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[PFC Board of Directors]
THE TIME IS 12:01 PM AND WE ARE CALLING THE DALLAS PUBLIC FACILITIES, UH, CORPORATION MEETING.UH, TO ORDER, UM, BEFORE WE GET STARTED, I WANTED TO ACKNOWLEDGE ONE OF OUR NEWEST BOARD MEMBERS, UH, KEVIN WINTERS REPRESENTING DISTRICT 12.
ALL RIGHT, WITH THAT, WE'RE GONNA MOVE ON TO OUR NEXT AGENDA ITEM, AND THAT IS, UH, ROLL CALL.
KYLE, I WITH YOU, I THINK AARON BABY, IS HE ON? YOU KNOW, I DID SEE HIM.
PRESENT VICE PRESIDENT KEITH PALM MCCALL.
PRESENT DIRECTOR SCOTT SEL, DIRECTOR RONALD STINSON.
PRESENT DIRECTOR DAVID RUSSELL.
PRESENT DIRECTOR MARY POS SAID SHE WASN'T GONNA BE HERE.
IS KEN THERE? I CAN'T QUITE SEE.
PRESENT AND DIRECTOR KEVIN WINTERS.
UH, AT THIS TIME WE'LL MOVE TO THE NEXT AGENDA ITEM, AND THAT'S, UH, PUBLIC TESTIMONY.
SO IF THERE'S ANYONE WISHING TO SPEAK ON ITEM FOUR THROUGH SIX, NOW IS YOUR OPPORTUNITY.
NUMBER FOUR, WHICH IS APPROVAL OF THE MINUTES FROM THE APRIL 18TH, UH, MEETING.
MOTION HAS BEEN MADE PROPERLY.
MY KIND OF AGENDA, UH, NEXT WE'RE MOVING TO AGENDA ITEM NUMBER FIVE, UH, WHICH IS A BRIEFING ON THE OVERALL PUBLIC FACILITIES STRUCTURE.
REALLY GIVE AN OPPORTUNITY TO EDUCATE THE PUBLIC AS WELL AS, UH, SOME OF OUR, OUR BOARD MEMBERS, AND TO REALLY GET SOME OF OUR QUESTIONS ANSWERED IF WE HAVE 'EM.
SO AT THIS TIME, KYLE, IS THERE ANYTHING YOU WANNA SET UP OR YOU WANNA JUST PASS IT ON OVER? NO, I, I JUST WANT TO THANK EVERYBODY, UH, FOR ATTENDING TODAY'S MEETING.
UH, EVERYBODY OUT THERE, THIS IS, SHOULD BE CONSIDERED ALMOST A, A TRAINING OR A BRIEFING IN A WORKSHOP ABOUT THE PUBLIC FACILITY CORPORATION STRUCTURE.
WE DID THIS AT OUR FIRST BOARD MEETING.
WE HAVE A LOT MORE PUBLIC INTEREST IN THE PFC, SO I THINK IT'S HELPFUL FOR US TO, ONCE AGAIN, UH, TAKE A LOOK AT WHAT WE'RE LOOKING AT, HOW, HOW THESE DEALS WORK, UH, WITH A BENEFIT TO THE COMMUNITY THAT WE'RE PROVIDING.
AS WELL AS, UH, ANSWER SOME OF THE QUESTIONS THAT I HAVE RECEIVED.
I KNOW A LOT OF BOARD MEMBERS HAVE ALSO RECEIVED QUESTIONS, AND I, AND HOPEFULLY WE CAN ANSWER A LOT OF THOSE TODAY.
UM, I, I'M SURE JIM PLUMMER FROM BL BRACEWELL, OUR CORPORATION COUNSEL, IS HAPPY TO ANSWER ANY AND ALL QUESTIONS YOU HAVE.
AND, UH, WITH THAT, JIM, I WILL D TURN IT OVER TO YOU AND, UH, LET US KNOW AS YOU NEED US TO CHANGE THE SLIDES FOR YOU.
UM, MS. KYLE SAID WE'VE DONE THIS BEFORE, SO I'M GONNA COVER SOME OF THE, KIND OF THE BACKGROUND INFORMATION FAIRLY QUICKLY AND FOCUS ON WHAT I BELIEVE ARE SOME OF THE QUESTIONS THAT YOU HAVE BEEN GETTING.
UM, I'D LIKE THIS TO BE INTERACTIVE.
I DON'T WANNA SKIP OVER SO, AND NOT GET QUESTIONS ANSWERED.
SO TO THE EXTENT YOU HAVE A QUESTION, FEEL FREE TO INTERRUPT ME, RAISE YOUR HAND, UM, AND I, I'LL BE HAPPY TO ADDRESS 'EM.
UM, CUZ THE PURPOSE OF THIS IS, IS TO MAKE SURE THAT EVERYBODY UNDERSTANDS EXACTLY WHAT WE'RE DOING AND WHY WE'RE DOING IT, AND ALSO TO PROVIDE YOU WITH SOME ANSWERS.
SO WHEN YOU AS A BOARD MEMBER ARE ASKED QUESTIONS, YOU'LL BE ABLE TO ANSWER
[00:05:01]
THEM.UM, AND SO THE FIRST SLIDE, YOU CAN GO AHEAD AND CHANGE IT IS THE AUTHORITIES FOR A PUBLIC FACILITY CORPORATION.
THE PUBLIC FACILITY CORPORATION IS CREATED BY STATE LAW.
THE STATE OF TEXAS DETERMINED THAT PROVIDING WORKFORCE, HOUSING AND ECONOMIC DEVELOPMENT FOR SUFFICIENT GOVERNMENTAL PURPOSES TO ENABLE A CORPORATION TO BE CREATED TO FACILITATE THOSE ACTIVITIES.
AND IT'S DONE BY ENTERING INTO LEASEHOLD PARTNERSHIPS TO BUILD AND OWN PUBLIC FACILITIES.
AND PUBLIC FACILITIES HAVE INCLUDED MIXED INCOME HOUSING, STUDENT HOUSING, CONFERENCE FACILITIES.
WE'VE DONE HOTELS, PARKING GARAGES, PARKS, AND VARIOUS DOWNTOWN DEVELOPMENTS.
SO IT'S BASICALLY ANY ACTIVITY THAT IS PUBLICLY OWNED, DONE FOR THE BENEFIT OF THE PUBLIC, AND IS OPEN AND AVAILABLE TO THE PUBLIC.
NOW, THE APARTMENT PROJECTS THAT WE ARE FINANCING, THEY ARE OPEN AND AVAILABLE TO THE PUBLIC EVEN THOUGH THEY'RE GATED, BUT THEY MUST RECEIVE ALL PUBLIC INQUIRIES AND THEY HAVE TO BE OPEN AND AVAILABLE TO THE PUBLIC BASICALLY ON A FIRST COME, FIRST SERVE BASIS FOR QUALIFIED TENANTS, THE CORPORATION IS AUTHORIZED TO OWN, ACQUIRE, CONSTRUCT, REHABILITATE, RENOVATE, REPAIR, EQUIP, FURNISH OR PLACE AND SERVICE PUBLIC FACILITIES.
IT'S A NONPROFIT CORPORATION ACTING ON BEHALF OF THE CITY, AND WE SET UP THE CORPORATIONS TO SHIFT ANY RISK OF DEVELOPMENT AWAY FROM THE CITY.
IT'S ANTICIPATED THAT IN EVERY TRANSACTION WE DO, YOU ARE GOING TO OWN THE FACILITIES AND YOU'RE GONNA ENTER INTO A LONG-TERM LEASE WITH A DEVELOPMENT ENTITY BY YOU OWNING THE FACILITIES IT IS, AND YOU ARE A QUASI-GOVERNMENTAL ENTITY, YOU WILL OBTAIN A HUNDRED PERCENT PROPERTY TAX EXEMPTION FOR THAT FACILITY.
AND I'LL WALK THAT THROUGH WHAT BENEFIT THAT GIVES TO THE PROJECT AND WHAT BENEFITS IT GIVES TO YOU, UM, IN SETTING THIS UP.
WHAT'S THE PURPOSE? ONE OF THE PURPOSES IS TO CREATE HIGH QUALITY MULTI-FAMILY HOUSING.
UM, WE ARE OFFERING A FINANCIAL ADVANTAGE TO DEV A PRIVATE DEVELOPER TO CREATE HIGH QUALITY HOUSING.
YOU SHOULD BE DOING THIS WITHOUT ADDITIONAL INVESTMENT FROM THE CITY OTHER THAN THE PROPERTY TAX EXEMPTION, AND YOU SHOULD BE DOING IT WITHOUT RISK.
WE UTILIZE THE STATUTORILY GRANTED TAX EXEMPTION GIVEN BY THE STATE, UM, AND WE CAUSE A PRIVATE DEVELOPER TO GO OUT AND FINANCE, CONSTRUCT, OPERATE, AND ASSUME ALL RISK OF THE MULTIFAMILY DEVELOPMENTS.
AND THEY DO THAT BY GOING INTO THE MARKETS AND RAISING PRIVATE EQUITY AND PRIVATE DEBT.
ONE OF THE QUESTIONS THAT'S COME UP IS HOW DOES THE PFC DIFFER FROM AN H F C? AND AN H FFC IS A HOUSING FINANCE CORPORATION.
THE CITY OF DALLAS HAS A HOUSING FINANCE CORPORATION.
HOUSING FINANCE CORPORATIONS HAVE GENERALLY ISSUED, UH, BONDS FOR THE PURPOSES OF FINANCING TAX CREDIT PROJECTS.
FEDERAL INCOME TAX LAW REQUIRES THAT 50% OF THE COST OF THE PROJECT MUST BE FINANCED WITH TAX EXEMPT BONDS.
AND SO THE HFCS HAVE TRADITIONALLY BEEN THE ISSUERS OF THOSE BONDS.
YOU, YOU DO HAVE THE ABILITY TO ISSUE BONDS, AND THERE ARE CERTAIN ADVANTAGES THAT CAN BE OBTAINED BY HAVING A PFC ISSUE BONDS FROM THE ALLOCATIONS GRANTED BY THE STATE.
BUT WE'RE NOT DOING THAT AT THIS POINT.
THE HOUSING FINANCE CORPORATION ESTABLISHES ITS TAX EXEMPTION IN A DIFFERENT MANNER THAN A PUBLIC FACILITY CORPORATION.
THE HOUSING FINANCE CORPORATION ESTABLISH ITS TAX EXEMPTION BY EQUITABLE TITLE.
EQUITABLE TITLE MEANS THAT THEY HAVE TO BE THE GENERAL PARTNER OF THE DEVELOPMENT ENTITY, AND SO THEY HAVE TO STAY INVOLVED IN THE PROJECT ON A VERY LONG-TERM BASIS IN ORDER TO MAINTAIN THAT TAX EXEMPTION.
ALSO, THE HFCS ARE ISSUING BONDS IN THE TAX CREDIT STRUCTURES.
THE DISADVANTAGE TO AN HFC IS THAT IT HAS TO STAY INVOLVED AND THE MARKET
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RATE, UM, APARTMENT PROJECT AND EQUITY PROVIDERS ARE NOT USED TO HAVING A GOVERNMENTAL PARTNER.AND SO WHEN YOU DO AN H F C DEAL, THE EQUITY PARTNERS HAVE TO BE WILLING TO ACCEPT AN ONGOING INVOLVEMENT IN THE OWNERSHIP ENTITY BY THE GOVERNMENT ENTITY.
AND MANY, MANY EQUITY INVESTORS WILL NOT ACCEPT THAT STRUCTURE.
SO THE P F C STRUCTURE IS ONE WHERE YOU DO NOT HAVE AN ONGOING INVOLVEMENT IN THEIR DEVELOPMENT ENTITY.
AND WE COLLECT ALL OF OUR BENEFITS BY BEING A LANDLORD THAT THEN RAISES THE NUMBER OF INDIVIDUALS WHO ARE WILLING TO INVEST.
AND SO THE H F C IS NOT AS FAVORABLE OF A STRUCTURE FOR THE DEVELOPMENT ENTITIES TO DO THIS TYPE OF HOUSING.
IT IS A FAVORABLE STRUCTURE FOR TAX CREDITS.
AND SO TRADITIONALLY THEY'VE HAD DIFFERENT PURPOSES AND THEY HAVE DIFFERENT STRUCTURES BECAUSE THEY'RE TAX EXEMPTIONS ARE DIFFERENT.
AND THAT'S THE BIGGEST DIFFERENCE, IS THE PFC HAS A STATUTORILY GRANTED TAX EXEMPTION.
WHY WOULD YOU CONSIDER DOING A PUBLIC FACILITY CORPORATION HOUSING DEAL? THE FIRST ONE IS ECONOMIC DEVELOPMENT.
WHEN THE HOUSING MARKET HAS NOT BEEN ABLE TO PROVIDE DEVELOPMENTS, THERE ARE MANY AREAS IN EVERY CITY WHERE THERE ARE NOT COMPARABLE RENTS TO MARKET RATE RENTS.
UM, AND SO THIS OFFERS AN OPPORTUNITY TO GO IN AND DO ECONOMIC DEVELOPMENT BY VIRTUE OF CREATING MARKET RATE HOUSING AND ESTABLISHING THAT AN AREA OF TOWN CAN DELIVER MARKET RATE RENTS.
WHAT WE HAVE SEEN IS THAT IF YOU DO ONE OF THESE PROJECTS AND THEY'RE ABLE TO COLLECT A MARKET RATE RENT, IT ENABLES OTHER MARKET RATE PROJECTS TO BE DEVELOPED IN THE AREA BECAUSE NOW THERE'S A RENT COMPARABLE THAT THE BANKS CAN LOOK AT AND SAY, OKAY, THIS PROJECT THAT THE P F C DID IS COLLECTING MARKET RATE RENTS, THEREFORE THEY'RE AVAILABLE IN THIS COMMUNITY, THEREFORE, I CAN FINANCE THIS TRANSACTION.
