New Pearsall PFC aims at affordable housing

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Pearsall city councilors have approved creating a public facilities corporation (PFC) to promote affordable housing and develop partnerships with contractors.
The public-private partnership would allow the city to take properties off the tax rolls for developers to build workforce housing, according to Bobby Maldonado, legal counsel for the city.
“Builders have approached the city and expressed [interest in] partnerships with the city if the city would form a PFC for the purpose of creating affordable housing,” Maldonado told councilors on October 8.
“What they are trying to achieve by getting you to form a PFC is they are trying to make the project tax exempt,” the counselor said. “If they do not have to pay taxes, it makes the project more affordable. What it means for everyone else in this community is no taxes, no ad-valorem taxes are paid on that. The upside is the project is affordable.”
Local Government Code, Chapter 303, outlines requirements of the creation of a PFC which include the designation of a board.
“In other entities, the council is the board for the PFC,” Maldonado said. “This means the council has sole authority, it begins and ends with you. If we are going to authorize this vehicle to be used within this community, we are going to control the vehicle.”
The six-step process for the housing development tool includes the governmental entity creating a PFC to initiate participation in housing development. The developer proposes a mixed-income housing development. If approved by the city, the third step is reached, which entails the developer obtaining approvals, entitlements, and conventional financing from banks and lenders.
The local government’s PFC will then take ownership of the land and leases it back to the development; the developer builds housing for mixed-income residents. A property tax exemption is granted by the PFC to the developer to allow for below-market rates.
Councilors unanimously approved the creation of a PFC during a meeting on November 12.