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Presentation, discussion, and possible action on recommendation to debar Lionel Sims, Archie L. Jones, and Calvert Arms, Ltd. relating to Calvert Arms Apartments (HTC 92096 / CMTS 1064), and presentation of a related report to the Board regarding intention to issue a Notice of Violation seeking the assessment of administrative penalties through a contested case hearing with the State Office of Administrative Hearings
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RECOMMENDED ACTION
recommendation
WHEREAS, in 1992, Calvert Arms, Ltd. was awarded an allocation of Low Income Housing Tax Credits by the Board to build and operate Calvert Arms Apartments (HTC 92096 / CMTS 1064) (the Property);
WHEREAS, Lionel Sims and Archie L. Jones are the general partners for Calvert Arms. Ltd., and are therefore considered to be Responsible Parties, as defined by 10 TAC §2.102;
WHEREAS, 10 TAC §10.621 outlines monitoring requirements for property condition standards, including timelines for repairs;
WHEREAS, the TDHCA Compliance Division identified findings of noncompliance at the Property during a National Standards for the Physical Inspection of Real Estate (NSPIRE) inspection conducted on October 10, 2024, and referred the Owner for an administrative penalty on March 17, 2025, when findings of noncompliance were not timely corrected;
WHEREAS, the Enforcement Committee (Committee) offered an informal conference for the administrative penalty referral on May 29, 2025, but the Responsible Parties failed to appear;
WHEREAS, on June 23, 2025, the Department notified the Responsible Parties that they were being referred to the Committee for debarment pursuant to 10 TAC §2.401(d)(4), for refusal to correct NSPIRE deficiencies;
WHEREAS, the Committee offered an informal conference for the debarment referral on July 17, 2025, but Mr. Sims waived his right to the informal conference, stating instead that he had abandoned the Property;
WHEREAS, the Committee recommended a 30-year debarment and a contested case hearing to seek the maximum potential administrative penalty, which currently stands at $497,475.00, plus an additional daily accrual of $5,200.00;
WHEREAS, on September 9, 2025, the TDHCA Executive Director issued a debarment determination notice recommending a 30-year debarment term for Calvert Arms, Ltd., Lionel Sims, and Archie L. Jones, and notifying the parties that the Department also intended to seek administrative penalties;
WHEREAS, the Responsible Parties did not submit an appeal;
WHEREAS, staff has based the 30-year debarment recommendation on the Department’s rules for debarment and an assessment of each and all of the material factors that are to be considered in determining a recommended period of debarment, applied specifically to the facts and circumstances present in this case;
WHEREAS, staff has based its administrative penalty recommendation on the Department’s rules for administrative penalties and an assessment of each and all of the statutory factors identified to be considered in assessing such penalties, applied specifically to the facts and circumstances present in this case; and
WHEREAS, staff is aware that USDA-Rural Development, the mortgage lienholder, intends to foreclose the property on October 7, 2025, an action that may eliminate the HTC LURA.
NOW, therefore, it is hereby
RESOLVED, that a Final Order of Debarment for a 30-year term ending October 9, 2055, for Calvert Arms, Ltd., Lionel Sims, and Archie L. Jones, substantially in the form presented at this meeting, and authorizing any non-substantive technical corrections, is hereby adopted as the order of this Board;
RESOLVED, that the Board accepts staff’s recommendations regarding the assessment of an administrative penalty as described in the Report to the Board in the form presented at this meeting, along with the associated Agreed Final Order, substantially in the form presented at this meeting, and authorizing any non-substantive technical corrections, which order is hereby adopted as the order of this Board in the event that Calvert Arms, Ltd. chooses to settle the matter to avoid a contested case hearing; and
RESOLVED, that if the administrative penalty matter is not settled, the Board authorizes and directs the Executive Director and his designees to do all things necessary to pursue the assessment of administrative penalties, including a contested case hearing before an administrative law judge with the State Office of Administrative Hearings, but recognizing that efforts to assess an administrative penalty may be halted in the event that the USDA-RD foreclosure eliminates the TDHCA LURA.