UM, THE PROJECTS THAT WE WILL BE DOING SHOULD BE CLASS A HIGH-END DEPARTMENT PROJECTS.
AND BY VIRTUE OF BRINGING A PROPERTY TAX EXEMPTION TO THOSE PROJECTS, WE WILL ENABLE THE DEVELOPERS TO DEVELOP THE PROJECT, UM, BY INCREASING THE AMOUNT OF DEBT AND EQUITY THEY GET.
AND HAVE A LITTLE EXAMPLE HERE.
IF YOU HAD A 250 UNIT COMPLEX THAT HAS RENT SUFFICIENT TO CREATE A NET OPERATING INCOME BEFORE DEBT SERVICE OF A MILLION DOLLARS, AND IT'S PAYING $700,000 OF PROPERTY TAXES, THEN THEY ARE ONLY HAVE $300,000 AVAILABLE TO PAY DEBT SERVICE.
AND THE WAY THE MORTGAGE IS SIZED IS SIZE IS YOU TAKE THE NOI, UM, AND IF IT IS A MILLION DOLLAR NOI, UM, AND YOU DIVIDE IT BY THE CAP RATES IN THE MARKETS AND MULTIPLY IT BY AN 80% LOAN TO VALUE, IN THIS CASE, THAT WOULD BE A 13 MILLION MORTGAGE THAT YOU COULD GET FOR OUR PROJECT.
ON THE OTHER HAND, IF YOUR NOI IS 1,000,007 BECAUSE YOU'RE NOT PAYING PROPERTY TAXES AND YOU DIVIDE IT BY THE SAME CAP RATE TIMES THE SAME 80%, YOUR MORTGAGE CAN NOW BECOME 22 MILLION.
SO WE ENABLE DEVELOPERS TO GO OUT AND RAISE ADDITIONAL DEBT AND EQUITY FOR THESE PROJECTS BY VIRTUE OF HAVING THE PROPERTY TAX EXEMPTION.
AND AS I PREVIOUSLY SAID, LEASING UP A CLASS A APARTMENT DEVELOPMENT AND ENCOURAGES ADDITIONAL CLASS A DEVELOPMENT AND ECONOMIC DEVELOPMENT.
HEY JIM, THIS IS KEN MONTGOMERY ON THAT LAST, ON THIS, THIS CURRENT SLIDE, THAT LAST, UM, BULLET POINT.
UM, CREATION AND SUCCESSFUL LEASE UP CLASS A ENCOURAGES, I'M GONNA SKIP THE OTHER CLASS A DEVELOPMENT, UM, ECONOMIC DEVELOPMENT.
UM, IT COULD YOU POINT US IN THE DIRECTION OF, UM, RESEARCH THAT'S BORN THAT OUT.
UM, IN OTHER WORDS, UH, I'M ASSUMING THAT THERE'S PROBABLY SOMETHING OUT THERE THAT SAYS
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WHEN A, A PFC DEVELOPMENT GOES IN, UM, THE TAX BASE INCREASES IN A TWO MILE RADIUS BY X OR, YOU KNOW, SOMETHING LIKE THAT.UNFORTUNATELY, THESE DEALS HAVE BEEN AROUND ABOUT FIVE YEARS AND THERE'S NOT A LOT OF HARD DATA SHOWING THEM.
I, I WISH I COULD POINT YOU TO A STUDY TO THAT EFFECT.
I CAN GIVE YOU ANECDOTAL EVIDENCE OF THAT.
UM, THE, THE FIRST P F C DEAL WAS DONE IN SAN ANTONIO, UM, ON A PROJECT, UM, THAT WAS THEN ON A STREET CALLED DURANGO ON THE SOUTH SIDE OF DOWNTOWN.
IT WAS LARGELY A WAREHOUSE DISTRICT, AND THEY PUT THE APARTMENT PROJECT IN AND IT WAS ABLE TO OBTAIN MARKET RATE RENTALS.
THERE ARE NOW 5,000 UNITS WITHIN A TWO MILE RADIUS OF THAT PROJECT.
UM, BECAUSE THEY WERE ABLE TO SHOW THAT THAT THE NEAR SOUTH SIDE OF DOWNTOWN WAS A DESIRABLE HOUSING AREA.
UM, AND ALL OF THOSE UNITS HAVE DEVELOPED AS A RESULT OF ESTABLISHING THE MARKET RATE PRODUCT THERE.
UM, AND WE HAVE HAD OTHER EXAMPLES.
THE, UM, BROOKS REDEVELOPMENT AUTHORITY DID A PUBLIC FACILITY CORPORATION DEAL IN THE REDEVELOPMENT OF AN AIR FORCE BASE, UM, THAT AIR FORCE BASE.
NOW, AFTER HAVING DONE ACTUALLY TWO OF THOSE PROJECTS AS REDEVELOPED WITH HIGH-END RETAIL MEDICAL OFFICE, A HOSPITAL, UM, AND SEVERAL MANUFACTURING FACILITIES LOCATED AROUND THE PERIMETER BECAUSE IT BROUGHT HOUSING, UH, VERY HIGH QUALITY HOUSING TO THE DEEP SOUTH SIDE OF SAN ANTONIO.
AND SO WE HAVE SEEN THIS WORK ON NUMEROUS OCCASIONS.
NOW, THE ONE THING I'VE GOT TO TELL YOU IS IT'S NOT INSTANTANEOUS YOU APPROVE A DEAL.
IT TAKES TWO YEARS TO BUILD THE DEAL, TAKES A YEAR TO GET IT LEASED UP.
UM, AND THEN OTHERS START LOOKING AT IT, AND THEN THEY TAKE TWO YEARS TO BUILD.
SO THE EFFECT OF THESE DEALS IS A MINIMUM OF FIVE YEARS AWAY.
AND SO THAT'S PART OF THE REASON I DON'T HAVE HARD DATA.
UM, I'D LOVE TO SHOW YOU HARD DATA, BUT IT, I JUST DON'T THINK IT EXISTS AT THIS POINT.
AND THAT, UH, THAT AIR FORCE BASE IN, UH, SAN ANTONIO, THAT WAS A DECOMMISSIONED, UM, IT WAS BASE, YES SIR.
THE OTHER THING THAT THESE PROJECTS DO IS THEY CREATE WORKFORCE HOUSING.
50% OF THE UNITS HAVE TO BE RESERVED TO INDIVIDUALS WHOSE INCOME IS 80% OR LESS THAN AREA MEDIAN INCOME.
UM, YOU CAN REQUIRE DEEPER AFFORDABILITY.
UM, MANY, MANY OF THESE PROJECTS HAVE BEEN DONE, UM, WITH HAVING 10% AT 60% OF MEDIAN INCOME.
BUT I WANT TO BE VERY CLEAR THAT THIS IS NOT A TOOL TO PROVIDE LOW INCOME HOUSING, UM, IN THESE TRANSACTIONS.
THE DEVELOPER HAS TO GO OUT AND RAISE EQUITY, AND EQUITY IS VERY EXPENSIVE.
UM, AND TRYING TO FORCE THESE TRANSACTIONS TO PROVIDE TRULY LOW INCOME HOUSING MAKES THEM, UH, FINANCIALLY UNFEASIBLE.
THE TAX CREDIT MODEL IS A FAR BETTER WAY TO PROVIDE TRULY AFFORDABLE HOUSING.
AND SO, UM, OUR FOCUS IS TO PROVIDE WORKFORCE HOUSING.
WE WILL DO THAT AND WE WILL PLACE A REGULATORY AGREEMENT.
A REGULATORY AGREEMENT IS NOTHING BUT A DEED RESTRICTION.
AND THAT DEED RESTRICTION IS GOING TO REQUIRE THEM TO MAINTAIN THE WORKFORCE HOUSING.
IT'S GONNA REQUIRE THEM TO GET A THIRD PARTY AUDIT OF COMPLIANCE OF THAT WORKFORCE HOUSING EVERY YEAR.
AND SO WE WILL BE ABLE TO MONITOR AND WE WILL HAVE THIRD PARTY COMPLIANCE REPORTS FROM EVERY TRANSACTION THAT WE PARTICIPATE IN.
WE ALSO REQUIRE THAT THE PROJECTS BE ADJUSTED FOR FAMILY SIZE AND RENT RESTRICTED.
IF YOU WERE TO JUST TAKE THE DALLAS COUNTY A M I OF 97,400 AND YOU WERE TO NOT ADJUST FOR FAMILY SIZE,
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THEN YOU WOULD BE ABLE TO HAVE, UH, AN INCOME OF $77,000 FOR THESE PROJECTS.BUT IF YOU LOOK AT A SINGLE ONE ROOM APARTMENT PROJECT, WE ADJUST FOR FAMILY SIZE AND SAY, NO, THAT SHOULD ACTUALLY BE A $54,000, UH, INCOME LIMIT.
THERE ARE SIMILAR LIMITS ON RENTS WHEN YOU ADJUST FOR FAMILY SIZE.
SO A EFFICIENCY UNIT IN DALLAS COULD HAVE A $1,364 RENT, AND A THREE BEDROOM UNIT COULD HAVE A 20,000, I'M SORRY, 2020 $6 RENT.
AND THE REASON WE DO THAT IS BECAUSE WE WANT TO TRY AND MAKE SURE THAT PEOPLE WHO ARE LIVING IN THESE APARTMENT PROJECTS CAN ACTUALLY AFFORD TO LIVE THERE.
THOSE NUMBERS ARE SET AT A 30% OF THE INCOME NUMBER FOR THE FAMILY SIZE.
THAT RENT RESTRICTION THEN ASSURES THAT YOUR TENANTS ARE NOT RENT BURDENED.
THEY'RE NOT PAYING 50% OF THEIR INCOME TO LIVE IN THESE COMPLEX.
SO THESE PROJECTS THAT WE WILL BE LOOKING AT, UM, WILL HAVE RENT RESTRICTIONS AND THEY WILL BE AFFORDABLE TO THE INDIVIDUALS WHO LIVE THERE.
UM, AND SO THAT, THAT'S A REALLY IMPORTANT FACTOR IN TERMS OF PROVIDING COMMUNITY BENEFIT.
THE GROUP THAT WE'RE TARGETING IS GENERALLY REFERRED TO AS THE MISSING MIDDLE TAX CREDIT.
DEALS PROVIDE RESISTANCE FOR FAMILIES WHOSE INCOME IS 60% OR LESS, AND MARKET RATE GENERALLY IS FOR INDIVIDUALS WHO HAVE INDIAN INCOME OR MORE.
AND SO IF YOUR INCOME IS SOMEWHERE BETWEEN 60% AND A HUNDRED PERCENT, THEN YOU HAVE TROUBLE FINDING HOUSING.
AND THIS TRADITIONALLY HAS BEEN INDIVIDUALS STARTING A CAREER.
UM, IT HAS INCLUDED MOST PUBLIC SERVANTS, SO BEGINNING POLICE OFFICER, FIRE OFFICER TEACHER, MANY CITY EMPLOYEES, MANY HOSPITAL DISTRICT EMPLOYEES, UH, ALL FALL WITHIN THAT 80% OF MEDIAN INCOME LEVEL.
UM, AND IT, AS YOU CAN SEE THERE IN DALLAS, YOUR A M I IS NOW UP TO 97, 400, UH, AND AN 80% A M I NUMBER FOR A SINGLE HOUSEHOLD WOULD BE 54 5 60.
AND MS. ALLEN, CAN I INTERRUPT YOU JUST FOR A MINUTE? UM, A LITTLE, I DON'T WANNA SAY IT'S CONFUSING, BUT IN YOUR EARLIER SLIDE YOU SPOKE TO THE ABILITY TO GET INCREASED FINANCING ON A PROJECT, IF THERE'S NO PROPERTY TAXES, UM, HOW WOULD THAT PLAY IN IF YOU'RE NOT GONNA BE CHARGING FOR ALL UNITS MARKET RENT? YEAH.
THE, THE, THE, THE TRUTH IS, IS THAT THERE IS A TAX BURDEN THAT WOULD'VE BEEN IMPOSED.
AND LET'S JUST FOR ROUND NUMBERS PURPOSES SAY THAT THAT TAX BURDEN IS A MILLION DOLLARS A YEAR, THAT MILLION DOLLAR SAVINGS, SOME OF IT GOES TO MORTGAGE, SOME OF IT QUITE FRANKLY, GOES TO SUBSIDIZE THE AFFORDABLE UNITS.
SO THE AFFORDABLE UNITS, WE OFTEN SEE THEM AT 150 TO $200 A UNIT, LESS THAN THE MARKET RATE UNITS.
AND AS A GENERAL RULE, THE LARGER THE APARTMENT PROJECT, THE LARGER THE FAMILY, THE GREATER THE DIFFERENCE.
SO YOUR OWN BEDROOM UNITS MIGHT BE ALMOST EQUAL, BUT YOUR TWO BEDROOM UNITS ARE GONNA HAVE MAYBE $150 DIFFERENTIAL.
YOUR THREE BEDROOM UNITS MIGHT HAVE A $300 DIFFERENTIAL.
SO A PORTION OF THAT TAX SAVINGS IS OFFSET BY THE FACT THAT 50% OF YOUR UNITS ARE RESTRICTED TO WORKFORCE HOUSING.
UM, AND A PORTION OF THAT GOES TO HELP FINANCE BASICALLY BRIDGE THE GAP IN THESE TRANSACTIONS.
ONE OF THE THINGS THAT I THINK IS REALLY IMPORTANT FOR US IS THAT WE NEED TO BE ENSURING THAT WE'RE DELIVERING HIGH QUALITY HOUSING CLASS A HOUSING.
AND THAT REQUIRES 50% OF THE MARKET RATES SHOULD BE AT THE HIGHEST QUALITY.
