Title
Consider/Discuss/Act on a Resolution to Adopt an Affordable Housing Scorecard
Summary
COUNCIL GOAL: Direction for Strategic & Economic Growth
1.1: Provide a strong economy by creating a Global Housing Strategy and facilitating a balance between industrial, commercial, residential, and open space.
MEETING DATE: March 14, 2025
DEPARTMENT: Housing and Community Development
CONTACT: Cristel Todd, Affordable Housing Administrator
CITY COUNCIL ACTION:
• February 18, 2025, City Council Approved the Resolution to Adopt the Affordable Housing Scorecard to Provide a Uniform Metric for Evaluating Proposed Tax-exempt Rental Projects.
ITEM SUMMARY:
• Property tax exemptions have been used by the McKinney Housing Finance Corporation (MHFC), McKinney Housing Authority (MHA), and McKinney Public Facility Corporation (MPFC) as a strategy to provide more affordable housing units for the City’s residents. The City currently does not have a policy or a uniform metric for evaluating tax-exempt rental projects. The attached Affordable Housing Scorecard (“Scorecard”) provides a uniform metric for evaluating rental 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 MCDC McKinney Front Porch group for input.
• The purpose of the Scorecard is to provide a uniform metric for evaluating tax-exempt rental projects based on the following criteria:
o Amount of Affordable Units
o Affordability Level
o Housing Type
o Rent Saving to Tax Exemption Ratio
o Granting Entity Benefit (One-Time)
o Granting Entity Benefit (Reoccurring)
o Location
o Project Type
• The scorecard provides an initial screening of rental projects seeking tax-exemptions and is not intended to provide a comprehensive analysis of the proposed tax-exempt rental project for approval. The proposed scorecard would be part of a two-step review process that includes an initial review to see if the minimum scorecard thresholds are met followed by a more detailed quantitative analysis of the benefits of the proposed tax-exempt rental project.
• The scorecard establishes minimum thresholds for rental projects to be considered for tax-exemption:
o Project must provide rental housing units (either single- or multi-family residential).
o Project must include at least 50% of the total units as affordable units (80% AMI or lower).
o Project must include a minimum of 5% of the total units at 30% AMI.
• Due to the differences in development and financing between ownership and rental projects, the attached Scorecard is limited to rental projects. Homeownership projects are encouraged and will be evaluated separately.
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 four MHA proposals for tax exempt affordable multi-family housing projects (Magnolia Ranch, Kinstead, Jefferson Wilmeth and Jefferson Terry).
• In addition, MHA has submitted an additional project for the Council’s consideration for resolutions of support (Cotton Mill).
• On December 17, 2024, staff presented the draft scorecard to the Council for consideration and discussion.
FINANCIAL SUMMARY:
• Texas Local Government Code Chapters 303, 392, and 394 enable municipalities, counties and certain other 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.
BOARD OR COMMISSION RECOMMENDATION:
• On December 11, 2024, staff presented the draft affordable housing scorecard to the Front Porch for feedback and input.
• On January 28, 2025, staff presented the draft affordable housing scorecard to the McKinney Housing Authority for feedback and input.