TDHCA March 2024 Meeting Highlights

The TDHCA convened its board meeting at 10:02am on March 7, 2024, at the Greer Bldg, 125 East 11th Street Austin, Texas 78701.

March 7 Meeting Summary

TAAHP Staff attended the board meeting and summarized its main takeaways.

Consent Agenda Approved

AGENDA ITEM 19: Executive Director’s Report

Bobby Wilkinson Executive Director, TDHCA

• Housing Stability Services program – Served more than 100,000 Texans since the program launched in the summer of 2021. These households have received an average assistance amount of about $1,500 to help them maintain or obtain stable housing.
• Homeowner assistance fund (HAF) is active – with only a couple months left. The HAF program is federally funded that can help Texan residents with overdue mortgage payments, property tax, homeowners’ insurance, HOA fees and now recently utilities assistance.
  • HAF has provided assistance to almost 58,405 unique households with an average assistance amount per household totaling $12,521. TDHCA has distributed $723.3 million in assistance pay to date.
  • $4.9 million is approved payment scheduled and there’s about $600,000 million funds remaining.
  • There are approximately 1,800 submitted HAF applications in queue requiring review and decision.

AGENDA ITEM 22: Asset Management

Presentation, discussion, and possible action regarding a material amendment to the Housing Tax Credit Application, changes to the ownership structure, and a waiver of 10 TAC §11.9(b)(2)(A) for Celebration Paris (HTC#22219/#23814) – page 589

Summary: Celebration Paris received an award of 9% HTCs in 2022 and was approved for a reallocation of credits under Force Majeure in 2023 (HTC #23814) for the new construction of 76 multifamily units for the elderly population in Paris, Lamar County. Based on current construction costs, construction and permanent interest rates, and tax credit equity pricing, the original 76-unit community is not feasible with the awarded annual credit allocation. The reduction to 60 units, the more efficient single building design, and property tax exemption are all necessary under current economic conditions to achieve feasibility. the Applicant provided a letter from the syndicator and the lender confirming that the Development would not be financially feasible without the proposed changes. A resolution of support from the City of Paris was also provided.

Reasoning for the Requested Changes: Unprecedented increases in construction material costs, labor shortages, material supply chain delays, rising interest rates, rising operational costs and declining tax credit equity pricing.

Amendment Requests

1. Site Plan & Building Reconfiguration: Including the unit count reduction detailed below to 60 units, the net rentable area is 51,345 square feet, a 23.8% reduction. The revised site plan also reduces the number of parking spaces to 66. The parking ratio of 1.1 per unit has proven more than adequate across Texas in senior communities and meets the PUD zoning requirements approved by the City of Paris.
2. Reduction of Units & Unit Mix Adjustment: A 21.05% reduction in the number of units from 76 to 60 units, with an increase of six one-bedroom units and elimination of 22 two-bedroom units for a 50%/50% mix instead of the 32/68 ratio originally proposed in the Application. The elimination of the 16 units and slight changes to the unit sizes would result in a 23.87%, or 16,103 square feet, reduction in the Net Rentable Area, from 67,448 square feet to 51,345 square feet;
3. Organizational modifications: A reorganization of the ownership to qualify for ad valorem tax exemption and the admission of a co-developer with rural senior housing experience.

Discussion

• The biggest pushback from the board was concerning the unit decrease – from 70 to 60 units. Board members were concerned about setting a precedent for decreasing the unit count. The Mayor of Paris asked the board to accept the recommended requests because 60 units is better than none.
• After a long discussion, the Board approves by a 3-2 vote the material amendment request from Celebration Paris for 64 units (16% decrease) along with the request for changes to the ownership structure, and a rule waiver.

AGENDA ITEM 29: Multifamily Finance

Presentation, discussion, and possible action regarding a waiver of the 2024-1 National Housing Trust Fund Notice of Funding Availability for Burleson Studios (24454)

• The Applicant for Burleson Studios has requested a waiver of the current NOFA, and instead asked for a loan to be made available to the Application that is structured as either deferred forgivable or deferred payable, with an interest rate of 0%.
• Staff believes that creating a separate loan product under this NOFA would necessitate cancelling the NOFA, returning all submitted Applications, and then creating a new NOFA that makes the requested terms available to any potential Applicant, with a new thirty-day application acceptance and RAF period, as it is possible that there are Applicants who would have benefitted from the requested loan terms but chose not to initially apply.
• The Board approves staff recommendation to deny the waiver request from Burleson Studios (#24454) of the 2024-1 National Housing Trust Fund Notice of Funding Availability.

AGENDA ITEM 32: Multifamily Finance

Presentation, discussion, and possible action regarding the approval for publication of the 2024-2 and 2024-3 Multifamily Direct Loan Notices of Funding Availability

• The 2024-2 and 2024-3 NOFAs announce the availability of Multifamily Direct Loan funds for Applications received between April 1, 2024, and October 31, 2024 (if sufficient funds remain). The funds in these NOFAs are inclusive of the $25,000,000 in HOME and $25,000,000 in TCAPRF.
• Staff is also requesting to be able to add HOME or TCAP-RF to each respective NOFA in the event that any funds become available, through either the termination of a previous application, the availability of program income, or other similar circumstances.
• The 2024-2 HOME NOFA and the 2024-3 TCAP RF NOFA, both of which contain $25 million in funds that will be available for multifamily rental developments. These funds are being made available in a series of application acceptance periods with a specific list of priorities. The department will take applications until no funds remain. Both NOFA’s contain similar application acceptance dates and priorities. The main difference being the HOME NOFA is subject to both a sub-regional and regional distribution formula. The first application acceptance period will go on from April 1st, April 30th of this year. This period makes funding available throughout the state following a regional distribution formula similar to the regional allocation formula used for tax credits. During this period, the only applicants that will be eligible to apply are prior 9% tax credit awards not already layered with federal funds from TDHCA and not currently applying for 9% tax credits in 2024.
• The next application acceptance date will be for the same group of eligible applicants, but for this period, applicants will not be subject to the original distribution amounts. Instead, applicants will be required to request at least $4 million in HOME or $5 million in TCAP, but no more than $10 million in funding. Staff expects that the demand will exceed the supply for these funds and will suspend the NOFA once all available funds have been applied for.
• Applicants have the option of either a fully amortizing loan made at 2% interest, or for applicants requesting HOME Funds that have a first lien FHA insured loan. There is a cash flow payment option as required by HUD’s Map guide. It’s also important to note that the department does not currently have an agreement with HUD to layer TCAP funds with FHA loans, and therefore developments layered with an FHA loan are not eligible to apply for the TCAP RF funds.
• Upon board approval of this NOFA, TDHCA staff will begin taking applications April 1st with the first application acceptance date, again being April 30th. They will continue taking applications until the funds are exhausted and the NOFAs are suspended.
  The Board adopts staff recommendation to approve for publication the 2024-2 and 2024-3 Multifamily Direct Loan Notices of Funding Availability

Meeting adjourned at 12:43 AM

The next TDHCA board meeting is on April 11, 2024