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Presentation, discussion, and possible action regarding a Material Application Amendment to the Housing Tax Credit Application, changes to the ownership structure, and a waiver of 10 TAC §11.9(b)(2)(A) for 930 Military Parkway Living (HTC #24023)
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RECOMMENDED ACTION
recommendation
WHEREAS, 930 Military Parkway Living (the Development) received a 9% Housing Tax Credit (HTC) award in 2024 for the construction of 111 units, of which 88 are designated as low income units, in Mesquite, Dallas County;
WHEREAS, due to the need to fill a funding gap, which is expected to be filled by obtaining Multifamily Direct Loan (MFDL) funding from the Department, 930 Military Parkway Living, Ltd. (the Applicant) requests approval to change the income and rent restrictions in order to qualify for the National Housing Trust Fund loan;
WHEREAS, the income targeting of the Development had to shift significantly to make way for 10 additional units restricted at the higher of the poverty line or 30% of Area Median Income (AMI), decrease the number of market units from 23 to 16, and still maintain an average income of 54% or lower, as per 10 TAC §13.3(d)(2)(a), if average income is elected no more than 15% of the total units can be designated market rate and still remain eligible for MFDL funds;
WHEREAS, in lieu of a Parkland Dedication fee, the City of Mesquite (the City) has agreed to the donation of an undeveloped parcel of 3.992 acres as parkland, which will result in a 45.72% decrease to the acreage of the Development, from 8.732 acres to 4.74 acres, and an 84.22% increase to the residential density, going from 12.71 units per acre to 23.42 units per acre;
WHEREAS, Board approval is required for a modification of the residential density of at least 5% as directed in Tex. Gov’t Code §2306.6712(d)(6) and 10 TAC §10.405(a)(4)(F), and the Applicant has complied with the amendment requirements therein;
WHEREAS, to improve the financial feasibility of the Development by obtaining a property tax exemption, the Applicant is seeking to replace the originally proposed General Partner, Mesquite 930 Military Parkway Living GP, LLC, with Mesquite 930 Military Parkway GP, LLC, of which the Mesquite Housing Finance Corporation will be the sole member;
WHEREAS, the HTC Application for the Development received two points for agreeing to include a certified Historically Underutilized Business (HUB) in the ownership structure of the General Partner and materially participating in the development and operation of the Development throughout the Compliance Period, and receiving a combination of ownership interest in the General Partner of the Applicant, cash flow from operations, and developer fee which taken together equal at least 50% and no less than 5% for any category;
WHEREAS, Applicant is seeking to revise the ownership structure by adding a Class B Limited Partner, 930 Military Parkway Living SLP, LLC, and moving the HUB, The Land Experts, LLC, from the ownership structure of the originally proposed general partner to the newly formed Class B Limited Partner, 930 Military Parkway Living SLP, LLC, which will be 34% owned by the HUB as well as 66% owned by 930 Military Parkway Living GP MGR, Inc.;
WHEREAS, the Applicant requests a waiver of the specific requirement in 10 TAC §11.9(b)(2)(A) that states the HUB must have an ownership interest in the General Partner, allowing the Development to continue to qualify for the two points for Sponsor Characteristics with the HUB in the ownership structure of the Class B Limited Partner and continuing to meet the intent of 10 TAC §11.9(b)(2)(A) to have a HUB materially participate in the Development; and
WHEREAS, the requested changes and waiver do not negatively affect the Development, impact the viability of the transaction, impact the scoring of the Application, or impact the HTC award;
NOW, therefore, it is hereby
RESOLVED, that the requested material amendment to the Housing Tax Credit Application, changes to the ownership structure, and a waiver of the 10 TAC §11.9(b)(2)(A) for 930 Military Parkway Living are each approved, subject to clearance of the previous participation review, as presented at this meeting, and the Executive Director and his designees are each authorized, directed, and empowered to take all necessary action to effectuate the foregoing.