UM, YOU HAVE THE ABILITY IN THESE TRANSACTIONS TO REVIEW THE PLACEMENT OF THE HOUSING,
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THE QUALITY OF THE HOUSING.UM, YOU HAVE THE ABILITY TO SET CRITERIA, SO YOU COULD HAVE DESIGN REQUIREMENTS.
YOU, YOU WILL SEE PLANS INSPECT, YOU COULD HAVE TENANT SELECTION REQUIREMENTS.
UM, WE ACTUALLY HAVE TENANT RIGHTS, UH, IN IMPOSED IN THE DEALS WE DO IN SAN ANTONIO.
YOU ARE A PARTNER IN THE DEAL, THEREFORE YOU HAVE A SAY AS TO WHAT THESE DEALS LOOK.
JAMES, CAN I, UH, JAM? CAN I, JAMES, CAN I ASK A QUESTION? SURE.
UH, WELL, IN GETTING TO THIS, I KNOW THE FIRST THING THAT I I THOUGHT ABOUT WAS THAT IT SORT OF BRINGS UP A LOT OF ZONING QUESTIONS.
AND IN PAST MEETINGS I'VE BEEN DOING MY BEST TO SAY TO, TO TRY TO PULL BACK FROM, UH, SOME OF THESE REQUIREMENTS THAT, FOR SOME OF THESE MAKING COMMENTS ABOUT SOME OF THESE THAT ARE JUST, THAT YOU'RE JUST MENTIONING.
BECAUSE I HAVE SEEN, UH, LIKE IN A FEW OF THE PAST PROJECTS, YOU KNOW, THEY WERE OVER PARKED AND THEN WERE SAID, WELL, THEY'LL TAKE CARE OF THAT IN ZONING.
UH, BUT IN MY PERSONAL EXPERIENCE, UH, YOU KNOW, LIKE THE SITE PLAN THAT I SAW, IT WAS, IT WAS BASICALLY ALL PARKING.
SO HOW DO WE, UH, DO THAT AND STAY OUT OF THE, UH, UH, THE OTHER, UH, CITY, UH, UH, COMMISSIONS LIKE THE ZONING COMMISSION? IT, IT, IT IS, THERE'S GONNA BE SOME OVERLAP AND YOU HAVE TO DECIDE WHAT IS IMPORTANT TO YOU FROM A COMMUNITY BROAD COMMUNITY BENEFIT PERSPECTIVE.
I WOULD ENCOURAGE YOU TO LOOK AT THESE DEALS AND, AND IF YOU'RE GONNA SET STANDARDS, YOU WANNA SET 'EM FOR EVERY DEAL, NOT THE INDIVIDUAL LOCATION OF THE DEAL, LEAD THAT TO ZOOMIN.
UM, FOR EXAMPLE, UM, YOU, YOU MAY TAKE THE POSITION THAT YOU WOULD LIKE TO SEE DEVELOPMENT IN CERTAIN PARTS OF YOUR CITY, AND IN THOSE PARTS OF THE CITY, MAYBE WE'RE MORE WILLING TO GIVE UP ON SOME OF THESE ISSUES.
UM, PARTICULARLY THE ECONOMIC ISSUES.
UM, YOU MIGHT, WE HAVE A STANDARD IN OUR LEASE AGREEMENT THAT IT'S GOT TO BE A CLASS A APARTMENT.
AND WE EVEN HAVE A PROVISION THAT SAYS YOU HAVE TO DO A NEEDS ASSESSMENT EVERY SEVEN YEARS OR WHEN THE PROJECT SELLS TO TRY AND MAINTAIN QUALITY.
UM, AND SO I THINK THE WAY, THE BEST WAY TO ADDRESS THAT IS TO HAVE A DISCUSSION ABOUT OVERALL POLICY, NOT GET INTO THE WEEDS OF AN INDIVIDUAL PROJECT.
UM, I, AND THEN I THINK YOU HAVE KIND OF CROSS OVER SO MUCH.
UM, FOR EXAMPLE, UH, JAMES, UH, IF YOU DON'T MIND, SO SURE.
SO LIKE IN THE PAST I WAS THINKING, UH, WELL, YOU KNOW, UH, A CLASS A APARTMENT DEVELOPMENT SHOULD HAVE, UH, EVERY ANYONE BUILT TODAY THAT WILL BE AROUND, YOU KNOW, FOR NEXT 70 YEARS SHOULD HAVE, UH, DEPENDING ON THE SIZE, SHOULD HAVE, UH, ELECTRIC CHARGING STATIONS.
BUT YET, I, I, I SORT OF WITHHELD THAT COMMENT AT ONE OF THE MEETINGS BECAUSE I WAS LIKE GOING, OKAY, THAT MIGHT BE MORE OF A ZONING QUESTION, SO I BETTER NOT GET INTO THAT.
BUT I DON'T SEE ANY ELECTRIC CHARGING CHA CHANGES STATIONS ON THIS, BUT I KNOW THAT IF YOU'RE BUILDING A CLASS A DEVELOPMENT IN DALLAS, IN YOU'RE BUILDING IT FOR THE FUTURE.
IF I WERE OWNING IT, I CERTAINLY WANNA MAKE SURE THAT IT WAS BUILT FOR THE NEEDS OF THE FUTURE, UH, AS FAR AS TRANSPORTATION AND SUCH IS CONCERNED.
AND SO, UH, IT SOUNDS LIKE YOU'RE SAYING THAT MAYBE WE COULD HAVE A C CHECK WITH LIKE WALKABILITY TOO.
WALKABILITY IS VERY IMPORTANT WITHIN THE CITY OF DALLAS.
UH, YOU KNOW, WE WE'RE NOT SPRAWLING ANYMORE.
WE'RE SPRAWLING IN INTERNALLY AND UPWARD.
UM, SORRY, ARE YOU SAYING, AND PERHAPS KEVIN COULD CHIME IN, THAT THESE ARE THE TYPES OF THINGS THAT WE COULD HAVE A, JUST A GENERAL CHECKLIST OF LIKE, UH, UH, WALKABILITY AND, UH, YOU KNOW, UM, IDEAS FOR THE, UH, FUTURE DEVELOPMENT LIKE ELECTRIC CHARGING STATIONS.
AND I DON'T WANT TO GET INTO THE, I KNOW IT'S MUDDY WATERS AND I DON'T WANT TO GET INTO ZONING, BUT IT SOUNDS LIKE YOU'RE, YOU'RE TELLING US SOMETHING THAT I DIDN'T KNOW PRIOR TO THIS MEETING, OR IF I DID, IT DIDN'T STAND OUT TO ME.
WELL, THAT'S ONE OF THE REASONS THAT YOU GUYS CREATED THE SUBCOMMITTEES IS FOR THE SUBCOMMITTEES TO SIT DOWN AND ADDRESS THINGS LIKE THAT.
FIRST OFF, FROM A LEGAL PERSPECTIVE, YOU HAVE THE ABSOLUTE ABILITY TO SET REQUIREMENTS.
HAVING CHARGING STATIONS, UH, ENERGY STAR APPLIANCES.
UM, WE HAVE ALWAYS REVIEWED WHETHER OR NOT THEY'RE CLOSE TO TRANSIT
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AND, AND MADE THAT PART OF THE PRESENTATION TO THE BOARD.UM, WALKABILITY, I THINK THERE ARE THINGS THAT, THAT DON'T HAVE TO BE, YOU MUST DO THESE THINGS.
I THINK THERE ARE THINGS THAT THE BOARD CAN SAY TO THE STAFF, WE WANNA MAKE SURE YOU ADDRESS THIS.
SO HERE'S A LIST OF 10 THINGS.
AND AS LONG AS THEY HAVE THEM, YOU DON'T NEED TO TELL US.
BUT IF THEY DON'T HAVE THEM, THEN WE NEED TO HAVE A DISCUSSION ABOUT IT.
UM, CUZ THERE MAY BE FACTS WHERE YOU REACH A CONCLUSION THAT THEY DON'T HAVE TO HAVE EVERY ONE OF THOSE THINGS.
UM, YOU MAY WANT, YOU MAY BE DOING A PROJECT PURELY FOR ECONOMIC DEVELOPMENT AND IT MAY BE A SMALL INFIELD PROJECT AND CERTAIN THINGS THAT YOU, YOU MIGHT SEE IN OTHER PROJECTS THEY CAN'T AFFORD TO DO, OR, OR IT'S JUST INAPPROPRIATE.
BUT I THINK THAT IT WOULD BE, IT WOULD BE APPROPRIATE FOR YOU TO SAY, OKAY, HERE'S OUR CHECKLIST.
WE WANT TO KNOW THERE'S ENERGY STAR APPLIANCES.
UH, WE WANT TO KNOW THAT THEY ARE GOING TO PROVIDE ELECTRIC CHARGING STATIONS.
UH, WE WANT TO MAKE SURE THAT THEY'RE PARKING AT A RATE OF WHATEVER IT IS, ONE CAR TO, TO AN APARTMENT, 1.5 CARS TO AN APARTMENT.
A A LOT OF THAT IS GONNA BE COVERED BY OTHER ENTITIES, BUT IF THAT'S TRULY IMPORTANT TO THIS BOARD, THEN WE, WE CAN ADDRESS IT.
BUT I THINK IT OUGHT TO BE DONE ON A POLICY BASIS AND THEN WE APPLY THE POLICY TO THE INDIVIDUAL UNITS.
SO WE COULD HAVE LIKE A, YOU'RE RIGHT.
SO A CHECKLIST, UH, BY CHANCE, WOULD YOU HAVE ANY EXAMPLES, UH, FROM ANOTHER PFCS THAT, UH, YOU COULD SEND US, UH, THAT MIGHT HAVE, UH, WALKABILITY ANY OTHER QUALITY OF LIFE, UH, ITEMS THAT WE COULD INCORPORATE INTO OUR APPLICATION PROCESS? I ACTUALLY DO NOT HAVE SUCH A CHECKLIST.
UH, WE ARE TRYING TO DEVELOP 'EM IN SAN ANTONIO.
HOUSTON DOES NOT HAVE A SIMILAR CHECKLIST, NOR DOES AUSTIN.
SO I HATE TO TELL YOU THIS, BUT YOU'RE GONNA HAVE TO LEAD BE ON THE LEADING EDGE WITH SOME OF THIS.
UM, AND SOME OF IT, YOU KNOW, I THINK, I THINK WE COME UP WITH THINGS AND DETERMINE WHETHER OR NOT THEY'RE A REAL ISSUE.
UM, I I I, I VERY MUCH AGREE WE, WE DON'T WANNA BE IN THE ZONING BUSINESS.
YOUR MANDATE IS TO PROVIDE WORKFORCE HOUSING.
UM, BUT THERE ARE CERTAIN THINGS THAT I THINK YOU CAN SAY, WE THINK A CLASS, A APARTMENT PROJECT SHOULD HAVE THESE THINGS.
AND SO I I THINK YOU APPROACH IT FROM THE PERSPECTIVE OF A KEY TO THE LONG-TERM QUALITY MAINTAINABILITY OF THESE PROJECTS IS THAT 50% AT MARKET RATE BECAUSE WE ARE COUNTING ON DEVELOPERS HAVING TO MAINTAIN THE PROJECT AT A HIGH QUALITY IN ORDER TO OBTAIN MAXIMUM RENTS ON THE MARKET RATE SIDE.
THAT THAT IS ONE OF THE KEY COMPONENTS OF THIS STRUCTURE IN ENSURING THAT THIS REMAINS A HIGH QUALITY PRODUCT.
AND SO I THINK IT IS APPROPRIATE FOR YOU TO ADDRESS THINGS THAT YOU THINK ARE PERTINENT TO MAINTAINING A CLASS A APARTMENT PROJECT.
AND I THINK THAT'S THE WAY I WOULD
AND THE ONLY THING THAT'S PERTINENT TO YOUR DISCUSSION IS WHAT DOES IT REQUIRE TO BE A CLASS A PROJECT.
AND TO JUMP ON THAT, UH, JIM, THIS IS KYLE HEINZ.
UH, I'D LIKE TO JUST KIND OF POINT OUT THAT WE'RE, WE'RE AT THE BEHEST OF PEOPLE THAT WANT TO SUBMIT AN APPLICATION TO US.
SO WE'RE GONNA SEE A WHOLE MYRIAD OF DIFFERENT TYPES OF PROJECTS AND LOCATIONS.
SO WE NEED TO BE ABLE TO TAKE A LOOK AT THOSE THINGS AND THEN MAKE SURE THAT WE HAVE WHAT WE, WE NEED, BUT A CERTAIN SITE.
MAY WE HAVE DIFFERENT GOALS FOR THAT SITE? IS IT AN, LIKE JIM SAID, IS THIS AN ECONOMIC DEVELOPMENT PLAY TO SET NEW MARKET COMPS TO ACTUALLY BRING IN HIGHER INCOMES TO CERTAIN AREAS OF THE CITY, WHICH IS A, A GOAL OF A GOAL OF ALL OF OURS? OR IS THIS IN A HIGHER OPPORTUNITY AREA WHERE MAYBE WE'RE TRYING TO, WE'LL GET THIS CLOSE TO TRANSIT EXISTING TRANSIT THAT WE HAVE, LIKE THE STANDARD AT ROYAL LANE DEVELOPMENT THAT WILL BE UNDER CONSIDERATION FOR FINAL APPROVAL NEXT MONTH THAT'S RIGHT NEXT TO A DART STATION.
[00:35:01]
BUT THE PD THAT IT'S IN REQUIRES THAT SEA OF PARKING AND THERE WAS NOT MUCH WE COULD REALLY DO ABOUT IT.THANKFULLY, UH, WE ARE AMENDING OUR PARKING REQUIREMENTS AS, AS FAR AS THE MIXED INCOME HOUSING DEVELOPMENT BONUS PROGRAM.
SO WE'RE KIND OF CATCHING UP TO SOME OF THOSE THINGS.
