Melissa | Planning & Zoning

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PZ December 5, 2024

Northwest Melissa

• 276-Unit Multifamily PFC | 245 Co Rd 363 | Denied

Southeast Melissa

• 195-Unit BTR Horizontal Multifamily | 3995 Co Rd 413 | Approved

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Throckmorton Creek Apartments 245 Co Rd 363

Northwest Melissa | 24.51 Acres | 276 Units | Denied

Dominium's 276-unit PFC deal in Melissa faced significant opposition from residents and was unanimously denied by the Planning & Zoning Commission without a discussion.

The deal, located on 24.51 acres east of US-75 on Throckmorton Road, has been modified significantly since prior submissions in March and September 2024. Key changes include reducing units from 324 to 276 (-15% since September 2024), eliminating four-bedroom units, and adding a 1-acre commercial component.

A major change from the last denial is increasing AMIs from 100% at 70% to 100% at 80% AMI for 30 years. Neal Route of Dominium described it as "$500-600 monthly savings compared to market-rate apartments." This equates to roughly $1,400 for two-bedroom units and $1,600 for three-bedroom units.

Unique aspects include Dominium's commitment to extend a 16" water line across US-75 and construct 1,260 linear feet of Throckmorton Road improvements. The deal would maintain 13.5 acres of green space and provide 746 parking spaces.

Opposition

Community opposition centered on school capacity and infrastructure.

Mielke went on to challenge Dominium's community outreach, calling them liars.

Other neighbors focused on school capacity and infrastructure strain. Joel Mayoral emphasized educational impacts, stating "kids are suffering" in "overcrowded classrooms."

Additional opposition highlighted Melissa's rapid apartment growth and crime. Dennis Andrews noted "over 5,000 apartment units" already approved, with "over 1,000 empty units" existing. Wayne Cantley, also living on Country Ridge Road, presented crime statistics from an "area" around a Dominium property in McKinney. Cantley said there were "2 murders, 9 car thefts, or car break-ins, 2 car thefts," though did not give specifics on location, which deal he was referring to, or what statistics he was using.

Erin Sillito, a substitute teacher at 2117 E Harrison St, detailed school overcrowding. Sillito was the last to speak on the deal.

Support came from social service organizations and property owners. Habitat for Humanity's Lori Mealy endorsed the project as a potential model for addressing regional housing needs. Anna-Marie Welch from Veterans Center of North Texas advocated for the project. Welch described an employee making $140,000 who, after job loss, couldn't afford local housing on $4,000 military disability.

Commercial interests also backed the development. Brandon Trimble, representing property at Throckmorton and US-75's southeast corner, argued the project "makes a lot of sense from the thoroughfare perspective." The property seller, Charles McCollum, detailed spending "hundreds of thousands of dollars" on flood plain mitigation based on prior city support. And GlobalWafers, a major regional employer, submitted written support noting 45% of their new hires require only high school diplomas, with average per capita income under $35,000.

The stark contrast between institutional support and resident opposition followed a similar pattern as the September 2024 denial. Despite Dominium's modifications from previous submissions and backing from social service organizations, local concerns about infrastructure and school capacity proved decisive in the Commission's decision.

After hearing from 11 speakers (6 opposed, 5 in support), the Commission voted for denial. There was no discussion from the Commission following substitute teacher Erin Sillito’s arguments. The vote split 3-2, with Commissioner Dave Minton voting in favor of the deal (against the denial). This marks Dominium's third unsuccessful attempt to secure zoning approval for this site.

Unlike other versions of Throckmorton that were withdrawn after P&Z, Dominium’s 276-unit deal is set to go before City Council on December 10, 2024, with hopes to receive a supermajority (6/7) vote of approval.

At the heart of this structure is the THF Public Facility Corporation (PFC), an entity of the Texas Housing Foundation, which plays a multifaceted role in the development. As the bond issuer, THF PFC is facilitating up to $70 million in tax-exempt bonds ($64,819,515), a significant portion of the capital stack that enables the project to access 4% Low Income Housing Tax Credits.

Beyond its role as bond issuer, THF's involvement extends into the ownership and financial returns of the project. THF Housing Development Corporation, a nonprofit affiliate, will hold a 0.005% ownership interest as the sole member of the general partner. While this ownership percentage is minimal, it's structurally important for maintaining the project's tax-exempt status and accessing the tax credits.

THF will receive a portion of the developer fee and ongoing cash flow from the project. The developer fee, totaling $14,405,765 according to the development cost schedule, represents a significant upfront payment. The ongoing participation in cash flow further cements THF's long-term interest in the project's success with MOU Terms Pending.

The capital stack for the $126,670,155 deal is primarily composed of the $64,819,515 in PFC-issued tax-exempt bonds, $52,836,503 in tax credit equity (based on $5,743,098 in annual credits at a $0.92 syndication rate), and $8,172,750 in deferred developer fee.

Dominium’s deal was endorsed Arlington Housing Authority (Ultraground/AHFC) and the McKinney Housing Authority (Ultraground/MHFC).

Following the September 12, 2024 Denial, Dominium made several changes to their 4% app. There were no substantive changes to financing terms or structure. The financing remains as originally proposed with JLL’s C.W. Early, providing a $64.1M taxable construction loan at 7.82%, a $28.4M taxable equity bridge loan at 8.32%, and a $51.69M permanent loan at 5.97%. The equity investment from Polaris Capital and developer fee structure also remain unchanged.

Notably, the project is utilizing income averaging, allowing for a broader range of income levels among tenants while maintaining the overall affordability requirements. This strategy can potentially enhance the project's financial stability by diversifying the tenant base.

