STRATEGIC PRIORITY: Economic and Neighborhood Vitality
AGENDA DATE: June 9, 2021
COUNCIL DISTRICT(S): 4, 7
DEPARTMENT: Department of Housing & Neighborhood Revitalization
EXECUTIVE: Dr. Eric A. Johnson
______________________________________________________________________
SUBJECT
Title
Authorize the (1) the sale of up to 30 Land Transfer lots to Marcer Construction Company LLC, (Developer) and/or its affiliates subject to restrictive covenants, a right of reverter, and execution of all necessary documents, pursuant to the City's Land Transfer Program - Estimated Revenue: General Fund $79,318.62; the (2) the release of lien for all non-tax City liens, notices, or orders that were filed on up to 30 Land Transfer lots sold to Developer prior to or subsequent to the deeds transferring the lots to the City of Dallas; and (3) execution of a development agreement with Developer for the construction of up to 30 single-family homes on the Land Transfer lots - Estimated Revenue Foregone: $71,541.73 (see Fiscal Information)
Body
BACKGROUND
On May 22, 2019, City Council adopted the Land Transfer Program by Resolution No. 19-0824, as amended, for the purpose of incentivizing: (1) the development of quality, sustainable housing that is affordable to the residents of the City and (2) the development of other uses that complement the City’s Comprehensive Housing Policy, economic development policy, or redevelopment policy. Specifically, the Land Transfer Program authorizes the City to sell qualifying city-owned real property and resell tax-foreclosed real property to for-profit, non-profit and/or religious organizations, as applicable, in a direct sale at less than fair market value of the land, consistent with the authorizing state statute or city ordinance. The surplus lots are being sold in accordance with 272.001(g) of the Local Government Code and the tax foreclosed lots are being sold pursuant to 34.051 of the Texas Property Tax Code.
In March 2021, a qualified participating developer, Marcer Construction Company LLC, submitted an application (proposal) to purchase a total of 30 Land Transfer lots. The Department of Housing and Neighborhood Revitalization (Housing) evaluated the application pursuant to the standards set forth in the Land Transfer Program guidelines, which included determining whether the developer met the eligibility standards to be deemed a “Qualified Participating Developer” and underwriting the proposal. The application was determined to be “complete” and met the minimum score to be eligible.
Housing collaborated with Marcer Construction Company LLC regarding the terms of sale of the vacant lots as well as the terms related to the construction and subsequent sale of single-family housing units to income eligible homebuyers.
The Developer being considered for the sale of 30 lots is Marcer Construction Company, LLC. The Developer is a domestic limited liability company formed in Texas in 2003 and based in Dallas. The President and Principal Owner of the company is Raul Estrada, who has over 15 years of home building experience as well as home renovation experience. In addition, the applicant has a staff of nine to support the operations of the company and fully licensed sub-contractors. The Developer has been certified as a Minority/Women-owned Business Enterprise organization, licensed with the City of Dallas and is a participant in the City’s Land Bank Program. To date, the applicant has constructed and sold 39 affordable housing units for the City of Dallas Land Bank Program since 2017.
The proposal indicates the construction of 30 single family units ranging from 1470 square feet (SF) to 1634 SF with a minimum of three bedrooms and two baths. The price range of the proposed units will be $194,000.00 - $225,000.00 targeting homebuyers in an income range of 61% - 120% area median income (AMI), of which 14 units will be used to target homebuyers in an income range of 61-80% AMI. The developer intends to market the City of Dallas Homebuyer Assistance Program to those homebuyers categorized in the 61-80% AMI range.
The development terms applicable to each lot are as follows:
• Vacant Lot Sales Price: Attached as Exhibit A.
• Single-Family Home Sales Price: The sales price of the home cannot exceed the 2020 U.S. Department of Housing and Urban Development (HUD) HOME homeownership sales price for the Dallas, TX HUD Metro FMR Area and must be affordable based on the income of the targeted homebuyer.
• Targeted Income of Homebuyer: 61-120% AMI.
• Construction Timeframe: Developer must apply for a construction permit and close on any construction financing within 60 days of purchase from the City. In addition, Developer should complete construction and sale of each affordable housing unit to an income eligible homebuyer within two years of the date of acquisition of the vacant lot utilized for construction of the unit.
• Restrictive Covenants: Developer must: (1) sell each lot to an income eligible household and (2) prior to the sale, must provide to Housing staff written documentation of the income of the proposed purchaser and the sales price. After sale of the home, the property must be occupied as an income eligible household’s principal residence during the entire term of the affordability period.
• Affordability Period: Once the property is sold to an income eligible household, it must be occupied as the household’s principal place of residence for at least five years. If the original purchaser re-sells the property during the affordability period, the property may only be sold to another income eligible household.
• Right of Reverter: Title to the property may revert to the City if Developer has: 1. failed to take possession of the land within 90 calendar days after receiving the deed to the parcels of real property; 2. failed to complete construction of all required housing units or other required development on the real property, or failed to ensure occupancy by eligible households within the development timeframe set forth in the development agreement; 3. incurred a lien on the property because of violations of city ordinances and failed to fully pay off the lien within 180 days of the City's recording of the lien; or 4. sold, conveyed, or transferred the land without the consent of the City.
ESTIMATED SCHEDULE OF PROJECT
Begin Project July 2021
Complete Project July 2023
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
The Housing and Homelessness Solutions Committee was briefed by memorandum regarding this matter on May 24, 2021. <https://cityofdallas.legistar.com/View.ashx?M=F&ID=9255775&GUID=7C66DDBE-FD3B-48C1-97C0-5FFEC9293CA9>
FISCAL INFORMATION
Estimated Revenue: $79,318.62 (include estimated future property tax revenue and the sale of lots)
The City of Dallas will receive revenue from the sale of the lots, see attached Exhibit A, in the amount of $30,861.97. For tax foreclosed lots, the sales price for each lot is a minimum of $1,000.00 for lots up to 7,500 square feet and an additional $0.133 per square foot for lots which exceed 7,500 square feet. Surplus lot shall be offered at fair market values. A discount is available if project underwriting indicates that the discount is needed either to ensure the viable sale, lease or lease-purchase to an income-qualified buyer. The surplus lots identified on Exhibit A are being sold at a discounted price of $1,000.00 each. Upon completion of the proposed 30 housing units the expected property tax revenue for the City of Dallas is expected to be $48,456.65 annually.
Estimated Revenue Foregone: General Fund $71,541.73
In addition, Exhibit A details the Estimated Foregone Revenues from the release of non-tax City liens: $71,541.73
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 |
M/WBE % |
M/WBE $ |
|
$4,731,120.00 |
Construction |
32.00% |
32.00% |
$1,513,958.40 |
|
• This contract meets the M/WBE goal. |
|
• Marcer Construction Company, LLC - Local; Workforce - 100.00% Local |
OWNER
Marcer Construction Company, LLC
Raul Estrada, President
MAP
Attached