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Presentation, discussion, and possible action regarding a Material Amendment to the Housing Tax Credit Application for Eden Court (HTC #23428)
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RECOMMENDED ACTION
recommendation
WHEREAS, Eden Court (the Development) received an award of 4% Housing Tax Credits (HTCs) in 2023 for the acquisition and rehabilitation of 110 elderly preference units in Seguin, Guadalupe County;
WHEREAS, Eden Court Senior Housing LP (the Development Owner or Owner) requests approval for a material amendment to the Application to decrease the number of low-income units from 110 to 109;
WHEREAS, one household was discovered to be over income when the management company began income qualifications of the current residents, and the Owner would like to turn the unit into a market unit now to not displace this elderly tenant;
WHEREAS, the requested change reduces the applicable fraction from 100% to 98.78%, resulting in a reduction of approximately $15,000 in annual Housing Tax Credits, which will result in a reduction of approximately $140,000 to equity proceeds but will not impact the Development’s financial feasibility; and
WHEREAS, Board approval is required for a reduction in the number of low-income units, and the Development Owner has complied with the amendment requirements in 10 TAC §10.405(a);
NOW, therefore, it is hereby
RESOLVED, that the requested amendment for Eden Court is approved as presented at this meeting, and the Executive Director and his designees are each hereby authorized, directed, and empowered to take all necessary action to effectuate the foregoing.
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BACKGROUND
Eden Court received a 4% HTC award to acquire and rehabilitate 110 units in Seguin, Guadalupe County. In a letter dated August 29, 2024, Tracey Fine, representative for the Development Owner, requested approval to decrease the number of low-income units from 110 to 109. This change represents a material amendment to the Application.
The Development Owner states that a single current household is not income qualified. This household is a long-term resident who is disinclined to move.
The change in the number of low-income units will result in the LURA restricting 28 units at 50% of Area Median Income (AMI); 81 units at 60% AMI; and one unit at market rate.
There is an anticipated loss of approximately $15,000 in annual tax credits or $140,000 in equity as a result of this change, which can be absorbed through an increase in deferred developer fee. Rental income and operating expense assumptions remain unchanged from application, representing a nonmaterial impact to the underwriting. The development remains feasible, and the final credit amount will be determined at cost certification.
The Owner indicated that the necessity of this amendment was not reasonably foreseeable at the time of application. The Owner did not know when this transaction was put together if this resident would want to leave prior to income certification, and since this tenant’s unit was originally a non-HTC unit, the Owner was not able to certify the tenant’s income prior to submitting the Application.
Staff has determined that the proposed change noted above would not have impacted the HTC award.
Staff recommends approval of the amendment request as presented herein.