Council members split over HFC/PFC acquisitions after briefing on proposed tax exemptions; staff to return with additional details

The committee received briefings March 24 on two acquisition-style items overseen by the city's housing entities: a Housing Finance Corporation (HFC) portfolio acquisition that would remove certain existing market-rate units from the tax rolls and a Public Facility Corporation (PFC) activity on an existing multifamily site at LBJ. Committee members raised objections to removing properties from the tax rolls, questioned the proposed affordability mix and asked staff to return with more complete fiscal and policy analysis.

Why it matters: both briefings would change how private multifamily properties operate and how they are taxed; committee members said the city must balance immediate affordable-housing gains against lost property-tax revenue that funds schools, county services and other regional functions.

Housing staff presented the HFC item as a continuing programmatic tool; Jacqueline Schroeder (housing administrator) and Aaron Aquinto (general manager, HFC) answered policy questions. Aaron Aquinto said the market-rate share of units would remain market-rate for that portion and that the HFC accepts vouchers and will operate the properties to serve lower-income tenants over time. Councilmember Mendelson pressed for fiscal detail and asked staff to quantify the revenue the properties currently pay and the 15-year tax-exemption projections cited in the packet. Staff committed to follow-up memos and to provide jurisdiction-by-jurisdiction tax impacts; one staff figure cited in discussion (from DCAD during Q&A) indicated the property in question paid roughly $510,907 to the city this year and about $1.6 million in total to all taxing jurisdictions combined (city, school district, county, college, hospital) in the current tax year.

Councilmembers objected to the proposed affordability tiering and to using tax-exempt entities to capture market-value properties. Councilmember Mendelson said taking property off the tax rolls "raises taxes for other people" and criticized the inclusion of units at higher AMI bands (140% AMI) in a portfolio that would receive tax exemptions. She said the decision should be weighed against the foregone revenue and asked for a full accounting of the impact on other taxing jurisdictions, including the school district and Parkland.

The PFC item (5550 LBJ) also drew questions about unit mixes and the memo's clarity; committee members and staff noted a typographical inconsistency in the memo's income-target table and asked staff to standardize how HFC and PFC exemptions and projections are reported. Staff said economic development had negotiated a payment to make the Deep Ellum TIF whole for the remaining TIF agreement amount if the PFC project proceeds.

Next steps and decisions: Chair Gracie asked housing staff to bring back recommended policy changes that staff previously discussed with the committee, and several councilmembers asked for the housing department's recommendations to be returned next month. The city attorney clarified one procedural point for the record: the HFC briefing on the agenda was informational and not the same item as any proposed prepayment/repayment or TIF prepayment that would follow as a separate council item.