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BACKGROUND
930 Military Parkway Living (HTC #24023) was approved for a 9% HTC award in 2024 for the new construction of 111 units, of which 88 are designated as low-income units, for the general population in Mesquite, Dallas County. Construction of the Development has not begun. The Applicant elected Average Income as the Qualified Low Income Housing Development Election, with an average income of 54% or lower.
In a letter as of May 20, 2025, Cody Hunt, the representative for the Applicant, requested approval for a material amendment to the Application to revise the income targeting in order to qualify for the National Housing Trust Fund loan. With this change, the Development would still have an average income of under 54%, but would have 19 units at 30% AMI and 16 market units instead of the nine units at 30% AMI and 23 market units proposed at application.
Additionally, in lieu of a Parkland Dedication fee, the City of Mesquite has agreed to the donation and dedication of 3.992 acres of an undeveloped portion of the Development site as parkland. The change of site acreage will increase residential density by 84.22%, from 12.71 units per acre to 23.42 units per acre. Despite this change, the site plan remains the same as in the initial Application. The Applicant stated that when the initial Application was submitted, the Applicant did not have confirmation that the City of Mesquite would allow them to dedicate the back parcel of the site in lieu of Parkland Dedication fees. Now that they have confirmation, the Applicant can move forward developing on solely the front portion of the site. It was not reasonably foreseeable that the City would agree to this structure, but is now essential to the financial feasibility of the Development.
In addition to the amendment for the change in income targeting and residential density, the Applicant is requesting approval for changes to the ownership structure, which will require a waiver for a requirement related to ownership by a Historically Underutilized Business (HUB), as the HTC Application for the Development received two points because the Development was structured to include a Historically Underutilized Business (HUB) in the ownership structure that would have some combination of ownership interest in the General Partner of the Owner, cash flow from operations, and Developer Fee, which taken together equal at least 50% and no less than 5% for any category. The HUB was also required to materially participate in the development and operation of the Development throughout the Compliance Period.
In a letter dated May 21, 2025, Michelle Snedden, on behalf of the Applicant, proposed changes to the ownership structure for the Development, which requires a waiver of the provision in 10 TAC §11.9(b)(2)(A) that specifies the HUB is required to have an ownership interest in the General Partner. The Applicant is seeking to add a Class B Limited Partner, 930 Military Parkway Living SLP, LLC, and move the HUB, The Land Experts, LLC, from the ownership structure of the General Partner to the newly formed Class B Limited Partner, which will be 34% owned by the HUB as well as 66% owned by 930 Military Parkway living GP MGR, Inc. Mesquite 930 Military Parkway GP, LLC will be added as the new General Partner, of which the sole member will be the Mesquite Housing Finance Corporation. The requested changes to the ownership structure, along with a ground lease structure, will improve the financial feasibility of the Development by providing an ad valorem tax exemption.
However, this change to the ownership structure would result in the HUB no longer meeting the requirements for the two Sponsor Characteristics points awarded at Application because it will no longer be in the ownership structure of the General Partner. Therefore, the Applicant requests to waive this specific requirement and to allow the Development to continue to qualify for the two Sponsor Characteristics points with the HUB in the ownership structure of the Class B Limited Partner. The Applicant states that the Class B Limited Partner will perform the same duties, materially participate, and be functionally equivalent to the general partner. The HUB would continue to be required to meet all other requirements in 10 TAC §11.9(b)(2)(A), including the requirement to materially participate in the development and operation of the Development throughout the Compliance Period. This revised ownership requirement would be codified in the LURA for the Development.
The Applicant provided Resolution No. 07-2025, as of February 17, 2025, from the City of Mesquite stating that the City continues to support the Development, including the change in structure to allow for a property tax exemption.
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 with the additional proposed changes to the financing structure. Additionally, staff reviewed the original Application and scoring documentation against this amendment request and has concluded that none of the changes would have affected the scoring or selection of the Application in the competitive round. The recommendation for the direct loan funds from the Department will be presented separately from this amendment to the HTC Application.
Staff recommends approval of the Application amendment, changes to the ownership structure subject to clearance of the previous participation review, and the waiver of 10 TAC §11.9(b)(2)(A) as presented herein.