In multifamily real estate, “PFC” stands for Public Facility Corporation. A PFC is a nonprofit entity created by a local government (such as a city or housing authority) to facilitate the development of affordable and mixed-income housing through public-private partnerships.
How PFCs Work
- The PFC legally owns the multifamily property.
- The property is leased to a private developer who manages operations.
- This ownership structure allows the property to qualify for a property tax exemption.
- In exchange, the developer agrees to set aside a portion of units as affordable housing based on local Area Median Income (AMI) thresholds.
Key Benefits
- Tax-Exempt Status: Reduces operating costs and boosts net operating income (NOI).
- Affordability Commitments: Developers offer below-market rents on a portion of units.
- Increased Housing Supply: Helps cities expand workforce and affordable housing without issuing public debt.
Common Uses
- Workforce Housing: Units for teachers, nurses, service workers, and others earning 60%–120% of AMI.
- Mixed-Income Communities: Combines market-rate and affordable units.
- High-Growth Regions: Especially popular in Texas under Chapter 303 of the Local Government Code.
Why It Matters
PFCs make multifamily housing more financially viable for developers while advancing public goals for housing affordability. They reduce risk and enhance cash flow while helping municipalities meet critical housing needs without relying on taxpayer-funded bond programs.
FAQs
- Is a PFC the same as a housing authority? No. A PFC is typically created by a housing authority but operates as a distinct nonprofit.
- Do PFC properties always offer affordable housing? Yes, affordability is required in exchange for tax benefits.
- Is the PFC model used outside Texas? Yes, but it is most developed and utilized in Texas.
Summary
A PFC in multifamily real estate is a government-affiliated nonprofit that enables property tax-exempt housing projects through developer partnerships. These structures promote affordable and workforce housing, balancing public interests with private investment returns.