SO THAT'LL BE TAKEN CARE OF JUST BASED ON ORDINANCE.
SO THAT'S, THAT'S GREAT TO KNOW.
BUT I JUST WANTED, WANTED TO POINT OUT THAT, YOU KNOW, WE'LL SEE A LOT OF DIFFERENT THINGS AND IT'S UP TO US TO DETERMINE THE LEVERS THAT WE PULL AND WHAT, WHAT CONSTITUTES A A, A GOOD, I THINK WE SHOULD HAVE, WE CAN PROBABLY SET THESE THINGS LIKE CHARGING STATION PROBABLY IS A, IS SOMETHING THAT ANY MARKET ARRAY DEVELOPER WOULD PROBABLY HAVE JUST BECAUSE OF THE UBIQUITY OF, UH, ELECTRIC CARS NOWADAYS.
SO OBVIOUSLY THAT'S SOMETHING, BUT I JUST WANTED TO MAKE SURE THAT WE'RE ALL AWARE THAT WE'RE GONNA SEE A LOT OF DIFFERENT THINGS CUZ EACH SITE IS, IS CARRIES ITS OWN DIFFERENT CHALLENGES AND, AND PROS AND CONS.
SO, UM, I'LL SEND IT BACK TO YOU GUYS.
WELL, AND, AND KYLE, TO THAT POINT, THIS IS, UH, DIRECTOR RUSSELL.
I ACTUALLY THINK TO YOUR POINT, WE'RE AT THE BEHEST OF THESE INCOMING, UH, INQUIRIES FROM DEVELOPERS THAT WE SHOULD TO, TO JIM'S POINT, CREATE A SORT OF A CHECKLIST TO BE ABLE TO GIVE TO THOSE DEVELOPERS FOR THEM TO FILL OFF.
AND SO I THINK THERE'S KIND OF TWO WAYS TO LOOK AT IT.
ONE IS THERE ARE CERTAIN THINGS, UH, THAT WE FEEL CHARGING STATIONS, RIGHT? BEING, YOU KNOW, ONE OF THOSE THAT ANY DEVELOPMENT HAS TO HAVE.
BUT WE CAN ALSO HAVE A CHECKLIST OF SORTS OF KIND OF LIKE A, LIKE A SCORING PROCESS, RIGHT? LIKE, DOES IT HIT NINE OUT OF 10 OF THESE THINGS OR EIGHT OUT OF 10 OF THESE THINGS, WHETHER IT'S WALKABILITY, ET CETERA.
BECAUSE I DO THINK, UM, AND I DIDN'T THINK ABOUT IT UNTIL THE OTHER DIRECTOR MENTIONED IT, BUT AGAIN, IF THIS IS SOMETHING THAT'S SUPPOSED TO BE A 50 TO 70 YEAR PROJECT, LIKE THERE ARE JUST CERTAIN THINGS THAT FROM A SUSTAINABILITY STANDPOINT, LIKE IF YOU'RE BUILDING SOMETHING TODAY THAT DOESN'T HAVE A CHARGING STATION, I MEAN, LIKE THAT'S NOT SUSTAINABLE.
AND WE, AND WE PROBABLY SHOULDN'T EVEN BE, YOU KNOW, REALLY APPROVING PROJECTS WITH, WITH JUST CERTAIN RAM WITH CERTAIN MODIFICATIONS JUST LIKE NOT A PART OF THE INITIAL, UH, PLANS OF, OF, OF CONSTRUCTION.
SO I DO THINK, AND I DON'T KNOW WHICH SUBCOMMITTEE, UH, THAT WOULD FALL UNDER, UH, BUT I DO THINK WE SHOULD LIKE REALLY GET ON TOP OF BEING ON THE LEADING EDGE AS MR. PLUMMER SAID AND CREATING WHAT THAT CHECKLIST LOOKS LIKE.
WELL, AND THERE'S OTHER SIMPLE THINGS.
I MEAN, LET'S JUST TAKE A SWIMMING POOL FOR EXAMPLE.
VIRTUALLY EVERY CLASS A APARTMENT PROJECT HAS A SWIMMING POOL, SO IT'S AN EASY ONE TO PUT ON THE LIST, BUT I GUARANTEE YOU, YOU'RE GONNA RUN INTO A TRULY URBAN, MAYBE DOWNTOWN FACILITY THAT IS INFILL.
IT'S GONNA BE 150 UNITS, IT'S GONNA BE VERY SMALL BY COMPARISON TO SOMETHING YOU WOULD DO MORE OUT IN A SUBURB.
AND, AND THEY MAY NOT BE ABLE TO DO CERTAIN OF THESE THINGS.
AND THE REAL KEY WILL BE WE NEED TO BE LOOKING AT IT AND THEY NEED TO BE JUSTIFYING WHY THEY'RE NOT DOING IT.
THAT THAT'S REALLY THE KEY TO THIS IS WE'RE DOING OUR DILIGENCE TO MAKE SURE THAT THIS PROJECT MAKES SENSE AND IT DESERVES THE TAX EXEMPTION.
UM, AND SO IT, IT'S, AND, AND THEN YOU'RE, YOU'RE GOING TO GET SOME REALLY OFF THE WALL PROPOSALS.
AT THE END OF THE DAY, I, I AM LITERALLY WORKING ON A DEAL WHERE WE'RE TRYING TO PUT P UH, PERMANENT SUPPORTIVE HOUSING IN ONE OF THESE PROJECTS AND WE'RE HAVING TO MAKE ALL KINDS OF CONCESSIONS ON THE PERMANENT SUPPORTIVE HOUSING SIDE BECAUSE IT'S A VERY DIFFERENT ANIMAL, BUT IT'S SOMETHING THE COMMUNITY WANTS.
AND SO, YOU KNOW, I I DO THINK WE HAVE TO KEEP AN OPEN MIND AS WE GO THROUGH THIS AND EVALUATE THEM.
BUT FROM OUR PERSPECTIVE, AT THE END OF THE DAY, THE ULTIMATE QUESTION IS, IS THERE A COMMUNITY BENEFIT THAT JUSTIFIES THIS TAX EXEMPTION? AND WE DO NEED TO MAKE SURE THAT WE'VE GOT A LONG-TERM SUSTAINABLE PROJECT.
AND I THINK, I THINK HAVING, HAVING THE THIS CHECKLIST TO YOUR POINT, IT HELPS US HAVE MORE CLARITY INTO MAKING THAT DECISION.
YES, IS GOING INTO EVERY DECISION, JUST KIND OF, YOU KNOW, LOOKING AT THEM INDIVIDUALLY.
I DO THINK THERE NEEDS TO BE SOME MORE SYNCHRONICITY TO HOW THOSE THINGS GET, GET, UH, A THUMBS UP OR THUMBS DOWN MAKES, MAKES GOOD SENSE.
I MEAN, ONE OF THE THINGS THAT REALLY IMPORTANT POINT OUT, THESE DEALS ARE DONE FOR TO A LEASE.
SO YOU OWN THE BUILDING, YOU DO A LONG TERM LEASE THAT MAKES YOU THE LANDOWNER A DEFAULT UNDER THAT LEASE TECHNICALLY MEANS YOU CAN TERMINATE A LEASE.
WHEN YOU TERMINATE THE LEASE, YOU OWN THE BUILDING OUTRIGHT.
AND SO EQUITY INVESTORS AND LENDERS ARE GOING TO BE VERY, VERY SENSITIVE ABOUT YOUR ABILITY TO DECLARE DEFAULTS.
[00:40:02]
AND THAT'S ONE OF THE REASONS THAT WE PUT IN THE PROVISION THAT SAYS IT'S GOTTA BE CLASS A.IF WE GET 20 YEARS DOWN THE ROAD AND SOMETHING MY OWNER DECIDES I CAN MAKE MORE CASH FLOW BY JUST TAKING MONEY AND NEVER PUTTING ANYTHING BACK IN THIS BUILDING ON A SHORT TERM BASIS AND THEY LET IT RUN DOWN, WE HAVE THE ABILITY TO SAY, YOU'RE NOT MAINTAINING A CLASS A PROJECT, WE'RE GOING TO DECLARE A DEFAULT.
NOW RECOGNIZE THAT'S GONNA BE A FIGHT, UH, BECAUSE WE ARE THREATENING SOMEBODY'S 60, 70, A HUNDRED MILLION DOLLAR INVESTMENT, BUT WE HAVE THE LEVERAGE TO DO IT WITH.
AND SO YOU WILL HAVE LEGAL DOCUMENTS THAT WILL HELP YOU ON A LONG-TERM BASIS.
WE ALSO REQUIRE THE PHYSICAL NEEDS ASSESSMENT.
SO ANYTIME THEY GO TO, THE REASON WE DO THIS ON A SALE IS CUZ WHEN THEY'RE SELLING THE PROJECT, THEY'RE PROBABLY MAKING MONEY.
SO THEY HAVE THE ABILITY TO PUT MONEY BACK IN AND CLEAN EVERYTHING UP.
AND WE DO IT EVERY SEVEN YEARS.
AND THAT HELPS US ENSURE THAT WE'RE GONNA HAVE A LONG-TERM, HIGH QUALITY PRODUCT.
ONE THING I DO WANT TO POINT OUT TO YOU IS YOU DO NOT HAVE THE ABILITY TO MANDATE THAT THEY MAKE ADDITIONAL INVESTMENTS AND BRING NEW THINGS ON.
FOR EXAMPLE, IF IN THE FUTURE, UM, NOBODY WANTS TO HAVE AN EXERCISE ROOM, THE ONLY THING THEY WANT TO HAVE IS A VIRTUAL VIDEO ROOM, YOU WILL NOT HAVE THE ABILITY TO FORCE THE DEVELOPER TO TAKE OUT THE EXERCISE ROOM AND PUT IN THE VIRTUAL VIDEO ROOM.
IT'S ONLY MAINTAINED AS A CLASS A PROJECT AS IT WAS BUILT.
THEY GET TO MAKE THE THE ECONOMIC DECISION ABOUT WHETHER OR NOT THEY'RE GONNA MAKE THOSE CHANGES.
HEY JIM, QUICK QUESTION ON THE, UH, ON THAT LAST PIECE.
ARE YOU AWARE OF ANY OR KNOW OF ANY PFCS THAT HAVE STAFF THAT DO THAT? OR IS THAT TYPICALLY THIRD PARTIES THAT DO INSPECTIONS, MAINTENANCE, THINGS LIKE THAT? WE, WE DO IT ALL BY THIRD PARTY.
UM, A THERE'S A LACK OF EXPERTISE ON STAFF'S LEVEL AND B, YOU'LL HAVE TO ANSWER TO THE PUBLIC.
AND THE BEST WAY TO ANSWER TO THE PUBLIC IS TO BE ABLE TO SAY, HERE IS A QUALIFIED THIRD PARTY ANALYSIS, TOTALLY INDEPENDENT.
AND SO WE, WE GENERALLY REQUIRE THIRD PARTIES
WE ALSO TRY TO MAKE THIS A LONG-TERM REVENUE SOURCE TO REPLACE THE LOST TAXES.
UM, OUR GOAL IS TO ENSURE THAT WE CAN TELL THE CITY OF DALLAS THAT THE REVENUE THAT WE ARE GENERATING IS EQUAL TO WHAT THE CITY OF DALLAS WOULD'VE GOTTEN GREATER THAN WHAT THE CITY OF DALLAS WOULD'VE GOTTEN IF THIS PROJECT WAS TAXED.
WE COLLECT A 250 THOU, OH, WE GOT WAY OFF THERE.
WE COLLECT A $250,000 FEE AT CLOSING.
THE REASON WE COLLECT THE $250,000 FEE AT CLOSING IS BECAUSE THERE WON'T BE ANY FEES GENERATED FROM THESE PROJECTS DURING CONSTRUCTION.
SO YOU'LL HAVE A TWO YEAR PERIOD WHERE YOU'LL BASICALLY GET NO CASH FLOW WHEN THE PROJECT GETS CONSTRUCTED, YOU'LL BEGIN RECEIVING ANNUAL RENT EQUAL TO THE ROUGHLY THE CITY TAXES.
WE GET 25% OF THE TAX SAVINGS AS IT FROM, AS THOUGH THE PROJECT WAS TAXABLE.
AND THAT 25% TAX SAVINGS GOES ON FOR THE 75 YEARS.
WE HAD A DISCUSSION AT ONE POINT ABOUT HOW ARE WE GONNA INCREASE THAT, UM, AND ULTIMATELY WHERE WE HAVE LANDED IS WE ARE GONNA INCREASE THAT NUMBER BY 3% A YEAR EVERY YEAR.
AND REGARDLESS OF WHAT'S HAPPENING, THE 3% NUMBER WAS SELECTED BECAUSE THAT'S WHAT MOST BANKS ARE WILLING TO ACCEPT.
THEY DO NOT LIKE THE CONCEPT OF RENT BEING ABLE TO PRIME AT A QUICK RATE.
SO, YOU KNOW, WE ALL KNOW OUR INFLATION RATE NOW IS AT LEAST SIX OR 7%.
SO YOU WON'T KEEP UP WITH HYPERINFLATION, BUT OVER THE LAST 10 YEARS,
[00:45:01]
THE INFLATION RATE WAS 2%.SO 3% IS THE LONG-TERM AVERAGE, AND THAT'S WHAT WE'RE USING.
WE'RE ALSO GONNA RECEIVE 15% OF THE INITIAL SALE PROCEEDS AFTER THE RETURN OF DEBT AND EQUITY.
UM, THAT IS A WAY TO COMPENSATE YOU AT A LARGER LEVEL THAN THE PROPERTY TAXES WOULD'VE BEEN.
WE OFTEN SEE THAT NUMBER BEING IN THE $3 MILLION RANGE.
SO THE, THE ANNUAL TAXES, DEPENDING ON THE SIZE OF THE PROJECT, YOU SHOULD EXPECT 200, 300001ST SALE.
