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Denton council backs staff direction to tighten housing tax credit support, prioritizing deep affordability
Summary
City staff proposed replacing an "a la carte" review of housing tax credit applicants with an annual priorities-setting work session, pre-application meetings, neighborhood notice, and a scoring matrix that favors 30% and 50% AMI units; council directed staff to proceed and requested regular ISRs to monitor effects on applications.
City staff on Tuesday outlined changes to Denton—s policy for issuing letters of support for projects seeking federal Low-Income Housing Tax Credits, urging the council to emphasize deep affordability and to make the city—s review process more selective.
"Every year, the federal government allocates billions of dollars to the states to help develop affordable housing," Jesse Kent, director of community services, told the council, summarizing staff—s proposal to move from bringing every qualified applicant to council to instead presenting only those projects that match annual council priorities. Kent said staff will require a pre-application meeting, a neighborhood meeting and a local tax-partner partnership if a developer requests a property tax exemption.
Why it matters: Kent and staff argued that Denton—s housing market means that 80% AMI units frequently do not lower local rents; the scoring matrix was therefore designed to reward 50% and 30% AMI units that are more likely to reduce rents for Denton households. Kent cited city data showing about 46% of Denton households qualify as low income and that 68% of renters are low income, and urged the council to prioritize production that reduces cost burdens.
Key details: The staff-proposed matrix ties the level of preferred property-tax exemptions to higher scores: lower thresholds for projects that will continue to pay property tax, higher thresholds for larger exemptions. Staff said developers will submit a pro forma and unit mix; every percent of the development at 30% AMI earns a full point in the matrix, while 50% AMI counts for fractional points, with a numerical threshold for council consideration.
Council direction and concerns: Council members broadly praised the Denton-specific analysis and the intent to direct incentives toward deeper affordability, but several asked for more specificity on public notice and on how the scoring will be adjusted year-to-year. One member asked whether caps or geographic distribution rules should be added; others asked staff to ensure the new requirements do not unintentionally deter developers from proposing 30—50% AMI units.
Legal and fiscal context: Staff emphasized that housing tax credits are administered by the Texas Department of Housing and Community Affairs and that a tax-credit award does not automatically trigger property-tax exemptions. Council members also raised the long durations of some past tax-exemption arrangements (some public facility corporation exemptions are time-limited; certain housing authority exemptions do not expire if occupancy thresholds are maintained) and suggested the issue could be raised on the city—s legislative agenda.
Next steps: Staff said the application cycle will open in December, staff assessment will occur in January and resolutions of support or no-objection would be due in February; council asked for an annual ISR showing which projects applied and which did not meet the thresholds so the matrix can be tuned in future years.
