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Presentation, discussion, and possible action on a request for an extension of the previously approved deadline to Place in Service for Paige Estates
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RECOMMENDED ACTION
recommendation
WHEREAS, Paige Estates was awarded 9% housing tax credits during the 2021 Competitive Housing Tax Credit cycle, received supplemental housing tax credits in 2023, and was then approved for force majeure treatment by the Board in 2024, resulting in a current deadline to place in service by June 30, 2026;
WHEREAS, the current deadline to place in service is more restrictive than what is allowable federally, which would be December 31, 2026;
WHEREAS, the Owner has requested that the Board extend its previously approved deadline to December 31, 2026; and
WHEREAS, the Development Owner has submitted documentation demonstrating that such an extension is warranted;
NOW, therefore, it is hereby
RESOLVED, that the previously approved deadline to place in service for Paige Estates is extended to December 31, 2026.
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BACKGROUND
|
Development |
Paige Estates |
|
Target Population |
Elderly |
|
HTC Award |
$1,290,300 |
|
City |
Waco |
|
Total Units |
64 |
|
HTC Units |
64 |
|
Initial Year of Award |
2021 |
|
Extension Requested |
Six months |
Paige Estates is a 64-unit development located in Waco, McLennan County. The development received an award of 9% Housing Tax Credits in 2021, received supplemental credits in 2023, and was granted force majeure treatment by the Board in 2024. As a result, the current deadline to place in service is June 30, 2026.
Despite making significant progress, the development has experienced prolonged delays due to pandemic-related market disruptions and continued challenges related to financial feasibility. These delays, which previously warranted force majeure relief, have persisted into 2025. The following is a brief synopsis of the delays and the project’s current status:
• Rising construction costs and fluctuating interest rates have created a financing gap requiring extensive restructuring;
• Environmental clearance and Part 58 review were required to secure ARPA funds and Project-Based Vouchers (PBVs) through the Waco Housing Authority;
• The project is now permit-ready and construction can begin immediately upon financial closing;
• Closing is scheduled for July 2025, with a 14-month construction schedule and projected completion in August 2026;
• The equity investor requires a time cushion between completion and the placed in service deadline before authorizing closing.
As a result of the delays, the Owner has requested that the Board extend its previously approved deadline to place in service to satisfy investor requirements and proceed with closing.
APPLICABLE RULE
Under 10 TAC §11.6(5), a Development Owner may return credits and receive a reallocation outside the standard allocation process if the return is the result of a qualifying force majeure event occurring prior to issuance of IRS Form(s) 8609. Pursuant to 10 TAC §11.6(5), the Department’s Governing Board may approve execution of a Carryover Allocation Agreement for the current program year with the Development Owner that returned the credits, but only if the following conditions are met:
(A) The credits were returned as a result of "Force Majeure" events that occurred before issuance of Forms 8609. Force Majeure events are the following sudden and unforeseen circumstances outside the control of the Development Owner: acts of God such as fire, tornado, flooding, significant and unusual rainfall or subfreezing temperatures, or loss of access to necessary water or utilities as a direct result of significant weather events; explosion; vandalism; orders or acts of military authority; unrelated party litigation; changes in law, rules, or regulations; national emergency or insurrection; riot; acts of terrorism; supplier failures; or materials or labor shortages. If a Force Majeure event is also a presidentially declared disaster, the Department may treat the matter under the applicable federal provisions. Force Majeure events must make construction activity impossible or materially impede its progress.
The Board previously approved a request from the Development under this rule in 2024. Normally, the deadline to place in service would have been December 31, 2026, but as part of that approval, the Board imposed a more restrictive deadline of June 30, 2026. The Developer is now requesting that the Board extend its previous approval to allow for the full federally-allowable timeline to place in service.
IMPACT OF BOARD DECISION
If the Board approves the request:
• The new placed-in-service deadline will be December 31, 2026.
If the Board denies the request:
• The original placed in-service deadline of June 30, 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 approval of the request to extend the previously approved deadline to place in service for Paige Estates.