsel and financial advisors have confirmed that this Project would not be feasible but for the DPFC’s participation and that the Project furthers the goals of the DHP33 as follows:
1. Provides mixed-income affordable housing in a high opportunity area that would not be available if not for this project.
2. Provides redevelopment of a property that has minimal tax revenue currently.
3. Generates revenue to the DPFC to utilize in new affordable housing opportunities.
4. The Project does not interfere with an existing Tax Increment Financing District or Public Improvement District.
The DPFC’s Board recommends approval of this item to allow this mixed-income housing development to move forward.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On February 25, 2025, the Dallas Public Facility Corporation Board of Directors approved the negotiation and execution of a term sheet with the Applicant.
The Housing and Homelessness Solutions Committee was briefed by memorandum regarding this matter on March 24, 2025. <https://cityofdallas.legistar.com/View.ashx?M=F&ID=13944687&GUID=D9987CA2-96A7-4CD1-A2BD-BDC268B61FD8>
FISCAL INFORMATION
General Fund: $170,331,504.00
Current Year 1 Taxes: $78,034.81
Current 75 Year Projections: $21,274,697.02
Predicted Post Development 75 Year Projections: $170,331,505.00
Below you will find a chart outlining the total taxes forgone for the Project by taxing entity.
|
Taxing Entity |
Year 1 |
75 Year Current |
75 Year Post Development Predicted |
|
COD |
$ 78,034.81 |
$21,274,697.02 |
$170,331,505.00 |
|
Dallas ISD |
$110,428.62 |
$30,106,249.15 |
$241,039,503.66 |
|
Dallas County |
$ 23,863.35 |
$ 6,505,885.53 |
$ 52,088,036.19 |
|
Dallas College |
$ 11,693.04 |
$ 3,187,883.50 |
$ 25,523,137.60 |
|
Parkland Hospital |
$ 23,475.78 |
$ 6,400,221.99 |
$ 51,242,059.24 |
|
Total |
$247,495.60 |
$ 67,474,937.18 |
$540,224,241.69 |
MAP
Attached