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Presentation, discussion, and possible action on an appeal for 10112 Bissonnet Living
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RECOMMENDED ACTION
recommendation
WHEREAS, 10112 Bissonnet Living is a 2024 9% Housing Tax Credit Application that proposes the new construction of 121 Units, 98 of which as affordable, in Houston;
WHEREAS, the Applicant provided a Resolution of Support from the City of Houston with the Application, but that Resolution did not contain necessary language for the Development to qualify for an increase in Eligible Basis;
WHEREAS, the Department conducted an underwriting analysis of the Application without this increase in Eligible Basis, which resulted in the Application being financially infeasible and therefore not eligible for an award of Housing Tax Credits;
WHEREAS, the Applicant has appealed this recommendation, and has requested that the Department accept a new Resolution that was approved by the City of Houston on June 11, 2024, and which contains the necessary language to qualify for the increase in Eligible Basis; and
WHEREAS, the Qualified Allocation Plan (QAP) specifies that Resolutions must be submitted no later than the Full Application Delivery date of March 1, 2024, and therefore the Department cannot accept the new Resolution;
NOW, therefore, it is hereby
RESOLVED, that the appeal for 10112 Bissonnet Living is hereby denied.
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BACKGROUND
Housing Tax Credit Developments are eligible to claim tax credits annually for a period of 10 years. The amount of these credits is based on the Development’s Eligible Basis, which is the total allowable cost associated with the depreciable residential rental project. Very generally, Eligible Basis includes the cost of constructing items such as the Units, amenities, and common areas, while excluding non-depreciable assets such as the land on which the Development is built. If the building is located in a HUD-designated Qualified Census Tract, Difficult Development Area, or certain other high costs areas, the eligible basis may be increased to 130% of the actual costs, although in no instance will the boost exceed more than the amount of credits required to create the HTC rent-restricted Units.
10112 Bissonnet Living is a 2024 9% Housing Tax Credit Application that proposes the new construction of 121 Units, 98 of which as affordable, in Houston. The Development Site is in a HUD-designated Qualified Census Tract, and therefore may qualify for the increase in Eligible Basis so long as certain requirements are met. These requirements include:
New Construction or Adaptive Reuse Developments located in a QCT that has in excess of 20% Housing Tax Credit Units per total households are not eligible for a 30% increase in Eligible Basis, which would otherwise be available for the Development Site pursuant to §42(d)(5) of the Code, unless the Application includes a resolution acknowledging the Development is located in a census tract that has more than 20% Housing Tax Credits Units per total households and stating that the Governing Body of the appropriate municipality or county containing the Development has no objection to the Application.
The Application included a Resolution of Support from the City of Houston; however, this Resolution did not acknowledge that the Development is located in a census tract that has more than 20% Housing Tax Credit Units per total households, and therefore, was not sufficient to qualify the Application for the increase in Eligible Basis. Underwriting the Application without this increase resulted in the annual credit amount being reduced by $185,000, which rendered the Application infeasible and therefore ineligible for an award.
The Applicant has appealed this determination. In the Appeal, the Applicant has provided a new Resolution from the City of Houston, adopted on June 11, 2024, that includes the required language acknowledging the concentration of HTC units in the Census Tract. The appeal also requests a waiver of 10 TAC §11.4(c)(1), which is the rule that requires the Resolution to be used for the increase in Eligible Basis be submitted no later than the Full Application Delivery Date of March 1, 2024.
Staff is unable to recommend that the appeal be granted as presented. 10 TAC §11.207, related to Wavier of Rules, explicitly prohibits waiver requests from being accepted between the time of Application submission and award. Because the waiver request cannot be accepted and the required Resolution was not submitted by the Full Application Delivery Date as required by the rules, staff recommends denial of the appeal.