The TDHCA convened its board meeting at 10:04 am October 10, 2024, at the Greer Building, Williamson Board Room 125 E. 11th Street Austin, TX 78701.
October 10 Meeting Summary
The Board went into executive session at 10:03 am and returned at 10:21 am. During the executive session, the Board did not adopt any policy, position resolution, rule regulation, or take any formal action or vote on any item.
EXECUTIVE DIRECTOR’S REPORT
The Executive Director provided updates on several key housing initiatives:
- HOME-ARP Program Updates:
- Tiara Hardaway, the current HOME-ARP manager, is leaving for a position at HUD, with Peg McCoy set to take over.
- Burnet Place, the first HOME-ARP project in 2023, has begun moving tenants into its 31 supportive housing units, showcasing the program’s progress.
- Texas Homeowner Assistance Fund (HAF):
- The HAF has assisted 58,514 unique households, with an average assistance amount of $12,618, totaling $739.3 million disbursed.
- The program is now in its final phase, with all funds committed and the HAF website taken down, redirecting users to the TDHCA general site.
- Multifamily Direct Loan Program (MFDL):
- The MFDL successfully committed the Department’s 2022 National Housing Trust Fund grant of $47 million to multifamily developments, marking the largest allocation to date.
- This funding aims to provide long-term affordability (30% AMI units).
- Housing Stability Services (HSS):
- HSS secured a memorandum of understanding (MOU) with the Texas Veterans Commission, to provide three years of support for staffing in TVC’s homeless veterans program. With approximately $567,000 in funds, TVC was able to provide outreach, education, and housing navigation for more than 3,500 veteran families in Texas experiencing or at risk of homelessness.
- The initiative’s success led to permanent funding and retention of two staff members for this program.
ACTION REPORT ITEM 10:
Presentation from nonprofit and community stakeholders on matters concerning housing policy.
Tanya Lavelle from Disability Rights Texas opened the presentation by emphasizing the purpose behind their efforts: “Our goal is to educate all attendees about the LIHTC program from the perspectives of the organizations and individuals we represent as nonprofit and community partners. We aim to provide a comprehensive overview of the current housing landscape, clarify the objectives of the LIHTC program, and offer recommendations for aligning program outcomes with these goals. Additionally, we seek to highlight the diverse range of stakeholders involved in the LIHTC program, particularly the vital role of nonprofit partners and community organizations advocating for low-income tenants, as well as the self-advocates who reside in LIHTC units.”
Key Takeaways:
- Inclusivity in Decision-Making: There was a strong call for including diverse stakeholders—especially tenants and community advocates—in discussions around policy changes, particularly when considering changes to the Qualified Allocation Plan (QAP).
- Location Matters: Historical trends indicated a significant concentration of LIHTC units in high-poverty areas. The stakeholders warned against repeating past mistakes that resulted in community isolation and perpetuated poverty.
- Need for Engagement: The presentation highlighted the need for enhanced engagement from TDHCA with community stakeholders. Suggestions included expanding virtual participation options and proactively reaching out to underrepresented groups.
Board Reaction:
The board expressed appreciation for the input from the speakers, emphasizing the necessity of continuous dialogue among all stakeholders, including industry representatives. Board members highlighted the importance of collaboration and urged stakeholders to maintain open communication with developers and TDHCA staff. They also recognized the potential of leveraging other private sector philanthropic monies to help bridge financial gaps in affordable housing projects.
Overall, the board appeared supportive of the recommendations for improving engagement and collaboration, acknowledging the complexity of the LIHTC program and the need for diverse perspectives to enhance its effectiveness.
MULTIFAMILY BOND
AGENDA ITEMS 14: Inducement Resolution
The TDHCA board discussed the adoption of an inducement resolution for six pre-applications to secure bond volume cap for housing developments. The resolution is the first step in the application process, allowing for filing with the Bond Review Board and initiating further reviews.
The six developments are primarily new constructions in Dallas, but there’s also a project in Houston and another one in Wilmer – that would yield over 1,100 units. In total these projects are requesting approximately $223 million in bond volume cap, which exceeds the amount that staff expects to be available in the TDHCA set-aside for 2025. Reservations will be issued with available cap and the rest will remain on the waiting list to be reserved as volume cap may become available. The board approved Resolution No. 25-006 to move forward with applications for bond issuance.
HOME-ARP
AGENDA ITEM 22:
Presentation, discussion and possible action on regarding approval of a HOME-ARP Allocation Plan Second Amendment to add reallocated funds to the nonprofit capacity building/operating cost assistance, non-congregate shelter activities and administration activities to be released for public comment
The TDHCA board discussed a second amendment to the HOME-ARP Allocation Plan, which involves reallocating approximately $4.3 million in funds to enhance nonprofit capacity building, support non-congregate shelter activities, and cover administration costs. Originally allocated about $132 million in 2021, the HOME-ARP program targets individuals experiencing or at risk of homelessness. Due to adjustments from HUD, TDHCA is seeking to program these reallocated funds primarily in Odessa, Bryan, and Pasadena.
