Housing bonds may be put to work early
Wednesday, July 26, 2017 by Jo Clifton
Proponents of three proposed low-income housing projects are looking forward to Thursday when the board of the Texas Department of Housing and Community Affairs will announce which projects have been selected to receive housing tax credits.
Two of the three projects ranked most highly on the TDHCA’s list of local projects that might receive funding will need city of Austin bond funds in order to receive the tax credits.
According to a memo from Rosie Truelove, interim director of the city’s Neighborhood Housing and Community Development Department, City Council, acting as the board of directors of the Austin Housing Finance Corporation, must take action before Sept. 1 to ensure that those two projects receive the tax credits. The item has been set on Council’s Aug. 3 agenda.
If the city is to provide the required bond funds, Council will need to approve bond funding, and amend the budget of the Neighborhood Housing and Community Development Department to increase its current year budget by $5.5 million. In addition, it will have to approve an amendment adding $5.5 million to the Austin Housing Finance Corporation’s Fiscal Year 2016-17 capital budget.
The Austin project receiving the highest score from the state agency is Pathways at Goodrich Place in District 5. Pathways is not seeking city bond money. However, the other two projects, Aria Grand at Woodland Avenue and I-35 and a Foundation Communities project at the Mueller development, are both counting on city bond money. Both of those projects are in District 9.
Foundation Communities plans to build 132 affordable apartment units in the Mueller redevelopment area for families earning 60 percent or less of the median family income. The tenants will include 14 previously homeless families, according to Alyah Khan, communications coordinator for Foundation Communities.
David Potter, manager of the neighborhood development program at NHCD, told the Austin Monitor that 53 units at the Mueller development would be reserved for families making 60 percent MFI. Another 66 units would be reserved for those making 50 percent MFI, and 13 units would serve families making just 30 percent MFI.
In order to receive the $13.5 million in tax credits, the nonprofit will need a loan of $4 million from the Austin Housing Finance Corporation. Executive Director Walter Moreau told the Monitor they intend to call the apartments the Jordan, after the late Congress member Barbara Jordan.
Saigebrook Development is seeking a $1.5 million loan from the city’s housing finance corporation to help finance 70 units. With the city’s bond money, Saigebrook can expect to get a little more than $12 million in tax credit equity, according to the memo.
Saigebrook Development will be offering six units for families at 30 percent MFI, 24 units for those at 50 percent MFI and 30 units for families earning 60 percent MFI, Potter said. The other 10 units will be rented at market rates.
Rebecca Giello, assistant director of NHCD, explained that the department had initially submitted a six-year spending plan for the $65 million in bonds approved by voters in 2013. That included $15 million for the first year and then $10 million for each of the five years following that.
“If TDHCA approves Austin for two tax credit awards, it will require an early draw down of the final year. We do not have enough funding this fiscal year in order to respond to the applicants’ requests for dollars crucial to leverage the 9% tax credit awards,” Giello said via text message.
She further explained, “The tax credit program brings equity to a deal that is unique in that it is one of the most instrumental ways to reach deeply affordable units – 30 percent MFI in high opportunity areas.”
As Truelove said in her memo to Mayor Steve Adler and Council, 2009 offers a precedent for an early draw down of bond funds. That year, the state housing department awarded funding to three Austin projects, but the department did not have sufficient bond funds for that particular year in order to finish out the funding. “To meet the funding requirements for the applicants, Council approved an early draw down of 2006 affordable housing GO Bond funds in the amount of $2,055,495.”
If, as expected, Council approves the early draw down of $5.5 million in bond funding, the balance remaining for NHCD’s FY 2017-18 capital budget would be $10.5 million, “which will exhaust the $65 million of the 2013” affordable housing bond funds. This is how the remaining bond funds would be appropriated for FY 2017-18, according to Truelove: $2 million for the homeowner assistance program; $250,000 for the renter assistance program; and $8.2 million for the housing developer assistance program.
Photo by Scott Lewis made available through a Creative Commons license.
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