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Presentation, discussion, and possible action regarding the Issuance of Multifamily Housing Revenue Bonds (The Ridge at Loop 12) Series 2025A-1, Series 2025A-2, and Series 2025B, Resolution No. 25-013, an award of Direct Loan Funds, and a Determination Notice of Housing Tax Credits
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RECOMMENDED ACTION
recommendation
WHEREAS, the Board adopted an inducement resolution for The Ridge at Loop 12 at the Board meeting of March 9, 2023;
WHEREAS, an application for The Ridge at Loop 12 requesting 4% Housing Tax Credits, sponsored by DHFC The Ridge at Loop 12 GP, LLC and the Dallas Housing Finance Corporation, was submitted to the Department on May 3, 2024;
WHEREAS, an application was submitted under the Tax Credit Assistance Program (TCAP) 2024-3 Multifamily Direct Loan Notice of Funding Availability (2024-3 NOFA) with an Application Acceptance Date of May 6, 2024;
WHEREAS, in lieu of a Certification of Reservation, a Carryforward Designation Certificate from the Texas Bond Review Board (BRB) was issued on January 2, 2024, and will expire on December 31, 2026; and
WHEREAS, staff recommends approval of the issuance of Multifamily Housing Revenue Bonds for The Ridge at Loop 12 (Series 2025A-1, Series 2025A-2, and Series 2025B), an award of TCAP, and the issuance of a Determination Notice;
NOW, therefore, it is hereby
RESOLVED, that the issuance of Multifamily Housing Revenue Bonds (The Ridge at Loop 12) Series 2025A-1, Series 2025A-2 in the total amount of $50,000,000, and taxable bonds Series 2025B in the amount of $11,914,000, Resolution No. 25-013, is hereby approved in the form presented to this meeting;
FURTHER RESOLVED, the issuance of a Determination Notice of $4,343,053 in 4% Housing Tax Credits, and $10,000,000 in Tax Credit Assistance Program Repayment Funds (TCAP) Direct Loan funds for The Ridge at Loop 12, subject to underwriting conditions that may be applicable as found in the Real Estate Analysis report posted to the Department’s website, is hereby approved in the form presented to this meeting; and
FURTHER RESOLVED, that if approved, staff is authorized, empowered, and directed, for and on behalf of the Department to execute such documents, instruments and writings and perform such acts and deeds as may be necessary to effectuate the foregoing.
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BACKGROUND
General Information: The Multifamily Housing Revenue Bonds will be issued in accordance with Tex. Gov’t Code §2306.353 et seq., which authorizes the Department to issue bonds for its public purposes, as defined therein. Tex. Gov’t Code §2306.472 provides that the Department’s multifamily housing bonds are solely obligations of the Department, and do not create an obligation, debt or liability of the State of Texas or a pledge or loan of faith, credit or taxing power of the State of Texas.
Development Information: The Ridge at Loop 12 is proposed to be located at 1100 North Walton Walker Boulevard in Dallas, Dallas County, and involves the new construction of 300 units that will serve the general population. A 2023 Traditional Carryforward designation was received from the Bond Review Board and the application reflects that a Priority 3 designation has been elected, neither of which requires restrictions regarding the Area Median Family Income (AMFI). Of the 300 total units, 11 units will be rent and income-restricted at 50% of AMFI; 278 units will be rent and income-restricted at 60% of AMFI; and 11 units will be rent and income-restricted at 70% of AMFI. Layered among the HTC units are 52 TCAP units, of which 11 units are proposed to be rent restricted at Low HOME rents, and income-restricted at 50% of AMFI and 41 units are proposed to be rent restricted at High HOME rents and income-restricted at 60% of AMFI. Moreover, there are 56 Match Units.
Organizational Structure and Previous Participation: The Borrower is LDG The Ridge at Loop 12, LP, and includes the entities and principals as illustrated in Exhibit A. The applicant’s portfolio is considered a Category 2 and the previous participation conditions noted in Exhibit A-1 are recommended by staff.
Tax Equity and Fiscal Responsibility Act (TEFRA) Public Hearing/Public Comment: On March 18, 2022, the IRS released Revenue Procedure 2022-20, which permanently allows TEFRA hearings for qualified activity bonds to be held telephonically. Staff conducted a telephonic hearing for the proposed development on July 11, 2024. Representatives from the Department and the Developer were present, and no public comment was made. The Department has not received any letters of support or opposition for the development.
Summary of Financial Structure
Under the proposed structure, the Department will issue unrated, fixed rate tax-exempt bonds as Series 2025A-1, Series 2025A-2 and taxable bonds Series 2025B, in the aggregate principal amount of $61,914,000, to be purchased by NewPoint Real Estate Capital. The Series 2025A-1 bonds will be construction to permanent financing, have a 17-year term, with the first 10-years being interest only, a 40-year amortization, and a maturity date 40 years after closing, approximately March 1, 2065. The Bond Resolution included herein includes an exhibit that references a range of bond amounts that correspond to the applicable all-in interest rate. For purposes of the Department’s underwriting, the Series 2025A-1 bonds were underwritten utilizing a bond amount of $42,123,400 (construction and perm), with a maximum interest rate based upon the sum of 2.90% and the 15-year BVAL Municipal Index (non-callable) as published by Bloomberg, estimated at the time of underwriting to be 6.39% during the construction period. The interest rate is anticipated to be 5.84% during the permanent period.
The Series 2025A-2 bonds utilize the same range of bond amounts that correspond to the applicable all-in interest rate. For purposes of the Department’s underwriting, the Series 2025A-2 bonds were underwritten utilizing a bond amount of $7,856,600 with a maximum interest rate based upon the sum of 3.45% and the 15-year BVAL Municipal Index (non-callable) as published by Bloomberg, estimated at the time of underwriting to be 6.39%. The Series 2025A-2 bonds are intended to be construction only, with a 34-month term, with the option of two six-month extensions, and a final maturity date of January 1, 2029 (inclusive of both extensions).
The series 2025B taxable bonds are underwritten in the amount of $11,914,000, with a maximum interest rate based upon the sum of 3.45% and the two-year U.S. Treasury Note, estimated at the time of underwriting to be 6.39%. A 34-month term, with the option of two six-month extensions, and a final maturity date of January 1, 2029, is anticipated (inclusive of both extensions).
A request for $10,000,000 of the Department’s Multifamily Direct Loan TCAP funds will support 52 of the units and will provide 56 Match Units. The interest rate will be 2% as required under the 2024-3 NOFA. The term of the TCAP loan will be co-terminus with the senior permanent loan.