LEGAL
AGENDA ITEM 23:
Presentation, discussion, and possible action regarding the adoption of an Agreed Final Order concerning Eban Village I (HTC # 95047/ CMTS # 1354) and Eban Village II (HTC # 99022 / CMTS 2087) Sascha Stremler
The TDHCA board discussed the adoption of an Agreed Final Order concerning Eban Village I and II, both owned by Hope Housing Foundation, which has a history of compliance issues across its properties. The complexes, located in Dallas, have 110 units in Eban Village I and 220 in Eban Village II, with 165 units restricted by the housing tax credit program. Recent inspections revealed several non-compliance issues, including failure to implement utility allowances and lack of designated special needs housing.
Following an informal conference, the enforcement committee recommended an administrative penalty of $23,125, with 50% forgivable if the owner addresses all violations and submits necessary documentation by November 12, 2024. If the owner fails to comply, the full penalty will be due. The discussion underscored the need for stricter oversight and corrective measures, especially given the owner’s history of violations. The board’s action aims to ensure compliance and encourage better management practices moving forward.
AGENDA ITEM 24:
Presentation, discussion, and possible action on recommendation to debar multiple parties for conduct relating to Plainview II Triplex (HOME 532315 / CMTS 2658)
The TDHCA board addressed the debarment of Hale Center Housing Authority and its executive director, Cindy Carthel, due to multiple compliance failures related to the Plainview II Triplex, which consists of three single-family homes restricted at 50% of AMI. The property was subject to a 1994 LURA in exchange for an interest-free loan. That loan matured on September 1st, 2024, and has been paid in full and the LURA expired on August 19th, 2024. Despite signing agreed final orders in 2017, 2020, and 2023 to correct non-compliance issues, the responsible parties did not resolve all violations, particularly concerning a household exceeding income limits.
The enforcement committee recommended a 10-year debarment. This recommendation was based on the severity of the violations and the repeated non-compliance. The responsible parties are not appealing the debarment. The board unanimously approved the debarment, emphasizing the need for accountability and compliance within housing authority operations.
Multifamily Finance
AGENDA ITEM 30:
Presentation, discussion, and possible action on approving a new outside counsel contract, and delegation of contract signature authority to the Executive Director
The TDHCA board discussed the approval of a contract with the law firm Best, Best, and Krieger to assist with document preparation for multifamily direct loans, prompted by a significant increase in federal funding sources during the pandemic. With a growing pipeline of deals expected to close within the next year, the department seeks external legal support to expedite the drafting of contracts and loan documents.
The initial estimated cost for this service is approximately $600,000, to be funded through administrative funds from the federal grants, ensuring no general revenue will be used. The arrangement is intended to be temporary, lasting through the end of the next state fiscal year, with plans to evaluate its success by spring 2025 before deciding on any future contracts. The board unanimously approved the contract, with a clear understanding that internal legal staff would handle any conflicts of interest that may arise.
AGENDA ITEM 31:
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 Vista at Silver Oaks
The TDHCA board reviewed a request from Vista at Silver Oaks, a 76-unit development in San Antonio, for a three-month extension of its placed-in-service deadline due to construction delays caused by unexpected public improvements. Originally awarded housing tax credits in 2022, the project’s deadline is currently set for December 31, 2024. However, unforeseen issues with public sewer lines have caused an 82-day delay, putting the project at risk of missing the deadline with only eight days of buffer.
To mitigate this risk, the applicant seeks to extend the deadline to March 31, 2025, allowing more flexibility in case of further delays. The staff recommended approval of the request to provide the necessary breathing room for the project to ensure compliance with federal timelines. The board acknowledged the importance of allowing such adjustments to support successful project completion while maintaining adherence to regulations.
AGENDA ITEM 32:
Presentation, discussion, and possible action on an approval of a loan and 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 305 E Round Grove Living
The TDHCA board discussed a request from 305 E Round Grove Living, a development awarded 9% housing tax credits in 2023 for the construction of 90 units in Lewisville, of which 57 are affordable. Due to rising interest rates and construction costs, the project faces a $4.4 million funding gap, preventing it from moving forward. To address this, staff recommended approving a HOME loan of $4,438,911 at 2% interest.
Additionally, the development seeks an extension of its placed-in-service deadline from December 31, 2025, to December 31, 2026, under the force majeure provision of the Qualified Allocation Plan (QAP). This extension aims to accommodate the funding delays without affecting the project’s scope, as the number of units remains unchanged. The board expressed support for the loan and the deadline extension, recognizing the challenges posed by increased costs while ensuring the project’s compliance with funding requirements. Staff anticipates that the new timeline will be feasible barring further delays.
Summary of Discussion on Cost Increases in 4% vs. 9% Deals
At the end of the meeting, Board member, Holland Harper raised a concern about significant cost increases in 4% deals compared to 9% deals, questioning whether developers might be incentivized to escalate costs to secure more credits. Teresa Morales explained that 9% deals have a fixed credit ceiling, limiting additional credits even if costs rise. In contrast, 4% deals are based on eligible costs without a ceiling, allowing for credit increases when expenses rise.
Morales noted that substantial cost increases in 4% deals are rare, with a rule requiring developers to explain increases over 20%. She emphasized that while there were notable cost variations in projects completed during the COVID-19 pandemic, the majority of deals remained within typical ranges. Board Chairman Leo Vasquez echoed Harper’s concern, suggesting that the system might inadvertently encourage higher costs for more credits – however he did mention that there was no need to address it at the moment.
Adjourned at 2:03 pm.