YOU SHOULD EXPECT TWO OR $3 MILLION EVERY SUBSEQUENT SALE YOU GET 2% OF THE GROSS SALES PRICE.
AS A GENERAL RULE, WHAT WE HAVE BEEN SEEING IS THESE PROJECTS ARE SELLING AT A, ON THE FIRST SALE AT 90 TO A HUNDRED MILLION.
SO YOU SHOULD EXPECT THE SECOND SALE TO BE SOMEWHERE AROUND A HUNDRED MILLION.
YOU GET 2% OF THE GROSS, THAT'S 2 MILLION.
SO EVERY TIME THE PROJECT SELLS, YOU WOULD GET 2 MILLION.
YOU'RE ALSO GONNA RECEIVE 25% OF THE SALES TAX SAVINGS.
UM, GENERALLY THAT'S A NUMBER, 300, $400,000, UH, PAID HALF AT CLOSING AND HALF AT PROJECT COMPLETION.
NOW WHAT CAN YOU DO WITH THE MONEY? WELL, YOU CAN RETAIN IT AND YOU CAN UNDERTAKE HOUSING ACTIVITY.
YOU CAN DO ANY PUBLIC FACILITY YOU WANT TO DO.
FOR EXAMPLE, IF WE GOT TO A PROJECT AND FROM A WALKABILITY PERSPECTIVE, OUR PROJECT'S GONNA PUT IN SIDEWALKS AND THEN WE HAVE A VACANT LOT AND THERE'S NO SIDEWALKS AND THEN THERE ARE SIDEWALKS AFTER THAT.
YOU COULD PUT IN A SIDEWALK ON THE VACANT LOT.
IF YOU COULD GET THE OWNER TO AGREE, WHICH YOU PROBABLY COULD, UM, YOU COULD GIVE YOUR MONEY, UM, TO AN ENTITY TO LOWER HOUSING, DO MORE TRUE LOW INCOME HOUSING.
UM, YOU CAN GIVE THE MONEY TO THE CITY.
THE CITY CAN USE THE MONEY FOR ANY CITY PURPOSE IT WANTS TO USE THE MONEY FOR.
AND SO, YOU KNOW, OUR HOPE IS THAT SOMEWHERE DOWN THE ROAD, UM, YOU'VE GOT AN ANNUAL INCOME COMING IN THAT'S CONSISTENT.
UM, AND YOU COULD FUND OTHER PROJECTS.
YOU MIGHT FUND PROJECTS THAT THE CITY SAYS, I DON'T HAVE ANY WAY TO FUND THIS, BUT I'D REALLY LIKE TO GET IT FUNDED.
UM, AND SO I, YOU KNOW, HERE WE USE A LOT OF THE MONEY, UM, FOR SINGLE FAMILY HOUSING REHAB.
OUR CITY SAYS, I DO NOT, I DO NOT HAVE THE MONEY TO DO SINGLE FAMILY HOUSING REHAB EXCEPT THROUGH HUD.
AND IF YOU DO A REHAB PROJECT THROUGH HUD, YOU HAVE TO REHAB LITERALLY EVERYTHING IN THE HOUSE.
AND WHAT I NEED IS A FUND WHERE I CAN GO IN AND DO EMERGENCY REPAIRS.
SO PLUMBING REPAIRS, ELECTRIC REPAIRS IN THE NEIGHBORHOOD OF FIVE TO 20, $20,000.
AND AND YOU HAVE THE ABILITY TO DO THAT WITHOUT ALL THE STRINGS THAT ARE ATTACHED TO A FEDERAL PROGRAM.
SO THE YES, JIM, JIM, JUST, JUST A SECOND.
I I WOULD JUST WANNA KNOW THAT THERE IS PRECEDENCE FOR THIS BECAUSE, UH, THE DALLAS HOUSING FINANCE CORPORATION RE RECENTLY AUTHORIZED USING 5 MILLION OF 5 MILLION OF OUR REVENUES TO PROVIDE FOR SALE HOUSING DEVELOPMENT, UH, SUBSIDIES, UH, THROUGHOUT THE CITY.
SO WE'RE LOOKING AT THAT RIGHT NOW AND UH, WE'LL BE VERY EXCITED ABOUT THAT BECAUSE LIKE WE, LIKE WE SAID, THESE PROGRAMS, THE HFC AND THE PFC GENERALLY ARE PROVIDING, UH, ASSISTANCE, SUPPORT SUBSIDY, HOWEVER, WHATEVER YOU WANNA CALL FOR RENTAL DEVELOPMENT WITH THE REVENUES WE GET, WE CAN ALSO PROVIDE, UH, THE, THE, THE FOR SALE HOUSING, UH, DEVELOPMENT THAT MAY BE EASIER TO USE OF THESE FUNDS AND NOT USE HOME AND CDBG FUNDS THAT COME LIKE JIM MENTIONED WITH A LOT OF RESTRICTIONS.
SO IT GIVES US THAT OPPORTUNITY.
THERE'S ALSO THE, THE FUTURE OPPORTUNITY TO DO TARGETED REPAIR PROGRAMS. UH, THE CITY RECENTLY, UH, AUTHORIZED, UH, TARGETED REPAIR PROGRAMS IN WEST DALLAS AND HISTORIC 10TH STREET.
WE COULD DO THE SAME THING WITH SOME OF OUR FUNDS, ADD TO THOSE PROGRAMS, ADD TO OUR HOME REPAIR PROGRAM.
UH, THAT'S, THIS IS ALL DIRECTION THAT WILL BE MADE BY THE BOARD, BUT UM, I JUST WANTED TO USE THIS AS AN OPPORTUNITY TO KIND OF, YOU KNOW, TALK ABOUT THE GREAT THINGS THAT WE'RE DOING, UH, WITH THE, WITH THE OTHER KIND OF SISTER CORPORATION.
BUT IT'S SOMETHING WE CAN LOOK TO DOWN THE ROAD TO PROVIDE, UH, ALSO PROVIDE AND CAUSE THE DEVELOPMENT OF FOREST SALE HOUSING CUZ WE NEED ALL TYPES OF HOUSING IN THE CITY.
AND THIS IS JUST ONE OF THE OTHER WAYS IN THE FUTURE THAT WE'LL BE ABLE TO DO THAT.
[00:50:02]
ALL RIGHT, NEXT SLIDE.WE'RE GONNA HAVE A LEASE THAT'S 75 YEARS LONG.
THAT IS THE BIGGEST ISSUE WE EVER RUN INTO.
CONSTANTLY PEOPLE ARE LIKE, WHY 75 YEARS? AND THE ANSWER IS VERY SIMPLE.
THE BANKERS WILL NOT ACCEPT A SHORTER TERM.
THEY WILL NOT LOAN THE MONEY UNLESS THEY HAVE A 75 YEAR LEASE.
AND THE, THE, THE REAL REASON FOR THAT IS THE BANKER'S VIEW.
A 75 YEAR LEASEHOLD IS THE EQUIVALENT OF A FEE INTEREST LEASEHOLD.
AND SO THEY LOAN ON THE SAME BASIS.
I HAVE TRIED TO SHORTEN THAT AND I HAVE BEEN UN UNSUCCESSFUL.
UM, AND I JUST DON'T THINK THERE'S ANY WAY WE'RE GONNA BE ABLE TO DO LESS THAN 75 YEARS.
NOW THE QUESTION THEN BECOME, OKAY, SO WE GOT A 75 YEAR LEASE.
HOW, HOW ARE WE IN A POSITION WHERE THEORETICALLY AT SOME POINT IN THE FUTURE, THE PROJECT CAN BE ADDED BACK TO THE TAX ROLES AND AT LEAST TERMINATED IF THE LOW INCOME SET ASIDE IS TERMINATED AND THE DEVELOPERS ALL VIEW THIS AS MAYBE 20 YEARS FROM NOW, IT WILL BE MORE PROFITABLE FOR ME TO PAY TAXES AND CHARGE MARKET RATE RENT.
SO I WANT THE ABILITY AT SOME POINT IN THE FUTURE TO ESSENTIALLY GET OUT OF THIS AND I'M WILLING TO PAY YOU YOUR FAIR SHARE WHEN I DO, BUT I WANT THE ABILITY TO GET OUT.
AND, AND PRINCIPALLY IT'S BECAUSE THEY ASSUME MARKET RATE RENTS WILL BE SO MUCH HIGHER THAN OUR RESTRICTED RENTS.
THEY ALSO KNOW THAT THEORETICALLY, UM, THE TAX SYSTEM COULD CHANGE.
AND SO THEORETICALLY IN THE FUTURE, INSTEAD OF HAVING A MILL RATE OF $2 AND 75 CENTS, THERE MIGHT BE A MILL RATE OF A DOLLAR 50.
AND THEN IT'S NOT AS BIG OF AN ADVANTAGE TO THEM.
AND SO THEY WANT TO KNOW HOW LONG ARE YOU REQUIRING US TO KEEP THIS AFFORDABLE? UM, AND THAT'S, THAT'S ONE OF THE THINGS WE NEED TO GO AND, AND WORK THROUGH.
AND I'M GONNA START THAT THE, THE DEVELOPERS WANT THE LEASE AND THE AFFORDABILITY TO TERMINATE IF THE TAX EXEMPTION IS LOST, THAT THAT'S GOING TO BE A MANDATORY REQUIREMENT.
IF, IF YOU AREN'T GIVING ME THE BENEFIT OF THE TAX EXEMPTION, I WANT YOU OUT OF MY DEAL.
THE REASON FOR THAT IS BECAUSE IT WILL COST THEM A MILLION DOLLARS OR MORE IN ADDITIONAL EXPENSES.
CAUSE NOW THEY'VE GOTTA PAY TAXES.
SO THEY WANT TO MAKE AFFORDABILITY REQUIREMENT.
AND SO EVERY ONE OF THEM WILL, THAT WILL BE MANDATORY.
THE BANKS HAVE THE ABILITY UPON A FORECLOSURE TO ELIMINATE THE TAX EXEMPTION AND FORECLOSE ON YOUR FEE INTEREST IN THE BUILDING.
THAT THAT'S A REQUIREMENT OF THE BANKS LENDING THE MONEY.
I DON'T THINK THE BANKS WILL DO THAT BECAUSE THEN THEY HAVE TO PAY TAXES.
SO IN A FORECLOSURE EVENT, YOU'VE GOT A PROJECT THAT IS NOT CASH FLOWING, IT'S IN TROUBLE AND THEY ARE NOT GONNA WANT TO TAKE ANY ACTIVITY THAT INCREASES THEIR EXPENSES.
SO I DON'T SEE THEM ACTUALLY FORECLOSING YOU OUT.
I SEE THEM COMING TO YOU AND TRYING TO CUT A DEAL.
THEN THE QUESTION BECOMES UPON A SALE, CAN THEY ELIMINATE THE TAX EXEMPTION AND JUST SELL THE FEE INTEREST IN THE BUILDING, UM, PAY YOU YOUR FEES AND TERMINATE THE RELATIONSHIP.
AND WE HAVE TAKEN THE POSITION TO DATE.
IF YOU WANT TO DO THAT, YOU MAY ASK US TO DO THAT AND WE WILL CONSIDER IT.
AND NOW WE ARE GETTING A LOT OF PRESSURE, UH, FROM THE DEVELOPER SAYING, NO, WE WANT A TIME PERIOD WHERE THAT BECOMES AN OPTION TO US.
AND SO ONE OF THE THINGS THAT WE HAVE TO LOOK AT IS DO WE WANT TO SET A MINIMUM AFFORDABILITY PERIOD? UM, THE DEVELOPERS WOULD I THINK WOULD ACCEPT A 10 YEAR MINIMUM AFFORDABILITY PERIOD WITHOUT A LOT OF ISSUE.
15 YEARS IS THE TAX CREDIT INITIAL COMPLIANCE PERIOD.
UM, THAT IS ANOTHER STANDARD THAT WE COULD LOOK TO.
30 YEARS IS THE END OF THE TAX CREDIT EXTENDED COMPLIANCE PERIOD.
SO WHEN YOU DO A TAX CREDIT DEAL, IT'S ALWAYS GONNA HAVE LOW INCOME SET ASIDES FOR A 30 YEAR PERIOD.
[00:55:02]
AND SO, YOU KNOW, WE NEED TO KNOW WHETHER YOU FEEL LIKE WE WANT TO SET A PERIOD AND WE WANT TO SAY TO THE DEVELOPERS, YOU HAVE TO MAINTAIN THIS AFFORDABILITY FOR A 10 YEAR PERIOD, 15 YEAR PERIOD, 30 YEAR PERIOD OR SOME OTHER PERIOD YOU DETERMINE OR DO WE WANNA SAY NO, YOU HAVE TO MAINTAIN THIS AFFORDABILITY UNTIL WE AGREE OTHERWISE.SO IF YOU RUN OUT, COME TALK TO US, BUT WE'RE NOT GONNA GIVE YOU A TIMEFRAME IN WHICH YOU HAVE AN OPTION.
AND SO, YOU KNOW, THAT'S ONE OF THE THINGS THAT WE WANT TO GET YOUR FEEDBACK ON.
UM, OBVIOUSLY THE SHORTER THE TIME PERIOD, THE HAPPIER THE DEVELOPERS ARE.
IF IT'S SET UP AS WE'VE GOTTA DO 30 YEARS, WE'RE WE'RE NOT DOING THIS.
UM, YOU NEED TO KNOW THAT YOU ARE IN A COMPETITIVE WORLD.
UM, DEVELOPERS CAN DEVELOP ANYWHERE AND THE DEVELOPERS WHO DO THESE PUBLIC FACILITY CORPORATION DEALS LOOK AT ALL THE CITIES IN TEXAS.
NOBODY ELSE THAT I'M AWARE OF HAS A PER A MINIMUM SET ASIDE A PERIOD.
