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Presentation, discussion and possible action regarding a waiver of 10 TAC §11.101(b)(1)(A)(vii) of the Qualified Allocation Plan (QAP) relating to the percentage of efficiency and/or one bedroom units for Oak Hill Lofts (#24495).
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RECOMMENDED ACTION
recommendation
WHEREAS, a 4% Housing Tax Credit application for Oak Hill Lofts was submitted to the Department on September 20, 2024;
WHEREAS, the unit mix includes more than 30% efficiency and/or one-bedroom units, which exceeds the threshold allowed in 10 TAC §11.101(b)(1)(A)(vii) of the 2024 QAP, thus rendering the development ineligible;
WHEREAS, a waiver has been requested by the applicant; and
WHEREAS, staff does not recommend a waiver be granted pursuant to 10 TAC §11.207 considering the applicant submitted a 2023 4% Housing Tax Credit application for this development that included an eligible unit mix, and then, while aware of the efficiency/1-bedroom limitation, reconfigured the development to include an ineligible unit mix, and subsequently pursued bond financing recognizing the development was ineligible under the QAP;
NOW, therefore, it is hereby
RESOLVED, that a waiver of §11.101(b)(1)(A)(vii) of the 2024 QAP relating to the allowable percentage of efficiency and/or one-bedroom units for Oak Hill Lofts is hereby denied.
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BACKGROUND
General Information: Oak Hill Lofts is to be located in Austin, Travis County, and proposes the new construction of 90 units that will serve the general population. The Certificate of Reservation from the Bond Review Board was issued on August 8, 2024, under the Priority 3 designation, which does not require any specific restrictions on rent or income. The applicant has indicated that the development will include a mix of units with rents restricted between 30% and 80% of Area Median Family Income (AMFI).
Waiver Request: Pursuant to §11.101(b)(1)(A)(vii) of the QAP, “any New Construction, Reconstruction, or Adaptive Reuse Development proposing more than 30% efficiency and/or one-Bedroom Units will be considered ineligible. This requirement will not apply to Elderly or Supportive Housing Developments.”
The unit mix for Oak Hill Lofts consists of 50 one-bedroom units, 30 two-bedroom units, and 10 three-bedroom units. The number of one-bedroom units comprises approximately 56% of the total unit count. The applicant has requested a waiver of the aforementioned rule, so that the development may be eligible without necessitating a change to the currently proposed unit mix.
According to the waiver request submitted, the development site was purchased in 2021, and the project was originally contemplated to utilize off-site modular construction. In 2023, the developer submitted a 4% Housing Tax Credit application for this development that adhered to the efficiency/1-bedroom unit limitation, but that application was ultimately withdrawn. Due to issues with suppliers, the developer decided to reconfigure the project, and now proposes traditional new construction instead of modular construction. As a result of that reconfiguration, the proposed development now includes 56% one-bedroom units and is considered ineligible under the 2024 QAP. The applicant notes that the redesign resulted in 21% more bedrooms than the previous configuration; however, it was reconfigured in a way that violates the QAP. Previously, according to the 2023 tax credit application, the development would have included 24 efficiency units and 58 two-bedroom units.
Based on the information provided, the applicant reconfigured the development after the efficiency/1-bedroom provision was included in the QAP, and subsequently made submissions to the issuer and the Texas Bond Review Board, and also submitted architectural plans for the permitting process with the City of Austin, with a unit mix that is ineligible. Moreover, considering that the applicant submitted a 2023 tax credit application that included an eligible unit mix, and then, while aware of the efficiency/1-bedroom limitation, reconfigured the development to include an ineligible unit mix, staff does not believe a waiver of the rule is warranted or fits within the provision of the waiver rule that this was not within the control of the applicant.
Based on the aforementioned factors and timeline associated with the design of Oak Hill Lofts, staff recommends that a waiver of §11.101(b)(1)(A)(vii) not be granted.