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BACKGROUND
REFERRED VIOLATIONS SUBJECT TO DEBARMENT:
1. Tex. Gov’t. Code 2306.0504(c) states, “(c) The department shall debar a person from participation in a department program if the person: […] (1) materially or repeatedly violates any condition imposed by the department in connection with the administration of a department program, including a material or repeated violation of a land use restriction agreement regarding a development supported with a housing tax credit allocation [emphasis added].” Debarment is therefore mandatory for a material violation.
2. 10 TAC §2.401(d)(4) defines material violations that shall be considered for mandatory debarment, stating, “(d) Material violations of a LURA. A Responsible Party will be considered to have materially violated a LURA, Program Agreement, or condition imposed by the Department and shall be referred to the committee for mandatory Debarment if they: […] (4) Refuse to correct a UPCS, NSPIRE, or final construction inspection deficiency after the effective date of this rule;”
3. 10 TAC §10.621 outlines monitoring requirements for property condition standards, including timelines for repairs. TDHCA inspected on October 10, 2024, and the NSPIRE inspection scored 53.8 out of 100. The TDHCA Compliance Division issued an inspection report on October 15, 2024, setting a deadline of January 13, 2025, to submit evidence of correction. Mr. Sims refused to correct the noncompliance, and has waived his right to an informal conference, stating instead that he has abandoned the property. Mr. Jones’ failure to respond equates to a refusal to correct deficiencies.
PROPERTY INFORMATION: 1992 9% HTC award for new construction of 24 units in 3 buildings in Calvert, Robertson County, with all units restricted at 60% AMI. The HTC LURA was effective in 1994. The 15-year federal HTC Compliance Period expired on December 31, 2008, and the state HTC Extended Use Period runs 35 years, terminating on December 31, 2028. USDA-RD is the mortgage lender, and has scheduled a nonjudicial foreclosure for October 7, 2025.
RESPONSIBLE PARTIES IN CONTROL: Lionel Sims and Archie L. Jones are the general partners for Calvert Arms, Ltd., the owner of the Property. There are no other actively monitored developments in this portfolio. The original owner remains in control, but Mr. Sims believes that he is no longer responsible because he sent a self-created “Abandonment of Ownership Interest” document to USDA-RD along with the property keys. Neither USDA-RD nor TDHCA have accepted this “Abandonment of Ownership Interest” as being legally dispositive of Mr. Sims ownership interest or responsibility for the Property.
DISTRESSED PROPERTY: The Property has struggled with financial feasibility and compliance problems since a fire destroyed units 9-16 in 2013. Units 1-8 and 17-24 remained in operation. Administrative penalty referrals in 2012 and 2014 were resolved informally, with full corrections made, but the casualty loss remained unresolved because the damaged units were demolished and there were insufficient insurance funds to rebuild the lost units because the owner had not adequately insured the building. To our knowledge, insurance proceeds from the fire remain in a holding account that was originally intended to be used for future remodeling of existing units and a planned rebuild of the lost units. A proposed purchaser assumed management responsibilities in 2019, advanced money to help stabilize the property, and attended an Enforcement Committee informal conference in 2019, along with the owner and a tax credit consultant when the casualty loss was referred for an administrative penalty. The property reportedly could not adequately cash flow without the demolished building. During that meeting, the proposed purchaser outlined its plans to assume ownership, and then apply for multiple funding sources to remodel existing units and rebuild lost units. The LURA was originally set to expire on December 31, 2023. The Enforcement Committee, Executive, Legal, and Asset Management Divisions worked together to amend the LURA in lieu of an administrative penalty, extending the term for five additional years, offsetting lost years of affordability using the remaining units, therefore compensating for the period of lost affordable housing without jeopardizing the rehabilitation/rebuilding plans by the proposed buyer. In exchange for the extension, the Enforcement Committee recommended that the Department not seek an administrative penalty for failure to restore the casualty loss for the burned units.
