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Presentation, discussion, and possible action regarding a material amendment to the Housing Tax Credit Application for Lalita Senior Living (HTC #22227)
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RECOMMENDED ACTION
recommendation
WHEREAS, Lalita Senior Living (Development) received an award of 9% Housing Tax Credits (HTCs) in 2022 for the new construction of 102 multifamily units, of which 86 units are low-income units, in Brownsville, Cameron County;
WHEREAS, VDC Minnesota Southmost, LP (Development Owner or Owner) requests approval for a reduction in the number of units from 102 to 78 with a decrease of 17 one-bedroom units, and decrease of seven two-bedroom units, which would result in a 22.28% reduction to the Net Rentable Area, from 87,873 square feet to 68,292 square feet;
WHEREAS, this change would result in a revision to the rent and income restrictions from nine units at 30% Area Median Income (AMI), 18 units at 50% AMI, 59 units at 60% AMI, and 16 units at market rate to eight units at 30% AMI, 16 units at 50% AMI, 54 units at 60% AMI, and zero units at market rate;
WHEREAS, the Owner also requests a significant modification of the architectural design, including elimination of one of two residential buildings, an increase in floors of the remaining residential building from three to four, a 20.79% decrease in the Common Area from 29,184 square feet to 23,116 square feet, a reduction in site area, and a reduction in the parking spaces;
WHEREAS, Board approval is required for a significant modification of the site plan, a modification to the number of units or bedroom mix of units, a reduction of 3% or more in the square footage of the units or common areas, a significant modification of the architectural design of the Development, and a modification of the residential density of the development of at least 5%, as directed in 10 TAC §10.405(a)(4)(A), (B), (D), and (E) and in Tex. Gov’t Code §2306.6712(d)(1), (2), (4), and (5), and the Owner has complied with the amendment requirements therein; and
WHEREAS, the requested changes do not negatively affect the Development, impact the viability of the transaction, impact the scoring of the Application, or affect the amount of tax credits awarded;
NOW, therefore, it is hereby
RESOLVED, that the requested amendment for Lalita Senior Living 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
Lalita Senior Living received a 9% HTC award in 2022 for the new construction of 102 multifamily units, of which 86 units are low-income units, in Brownsville, Cameron County. In a letter dated October 23, 2023, Sam Hagerty, counsel for the Development Owner, requested approval for a material amendment to reduce the number of units from 102 to 78 by decreasing the number of one-bedroom units by 17, and decreasing the number of two-bedroom units by seven from what was originally proposed in the Application. This change would result in a revision to the rent and income restrictions from nine units at 30% Area Median Income (AMI), 18 units at 50% AMI, 59 units at 60% AMI, and 16 units at market rent to eight units at 30% AMI, 16 units at 50% AMI, 54 units at 60% AMI, and zero units at market rent.
The change will also result in a significant modification of the architectural design. These changes include: reduction from two to one residential buildings; an increase from three floors to four floors for the remaining residential building; a reduction of 19,581 square feet (22.28%) in the Net Rentable Area from 87,873 to 68,292 square feet; a decrease of 6,068 square feet (20.79%) in the Common Area from 29,184 square feet to 23,116 square feet. Additionally, the number of parking spaces is reduced to 117 from the 154 identified at Application. Site area was reported to be 6.37 net acres at Application after an imputed 1.35 acre right of way dedication, and is now reported as 5.09 acres, after a planned 1.35 acre right of way dedication (6.44 acres before planned dedication), according to the revised site plan. This change in acreage will result in a 4.30% decrease to the residential density from 16.01 to 15.32 units per acre. The enclosed table compares the site plan of the Development at Application and the revised site plan after the amendment.
The Owner received a letter of continued support from the City Manager of Brownsville, as well as confirmation of support from their lender and investor.
The Owner states the reason for the requested changes is to reduce development costs to maintain feasibility, and indicates that, without reduction to the overall size, the Development is no longer feasible. The Owner cites increased construction costs, increased borrowing costs, and reduced equity pricing, and states that these factors were not foreseeable or preventable by Owner.
The Development was re-underwritten with the proposed amendment and revised financial information. The analysis supports no change to the HTC allocation and demonstrates the Development remains feasible. Staff also confirmed that the revised design plans and parking will continue to meet accessibility requirements. Additionally, staff reviewed the original Application and scoring documentation against this amendment request and has concluded that none of the changes would have resulted in selection or threshold criteria changes that would have affected the selection of the Application in the competitive round.
Staff recommends approval of the amendment as presented herein.