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Presentation, discussion, and possible action regarding approval of a Multifamily Direct Loan assumption and modification for Seville Row Apartments (TCAP #13090009754)
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RECOMMENDED ACTION
recommendation
WHEREAS, in 2008, the Department awarded 4% housing tax credits (HTC #08417) to Seville Row Apartments (the Development), and in 2010, two rounds of TCAP funds were awarded, as cash flow, forgivable loans, in the amounts of $2,261,410 and $328,531, for a total of $2,589,941 under the TCAP Tax Credit Replacement Initiative, to rehabilitate 90 multifamily units for the elderly in Beaumont, Jefferson County;
WHEREAS, the TCAP loans have a maturity date of September 1, 2026, and upon maturity, as long as the borrower is not in default under any terms of the Notes or any document securing payment of the Notes, payment of the outstanding principal will be waived;
WHEREAS, prior to maturity, upon the sale of the Development or upon the refinance of any superior liens, 10% of the net sale proceeds or 10% of the refinancing proceeds would be due and payable under the Notes and applied to the outstanding principal balance;
WHEREAS, Steele Seville LLC (Proposed Owner) plans to purchase the Development from Beaumont Leased Housing Associates II, Limited Partnership (Current Owner);
WHEREAS, the Proposed Owner is requesting approval to assume the TCAP loans, and requesting that the loans be modified to extend the loans to February 16, 2052, which is 40 years from when the permanent period started for these loans, and with the payment schedule changing from semi-annual to annual; and
WHEREAS, Board approval is required for the assumption of the TCAP loan because the proposed transaction does not meet the condition in 10 TAC §13.13(d)(2)(B) for Executive Director approval;
NOW, therefore, it is hereby
RESOLVED, that the request for the Proposed Owner to assume the TCAP loans and written agreement, and to modify the TCAP loans to change the maturity date to February 16, 2052, and change the payment schedule from semi-annual to annual is approved, as well as all other modifications to the loan and contract documents as presented at this meeting, and the Executive Director and his designees are hereby authorized, empowered, and directed to take all necessary action to effectuate the foregoing.
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BACKGROUND
Seville Row Apartments received an award of 4% housing tax credits in 2008 and two TCAP loans in 2010 for the acquisition and rehabilitation of 90 units for the elderly in Beaumont, Jefferson County. All 90 of the units in the Development are income and rent restricted. The TCAP funds were awarded in the form of two loans in the amounts of $2,261,410 (loan #130900009754) and $328,565 (loan #130900009754B), for a total loan amount of $2,589,941. The TCAP loans are structured as cash-flow loans with a 0% interest rate and are forgivable upon maturity on September 1, 2026, if the borrower is not in default under any terms of the loan documents, written agreement, or the Land Use Restriction Agreement. Thirty semi-annual installments of $75,380.33 and $10,951.03 are due March 1st and September 1st, with the first payments beginning March 1, 2012, and continuing until September 1, 2026, when the loans mature. The Notes allow the scheduled payments to be deferred if 10% of cash flow multiplied by a percentage of the TCAP Note is not sufficient to make the scheduled payments. TCAP loan #09754 has a balance of $1,932,038.10, and TCAP loan #09754B has a balance of $248,825.97 as of this write-up. Prior to maturity, upon the sale of the Development or upon the refinance of any loans held by the senior lender or any other superior lienholder during the term of the loans, 10% of the remaining sale proceeds after repayment of the senior loans or 10% of the refinancing proceeds would be due and payable under the Notes and applied to the outstanding principal balance.
In a letter dated December 17, 2024, Justin Boyd, the representative for Steele Seville LLC (Proposed Owner), requested approval for the TCAP loans to be assumed. In addition, approval was requested for a modification of the TCAP loans to extend the loan to February 16, 2052, which is 40 years from when the permanent period started, and also adjust the payment schedule from semi-annual to annual.
The Proposed Owner states that it is their intention to purchase and renovate the property using 4% Housing Tax Credits. The Proposed Owner has agreed to make the required payment equal to 10% of the remaining sale proceeds after repayment of the senior loans. A draft buyer closing statement submitted with this request reflects that the anticipated net sale proceeds to the Current Owner will be $140,825.38, which would result in an anticipated payment of $14,082.54 to the TCAP loans. The Department will confirm the final amount due at closing.
Staff recommends approval of the requested assumption of the TCAP loans and the written agreement, and the modification of the TCAP loans to extend the maturity date to February 16, 2052, and revise the requirement for semi-annual payments to annual payments, effective as of the date of the closing of the new first lien loan. The LURA will be amended to reflect a longer term to match that of the loan and to state that the LURA will survive a foreclosure or deed in lieu of foreclosure.