There are two "tax credit" deals being discussed. One is referred to as the 4% structure, and the other is the 9% structure. Essentially, these percentages represent the annual amount of tax credits that can be available for funding an apartment project. By multiplying 4% or 9% times the cost of the project, it determines how much in tax credit funds can be utilized in financing a project. In other words, a $20 million project can expect $800K a year under a 4% program ($20 million x 4%), or $1.8 million for the 9% program. However, under the 9% program, the aid is capped at $1.5 million per year. Therefore, all a $20 million project can ever expect is $1.5 million per year.
There is a major difference between the two proposals. The 9% funding is highly competive because only 8 projects are awarded the opportunity of the 9% funding over a very large area......I have heard three counties, including Dallas. The State of Texas has a very demanding scoring system to determining the best sites.
The 4% deals are not restricted, however there becomes the problem of issuing bonds to cover the difference in equity required between the two funding programs ($800K vs $1.5 million/year), or the developer must bring in another investor.........say like Dallas Housing Authority.
Now, we have a new set of problems. We don't have a Housing Finance Corporation. Therefore, we can't issue tax exempt financing structure. Any developer wishing to build a 4% project in Rowlett would probably have to invite into the deal someone like Dallas Housing Authority or Garland Housing Authority. When this is done, these authorities control the rules. For example, the Blue Line project that was denied by City Council proposed the participation of Dallas Housing Authority. As part of the deal, the DHA would be granted 100% authority of 60 of the 200 units, plus they control most of the rules. Folks, where do you think those 60 tenants would come from?
I have absolutely nothing against the Dallas Housing Authority. They do a fine job for Dallas. However, I don't want to take care of Dallas residents. I want to take care of Rowlett citizens.
We absolutely need a Housing Financing Corporation. They could issue their own tax exempt financing vehicles. Unfortunately, I believe some on Rowlett's staff are purposely dragging their feet on this issue. I have no earthly idea why. Probably just to prove that they can. It's time for City Council to lay down the law.
There are some things we need to do to make Rowlett a great town. We seem to be groping a bit.
There is a lot to miss, but I tried to give you an honest picture. If you have any questions, send me an email from the Contact page above. No one will know you sent it and I will try to get you an answer.