November 10 Meeting Summary
CALL TO ORDER ROLL CALL Leo Vasquez, Chair CERTIFICATION OF QUORUM
Called to order 9:05am. Braden; Thomason absent.
CONSENT AGENDA approved.
ITEM 1: APPROVAL OF THE FOLLOWING ITEMS PRESENTED IN THE BOARD MATERIALS:
- 3rd Special Session did not adopt any legislation that impacts the department.
- Rent Relief Program: the application process is shut down due to excess demand for available funding.
- Conforming changes related to the Build Back Better Program. The agency will adjust according to whether and when the federal legislation is passed. Seeking to do this in a manner with as little disruption as possible.
- Mortgage Assistance: Homeowners Assistance Fund (HAF); waiting on Treasury approval of submitted plan. $842m for TX households to catch up with mortgages.
- Multifamily Finance – Tx will receive more tax credits; these will fund next application for Cypress Creek in Temple as the next award.
- Supplemental tax credits: forms to be posted this week.
- 4% 2022 lottery held last week. 191 applications totaling $6.6B; availability is $3.3B. Program is in high demand.
4a. Presentation, discussion, and possible action regarding the Issuance of Multifamily Housing Revenue Bonds (Meadowbrook Apartments) Series 2021 Resolution No. 22- 009 and a Determination Notice of Housing Tax Credits
- $30M MF Housing Revenue Bonds
- $1.8M in 4% tax credits.
- Staff supports the issuance of tax-exempt Multifamily Housing Revenue Bonds (Meadowbrook Apartments) Series 2021 in the amount of $30,000,000, Resolution No. 2- 009.
- Staff also supports the issuance of a Determination Notice of $1,823,422 in 4% Housing Tax Credits for Meadowbrook Apartments, subject to underwriting conditions that may be applicable as found in the Real Estate Analysis report posted to the Department’s website.
4b) Presentation, discussion, and possible action regarding the Issuance of a Governmental Note (Fiji Lofts) Resolution No. 22-010 and a Determination Notice of Housing Tax Credits
- Staff supports the issuance of a tax-exempt, unrated Governmental Note (Fiji Lofts) Series 2021 in the amount of $23,849,000, Resolution No. 22-010.
- Staff also supports the issuance of a Determination Notice of $2,080,856 in 4% Housing Tax Credits for Fiji Lofts, subject to underwriting conditions that may be applicable in the Real Estate Analysis report.
Item 5: Presentation, discussion, and possible action on an order approving and recommending to the Governor the repeal of 10 TAC Chapter 11 concerning the Housing Tax Credit Program Qualified Allocation Plan, and an order approving and recommending to the Governor in accordance with Tex. Gov’t Code §2306.6724(b) the new 10 TAC Chapter 11 concerning the Housing Tax Credit Program Qualified Allocation Plan, and, upon action by the Governor, directing its publication in the Texas Register
Brooke Boston provided initial modifications to the proposed QAP [these were updated later in the meeting].
Marchant – consider looking at how to fold Opportunity Zones to housing proximity for Employment Housing.
Undesirable Site Features: Joint Land Use Studies
Letter from Sen. Menendez stated concerns regarding the issue of Undesirable Site Features and requested that this item be removed or reconsidered. The letter stated that the proposed QAP has a detrimental effect on needed affordable housing near military installations. San Antonio has already added many requirements to accommodate noise and other undesirability concerns. Need for more affordable housing for these installations and the QAP restricts this opportunity due to 5-mile radius included in the proposed QAP.
This issue was raised by a number of speakers citing that the proposed rule was untenable and unnecessary due to existing requirements already in the QAP as well as HUD and military installations. Several recommendations were provided by TDHCA staff and by members of the development community. Recommendations ranged from removal for future consideration to allowing for specific noise levels which are comparable to railroad proximity requirements.
Initial modifications presented by Brooke Boston are expected to resolve this issue.
Per Project Cap:
Many speakers highlighted the reduction of the per project cap from $2m to $1.5m as a critical concern given the enormous cost increases for materials and labor. The higher cap will allow for more feasible developments. Also, whereas nonprofit organizations have many other funding alternatives, private developments must rely on the leverage afforded by tax credits. The alternative view was that the lower cap allows for more developments to be funded and that the added flexibility may not be used efficiently or effectively. Chairman Vasquez mentioned support $2m per development, but cost/sq. ft lags the market and needs to be addressed and asked staff to look at this for next year with an index for inflation.
Rights of First Refusal –
Recommendations from the development community included that ROFR’s should be listed as 1 point “or” 1 point as opposed to 1 point “or” 2 points. Others recommended 1 point “and” 1 point.
Public comment included concerns that the language is not consistent with statute: QAP “shall” provide at least 5% vs. “up to” or “no more than” 5%.
TDHCA staff expressed concern that USDA can’t be the primary component of the 5% and believes that this harmonizes with the statute as closely as possible.
Cost Per Square Foot:
Comments were made stating that no one can build for $85/sq ft. while also stating that 30% income units increase costs and do not contribute toward a breakeven financial status.
Brooke Boston was asked to provide a final summary of changes to be included in the final motion for the QAP:
- Undesirable site features JLUS – developments in clear zone; there was some redundancy; 65-70 decibels could be allowed with appropriate mitigation. Over 70, would require board waiver.
- ROFR – revising to a or b with an increase to 2 points
- Special needs score will be changed to 3 points
- Ability for COC to be claimed by USDA; strikes one sentence.
- At-risk set aside to say that no more deals would be funded once 5% is achieved.
- Increase development cap to $2m.
- Update to the date impacting underserved.
Motion: Batch/Marchant – approved
6a) Presentation, discussion, and possible action on Awards of Multifamily Direct Loan Funds from the 2021-3 Multifamily Direct Loan Notice of Funding Availability
Staff supports award of $775,000 of NHTF for Brenham Trails from the General Set-Aside of the 2021-3 NOFA is approved, subject to conditions that may be applicable as found in the Real Estate Analysis underwriting report posted to the Department’s website.
Motion: Marchant/Batch – approved
6b) Presentation, discussion and possible action on a request for return and reallocation of tax credits under 10 TAC §11.6(5) related to Credit Returns Resulting from Force Majeure Events for Application 18235 Memorial Apartments in McAllen
Staff supports the request for treatment of the Development under an application of the force majeure rule is approved, with the 2018 Qualified Allocation Plan and Uniform Multifamily Rules, and the 2021 Program Calendar applicable to the Development (to the extent allowable by federal or state law) for the purposes of the force majeure event. This will modify the Placed in Service deadline to December 2023 from November 2021. Developer believes July 2022 is sufficient. Board supports modification of Placed in Service deadline to December 31, 2022.
Motion: Thomas/Batch – Approved
6c) Presentation, discussion, and possible action regarding the issuance of a Determination Notice for Torrey Chase Apartments (#21463) in the Houston ETJ
Staff supports the issuance of a Determination Notice in the amount of $2.58m, subject to underwriting conditions as found in the Real Estate Analysis report posted to the Department’s website, and subject to any compliance conditions is hereby approved in the form presented at this meeting.
State rep letter (Rep. Harless) against funding this development.
Motion to support: Batch/Marchant – approved.
Next meeting. Thursday, December 9th.