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Presentation, discussion, and possible action on recommendation to adopt an Agreed Final Order assessing an administrative penalty relating to Reading Park Apartments (HTC 02462 / Bond MF064 / HTF 853336 / CMTS 3321)
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RECOMMENDED ACTION
recommendation
WHEREAS, Reading Park Apartments (HTC 02462 / HTF 853336 / BOND MF064 / CMTS 3321), owned by Reading Road Apartments, L.P., had uncorrected compliance findings relating to the applicable land use restriction agreements and the associated statutory and rule requirements;
WHEREAS, TDHCA identified findings of noncompliance during its regularly scheduled 2025 National Standards for the Physical Inspection of Real Estate (NSPIRE) inspection at Reading Park, and referred that noncompliance for an administrative penalty when it was not timely corrected;
WHEREAS, corrective documentation and associated acknowledgments were uploaded on July 16, 2025 and August 18, 2025, after intervention by the Enforcement Committee;
WHEREAS, an Enforcement Committee informal conference was held on December 16, 2025, and Owner agreed, subject to Board approval, to enter into an Agreed Final Order assessing an administrative penalty of $3,750.00; and
WHEREAS, staff has based its recommendations for an Agreed Final Order on the Department’s rules for administrative penalties and an assessment of each and all of the statutory factors to be considered in assessing such penalties, applied specifically to the facts and circumstances present in this case.
NOW, therefore, it is hereby
RESOLVED, that an Agreed Final Order assessing an administrative penalty of $3,750.00, substantially in the form presented at this meeting, and authorizing any non-substantive technical corrections, is hereby adopted as the order of this Board.
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BACKGROUND
PROPERTY INFORMATION: Reading Park received an allocation of 4% Low Income Housing Tax Credits, multifamily housing revenue bonds, and a Housing Trust Fund (HTF) loan during 2002 and 2003, to build and operate 252 units in Rosenburg, Fort Bend County, with two units restricted at 30% AMI, and the remainder restricted at 60% AMI. There are 27 buildings.
The HTC, Bond, and HTF LURAs expire in 2033, 2034, and 2059, respectively.
OWNERSHIP AND PROPERTY MANAGEMENT: Reading Park is owned by Reading Road Apartments, L.P. Its general partner is ultimately controlled by On Track Ministries Inc., a Texas 501c3 nonprofit corporation (OTM), which is controlled by a board of directors, including: Cliff McDaniel, Clay McDaniel, David Dominy, Helen Harris, and Harvey Owen. Its limited partner, which has primary control authority, is AH Housing Fund 1131, LP., a Nevada limited partnership, ultimately controlled by April Housing and Blackstone, via a series of pass-through entities. Brian Kim, John Prete, and Tom Jack are on the board of directors for the limited partner’s parent company, and Katherine Vance of April Housing is the primary owner contact in CMTS. AOG Living is the property management Company, and is unaffiliated with ownership. Patricia Murphy acts as consultant for OTM for compliance monitoring matters, and is unaffiliated with ownership.
REFERRED VIOLATIONS SUBJECT TO ADMINISTRATIVE PENALTIES:
1. National Standards for the Physical Inspection of Real Estate (NSPIRE). TDHCA conducted a physical inspection on April 2, 2025, and the Compliance Division set a corrective action deadline of July 7, 2025. The property submitted a timely response for all life threatening deficiencies, but failed to submit a response for the rest of the deficiencies cited by TDHCA. The unresolved deficiencies were referred to the Enforcement Committee (the Committee) on July 14, 2025. Further corrective documentation and associated acknowledgments were then submitted on July 16, 2025 and August 18, 2025, after intervention by the Committee, resolving all noncompliance. A list of referred noncompliance is attached to the Agreed Final Order. An informal conference was rescheduled to December 16, 2025, prioritizing other properties since this referral was minor and the noncompliance was resolved quickly.
FACTORS CONSIDERED TO DETERMINE ADMINISTRATIVE PENALTY: The Committee analyzed the required statutory factors for determining an appropriate administrative penalty as follows:
1. The seriousness, extent, and gravity of the violations, and whether a hazard is posed to the health, safety, or economic welfare of the public: There are no economic hazards for the public, and most of the referred physical deficiencies are minor. The damaged refrigerator door seals are an energy efficiency violation, and all of the gaskets showed deterioration in the same location, suggesting a weak point that is deteriorating over time. The cockroaches in two units are serious, but this finding was only cited in two unconnected units, indicating a housekeeping issue by the affected tenants. The broken self-closing door mechanism is serious, but again, was only cited for one unit, suggesting either an isolated faulty hinge or tenant tampering. The door did close and lock, but the self-closing mechanism was not functioning, so the safety hazard presented is minor. The loose toilet bases are potentially serious violations, and are new to the NSPIRE inspection protocol; this was not a finding under the prior Uniform Physical Condition Standards (UPCS) inspection protocol. There is a potential risk of injury if a tenant slips on a loose toilet, but the most likely potential impact is that loose toilet bolts can cause wax seal deterioration, leading to eventual problems for lower units if dirty water leaks go undetected. There were no findings relating to leaks or mold, so this is more of a future possibility rather than an existing hazard.
