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Anna council hears overview of HFC/PFC tools as members question multifamily growth
Summary
City officials and outside advisers briefed the council on how the city's Housing Finance Corporation (HFC) and Public Facility Corporation (PFC) have been used to support multifamily developments, prompting debate about impacts on schools, public safety and when the city should use those incentives.
The Anna City Council on Tuesday heard a detailed briefing on the city's use of Housing Finance Corporation and Public Facility Corporation tools to support multifamily projects, and several council members said the city should be cautious about offering more incentives.
Advisers and city staff said the two corporate vehicles provide tax and financing benefits that can be structured to yield lower rents for residents while recapturing some financial benefit for the city. Ryan Bowen, an attorney with Chapman and Cutler, told the council the HFCs and PFCs operate under state law — chapter 394 for HFCs and chapter 303 for PFCs — and typically come before the council at multiple points because the city council serves as the entities' board of directors.
"By partnering with private developers ... you do bring an ad valorem tax exemption," Bowen said, adding that federal tax rules and statute require set-asides for units targeted to households at particular shares of area median income.
Tim Nelson, financial adviser with Hilltop Securities, showed the council four developments that have used the city's HFC/PFC structure. He said those projects bring lower rents for tenants during the early, higher-construction years and produce lease payments to the HFC/PFC thereafter. Nelson estimated the four projects will yield about $2.1 million to the city-affiliated entities this year and smaller amounts in later years as construction completes.
Council members pressed staff and the advisers on local consequences. Councilman Kevin Totten said rapid multifamily growth has put pressure on schools and public safety and said the council needs to consider "how much is too much." Totten asked for data on police calls and school enrollments tied to HFC/PFC properties; staff said they can provide those numbers.
Other council members and staff described guardrails the city has used. Nelson said the city's deals include secondary tests intended to ensure projects deliver rent savings that are meaningful relative to market rents. "We typically build in a requirement that ... there always has to be a 10% advantage to the market rents for these low-market properties," he said.
Council members also questioned whether the tools remain necessary in a DFW market with abundant multifamily supply. Several members noted one project on the agenda that had been reconfigured to market-rate rather than use HFC/PFC tools, and staff said some developers are choosing that route.
Bernie Parker, director of economic development, said the HFC and PFC are part of a toolbox for recruiting and expanding businesses and housing and that the EDC and city use other incentives as well, including fee waivers and tax increment financing.
Council members sought a simple written framework for evaluating future HFC/PFC requests. Councilman Singh asked staff and advisers to provide clear qualifying criteria and public-benefit calculations for future proposals. Mayor Cain said she wants the city to keep the tool available but to be "prudent and thoughtful" in its use.
No formal action was required or taken on the HFC/PFC presentation. Staff and the advisers said they would follow up with the requested data and a suggested public-benefit rubric for council consideration.
Ending: City staff said they will deliver requested breakout data on tax abatement comparisons, construction-period sales-tax estimates, police calls and school-enrollment impacts tied to HFC/PFC projects, and a recommended qualification framework for future incentive requests.
