Title
Consider/Discuss/Act on Resolution Authorizing the Formation of McKinney Franklin Branch Holdings, LLC, (“The Ground Lessor”) in Connection with The McKinney Housing Finance Corporation Multifamily Housing Revenue Bonds (Franklin Branch Apartments), Series 2026; Authoring the Designation of the Corporation as the Sole Member of the Ground Lessor; Approving the Form and Substance of a Limited Liability Company Agreement and the Execution Thereof; Ratifying Certain Actions Heretofore Taken in Connection with the Ground Lessor; Authorizing the Execution of Documents and Instruments Necessary or Convenient to Carry out the Purposes of this Resolution; and Containing other Provisions Relating Thereto
Summary
COUNCIL GOAL: Goal #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: April 10, 2026
DEPARTMENT: Housing and Community Development
CONTACT: Cristel Todd, Affordable Housing Administrator
Margaret Li, Director of Housing and Community Development
RECOMMENDED BOARD ACTION:
• Approve Resolution.
ITEM SUMMARY:
• On December 13, 2024, NRP Holdings LLC (the “Developer”), was selected as the co-development partner for the McKinney Housing Finance Corporation (MHFC) Request for Qualifications (RFQ). The Developer is proposing a 100% affordable, 288-unit multifamily housing development to be located on an approximately 15.7-acre site on the southwest corner of FM1461 and Baxter Well Road known as the Franklin Branch Apartments (the “Project”).
• The proposed Resolution authorizes the legal creation of the McKinney Franklin Branch Holdings, LLC, which will serve as the "Ground Lessor" for the project and designate the MHFC as the sole member of this new holding entity. This "leasehold" structure is a primary requirement for securing a 100% ad valorem property tax exemption under Texas law. By the MHFC owning the land, the project remains affordable while generating a net financial benefit to the Corporation.
• The Resolution establishes the framework for the Ground Lessor to enter into a Ground Lease with the Borrower (Franklin Branch Apartments Ltd.), allowing the MHFC to maintain long-term control of the property. Creating a separate LLC for land holding (the "Ground Lessor") provides essential asset decoupling, shielding the MHFC’s other assets and operations from liabilities specifically related to the project site.
• In addition, the Resolution appoints the following MHFC representatives as officers to manage the Ground Lessor’s affairs:
o Tyler Underwood - President
o Lisa Emry - Vice President
o Ranjith Ranghunath - Treasurer
o Cristel Todd - Secretary
• The appointed officers are empowered to negotiate and execute the Ground Lease and all other documents necessary for the acquisition and financing of the development.
BACKGROUND INFORMATION:
• On September 22, 2024, the MHFC issued an RFQ to select a qualified developer for a public private partnership deal. In response to all notices published, four submissions were received prior to the deadline of October 10, 2024. An evaluation team comprised of MHFC board members, City Council, and city staff reviewed and ranked the submissions based on the evaluation criteria listed within the RFQ.
• On December 13, 2024, MHFC approved NRP Holdings, LLC as the qualified developer and co-development partner.
FINANCIAL SUMMARY:
• The proposed Project is estimated to receive approximately $3,039,257 in ad valorem tax abatement over a 15-year period. In exchange, the MHFC is estimated to receive approximately $3,420,000 in guaranteed income over over the same time period.
o Upon the conclusion of the 15-year compliance period, the annual ground rent is established at the greater of $300,000 or the City of McKinney’s portion of the foregone property taxes.
o To protect against inflation and ensure increasing value to the MHFC, the ground rent will feature a 3% annual escalation clause.
o In addition to annual rent, the Ground Lease structure entitles the MHFC to a Sale Fee of 1.5% of the gross proceeds from any future sale of the development (Total Value TBD).