Title
Consider/Discuss the Proposed Tax Exemption Scorecard
Summary
COUNCIL GOAL: Goal 1b: Provide a strong economy by creating a Global Housing Strategy and facilitating a balance between industrial, commercial, residential, and open space.
MEETING DATE: December 17, 2024
DEPARTMENT: Housing and Community Development
CONTACT: Kim Flom, Assistant City Manager
Margaret Li, Housing and Community Development Director
Cristel Todd, Affordable Housing Administrator
RECOMMENDED CITY COUNCIL ACTION:
• Consider/Discuss the proposed Affordable Housing Scorecard to provide a uniform metric for evaluating tax-exempt projects.
ITEM SUMMARY:
• The purpose of this work session item is to review and discuss the proposed Affordable Housing Scorecard to provide a uniform metric for evaluating tax-exempt projects.
• Property tax exemptions have been used by the McKinney Housing Authority (MHA), McKinney Housing Finance Corporation (MHFC), and McKinney Public Facility Corporation (MPFC) as a strategy to provide more affordable housing units. The city currently does not have a policy or a uniform metric for evaluating tax-exempt projects. The proposed scorecard provides a uniform metric for evaluating projects across all three granting entities to determine if they meet the city’s affordable housing goals.
• The proposed scorecard was developed in collaboration with MHA and presented to the McKinney Front Porch for input.
• The proposed scorecard would be part of a two-step review process that includes an initial scorecard review to see if the minimum thresholds are met followed by a more detailed quantitative analysis of the benefits of the proposed projects.
• The proposed scorecard will provide all granting entities with a uniform metric for evaluating proposals based on the following criteria:
o Affordability
o Housing Type
o Public Benefit
o Location
o Project Type
o Annual Allotment
o Annual Tax Exemption Allotment
• The scorecard can be used to screen out projects that do not meet the minimum threshold and limit the number of tax-exempt projects per year. This will also provide staff with an opportunity to analyze the total number of projects per year and adjust as needed.
• The proposed scorecard has been presented to the McKinney Front Porch for input and will continue to be refined if supported by Council.
BACKGROUND INFORMATION:
• Households that spend more than 30% of their household income are considered cost burdened.
• According to the McKinney Housing Needs Assessment (Root Policy Research), updated in September 2023, 46% of McKinney renters were cost burdened.
• The Root Policy Research identified a rental gap of 5,145 units for households earning less than $35,000 a year.
• In September 2024, the Housing and Community Development Department issued a Request for Qualifications for an affordable housing development through the MHFC.
• In 2024, the Council reviewed and provided resolutions of support for two MHA proposals for tax exempt affordable housing projects (Magnolia Ranch and Kinstead).
• In addition, MHA has submitted two additional projects for the Council’s consideration for resolutions of support (Jefferson Wilmeth and Jefferson Terry); and an additional project is currently also under review by the MHA board (Cotton Mill).
FINANCIAL SUMMARY:
• Sections 303, 392, and 394 enable municipalities and agencies to provide tax exemptions for projects that provide affordable housing without prior approval from the taxing entity.
• Granting entities providing tax exemptions are also able to receive financial benefits in the form of fees and lease payments. Revenue generated from these projects can be used to collaboratively support other affordable housing projects such as subsidized single-family housing or the development of Community Land Trust projects.