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File #: 1181    Version: 1 Name:
Type: Action Item Status: Agenda Ready
File created: 9/30/2025 In control: Governing Board
On agenda: 10/9/2025 Final action:
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 Retreat at Esther
Sponsors: Josh Goldberger
Attachments: 1. Retreat at Esther FM Request (Flattened), 2. Retreat at Esther REA Report (Flattened)
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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 Retreat at Esther

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RECOMMENDED ACTION

 

recommendation

WHEREAS, Retreat at Esther 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 Department lacks authority to extend federal placement-in-service deadlines and may only reset such deadlines by requiring the credits to be returned and immediately reallocated to the Development, as permitted solely under the force majeure provision of the Qualified Allocation Plan (QAP); and

 

WHEREAS, the Development Owner has submitted documentation demonstrating that a qualifying force majeure event has occurred;

 

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 approved, and that the 2024 Qualified Allocation Plan, Uniform Multifamily Rules, and the 2025 Program Calendar shall be applicable to the Development.

 

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BACKGROUND

Development

Retreat at Esther

Target Population

Elderly

HTC Award

$2,000,000

City

Houston

Total Units

103

HTC Units

103

Initial Year of Award

2024

Extension Requested

Six months

 

Retreat at Esther is a 103-unit development located in Houston, Harris County. The development received an award of 9% Housing Tax Credits in 2024. As a result, the current deadline to place in service in December 31, 2026.

 

The Development has experienced delays due to disruptions in the equity market and complications surrounding new funding sources. The project received an equity quote of $0.87 at the time of application, but the market slowed significantly later in the year, and credit pricing dropped into the $0.70 - $0.79 range. The Applicant was only able to secure an equity commitment at $0.80 in June 2025. This shortfall in credit pricing resulted in a significant funding gap.  To address this, the Applicant pursued and was awarded City of Houston HOME funds. While the award allows the project to remain financially feasible, adding a new federal funding source has delayed closing and introduced additional requirements. The project is now expected to close in late October/early November 2025. Following the closing, the project anticipates a 14-month construction timeline, with expected completion by February 2027, which extends beyond the original deadline. To accommodate these delays, the Developer is requesting a six-month extension of the placed-in-service deadline.

 

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.

 

Staff has reviewed this request and determined that the significant drop in equity pricing and subsequent complications surrounding obtaining new funding sources  constitute a force majeure event under the rules.

 

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 June 30, 2026.

 

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 approval of the request to return and reallocate tax credits for Retreat at Esther under the force majeure provisions of 10 TAC §11.6(5).