title
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 The Bryan
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RECOMMENDED ACTION
recommendation
WHEREAS, The Bryan was awarded 9% housing tax credits during the 2024 Competitive Housing Tax Credit cycle;
WHEREAS, the Development Owner executed a Carryover Allocation Agreement that included certifications stating each building receiving an allocation would be placed in service by December 31, 2026;
WHEREAS, the Development Owner has requested an extension to the placement in service deadline under 10 TAC §11.6(5), related to Credit Returns Resulting from Force Majeure Events;
WHEREAS, the Development is not financially feasible unless the Board approves an Application amendment presented at this meeting, which requests to reduce the number of Units by approximately 20%, which staff has recommended that the Board deny; and
WHEREAS, staff cannot recommend that the Board approve this item knowing that the Development is infeasible;
NOW, therefore, it is hereby
RESOLVED, that the request to treat the matter under the force majeure provisions of 10 TAC §11.6(5) is denied.
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BACKGROUND
|
Development |
The Bryan |
|
Target Population |
Elderly |
|
HTC Award |
$2,000,000 |
|
City |
Mission |
|
Total Units |
113 |
|
HTC Units |
113 |
|
Initial Year of Award |
2024 |
|
Extension Requested |
One year |
The Bryan is a 113-unit development located in Mission, Hidalgo County. The development received an award of 9% Housing Tax Credits in 2024. As a result, the current deadline to place in service is December 31, 2026.
Since receiving that award, the Development has experienced financial gaps caused by rising construction costs, declining equity rates, and rising interest rates. To address this gap, the Developer has requested to amend the Application to reduce the number of Units by approximately 20%. That amendment is scheduled to be presented at this meeting of the Governing Board, and staff recommends that the Board deny the amendment. Because the Development is no longer financially feasible, staff cannot recommend that the Board approve this request to return the credits and have them reallocated to the Development.
IMPACT OF BOARD DECISION
If the Board approves the request:
• The credits will be returned and reallocated, with the 2024 Qualified Allocation Plan, Uniform Multifamily Rules, and the 2025 Program Calendar applicable to the Development.
• A new Carryover Allocation Agreement will be executed.
• The new 10% Test deadline will be July 1, 2026.
• The new placed-in-service deadline will be December 31, 2027.
If the Board denies the request:
• The current placed-in-service deadline of December 31, 2026, remains in place.
• The Development Owner may either meet the existing deadline, return the credits, or have the award terminated for failing to meet the deadline.
• Returned credits will first be reallocated within the original subregion in accordance with 10 TAC §11.6(2). If no pending applications are eligible within the subregion, the credits will be added to the statewide collapse for reallocation.
This request has no impact on any funding source other than the Low Income Housing Tax Credit program.
RECOMMENDATION
Staff recommends denial of the request to return and reallocate tax credits for The Bryan under the force majeure provisions of 10 TAC §11.6(5).