SO IF WE SAY, SAY, YOU KNOW, YOU MUST MAINTAIN THE SET ASIDE FOR A GIVEN NUMBER OF YEARS, YOU WILL BE THE FIRST ONE TO DO THAT.
UM, EVERYBODY ELSE HAS SIMPLY SAID, YOU, YOU, HOUSTON SAYS YOU CAN'T SELL IT FOR FIVE YEARS, WHICH GIVES THEM A GUARANTEE FIVE YEAR PERIOD.
UM, BUT THEY HAVEN'T MANDATED A MINIMUM AFFORDABILITY PERIOD.
WE HAVEN'T DONE IT PRINCIPALLY BECAUSE, UM, WE THINK THAT IT'S PROBABLY GONNA BE 20 YEARS OR MORE BEFORE THAT TAX EXEMPTION, UM, IS NOT MORE VALUABLE THAN THE RENT INCREASES.
SO IT'S A VERY, WE THINK IT'S GONNA BE A VERY LONG TERM BEFORE SOMEBODY WOULD WANT TO, TO MAKE THIS A HUNDRED PERCENT MARKET RATE PRODUCT.
BUT THAT'S SOMETHING WE WOULD BE INTERESTED IN YOUR FEEDBACK ON.
SO TO CLARIFY, JIM, THE AS LONG AS THE UM, THE LEASEE IS RECEIVING, THE OPERATOR IS RECEIVING THE TAX EXEMPTION, THEY HAVE TO MAINTAIN THE AFFORDABILITY.
WHAT YOU'RE SAYING IS WHAT WOULD BE THAT MINIMUM IF THEY WANTED TO FOREGO THEIR TAX EXEMPTION CORRECT.
FOREGO THEIR TAX EXEMPTION AND GET US OUT OF THE DEAL.
OKAY, SO ESSENTIALLY JUST TAKE OUR DEAL, PAY US OUR SHARE, UM, WHICH MIGHT BE, YOU KNOW, IF A FIRST SALE HAS HAPPENED, IT'S A TWO 2% OF FAIR MARKET VALUE FEE AND SAY Y'ALL HAVE BEEN A GREAT PARTNER, BUT NO MORE.
UM, AND SO, BUT THAT IS A QUESTION THAT WE ARE RUNNING INTO CONSISTENTLY, UM, WHERE THE DEVELOPERS SAY NO, WE WANT THE ABILITY TO OPT OUT.
UM, SO THAT THAT IS SOMETHING WE WOULD LOVE TO GET YOUR FEEDBACK ON.
IF, IF THE BOARD HAS, UM, SPECIFIC THOUGHTS, UM, AND IT, AND IT'S ALSO A IT, THIS IS A DOUBLE-EDGED SWORD.
UH, THE CITY COUNCIL GAINS TAXES AND SO THERE ARE, THERE ARE GOING TO BE MEMBERS IN PUBLIC WHO SAY, NO, WE WON OUT OF THIS DEAL.
GET IT BUILT, MAINTAIN THE AFFORDABILITY, BUT THEN GET IT ON THE TAX ROLLS.
AND SO, UM, YOU KNOW, GENERALLY WE WANT TO MAINTAIN AFFORDABILITY AS LONG AS WE CAN.
WE THINK THAT'S THE REAL ADVANTAGE TO THE CITY.
UM, BUT I CAN ASSURE YOU THAT THERE ARE SOME WHO WILL SAY WE WANT THE ABILITY TO, TO GET OUT OF THESE DEALS AS WELL.
SO THAT, THAT IS, THAT IS SOMETHING, UH, IF NOT TODAY IN THE NEAR FUTURE, WE'D LIKE TO HAVE SOME DISCUSSION ON.
ANY QUESTIONS ON THAT? I WANNA PAUSE HERE TO SEE IF ANYBODY HAS ANY IMMEDIATE FEEDBACK OR IS THAT SOMETHING WE WANT TO COME BACK AND DISCUSS? I HAVE A QUESTION, JIM.
THE, UM, WHAT HAVE THE OTHER CITIES DETERMINED HAS, HAS SAN ANTONIO ANSWERED THAT QUESTION 10, 15, 30 YEARS? THAT'S ONE, ONE THOUGHT THERE.
HAVE YOU GOTTEN ANY PUSHBACK IN YOUR OTHER MARKETS
[01:00:01]
FROM OTHER TAXING UH, ENTITIES, SCHOOLS, COUNTY, COUNTY HOSPITAL? UH, WE HAVE GOTTEN ALMOST NO PUSHBACK FROM THE COUNTIES.UM, IN FACT THE COUNTIES ARE NOW VERY ACTIVELY EXPLORING SETTING UP THEIR OWN PFCS.
UM, THEY MIGHT DO IT THROUGH THEIR HOUSING AUTHORITY.
THEY MIGHT DO IT DIRECTLY IN TERMS OF SCHOOLS.
UM, AS A GENERAL RULE, UM, I HAD ONE ISSUE WITH THE SCHOOL DISTRICT, UM, PRINCIPALLY CUZ THEY DIDN'T UNDERSTAND HOW IT WORKED.
UM, THE SCHOOLS ARE NOT ADVERSELY AFFECTED ON AN OPERATING BASIS.
THE SCHOOLS RECEIVE A GIVEN AMOUNT PER CHILD PER DAY.
IT'S BASICALLY, UM, ABOUT $7,000 PER STUDENT PER YEAR.
AND IF YOU ARE A WEALTHY SCHOOL DISTRICT THAT COMES OUTTA YOUR LOCAL TAXES AND YOU PAY THE EXCESS OVER TO THE STATE, IF YOU'RE A POOR SCHOOL DISTRICT, THEN YOUR LOCAL TAXES MAKE UP A PORTION AND THE BALANCE COMES FROM THE STATE, BUT THE SCHOOL GETS THE EXACT SAME DOLLAR AMOUNT.
SO WHETHER SOMETHING IS ON THE ROLLS OR OFF THE RULES DOES NOT AFFECT THE SCHOOL DISTRICT'S OPERATIONS.
IN GENERAL, THE SCHOOLS MAY ACTUALLY BENEFIT.
UM, IF YOU PUT 30 CHILDREN, UH, ADDITIONAL CHILDREN INTO THE SCHOOL AND THE SCHOOL HAS ROOM FOR THEM, THAT'S, UH, MY MATH IS RIGHT.
THAT IS $140,000 A YEAR OF ADDITIONAL OPERATING EXPENSES.
IF THE SCHOOL IS OVERCROWDED AND YOU EXACERBATE THE CROWDING SITUATION, THAT CAN BE AN ISSUE.
THE SCHOOLS DO NOT GET THE TAXES THAT THIS PROJECT WOULD'VE GENERATED TO PAY FOR FUTURE BOND ISSUES.
SO THE SCHOOLS DO LOSE OUT IN THE ABILITY TO ISSUE FUTURE BONDS AND COLLECT REVENUE OFF OF THIS BUILDING.
AS A GENERAL RULE, SCHOOLS HAVE NOT, UH, SAID ANYTHING ABOUT THESE PROJECTS.
UM, WE'VE HAD SEVERAL SCHOOLS IN SAN ANTONIO WHO HAVE SAID, NO, WE ABSOLUTELY SUPPORT THESE PROJECTS BECAUSE WE NEED MORE STUDENTS.
AND SO THESE PROJECTS ARE GOOD FOR US.
UM, I HAD A SCHOOL DISTRICT IN BURNIE, UM, THAT CAME UP IN ARMS CUZ THEY WEREN'T CONSULTED.
UM, AND THEN ONCE WE ACTUALLY EXPLAINED HOW THE SYSTEM WORKED AND HOW IT AFFECTED THEM, UM, THEY ULTIMATELY APPROVED THE PROJECT.
UM, SO WE HAVE NOT HAD A REAL ISSUE WITH SCHOOLS AS WE GO THROUGH THIS PROCESS.
UM, AND THE COUNTY'S THE COUNTY.
THE SHORT ANSWER TO THE COUNTY IS IF YOU DON'T LIKE US SUPPORTING WORKFORCE HOUSING, UH, OR YOU THINK WE ARE SOMEHOW ADVERSELY AFFECTING YOU SET UP A P F C, MAKE THE MONEY OFF THE P F C AND, AND THEN THE CITY IS THE ONE THAT DOESN'T COLLECT THE TAXES.
BUT AS A PRACTICAL MATTER, MOST GOVERNMENT INDIES IN IN OUR WORLD TODAY RECOGNIZE THAT THERE ARE SOME REAL BENEFITS ON A BIG PICTURE BASIS OF PROVIDING AFFORDABLE WORKFORCE HOUSING.
THAT THERE'S AN ENORMOUS SHORTAGE.
UM, AND THIS IS JUST ONE OF THE TOOLS.
ALRIGHT, ONE OF THE THINGS I WANTED TO GO THROUGH IS HOW WE EVALUATE POTENTIAL PROJECTS.
UM, JIM, BEFORE YOU DO THAT, UM, JUST KIND OF WANTED TO ASK ANOTHER, UH, FOLLOW UP QUESTION.
UH, HAVE THERE, AND YOU MAY HAVE ALREADY SAID THIS, I APOLOGIZE, BUT HAVE THERE BEEN ANY DEALS WHERE DEVELOPERS, I KNOW YOU SAID DEVELOPERS ARE COMING TO THE TABLE WANTING KIND OF AN AN OUT CLAUSE, BUT HAVE YOU SEEN ANY PROJECTS WHERE THEY DETERMINED THEY SAID, WE WANT TO CHANGE, CHANGE, YOU KNOW, OUR, OUR AGREEMENT? I HAVE NOT.
UH, WELL LET ME, LET ME, LET ME ANSWER THE QUESTION THAT I THINK YOU WERE ASKING AND THEN I NEED TO QUALIFY IT.
I HAVE NOT SEEN A SINGLE PROJECT WHERE THE DEVELOPERS CAME BACK AND SAID, WE WANT TO GO ON THE RULES.
HAVE HAD PROJECTS WHERE THE DEVELOPERS HAVE COME BACK AND SAID, WE WANT TO CHANGE OUR AGREEMENT.
UM, I HAVE HAD PROJECTS WHERE, UM, THE DEVELOPERS HAVE COME BACK DURING COVID AND SAID, HEY, WE'RE HAVING A REALLY TOUGH TIME RIGHT NOW.
UM, WE DON'T WANNA PAY YOU THE RENT.
[01:05:01]
TO, TO BASICALLY HELP MAINTAIN PEOPLE IN PLACE, NOT WE'LL CLOSE 'EM OUT.UM, WE'D LIKE YOU TO, TO WAIVE OUR RENT FOR A YEAR.
UH, WHICH WE ENDED UP SAYING, NO, WE WON'T WAIVE THE RENT, BUT WE WILL YOU TO MOVE IT TO THE FIRST SALE.
UM, WE'VE HAD, WE'VE HAD PEOPLE COME BACK AND ASK FOR MINOR CHANGES IN DOCUMENTS.
UM, BUT I HAVE, I, I HAVE NOT HAD ANY SITUATIONS WHERE SOMEBODY CAME BACK AND SAID, TH THIS RELATIONSHIP'S NOT WORKING.
WE WANT OUT OR WE WANT TO PAY TAXES.
WE WANTED, WANTED TO COVER HOW WE EVALUATE PROJECTS.
UM, OBVIOUSLY YOU'VE SEEN THE APPLICATIONS, UM, WE GET A VERY DETAILED APPLICATION THEN YOUR STAFF, YOUR FINANCIAL ADVISORS, AND I REVIEW THE PROPOSALS.
UM, THE FINANCIAL ADVISORS RUN SOME CALCULATIONS.
UM, THE, THE CLASSIC ONE THAT THEY DO IS WHAT WE CALL THE, BUT FOR TEST, WE WANT TO KNOW FOR SURE THAT THEY COULDN'T DO THIS PROJECT WITHOUT YOUR PARTICIPATION.
IF THEY COULD DO THE PROJECT WITHOUT YOU, THEN OUR ADVICE IS DO THE PROJECT.
UM, W WE SHOULD ONLY BE DOING PROJECTS THAT CAN'T BE DONE OTHERWISE.
AND THAT DOES INCLUDE THE AFFORDABILITY.
UM, WE GO TO THEM, WE, WE OFTEN GET A ONE PAGE PROFORMA AND WE HAVE TO GO BACK TO THEM AND TELL THEM NO, WE NEED THE FULL PROFORMA.
AND WE OFTEN GET, OH, I'M SORRY, THAT'S PROPRIETARY.
WE'RE NOT GONNA SEND IT TO YOU.
AND OUR ANSWER TO THAT IS THEN, SORRY, YOU SHOULDN'T DO BUSINESS WITH A PUBLIC ENTITY.
WE NEED A FULL PROFORMA SO WE CAN SEE WHAT'S HAPPENING.
AND ALSO SO WE CAN EVALUATE THE EFFECT OF WHAT WE'RE ASKING FOR.
UM, IF THE PROFORMA IS, SHOWS A REALLY STRONG PROJECT PAYING US ALL OF OUR STANDARD FEES, THEN WE'RE GONNA GO BACK TO THEM AND WE'RE GONNA ASK FOR 10% OF THE UNITS AT 60% MEDIAN INCOME.
UM, WE, WE ARE TRYING TO DRIVE THEIR RETURNS DOWN TO A LEVEL WHERE THEY CAN FINANCE THE PROJECT, BUT WHERE WE HAVE MAXIMIZED THE COMMUNITY BENEFIT, AND SO WE WANT THE PROJECT LOOK AT THEIR RETURNS.
I THINK NOW MOST EQUITY PROVIDERS ARE DEMANDING A MINIMUM 20% I R R ON THEIR INVESTMENT AND THEY WILL NOT INVEST ON NO BONDS.