This deal’s affordability component is likely the cause for the endorsement from other housing authorities. Here’s how they’ve evolved: On September 12, 2024, Melissa's staff listed 100% of the units would be at 70% AMI. September 4% tax credit submittal AMIs:

• 35 units at 40% AMI

• 127 units at 50% AMI

• 127 units at 70% AMI

• 35 units at 80% AMI

December 5, 2024 Update: AMIs were revised to 100% at 80% AMI following the September 12, 2024 denial. This didn’t appear to make a dent in the decision-making.

Developer: Dominium, Tim Allen Phone: (763) 354-5604 Email: [email protected] LinkedIn, Mark S. Moorhouse Phone: (763) 354-5635 Email: [email protected] LinkedIn, Paul R. Sween Phone: (763) 354-5603 Email: [email protected] Neal Route Phone: (214) 960-1162 Email: [email protected] LinkedIn

Owner: Charles R. McCollum Email: [email protected]

Public Partner: Texas Housing Foundation PFC (THF PFC): Mark Mayfield Email: [email protected] LinkedIn

Perm Financing: JLL, Christian (C.W.) Early, Phone: (972) 646-1125 Email: [email protected] LinkedIn

Equity: Polaris Capital, LLC (Dominium Affiliate), Tim Allen Phone: (763) 354-5604 Email: [email protected] LinkedIn

8/8/24 Pro Forma: Throckmorton Creek PF

9/12/24 Staff Report: Throckmorton Creek Apartments

9/12/24 Project Plans: Throckmorton Creek Apartments Plan

12/5/24 Staff Report: Throckmorton Creek Apartments

12/5/24 Project Plans: Throckmorton Creek Apartments Plan

Armani Homes 3995 Co Rd 413

Southeast Melissa | 19.99 Acres | 195 Units | Approved

Armani Homes' 195-unit horizontal multifamily deal at 3987 County Road 413 received Commission approval despite significant opposition. The project sits on 19.991 acres in Melissa's ETJ and will be annexed into the City.

The Armani Homes deal introduces a distinct hybrid housing type to Melissa - horizontal multifamily that functions like single-family homes but operates as rental property. It allows both standalone single-family rental homes and townhome-style units configured with up to four attached units per building, marking a significant departure from traditional garden-style apartments.

Unit sizes range from 635 square feet for one-bedroom units to 1,235 square feet for three-bedroom homes, with two-bedroom units at 960 square feet. The development limits three-bedroom units to 20% of the total 195 units, ensuring a predominance of smaller households.

The design emphasizes single-family characteristics: each unit includes a private fenced backyard with wood, galvanized metal, or ornamental metal fencing. Exterior standards require 80% masonry construction and a minimum 8:12 roof pitch. The developer must provide at least three distinct elevations for each floor plan to avoid monotony.

Parking requirements align with expected single-family usage rather than typical multifamily standards: 1.25 spaces for one-bedroom units, 2 spaces for two-bedroom units, and 2.5 spaces for three-bedroom units. Notably, 30% of parking must be covered through either detached garages or carports.

The amenity package mirrors upscale apartment communities while maintaining a neighborhood scale: a 2,950-square-foot clubhouse, 1,000-square-foot pool, dog park, playground, pergola, and BBQ areas. The project includes six-foot perimeter fencing except where the property abuts public streets, rights-of-way, floodplain, or major creeks.

The developer committed to funding 60% ($1.822M) of road development costs.

The Commission's discussion centered on a key reality: the development would proceed regardless of their vote, but annexation would give the City control over standards and generate tax revenue.

Commissioner Dave Minton clarified the dynamic:

Commissioner Adam Porter, who noted that his children attend Sumeer Elementary, strongly opposed the development based his personal preferences and firsthand experience with existing traffic issues:

His opposition went beyond school access concerns, extending to fundamental issues with density and location:

Three community members spoke against the project. Dennis Andrews, 20 Meadowcreek Drive, opposed adding high-density housing, noting "over a thousand rental units not being used right now."

Joel Mayoral, 4018 Bluestem in Meadow Run, raised school capacity concerns, citing Sumeer Elementary's growth from 400 to 800 students. No community members spoke in support.

The City Council had previously approved the annexation agreement unanimously (6-0). The development will have strict standards: 80% masonry requirement, three distinct elevations per floor plan, and substantial amenities including a 2,950-square-foot clubhouse and 1,000-square-foot pool.

At this December 5th P&Z meeting, Commissioners approved rezoning the land from Agricultural to Planned Development District/Multifamily (PD/MF), which would allow the 195-unit build-to-rent deal.

Commissioner Dave Minton clarified the stakes: without both annexation and proper zoning, the development could still proceed in the ETJ without city control over building standards or tax benefits. This practical reality - that development would happen regardless - drove the commission's approval recommendation despite Commissioner Adam Porter's strong opposition based on traffic and density concerns.

Both the annexation and rezoning will go before City Council on December 10, 2024, for final approval. Despite Commissioner Porter's opposition regarding location and density, Jacob Rogers, Alternate Commissioner, moved for approval, recognizing the pragmatic benefits of annexation over uncontrolled ETJ development.

Developer: Armani Homes, Abdul Mohammed Phone: (317)-258-4678 Email: [email protected]

Owner: Rina P. Soni Phone: (317) 387-1687 Email: [email protected] LinkedIn, Anuya Dewoolkar Phone: (269) 324-6293, Syed Hasan Phone: (202) 783-7070 Email: [email protected]

Staff Report: Armani Homes SR

Project Plans: Armani Homes Plan

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