ABANDONMENT: The proposed purchaser funded operating deficits for multiple years while trying to finalize financing to rehabilitate and rebuild, but the deal was eventually deemed to be infeasible, and it chose not to purchase. It then terminated its property management agreement on July 31, 2024. The proposed purchaser is still owed $149,632.00 in deferred management fees and repairs. Mr. Sims then sent USDA-RD, the mortgage lender, a self-drafted “Abandonment of Ownership Interest” on August 2, 2024, purportedly abandoning the property to USDA-RD. USDA-RD rejected that abandonment document, stating that Mr. Sims remains the owner and is responsible for the property. TDHCA concurs. This abandonment has impacted existing low-income tenants, such as unit 7. The tenant in unit 7 had to be relocated in October 2024, after returning from a hospital visit to find that her apartment was covered in mold due to a toilet shut-off-valve leak. She had turned the air conditioning off while she was in the hospital for two weeks, so the leak caused mold in the bathroom and water damage to multiple rooms. The proposed purchaser handled the emergency despite terminating its purchase option and property management months earlier when the owner abandoned the property. The Department does not have information about current occupancy; however, the proposed purchaser filed a final Unit Status Report on July 10, 2024. At the time of abandonment, there were 13 occupied units.
USDA-RD FORECLOSURE PENDING: USDA-RD initiated collections in 2024, after Mr. Sims abandoned the property and attempted to send the keys to USDA-RD. The nonjudicial foreclosure is currently scheduled for October 7, 2025. The Property is owned via a single-asset limited partnership, and the Department recognizes that any administrative penalty enforcement action by TDHCA is subordinate to a foreclosure action by USDA-RD.
CURRENT ADMINISTRATIVE PENALTY REFERRAL: TDHCA performed an NSPIRE inspection on October 10, 2024, and the property scored 53.8 out of 100. Compliance issued their inspection report on October 15, 2024, setting a deadline of January 13, 2025, to submit evidence of correction. The noncompliance was referred for an administrative penalty on March 17, 2025. The Enforcement Committee Secretary was not able to resolve the matter or confirm a scheduled USDA-RD foreclosure date, so an informal conference was scheduled for May 29, 2025, but the owner failed to attend or reply.
CURRENT DEBARMENT REFERRAL: After the Responsible Parties failed to appear for the administrative penalty informal conference, the Compliance Division also initiated a debarment referral under 10 TAC §2.401(d)(4) for refusal to correct NSPIRE noncompliance. Staff set a debarment informal conference for July 17, 2025. An attorney for Mr. Sims responded on July 8, 2025, waiving the informal conference, stating instead that he has abandoned the property, and “affirm[ing] that he no longer holds any ownership or control over the subject property.” This response, coupled with Mr. Jones’ failure to respond, equate to a refusal to correct the NSPIRE deficiencies.
FACTORS CONSIDERED TO DETERMINE RECOMMENDED DEBARMENT TERM AND ADMINISTRATIVE PENALTY AMOUNT: The Enforcement Committee considered the following factors, pursuant to Tex. Gov’t Code 2306.042(b), Figure 2 of 10 TAC §2.302(k), and 10 TAC §2.401(j):
1. Repeated enforcement occurrences and history of previous violations:
a. Debarment: There are no prior debarment referrals.
b. Administrative Penalty: There are no prior administrative penalty assessments, but there is a referral history as noted above.
