What's Wrong with McKinney's Public Facility Corporation (MPFC), Part 1

McKinney Citizen to Citizen (MC2C) advocates for government transparency, sound fiscal policies, citizen education, and citizen participation. It is with all the above in mind that MC2C will be looking at PFCs or Public Facility Corporations. McKinney has one now. McKinney has also made its first PFC deal (hint: it is very bad and will be the subject of Part 2).

PFCs can be used as a tool to bring more affordable housing to cities, OR they can be used to develop areas for other reasons (as long as there are some lower-income units at 80% of the area median family income or AMI). The purpose of PFCs is really that vague. Note many concerns about PFCs from a policy report called Public Facility Corporations and the Section 303.042(f) Tax Break for Apartment Developments: A boon for affordable housing or windfall for apartment developers? Full report here. Executive Summary here. 

from 2020-ECDC-PFC-Report.pdf (utexas.edu)

Because the mission of PFCs is broad and there is no real oversight, PFCs can be taken advantage of by developers and/or the taxing entities that create them. Two bills aimed to remove loopholes floundered at the state level in this year’s legislative session. Read here and here.

PFCs allow entire properties to be taken off the tax rolls for very long periods of time, even from school districts. The public and other taxing entities are often left out, even though their tax base is adversely impacted by PFCs. The costs of any reporting or audits will fall on the shoulders of the taxing entity if there is to be any transparency. Unlike PFCs, more traditional low-income housing tools available must be approved in a public process and monitored through the TDHCA (Texas Housing and Community Affairs). 

What is our city doing to ensure this corporation is as transparent and fair to the public and other taxing entities as possible? Nothing in the boilerplate articles of incorporation is meant to restrict this tool's overly broad uses. This PFC will be here when your favorite and trusted city council member is gone. PFCs can take a favored developer’s property off tax rolls for more than 90 years, and no one will be able to do anything about it. 

For example, if you look at the articles of incorporation, nothing even specifies low-income housing as a focus for McKinney's PFC:
“The Corporation is organized to carry out the purposes of the Act and shall have and possess all powers enumerated in the Act. The sole purpose of the Corporation is to assist the City in financing, refinancing, or providing public facilities that are located within the city limits of the City of McKinney, Texas (“Public Facilities”).”

Other articles to read:

Are Public Facility Corporations a Boon For Affordable Housing? (candysdirt.com)

Dallas Approves New Approach for Affordable Housing – NBC 5 Dallas-Fort Worth (nbcdfw.com)