Over the objection of District 12 Councilwoman Cara Mendelsohn, the Dallas City Council recently approved a $1.85 million economic development grant to assist with the “extraordinary cost” of required off-site wastewater infrastructure improvements at a mixed-use development in The Cedars.
Councilman Jesse Moreno, who represents the area, said housing is needed in the rapidly growing Cedars neighborhood, and the grant also offers an opportunity to preserve a historic Dallas Power & Light building in the area.
The council approved the Public Facility Corporation project last summer, said Interim Economic Development Director Kevin Spath.
“The developer started to go through plan review and was told by the city that he was responsible for the replacement of 3,000 linear feet of offsite wastewater line … basically from Heritage Village all the way down to the project site,” Spath said. “They came to us and applied for additional incentives to help fill that gap.”
Developers with Low Ervay estimate the cost of the wastewater line to be about $3 million, and they already received some funding from Dallas Water Utilities. The wastewater line will benefit other properties in the surrounding area, Spath explained.
The project will include Marcus at Cedars, a four-story multi-family building with 76 mixed-income units at 2000 South Ervay Street, and Power & Light at Cedars, a five-story multi-family building with 310 mixed-income units.
Mendelsohn Balks at More Incentives
Typically when a developer unexpectedly has to cover additional costs for a project, it’s their responsibility to pay for it, Mendelsohn pointed out. Due to the PFC financing structure, the property already will be taken off the tax rolls for 75 years, she said.
“We are giving away the most generous benefit that this city offers … Nobody in this room will still be alive when this expires,” Mendelsohn said in a June 12 City Council meeting. “We’re all looking very closely at the budget realizing we need to be very careful with our dollars, and now we’re going to pay for their sewage also? I already voted no on the PFC deal .. and I’m not going to agree to pay even more for this. This is a very careless way, I believe, for us to spend our tax dollars.”
Revenue generated by the project will go back into the Public Facility Corporation, rather than the general fund, Mendelsohn added.
“We are creating a tax increase on everybody else,” she said. “I am actually being critical of this body’s tax policy as it relates to PFCs, as I have repeatedly almost every single time we vote on this.”
In Defense of Public Facility Corporation Projects
District 1 Councilman Chad West noted that the city generates revenue from PFC projects through rent payments and annual lease payments made to the PFC for the duration of the 75-year agreement.
“PFC deals are being recommended and approved for a reason,” West said. “As we know from rising construction costs, there is sometimes a delta, but sometimes the projects can’t be built without subsidies to make them work. When you have a benefit like affordable housing for the city, we have a responsibility in some sense to meet that delta.”
District 4 Councilwoman Carolyn King Arnold clarified that some 2012 bond funds were designated for economic development and housing purposes in the southern part of the city and in transit-oriented areas.
“I’m going to support this project, but I had to disturb the peace this morning around the southern sector and what we need,” Arnold said. “We’re going to make sure that the voters who voted for this item, particularly in the southern sector, get their fair share.”
A presentation on Public Facility Corporation projects is planned for the council’s Housing and Homelessness Solutions Committee in August, city officials said in a June 21 memorandum.