2. Seriousness of underlying issues, and whether a hazard is posed to the health, safety, or economic welfare of the public:
a. Physical: The NSPIRE inspection shows very serious noncompliance, including many life-threatening and severe findings. Physical safety issues are overwhelming for this inspection, including water damage and mold in occupied unit 7, which is an extreme example of the impact of abandonment while units were occupied. Occupied unit 18 is also in poor condition. Vacant unit 20 has exposed wiring, and multiple areas with water damage and wood rot. Occupied unit 22 has bedbugs throughout the unit. The Committee did note one mitigating factor, that some of the observed fire safety violations are due to NSPIRE protocol changes, such as checking the distance of smoke detectors from the ceiling; this was not part of the prior UPCS protocol.
b. Economic: Although not the primary concern for the NSPIRE violations, not having habitable units available for rent does have an economic impact on the public, as does the owner’s abandonment of the property.
3. Presence or absence of corrective action: No corrective action taken by Owner.
4. Other material factors that justice may require: Abandonment in and of itself is severe, however, that severity is compounded by the fact that many units were not vacant at the time of abandonment. 13 units were occupied, per the final Unit Status Report filed with TDHCA by the proposed purchaser in July 2024. Abandoning occupied units is egregious and potentially life threatening. Abandonment is never acceptable, but the owner should have - at a minimum - ensured that the property was vacant before taking such an extreme step. Owner is ignoring all correspondence and reports, claiming that he is no longer responsible due to his self-created “Abandonment of Ownership Interest” that he gave to USDA-RD. As noted above, USDA-RD rejected that abandonment, stating that the owner remains in control until USDA-RD forecloses. TDHCA Legal concurs, as does Robertson County, which still shows Calvert Arms Ltd as the owner for property tax purposes. The Responsible Parties chose not to attend the informal conferences; therefore, no mitigating factors were presented, however, the Committee did recognize that the property was struggling financially prior to abandonment. It did not cash-flow due to partial demolition as noted above, and there is a pending USDA-RD foreclosure.
5. Administrative penalty amount necessary to deter violations: The Property is owned via a single asset limited partnership. Any administrative penalty is unlikely to be paid, but the Committee believes there is a public benefit to moving forward. There are multiple years of lost affordability, and moving forward with enforcement sends a signal that abandonment does not remove responsibility and is not an acceptable way out, especially when a property is occupied. Owners must be held accountable even when collection is unlikely. With that said, the Department recognizes that the enforcement action will be subordinate to a foreclosure action by USDA-RD, therefore, Department efforts to assess an administrative penalty may render collection futile in the event that a USDA-RD foreclosure eliminates the HTC LURA. Foreclosure is currently scheduled for October 7, 2025.
In light of the above factors, the Enforcement Committee recommends the maximum administrative penalty allowable under Figure 2 at 10 TAC §2.302(k), including a now daily accruing component since more than six months has elapsed since expiration of the corrective action period. As of October 9, 2025, the maximum administrative penalty is $497,475.00, including a base amount of $39,875.00 plus daily accrual of $457,600.00. The daily accrual figure is composed of an additional optional $100.00 per day for each of the 52 uncorrected life threatening or severe deficiencies that remained uncorrected six months from the corrective action deadline. That optional daily accrual began on July 13, 2025, six months after the corrective action deadline passed.
RECOMMENDATION: After consideration of all appropriate factors, the Enforcement Committee and Executive Director:
1. Recommend the issuance by the Board of a Final Order of Debarment for a 30-year term ending October 9, 2055, for Calvert Arms, Ltd., Lionel Sims, and Archie L. Jones;
2. Submit staff recommendations regarding the assessment of the maximum administrative penalty as described in the enclosed Report to the Board, along with the associated Agreed Final Order to be used in the event that Owner chooses to settle the matter by correcting the noncompliance in order to avoid a contested case hearing; and
3. Recommend that the Board authorize and direct the Executive Director and his designees to do all things necessary to pursue the assessment of administrative penalties, including a contested case hearing before an administrative law judge with SOAH, but recognizing that efforts to assess an administrative penalty may not be pursued in the event that the USDA-RD foreclosure eliminates the TDHCA LURA.
Attachments:
1. Inspection Report
2. Final Order of Debarment
3. Report to the Board
4. Agreed Final Order
5. Abandonment of Ownership Interest