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Presentation, discussion, and possible action regarding a Material Amendment to the Housing Tax Credit Application for Laurel Flats (HTC #20167)
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RECOMMENDED ACTION
recommendation
WHEREAS, Laurel Flats (the Development) received an award of 9% Housing Tax Credits (HTCs) in 2020 for the acquisition and rehabilitation of 88 low-income units in Tyler, Smith County;
WHEREAS, OPG Laurel Flats Partners, LLC (the Development Owner or Owner) requests approval for a reduction in the Common Area from 28,114 square feet to 962 square feet, representing a reduction of 27,152 square feet or 96.58% from the Common Area represented in the Architect Certification at Application;
WHEREAS, Board approval is required for a reduction of 3% or more in the square footage of the Common Area as directed in Tex. Gov’t Code §2306.6712(d)(4) and 10 TAC §10.405(a)(4)(D), and the Owner has complied with the amendment requirements therein; and
WHEREAS, the requested change does not negatively affect the Development, impact the viability of the transaction, impact the scoring of the Application, or affect the amount of funding awarded;
NOW, therefore, it is hereby
RESOLVED, that the requested amendment for Laurel Flats 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
Laurel Flats received an award of 9% Housing Tax Credits in 2020 for the acquisition and rehabilitation of 88 low-income units in Tyler, Smith County. The rehabilitation of the Development has been completed, and the Owner has submitted the cost certification documentation. Upon review of the cost certification, staff identified a change in the square footage of the Common Area from what was represented at Application. Subsequently, in a letter dated May 6, 2024, April Engstrom, the Owner representative, requested approval for a reduction in the Common Area.
At Application, the architect certified that the total Common Area was 28,114 square feet on the Engineer/Architect Certification. However, at cost certification, it was revealed the actual square footage of the Common Area is 962 square feet, representing a reduction of 27,152 square feet or 96.58% from the Common Area represented at Application. The Owner explained the 962 square feet includes the leasing and maintenance office (as approved in a Material Amendment on June 16, 2022), and the laundry room. Upon further review, it was discovered that the 28,114 square feet was not accurate because it included the square footage of carports, exterior stairs, mechanical rooms and maintenance/storage not considered common areas under the definition in §11.1(d)(22) of the QAP. After removing the areas not considered to be Common Area, it was determined that the actual Common Area at Application should have been identified as 1,164 square feet. The 962 square feet identified as Common Area at cost certification is the result of the removal of a 202 square-foot laundry room, representing a 17.35% reduction of the actual Common Area. The Owner explained that this laundry room was replaced with a maintenance room because it was determined the second laundry room was not needed. Additionally, the Owner indicated all existing spaces have been kept as the original intended use. This change is a material amendment under Tex. Gov’t Code §2306.6712(d)(4) and 10 TAC §10.405(a)(4)(D) and requires Board approval.
The change to the Common Area square footage does not materially alter the Development in a negative manner, and was not reasonably foreseeable or preventable by the Development Owner at the time of Application. The Owner has indicated that there was no net financial impact on the Development as a result of the proposed changes. Staff has determined that this change does not affect the scoring of the Application or the funding award. The final recommended HTC amount will be determined upon finalization of the cost certification review process.
Staff recommends approval of the amendment request as presented herein.