ONE, ONE MORE QUESTION, UH, ON THE, WE CAN'T DO IT WITHOUT YOU CHECKLIST.
UM, DOES THAT MEAN THAT WE ACTUALLY HAVE IT AS PART OF OUR CHECKLIST THAT, UH, IF IT HAD, IF THE PROJECT HAD BEEN QUALIFIED FOR A FOUR 9%, UH, L TECH DEVELOPMENT AND THEY DIDN'T GO FOR IT, WOULD THEY NOT MEET OUR QUALIFICATIONS BECAUSE THEY HADN'T CHECKED EVERY BOX OF EVERY TOOL AVAILABLE TO THEM? AND HOW, HOW WOULD WE QUALIFY? HOW, HOW WOULD WE, UH, CONFIRM THAT? WELL, FIRST OFF, ALL OF THE 4% AND 9% DEALS ARE PUBLIC.
SO WE CAN CONFIRM THOSE THINGS.
BUT RIGHT NOW, UM, THE, THE PROBLEM YOU USUALLY HAVE IS THEY GET A PIECE OF PROPERTY UNDER CONTRACT, UM, STANDARD CONTRACTS IN TODAY'S MARKET, YOU USUALLY HAVE A 90, UH, 90 DAY DILIGENCE PERIOD, SOMETIMES SHORTER.
UM, THERE IS NO POSSIBLE WAY TO DO A 4% OR A 9% GET THE 4% OR 9% CREDITS IN A 90 DAY PERIOD.
RIGHT NOW, UM, MANY OF THE DEALS THAT WE HAVE SEEN, UH, WERE IN THE 4% TAX CREDIT ROUND.
THEY COULD NOT GET THE VOLUME CAP FROM THE TEXAS BOND REVIEW BOARD THAT IS NECESSARY TO DO A 4% DEAL.
THEY KNEW THEY WOULD NOT GET IT AT ALL THIS WHOLE YEAR.
SO THEY ELECTED TO DO A P FFC PROJECT, UM, BECAUSE THEY CAN'T HOLD ONTO THE REAL ESTATE FOR NEXT YEAR'S ROUND AND THEY CAN'T KEEP IT TIED UP THAT LONG.
AND VIRTUALLY NONE OF THESE DEVELOPERS, UM, OUR LAND BANKERS.
THAT, YEAH, THAT ANSWERS MY QUESTIONS.
CAUSE SO IT'S NOT NECESSARILY THAT THEY, UM, DIDN'T HAVE
[01:10:01]
TO HAVE SUBMITTED AN APPLICATION OR DID HAVE TO HAVE SUBMITTED AN APPLICATION.IT'S MORE OF THAT LIKE THE TERMS THAT I'VE SEEN IN THE FOUR 9%, SIR, YOU KNOW, 240, 270 DAY FEASIBILITIES.
AND YOU'RE JUST SAYING IT'S ALL OF A, A SITE CONTROL ISSUE THEN THAT THEY, THAT THE SELLER JUST COULDN'T, JUST COULDN'T GO THAT LONG.
USUALLY WON'T WAIT UNTIL AFTER 90 DAYS.
WELL THAT, THAT CLARIFIES THAT FOR ME.
ONE OF THE OTHER THINGS THAT WE DO IS WE TRY TO MAKE SURE YOUR TERMS ARE ON PAR WITH OTHER PFCS AND GO TO THE NEXT SLIDE, PLEASE, PLEASE.
UM, SO THE HOUSTON HOUSING AUTHORITY HAS A VERY ACTIVE PFC PROGRAM.
THEY RECEIVE A SEVEN FIVE BASIS POINT CLOSING FEE.
THAT'S USUALLY ABOUT 400 GRAM.
THEY RECEIVED 10 TO 15% OF THE NET OPERATING INCOME AFTER PREFERRED RETURN.
YOU'RE RECEIVING 15% AT THE, UH, THEY USUALLY ARE NOT GETTING AN ANNUAL RENT UNTIL AFTER THE FIRST OR SECOND SALE, UM, BECAUSE THEY'RE TAKING 15% OF THE NOI AND THERE IS NO NOI MOST OF THE TIME PROFORMA UNTIL AFTER THE SECOND SALE.
UM, THEY TAKE 10 TO 15% OF THE INITIAL SALE PROCEEDS, WHICH IS SIMILAR TO WHAT YOU DO.
THEY TAKE A 1% OF SUBSEQUENT SALE FEE, AND WE'RE TRYING TO GET 2%.
THEY DO DEMAND THAT 10% OF THEIR PROJECTS IS, UH, RESTRICTED TO INDIVIDUALS WHOSE INCOME IS 60% IMMEDIATE.
THEY ARE HOUSING AUTHORITY, THEREFORE, THEY'RE PUSHING THE AFFORDABILITY, UH, ISSUE.
AND SO, UM, OVERALL FROM A FINANCIAL PERSPECTIVE, YOUR TERMS ARE, ARE A LOT BETTER, UM, THAN WHAT HOUSTON'S GETTING.
BEAR COUNTY USES THE SAME TERMS YOU USE SAN ANTONIO'S NOT CURRENTLY PARTICIPATING IN PFC DEALS.
UM, TRAVIS COUNTY BASICALLY USES THE SAME TERMS YOU DO.
UM, AND AUSTIN, UH, JUST THE CITY OF AUSTIN JUST CREATED A PFC AND THEY'RE JUST STARTING, SO I DON'T HAVE THEIR TERMS YET.
AND THEN EL PASO DID A BUNCH OF PFC DEALS, BUT THEY WERE ALL RAD DEALS.
UM, RAD DEALS ARE PUBLIC HOUSING DEALS, AND THEY DID NOT RECEIVE BACK INCOME ANYWHERE NEAR WHAT YOU'RE RECEIVING FROM THESE TRANSACTIONS.
UM, SO AS A PRACTICAL MATTER, YOU ARE EITHER ON PAR OR FINANCIALLY BETTER THAN ANY OF THE OTHER PFCS AROUND.
AND, AND I'LL BE HONEST WITH YOU, PART OF THAT IS BECAUSE THE PFC PROGRAM EVOLVES CONSTANTLY AND WE HAVE BEEN ABLE TO NEGOTIATE BETTER AND BETTER TERMS AS WE'VE GONE ALONG.
UH, THE FIRST FEW DEALS WE DID, WE WERE JUST TRYING TO GET AN EQUITY INVESTOR TO PARTICIPATE.
NOW THERE ARE LOTS OF EQUITY INVESTORS WHO WILL PARTICIPATE.
SO WE'RE BE WE'RE, WE'RE BETTER ABLE TO GET MORE BACK TO THE COMMUNITY OUT OF THE DEEP.
UM, WE DON'T THINK YOU HAVE VERY BIG RISK.
UM, YOU MAY NOT MAKE THE PROJECTED PROFITS, BUT YOU'VE GOT NO INVESTMENT IN THE PROJECT, AND YOU SHOULD HAVE NO LIABILITY FOR ANY OF THE DEBT.
IF A PROJECT FAILS, THE EQUITY PROVIDER OR LENDER CAN TAKE OVER THE PROJECT AND THEY CAN KICK YOU OUT.
HOWEVER, HOWEVER, IF THEY DO THAT, THEY GOTTA PAY TAXES.
SO WE'RE NOT SURE THAT'S LIKELY THE ONE THING YOU DO NEED TO KNOW IS YOU CAN'T WITHDRAW, YOU CAN'T CHANGE YOUR MIND AND WALK AWAY.
UM, AND SO THESE ARE LONG TERM DEALS.
UM, THE OTHER THING IS YOU CAN GET SUED.
UM, THE PLAINTIFF'S ATTORNEYS SUE EVERYBODY THEY CAN FIND TO SUE.
UM, WE HAVE THE PROJECTS FULLY INSURED AND FULLY INDEMNIFIED.
UM, WE HAVE, I DON'T EVEN KNOW HOW MANY TIMES, PROBABLY 10 OR 15 TIMES WHERE THE PO FACILITY CORPORATIONS HAVE BEEN SUED IN THESE DATES.
AND IN EVERY INSTANCE WE HAVE SIMPLY TURNED TO THE DEVELOPER AND SAID, YOU NEED TO TAKE CARE OF THIS.
AND THEY HAVE TAKEN CARE OF IT.
UM, AND SO, UM, BASICALLY THEIR INSURANCE STEPS UP, PROVIDES A DEFENSE.
WE'RE NAMED AS AN ADDITIONAL INSURED ON ALL THE POLICIES.
AND IN THE TYPICAL LAWSUITS, UM, THEY'RE TYPICALLY SLIP AND FALLS.
UM, I DID HAVE A DEATH CASE, UM, IN ONE OF THESE DEALS WHERE SOMEBODY DIED
[01:15:01]
AND NONE OF THE PFCS HAVE HAD ANY LIABILITY TO DATE.THE OTHER THING YOU NEED TO KNOW IS THAT YOUR MEETINGS ARE OPEN TO THE PUBLIC, SAME AS CITY COUNCIL.
UM, SO YOU COULD HAVE A NEIGHBORHOOD UP IN ARMS COME, UM, SHOW UP AT A BOARD MEETING.
UM, AND YOU JUST NEED TO BE AWARE OF THAT.
UM, FROM MY PERSPECTIVE, I THINK THAT HAS A BENEFIT, UM, BECAUSE IF YOU GOT A PROJECT THAT'S NOT GOING WELL, OR NOT, NOT TREATING THE COMMUNITY PROPERLY, IT GIVES YOU THE ABILITY TO EXERCISE SOME INFLUENCE, UM, AND STEP INTO THE MIDDLE AND SAY, OKAY, MR. DEVELOPER, HOW ARE WE GONNA SOLVE THIS? AND IF YOU DON'T SOLVE IT, UM, THEN WE'VE GOT THE LEAST TO TURN TO AND WE CAN TRY AND ENFORCE OUR PROVISIONS.
UM, SO, UM, THAT'S A DOUBLE-EDGED SWORD, BUT I THINK IT'S A BENEFIT TO A GOVERNMENT ENTITY TO BE ABLE TO HAVE COMMUNITY INPUT AND HAVE THE ABILITY TO TRY AND ASSIST THEIR COMMUNITIES IF THERE'S A NEED TO.
UM, WE COULD GO TO THE NEXT SIDE.
UM, AND I I'M GOING TO RECOMMEND SINCE WE'RE ALREADY AT ONE 17, THAT, THAT Y'ALL SPEND SOME TIME LOOKING AT THIS AND ASK QUESTIONS.
BUT BASICALLY IT'S A 75 YEAR LEASE STRUCTURE.
UM, WE'RE NOT PART OF THE OWNERSHIP ENTITY OF THE TENANT.
WE GET ALL OF OUR INCOME THROUGH THE LEASE.
UM, ERIN, IF YOU'LL GO TO THE NEXT SLIDE, UM, YOU'LL SEE THAT, YOU KNOW, THERE'S A COMMERCIAL LOAN, THERE'S A DEVELOPMENT ENTITY.
WE HAVE A DEVELOPMENT AGREEMENT WITH.
WE DO SERVE AS THE GENERAL CONTRACTOR, AND WE SUBCONTRACT EVERYTHING BACK TO A DEVELOPER AFFILIATE.
THAT'S THE CONSTRUCTION COMPANY THAT BRINGS ABOUT A SALES TAX EXEMPTION FOR THE PROJECT, WHICH HELPS 'EM GET IT FINANCED.
AND THEN THERE'S A THIRD PARTY MANAGEMENT ENTITY.
UM, AND WE DO APPROVE THE MANAGEMENT ENTITIES ON THE FRONT END, UM, AND MAKE SURE THAT THEY'RE QUALIFIED MANAGEMENT COMPANIES.
AND SO WITH THAT, ANY OTHER QUESTIONS THAT YOU HAVE? ANY OTHER QUESTIONS THAT YOU GUYS HAVE GOTTEN THAT I HAVEN'T? HEY, JIM.
THIS MAY ACTUALLY, UH, MICHAEL, THIS MAY BE A, A QUESTION FOR THE CITY ATTORNEY'S OFFICE.
UM, YOU TALKED EARLIER ABOUT THE, BUT FOR, UM, UNDERWRITING ANALYSIS, AND I'M JUST CURIOUS AS TO WHAT, UM, BECAUSE I KNOW THERE'S SOME FINANCIAL ANALYSIS AT A COUNCIL LEVEL THAT HAPPENS IN EXECUTIVE SESSION, AND THERE'S SOME THAT'S PUBLIC INFORMATION.
AND I, I'M JUST CURIOUS AS TO WHAT, UM, HOW THAT BREAKS DOWN HERE AND WHAT WE COULD, UM, WHAT WE COULD ACTUALLY SEE IN THIS SESSION, AND THEN WHAT WE MIGHT NEED TO SEE IN EXECUTIVE SESSION ON THE FINANCIAL ANALYSIS.
BECAUSE FROM MY PERSPECTIVE, THE MORE THE MERRIER AND I'D LOVE TO SEE IT ALL.
WE HAVE NOT TRADITIONALLY HANDED OUT FINANCIALS, UH, TO THE BOARD JUST BECAUSE THEN THEY BECOME PUBLIC AND MOST OF THE DEVELOPERS DO NOT WANT THEM PUBLIC.
WE HAVE PROVIDED SUMMARY INFORMATION.
UM, UM, A LOT OF IT IS CONTAIN, ISN'T IT CALLED? IS THERE NOT? YEAH.
UH, MOST OF THE FINANCIAL INFORMATION IS IN THE APPLICATION.
UM, I WOULD, WE'VE BEEN ABLE TO, WHEN WE TALK WITH OUR OPEN RECORDS, UH, CITY ATTORNEYS, THAT THE FINANCIAL INFORMATION ISN'T SUBJECT TO OPEN RECORDS, UM, IS MOST IMPORTANTLY BEFORE IT'S APPROVED BY THIS BOARD AND COUNCIL.
