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Presentation, discussion, and possible action regarding a Material Amendment to the Land Use Restriction Agreement for The Heights at 8721 (HTC #20486)
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RECOMMENDED ACTION
recommendation
WHEREAS, The Heights at 8721 formerly known as Old Manor Senior (the Development) received a 4% Housing Tax Credit (HTC) award in 2020 for the new construction of 207 multifamily units, all of which are designated as low-income units, for the elderly, in Austin, Travis County;
WHEREAS, ECG Old Manor, LP (the Development Owner or Owner) represented at application and also executed a Land Use Restriction Agreement (LURA) reflecting a limitation for the elderly population;
WHEREAS, due to severe and ongoing occupancy challenges attributed largely to the elderly demographic restriction, the Development Owner requests to amend LURA to remove the current elderly restriction and instead allow for general occupancy for all ages with all committed incomes and rent limits remaining in place;
WHEREAS, 10 TAC §10.405(b)(2)(C) requires approval by the Board if there is a change to the Target Population; and
WHEREAS, the Development Owner has complied with the amendment requirements in 10 TAC §10.405(b), including holding a public hearing;
NOW, therefore, it is hereby.
RESOLVED, that the requested material LURA amendment for The Heights at 8721 is approved as presented at 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
The Heights at 8721 formerly known as Old Manor Senior received a 4% Housing Tax Credit (HTC) award in 2020 for the construction of 207 multifamily units, in Austin, Travis County. All the units in the Development are low-income units, and the target population is the elderly. The Elderly Limitation requirement in the LURA is the following:
• As determined by the HUD Secretary, is specifically designed and operated to assist elderly persons as defined in and provided under any Federal, State, or local government programs; or
• Is intended for, and solely occupied by persons who are 62 or older; or
• Is intended and operated for occupancy by at least one person 55 years of age or older per Unit, where at least 80% of the total housing Units are occupied by at least one person who is 55 years of age or older; and adheres to policies and procedures which demonstrate an intent by Development Owner and manager to provide housing for persons 55 years of age or older.
The Development is required to lease 100% of the units to individuals and families whose incomes do not exceed 60% of the area median gross income.
Construction of the Development was completed in 2024, and the cost certification documentation for the Development has been submitted by the Owner and is currently under review by the Department.
In a letter as of October 21, 2025, C. Hunter Nelson, representative for the Owner, requests approval to modify the current elderly restriction to allow general occupancy for all ages. Mr. Nelson explained that the change is necessary due to the fact that, despite the project’s high quality and low rents, lease-up has been significantly slower than anticipated, with current occupancy only at 62%. The underperformance and lack of traffic is something that the developer has not experienced in the more than 50 HTC properties that they have developed nationwide to date. The Owner indicated that, in response at the Development, they have implemented a range of targeted strategies to improve occupancy, including offering generous lease concessions, reducing rents well below the 60% AMI maximums, making staffing changes, and more. However, the property is failing to reach stabilization, and the Development continues to face severe and ongoing occupancy challenges attributed largely to the elderly demographic restriction. The amendment request letter further explains that the community would continue to house elderly residents, but population flexibility and access to a broader resident pool would allow the property to lease-up, stabilize and operate feasibly for decades to come. Without this consideration, the Owner fears the property is not financially or operationally feasible. While the construction lender has extended loan maturity to 2026, the anticipated financial cures are severe and not realistic. This, combined with the loss of equity due to a limitation on the Owner’s ability to fully claim the tax credits, creates a catastrophic scenario for the Owner.
The amendment request included an updated Market Analysis from the Gill Group. The market study prepared by Samuel T. Gill in October 2025 evaluated market conditions for the property under both the elderly-restricted and a general occupancy scenario for consideration by the Department. The Market Analysis demonstrates that the subject property is fundamentally misaligned with demand under its current elderly restriction. The study indicates that the property does not meet the Department’s base gross capture rate (GCR) threshold of 10%, which may be increased to 15% only in MSAs over one million population where the average occupancy of stabilized affordable housing within a 20-minute drive time exceeds 92.5%. Senior properties within the 20-minute drive time average 83.5% occupancy, well below the 92.5% requirement, meaning the subject property cannot qualify for the elevated 15% allowance and must be measured against the 10% base threshold. Against this standard, the subject property’s inclusive capture rate of 18% fails both the 10% and even the 15% tests. The study also indicates that there are 228 vacant senior units already competing in the market and reflects a penetration rate of 320.6% for this property based on only 109 income-eligible senior households. In short, the study indicates that the senior segment is oversupplied, structurally weak, and unable to support the subject.
By contrast, the family scenario in the Market Analysis meets all QAP requirements. Stabilized affordable properties within the 20-minute drive average 96.2% occupancy, thereby qualifying for the elevated 15% GCR. The subject property, if converted to general occupancy, would reflect an inclusive capture rate of 7.4% (simple 5.1%), comfortably below both the 10% base threshold and the 15% allowance.
The Development Owner held a public hearing at an offsite location on January 6, 2026, to discuss the proposed change to the designation from senior to general. Ten residents attended the hearing, and representatives of the Development Owner received feedback and answered questions regarding the change in residency requirements. Several comments of concern were made about the proposed switch, including about the level of security, management issues at the property, and lack of common area for children. In addition, the Department received written correspondence from several tenants expressing their opposition to this amendment.
Due to financial infeasibility and a potential for default on the financing and possible loss of LIHTC affordable units through foreclosure by the lender, staff recommends a conditional approval of the requested material amendment to the LURA for the Development. As a condition for this approval, the Department is recommending and the Owner has agreed to provide written notice to all households residing at the Development by March 31 2026, that there will be no penalty under their lease for terminating the lease early if the household provides the Owner by May 31, 2026, that they wish to terminate the lease early and providing an effective termination date because of the property switching from an Elderly Development to a General Development. Likewise, a notice will be provided to any household on the waiting list by March 31, 2026 that the Development is switching to a general development and that if the household notifies the Owner by May 31, 2026 that they wish to be taken off of the waiting list, any nonrefundable deposit or application fee will be refunded to the household.