Like any good opportunity, as soon as the boom begins, skeptics try to predict the bust. Despite economic factors such as the drop in oil prices, the Texas housing market has continued its momentum over the past several years. According to news outlets, the main factors powering this inertia are job growth and population growth; in other words, consumer demand.
As a trustee in the public finance market, Wilmington Trust has experience on the backside of the transaction that leads us to add a third component fueling this prolific mixture—stable and affordable public housing financing. More and more projects are being funded by issuing bonds and tax credits. While we facilitate transactions where ‘market rate’ bonds are used to finance sprawling apartment complexes complete with the latest in urban amenities, many of our clients utilize low income housing tax credits (LIHTC) in connection with multi-family bonds to fund their projects.
To help meet the housing needs of both a younger workforce and retired individuals, The Texas Department of Housing and Community Affairs (TDHCA) reported that they have allocated $65.3 million in federal housing tax credits to private developers who are creating rental properties that offer reduced rents.
Both developers and housing corporation/authorities will issue bonds to finance a multi-family housing project. As the trustee, we see the transaction unfold from the issuance of the bonds (amidst other various layers of funding), to the procurement of the real estate, to the underwriter who finds the buyer for the bonds, and finally the culmination of the bonds to cash proceeds.
The trustee role remains until the bonds are paid off; this could be a couple of years or a couple of decades, depending on the terms of the deal.
Greg Hasty, Vice President, Wilmington Trust, N.A., heads Wilmington Trust’s Texas business development effort that specializes in public finance to the housing market. He comments: “The projects we are seeing are not like before, some of the nicest projects in the Texas cities are being built with bonds. So the old perception of impoverished housing projects is a thing of the past. The new projects are beautiful and are amazingly affordable.”
Contact Greg Hasty at (972)383-3153 to learn more about the Corporate Trust solutions offered by Wilmington Trust or visit www.wilmingtontrust.com/publicfinance.
Wilmington Trust is a registered service mark. Wilmington Trust Corporation is a wholly owned subsidiary of M&T Bank Corporation (M&T).