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Presentation, discussion, and possible action regarding changes to the ownership structure and a waiver of 10 TAC §11.9(b)(2)(A) for Parkside on Carrier (HTC #21093/23920)
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RECOMMENDED ACTION
recommendation
WHEREAS, Parkside on Carrier (Development) received an award of 9% Housing Tax Credits (HTCs) in 2021, Supplemental Credits in 2023 (HTC #23920), and was approved for a Multifamily Direct Loan in 2025 for the new construction of 38 multifamily units for the elderly population in Grand Prairie, Dallas County;
WHEREAS, the HTC Application received two points for agreeing to include a certified Historically Underutilized Business (HUB) in the ownership structure of the General Partner and materially participating in the development and operation of the Development throughout the Compliance Period;
WHEREAS, Parkside on Carrier, L.P. (the Development Owner or Owner) is seeking to revise the ownership structure by changing JES Partnerships-Parkside, L.L.C., which is owned by JES Partnership Member, L.L.C. (60%) and by Parkside HUB, L.L.C (40%), from general partner to Special Limited Partner owning 0.0049% of the Development Owner;
WHEREAS, in order to qualify for a property tax exemption, the Owner also seeks to revise the ownership structure by adding Parkside on Carrier GPHFC GP, L.L.C. as General Partner, of which the sole managing member is the Grand Prairie Housing Finance Corporation;
WHEREAS, the Owner also requests a waiver of the specific requirement in 10 TAC §11.9(b)(2)(A) that states the HUB must have an ownership interest in the General Partner, allowing the Development to continue to qualify for the two points for Sponsor Characteristics with the HUB in the ownership structure of the Special Limited Partner and continuing to meet the intent of 10 TAC §11.9(b)(2)(A) to have a HUB materially participate in the Development; and
WHEREAS, the requested changes and waiver do not negatively affect the Development, impact the viability of the transaction, impact Tex. Gov't Code §§2306.001, 2306.002, 2306.359, and 2306.6701, or affect the amount of the tax credits awarded;
NOW, therefore, it is hereby
RESOLVED, that the requested waiver and changes to the ownership structure for Parkside on Carrier are approved as presented to this meeting, and the Executive Director and his designees are each authorized, directed, and empowered to take all necessary action to effectuate the foregoing.
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BACKGROUND
Parkside on Carrier was approved for a 9% HTC award in 2021, for Supplemental Credits in 2023, and a Multifamily Direct Loan in 2025 for the construction of 38 units, all of which are designated as low-income units, of multifamily housing for the elderly population in Grand Prairie, Dallas County. The HTC Application for the Development received two points because the Development was structured to include a Historically Underutilized Business (HUB) in the ownership structure that would have some combination of ownership interest in the General Partner of the Owner, cash flow from operations, and Developer Fee, which taken together equal at least 50% and no less than 5% for any category. The HUB is also required to materially participate in the development and operation of the Development throughout the Compliance Period.
In a letter dated February 26, 2024, Brian Kimes, the representative for the Development Owner, proposed changes to the ownership structure of the Owner and Developer and requested a waiver of the provision in 10 TAC §11.9(b)(2)(A) that specifies the HUB is required to have an ownership interest in the General Partner.
The Owner is seeking to revise the ownership structure by adding the Grand Prairie Housing Finance Corporation as the sole member of Parkside on Carrier GPHFC GP, L.L.C., the proposed General Partner. Additionally, the Owner is seeking to revise the ownership structure by changing JES Partnerships-Parkside, L.L.C., which is owned by JES Partnership Member, L.L.C. (60%) and by Parkside HUB, L.L.C. (40%), from general partner to Special Limited Partner (SLP) owning 0.0049% of the Development Owner. Parkside HUB, L.L.C. is solely owned by Trinity Realty, a certified HUB. Parkside on Carrier GPHFC GP, L.L.C. will now receive 30% of the Developer fee. JES Dev Co, Inc. will receive 65% of the Developer fee, and Parkside HUB, L.L.C. will receive 5% of the Developer fee.
The change in the structure will result in the HUB no longer meeting the requirements for the two points for Sponsor Characteristics awarded at Application. Therefore, the Applicant requests to waive this specific requirement and to allow the Development to continue to qualify for the two points for Sponsor Characteristics with the HUB in the ownership structure of the Special Limited Partner. The HUB would continue to be required to meet all other requirements in 10 TAC §11.9(b)(2)(A), including the requirement to materially participate in the development and operation of the Development throughout the Compliance Period. This revised ownership requirement would be codified in the LURA for the Development.
The Owner explained that due to increased construction costs, operating costs, interest rates and decreases in equity pricing, the Development is not feasible without significant changes. The admission of the Grand Prairie Housing Finance Corporation, along with a ground lease structure, will make the Development eligible for a 100% property tax exemption and will improve the financial viability of the Development. The Owner explained that the proposed general partner will delegate substantial management and control authority to the SLP, and the HUB member will continue to materially participate and gain experience in the Development. Additionally, the Owner states that the proposed structure results in no change to the Development and is merely a change in the title but not role, responsibility, obligation of the HUB member’s participation.
The Applicant states that the need for this waiver was not foreseeable at Application and that the granting of the waiver better serves the policies and purposes Tex. Gov't Code §§2306.001, 2306.002, 2306.359, and 2306.6701 by improving the feasibility of the Development, and the HUB will continue to materially participate in the Development.
The Owner submitted a letter from the City Manager stating the City of Grand Prairie’s continued support for the Development and the proposed changes to the ownership structure and indicating that the City of Grand Prairie is aware that the partnership between the Development Owner and the Grand Prairie Housing Finance Corporation will result in a property tax exemption.
Staff confirmed that the loss of the Sponsor Characteristics points could have affected the award because there was another Application that would have scored higher but was not underwritten.
Except for the requested waiver, the requested changes do not materially alter the Development in a negative manner, impact the viability of the transaction, and were not reasonably foreseeable or preventable by the Owner at the time of Application.
Staff recommends approval of the waiver request and the changes to the ownership structure of the Development as presented herein.