Luxury apartments are popping up in Oak Cliff — and so is new affordable housing

By Dallas Morning News Editorial

Dirt keeps flying in north Oak Cliff, where construction crews are building more than 600 luxury apartments throughout the neighborhood.

But north Oak Cliff has also turned out to be experimental ground for public-private partnerships to generate affordable rentals in Dallas. We are watching, rooting for their success.

The latest venture is an agreement between the city of Dallas and developer Mintwood Real Estate to create a 215-unit complex on a vacant lot at Colorado and Jefferson boulevards, with half the units for renters who make less than 80% of the area median income.

The city made the deal happen through a legal mechanism called a public facility corporation or PFC. It works like this: A developer transfers a piece of land and future improvements to an entity created by the city, the PFC. Because the property becomes publicly owned, the developer is exempt from paying property taxes — in this case, for 75 years. In exchange, the city gets annual lease payments from the developer plus 108 units for renters generally making between 60% and 80% of the median income.

Dallas city officials call these renters “the missing middle”: too well off to live in apartments subsidized by federal tax credits but not wealthy enough to afford market rents.

This month, the median rent for a one-bedroom apartment in Dallas reached $1,490, a number that goes up to $2,000 for a two-bedroom unit, according to Apartment Advisors. Oakhouse at Colorado — the future $48 million apartment complex that will be owned by the PFC and managed privately — will offer rents at $1,279 for a one-bedroom unit and $1,410 for a two-bedroom apartment, plus reduced rates on studios and three-bedroom units, for renters at 80% or less of the median income.

For a single tenant, that income limit is about $49,000. For a family of four, it’s $71,000.

The PFC tool has attracted criticism in other Texas cities, and for good reason. A study from the University of Texas at Austin found that public agencies using PFCs lack protections to ensure affordable rents are going to the people who need them.

For example, a PFC may specify that the income cap for the affordable apartments is $60,000. But if it does not require the apartment managers to adjust for household size, then they can rent the affordable units to any renters making that much. But a single renter making $60,000 can afford market rates. The situation is different for a family of four.

Kyle Hines, the city’s assistant director of housing, told us the city’s partnership will make those income adjustments. He said city staff vets the projects to confirm that they wouldn’t be financially feasible but for the tax exemption.

Near the future Oakhouse apartments, Dallas County has a separate public-private partnership with a nonprofit to build 230 apartments on county land, most of them for families making 60% or less of the median income. It uses a different legal mechanism than a PFC.

We’re encouraged to see this momentum.

We urge the city of Dallas to be judicious about tax break deals and to police its development partners to protect affordable rents. Still, it’s exciting to see so much private investment come to Dallas, and we are glad that residents in lower-paying jobs are part of the equation.