2. History of previous violations: Other properties for both OTM and April Housing have been referred during the past three years, but those referrals were minor and were resolved quickly without penalty assessment.
OTM was considered for debarment in December of 2024, after The Life at Timber Ridge Apartments (HTC 01101 / CMTS 343) and The Life at Timber Ridge II Apartments (HTC 03456 / Bond 03456B / CMTS 3411) were foreclosed by the mortgage lender, thereby eliminating TDHCA’s HTC and Bond LURA’s. April Housing / Blackstone was not associated with these properties. The special limited partner, Olive Tree Multifamily Manager LLC and Ian Bel, had primary control and was debarred for 3 years during at the TDHCA Board meeting on December 12, 2024, but OTM appealed to the Board, arguing that it did not have control authority, and was therefore not responsible for the foreclosures. OTM was not debarred, and it has been referred for an administrative penalty twice since it was considered for debarment. The first such referral was for Town Parc at Tyler (HTC 02110 / CMTS 3250), which was referred in January 2025. However, Town Parc at Tyler had submitted timely corrections for life-threatening noncompliance, and there were only three referred deficiencies: two damaged refrigerator gaskets and one damaged toilet in a unit that had another toilet. The Compliance and Legal Divisions reviewed the matter and agreed to close that referral informally despite OTM’s debarment board item in December 2024, since the unresolved noncompliance was minor, and corrections were quickly submitted after referral. The second OTM referral is under consideration today.
3. Efforts made to correct the violations: Failure to calendar and track deadlines is the primary problem for this referral, and is a repeated issue. Like with Town Parc at Tyler above, Reading Park also submitted timely corrections for life threatening deficiencies, but failed to submit corrections for the rest of the deficiencies until it was referred for an administrative penalty. Owner representatives state that all deficiencies were corrected before the corrective action deadline of July 7, 2025, but that staff had accidentally failed to submit corrective documentation. Final corrective documentation and associated acknowledgments were uploaded on July 16, 2025 and August 18, 2025, after intervention by the Enforcement Committee.
4. Any other matters that justice may require: Both OTM and April Housing / Blackstone have very large ownership portfolios, with 157 TDHCA properties for the OTM portfolio, and 46 TDHCA properties for the April Housing / Blackstone portfolio. During the informal conference, it was suggested that the primary reason corrections were not timely submitted for Reading Park was because Patricia Murphy did not have CMTS access due to a mistake. However, these are significant portfolio sizes, and the Committee questioned why such large owners would solely rely upon one consultant; surely there must be multiple eyes on the portfolio to mitigate risks. It is crucial to ensure complete and timely resolution of all TDHCA noncompliance, even when it is not major noncompliance.
OTM, April Housing/Blackstone, and AOG Living appear to be taking this matter seriously, with senior staff and executives for all organizations attending the informal conference. Each has implemented changes to prevent recurrence:
a. April Housing has implemented flags, alerts, and internal trackers to ensure that it is aware and escalating matters with property management if a deadline is approaching and corrections have not been submitted.
b. OTM hired Patricia Murphy as a consultant in December 2023, to help OTM prevent future compliance problems with TDHCA. Ms. Murphy performs weekly CMTS reviews of the entire OTM portfolio to track new deadlines, and she previews corrective submissions prior to submission to TDHCA. OTM accidentally did not grant her CMTS access to Reading Park, a problem that has been resolved by performing a full property reconciliation and implementing procedures to add access for Ms. Murphy after any future acquisitions.
c. AOG Living has adjusted its internal controls, adding calendar reminders and more CMTS administrators. It is also performing supervisory reviews before uploading corrections to CMTS.
5. Amount necessary to deter future violations: The referred noncompliance for Reading Park does not support a large administrative penalty since it is less serious and the actual dates of correction were within the corrective action period, but Reading Park failed to submit timely corrective documentation to TDHCA despite having a large and sophisticated ownership structure, with an extensive TDHCA property portfolio. Failure to submit complete and timely corrective documentation wastes limited TDHCA staff time that would be better allocated elsewhere, and it is appropriate to recommend an administrative penalty here even though the referred noncompliance is minor. In light of the above factors, the Committee recommends an Agreed Final Order assessing administrative penalties of $3,750.00. There is no recommended forgivable or probated portion to the administrative penalty.
RECOMMENDATION: Accordingly, after consideration of all appropriate factors, the Enforcement Committee and Executive Director recommend an Agreed Final Order for an administrative penalty in the amount of $3,750.00 against Reading Road Apartments, L.P.