AND THEN EVEN AFTER THAT, A WHOLE BUNCH OF THE INFORMATION COULD BE REDACTED.
I HAVEN'T ACTUALLY HAD ANY REQUESTS FOR IN DEPTH FINANCIAL INFORMATION.
UM, BUT IF, IF IT WAS TO BE, I, I DON'T KNOW WHAT IT, WHAT IT'S LIKE WHEN WE SUBMIT FINANCIAL INFORMATION TO ACTUAL CITY COUNCIL, LIKE WHAT THEY SEE AND WHAT THEY DON'T SEE.
LIKE I'LL ASK MICHAEL DOSS, UH, ASSISTANT CITY ATTORNEY TO KIND OF SPEAK TO THAT IF HE CAN.
UH, JUST TO ADD TO THAT, KYLE, UM, ANYTHING DISCLOSED AS CITY COUNCIL COULD MAINTAIN THAT CONFIDENTIALITY WHILE THERE'S AN OPEN APPLICATION, UM, AND THEN TO ADDRESS THE OPEN MEETINGS ACT QUESTION, THERE ARE EXCEPTIONS TO, UH, WHAT, UH, HAS TO BE TALKED ABOUT IN PUBLIC.
[01:20:01]
ONE OF THOSE EXCEPTIONS HAS TO DO WITH WHETHER OR NOT, UH, DISCUSSING SOMETHING WOULD PUT THE CITY AT A, UH, ECONOMIC DISADVANTAGE, UM, WHEN NEGOTIATING A DEAL.SO THERE ARE, THERE ARE EXCEPTIONS TO THE OPEN MEETINGS ACT AS WELL AS TO, UH, UH, THE PUBLIC INFORMATION ACT THAT WOULD BE APPLICABLE TO, UH, CERTAIN FINANCIAL INFORMATION WHILE A DEAL IS BEING NEGOTIATED.
AND ONE OF THE BIGGEST THINGS THERE IS, LIKE IF IN PART OF OUR FINANCE, WHEN WE'RE EVALUATING DEALS, WE'RE LOOKING AT THE COST OF THE LAND.
AND IF WE WERE TO DELIBERATE HERE AND DISCUSS AND PROVIDE THE FINANCIAL INFORMATION AND SHOW WHAT THAT ACQUISITION COST COULD BE, THAT MEANS THAT THE PUBLIC NOW SEES WHAT THAT BID IS AND, OH, I CAN, I CAN BUY THIS FOR A HALF MILLION DOLLARS MORE.
AND THEN OUR DEVELOPERS HAVE ANOTHER COUNTER COUNTER OFFER.
SO THAT'S ONE OF THE, JUST AN EXAMPLE OF WHERE OUR DISCUSSION OF THIS KIND OF, IN AN OPEN, OPEN SETTINGS AND OPEN MEETINGS, UH, SECTION THAT COULD REALLY BE TO OUR DISADVANTAGE.
SO THAT'S JUST ONE OF THE EXAMPLES.
UH, JUST KIND OF A SECOND FOLLOW UP TO, UH, KEITH'S QUESTION FROM EARLIER, UH, REGARDING THE BUT FOUR ANALYSIS.
UM, I JUST WANNA GET SOME CLARITY, UNDERSTANDING THAT, YOU KNOW, IF THEY CAN DO IT OTHERWISE OUTSIDE THE P FFC THAN THEY SHOULD, BUT WERE YOU COMPLYING THAT WE SHOULD BE A LAST RESORT OR THAT WE SHOULD JUST BE AN OPTION THAT THEY CONSIDER? NO, NOT, NOT, NOT.
I DON'T KNOW WHY I HAVE SO MUCH ECHO.
UM, YOU'RE DEFINITELY NOT A LAST RESORT.
I THINK YOU'RE JUST AN OPTION THEY WOULD CONSIDER, BUT WE, WE, WE SHOULD NOT PROVIDE PROPERTY TAX EXEMPTION TO A PROJECT THAT CAN GET FA FINANCED WITHOUT IT.
IN, IN OTHER WORDS, THE, FROM OUR PERSPECTIVE, THERE IS ALWAYS A EQUATION OF COMMUNITY BENEFIT VERSUS THE TAX EXEMPTION.
AND WE NEED TO MAKE SURE THAT OUR TAX EXEMPTION IS BEING USED TO DELIVER PROJECTS THAT WOULDN'T OCCUR OTHERWISE.
CAUSE OTHERWISE WE'RE JUST BENEFITING THE DEVELOPMENT.
BUT THEN AGAIN, UH, TO CLARIFY, YOU'RE THEN, YOU'RE SAYING THAT, UH, IF A PRIVATE DEVELOPER TO COME FORWARD AND HAVE THE SAME, UH, UM, AFFORDABLE HOUSING MIXTURE, THAT, THAT WE WOULD REQUIRE, UM, I DON'T KNOW HOW YOU WOULD TRACK THAT OR ANYTHING.
I DON'T THINK IT'S, HAS THAT HAPPENED TO DATE? I DON'T THINK IT HAS.
AT LEAST NOT IN DALLAS, UH, AN AFFORDABLE HOUSING, UH, MA UH, DEVELOPMENT DONE WITHOUT ANY, UH, ASSISTANCE FROM A GOVERNMENTAL ENTITY.
I DON'T KNOW, JIM, YOU MAY HAVE CUT OUT, BUT, UH, I CAN CONFIRM.
I HAVEN'T GOTTEN ANY PROPOSALS OR HAVE SEEN, UH, AFFORDABLE HOUSING DEVELOPED OUT OF THE KINDNESS OF ANYBODY'S HEART.
UH, FROM WHAT I, FROM WHAT I'VE SEEN THERE, YOU HAVE TO HAVE SOME SORT OF PARTICIPATION WITH THE CITY AND, UH, DIRECTOR WINNERS, JUST TO KIND OF ANSWER YOUR COMMENT, THERE ARE OTHER OPTIONS TO POTENTIALLY GET A SIMILAR TRANSACTION DONE THROUGH, FOR INSTANCE, THE FOUR AND 9% TAX CREDIT PROGRAM.
BUT A LOT OF THE, A LOT OF THE PROJECTS THAT WE'RE SEEING, AS JIM MENTIONED, THEY DON'T WANNA HAVE THEIR LAND TIED UP FOR 12 TO 24 MONTHS AS A DEVELOPER CONSUMMATE A TAX CREDIT PROPOSAL.
SO IT'S, IT'S BA THAT THAT SHOULD, WHILE IT'S NOT IMPOSSIBLE, IT'S JUST VERY UNLIKELY.
AND THEN THERE'S ALSO THE FACT THAT IN CERTAIN AREAS OF THE CITY, UH, WE ARE TRYING TO ACTUALLY GROW INCOMES AND GET MORE MARKET RATE UNITS.
SO WE DON'T, A TAX CREDIT DEVELOPMENT MAY NOT BE WHAT THE COMMUNITY WOULD ACTUALLY WANT IN THAT AREA WHERE IT'S, IT'S ALL 60% AAMI AND BELOW, UH, CERTAIN AREAS OF THE CITY.
WE, WE, WE WANT TO INCREASE THOSE IN INCOMES.
SO, UH, PFC DEAL IS ACTUALLY MORE ADVANTAGEOUS FOR US.
SO THERE'S A LOT OF DIFFERENT THINGS TO LOOK AT.
ALL THE, THE BIGGEST POINT THOUGH IS THAT IF WE DIDN'T GIVE THE PROPERTY TAX EXEMPTION, THE PROJECT WOULD NOT BE ECONOMICALLY FEASIBLE.
YOU WOULD NOT HAVE RESPONSIBLE EQUITY AND DEBT PROVIDERS WORKING ON THE DEAL.
UH, EVERYBODY NEEDS TO HAVE AT LEAST ENOUGH RETURN IN THAT DEAL TO WANT TO CARE ABOUT THE PROJECT, BUT WE ALSO CAN'T OVER SUBSIDIZE 'EM.
SO THAT'S, THAT'S KIND OF HOW WE LOOK AT IT.
THERE'S A LOT OF DIFFERENT, DIFFERENT THINGS, BUT THAT'S THE, THE BASIS FOR IT.
[01:25:03]
ALL RIGHT.ANY OTHER QUESTIONS OR COMMENTS? ALL RIGHT, JIM, THANK YOU SO MUCH FOR YOUR TIME, UM, TODAY.
IT IS, IT'S AMAZING HOW DIFFERENT THIS SOUNDS AFTER A FEW MEETINGS IN YOU UNDER YOUR BELT
SO THANK YOU SO MUCH FOR THAT.
UM, ONE OF THE COMMENTS I, I DO WANNA MAKE, I THINK WE, WE TALKED, UH, IN GREAT DETAIL ABOUT COMING UP WITH OUR CHECKLIST AND THINGS LIKE THAT.
SO, UM, I JUST, UH, TALKED TO KEN AND I KNOW THE GOVERNANCE COMMITTEE WILL BE, UH, UH, SCHEDULING, UH, THEIR FIRST MEETING AND GETTING SOME THINGS TOGETHER.
SO AS YOU THINK ABOUT YOUR CHECKLIST AND THOSE KIND OF THINGS, REGARDLESS OF HOW, YOU KNOW, BIG OR SMALL, THEY ARE, GO AHEAD AND SEND THEM OVER TO KEN AND LET THE GOVERNANCE COMMITTEE KIND OF, UH, FLESH THOSE OUT AND SEE WHICH ONES ARE REA UH, REALISTIC AND THEY CAN COME BACK AND, AND TALK TO US ABOUT THAT, RIGHT? YES.
CAN I ASK, UH, UH, WHAT'S YOUR, UH, SCHEDULED DATE FOR THAT, OR GENERALLY SPEAKING? I, I JUST LOBBED INTO KYLE, UH, ABOUT 15 MINUTES AGO.
UM, IT'LL BE BETWEEN BEFORE OUR NEXT PF FULL PFC BOARD MEETING.
YEAH, AND THE, THE COMMITTEES AREN'T, AREN'T A QUORUM.
YOU GUYS CAN HANG OUT AS YOU SEE FIT.
UH, SO NO, NO, THAT, SO AS YOUR SCHEDULES ALLOW OR WHATEVER, THAT'LL BE FINE.
ALSO, IN ADDITION TO THE CHECKLIST, LET'S ALL START THINKING ABOUT WHAT, HOW WE FEEL ABOUT THE AFFORDABILITY TERMS. I HAVE MY OWN OPINIONS.
WE CAN TALK OFFLINE AND, AND, UH, INDIVIDUALLY AND, AND, AND SEE WHAT WE SEE, HOW WE WANNA HANDLE THAT.
UM, BUT YEAH, THAT'S, THINK ABOUT THAT AS WELL.
IF THERE AREN'T ANY OTHER, UM, QUESTIONS OR COMMENTS, WE'RE GONNA MOVE TO, EXCUSE ME, AGENDA ITEM NUMBER SIX, FUTURE ITEMS. EXCUSE ME.
HEY, ZAIN, I CAN JUST QUICK RUN THROUGH ALL OF THIS.
SO JUST TO LET EVERYBODY KNOW, WE HAVE, UH, REACHED OUT TO EVERYBODY, ALL THE DIRECTORS.
OUR MEETING WILL BE NOT ON THE FOURTH TUESDAY THIS MONTH.
UH, IT HAS TO BE ON JUNE 21ST, UH, AS A SPECIAL CALLED MEETING.
WE'LL BE HAVING, HAVING THAT, THIS WILL ACCOMMODATE THE DALLAS HOUSING FINANCE CORPORATION THAT HAS VARIOUS, UH, MEETINGS AND REQUIREMENTS FOR THE, THE 4% PRIVATE ACTIVITY BONDS.
SO, UH, I APPRECIATE EVERYBODY GETTING BACK TO US AND LETTING US KNOW THAT THAT WILL WORK.
UM, WE HAVE, WE'LL HAVE FINAL APPROVAL OF THE STANDARD AT ROYAL LANE AT THAT, AT THAT MEETING.
AND THEN I'M NOT SURE WHICH OF THOSE NEXT PROJECTS WILL BE, UH, READY AND FINAL AND HAVE, UH, TERM SHEET FOR US TO APPROVE, BUT THEY'LL BE COMING.
AND THEN ALSO, UH, IN AUGUST, I'M HOPING TO HAVE COUNSEL APPROVAL OF POTENTIAL CHANGES TO THE CORPORATION BYLAWS FOR AN OPEN APP APPLICATION WINDOW.
BUT, UM, THAT'S, THAT'S OUT OF MY HANDS AND, AND SUBJECT TO, UH, UH, THE, THE WILL OF COUNSEL.
SO, WE'LL, WE'LL, WE'LL SEE AT THAT POINT.
BUT SIR, THAT'S ALL I HAD FOR PERFECT.
AND, UH, UH, KEVIN, UH, HAS THE STANDARD AT ROYAL, UH, JUST FY HAVE, HAVE THEY GONE THROUGH THE ZONING COMMISSION YET? STANDARD AT ROYAL IS ACTUALLY A BUY RIGHT DEVELOPMENT.
SO THEY, IT'S SUBJECT TO THE PD THAT'S BEEN ON THERE FOR YEARS.
AND THAT IS, I MEAN, THAT'S WHY THEY HAD TO PUT THAT AMOUNT OF PARKING ON THERE.
SO, UH, THAT'S, THAT'S PRETTY MUCH WHERE WE'RE AT ON THAT.
SO THEY DIDN'T WANNA AMEND THE PD, I GUESS, AND, UH, REDUCE THE PARKING.
I, I DON'T, I, WE'RE GONNA HAVE TO TALK ABOUT THIS OFFLINE.
IT'S NOT NECESSARILY AN AGENDA ITEM, SO, ALL RIGHT.
UM, WE'RE GONNA ADJOURN THIS MEETING AT ONE 30.