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Presentation, discussion, and possible action regarding an increase to the Housing Tax Credit amount for Belmont (HTC #21402)
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RECOMMENDED ACTION
recommendation
WHEREAS, Belmont (the Development) received a 4% Housing Tax Credit (HTC) award in 2021 for the new construction of 146 units for the general population in Austin, Travis County;
WHEREAS, construction of the Development has been completed, and LDG Belmont, LP (the Development Owner or Owner) requests, at cost certification, to increase the annual HTC amount from $1,264,833, the amount reflected in the Determination Notice, to $1,712,224, a difference of $447,391, which represents a 35.37% increase;
WHEREAS, §42(m)(2) of the Internal Revenue Code allows an increase of tax credits for a bond financed project when the increase is determined necessary as demonstrated through the submission of the cost certification package;
WHEREAS, 10 TAC §10.401(d) requires approval by the Board if an increase to the amount of tax credits exceeds 120% of the amount of credit reflected in the Determination Notice; and
WHEREAS, a review of the cost certification package submitted by the Development Owner supports the need for the additional tax credits requested, and staff has determined that the increase is necessary for the viability of the transaction;
NOW, therefore, it is hereby
RESOLVED, that the housing tax credit increase for Belmont requested by the Development Owner is approved as presented to 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
Belmont received a 4% HTC award in 2021 for new construction of 146 units for the general population in Austin, Travis County. On April 12, 2021, a Determination Notice was issued with an approved annual tax credit amount of $1,264,833. Construction of the Development was completed in late 2024, and the cost certification documentation for the Development is currently under review by the Department.
In the cost certification documentation, the Development Owner requested an annual tax credit award of $1,712,224, and this amount represents an increase of $447,391 (35.37%) from the amount reflected in the Determination Notice. Through the cost certification review process, the representative for the Development Owner explained that the Development incurred increased costs during construction. A comparison of the development costs from the time of the Application, in 2021, to Cost Certification indicates that total development costs increased $9,970,997 (27.76%), from $35,921,263 to $45,892,260.
In a letter as of October 8, 2025, Jason Trevino, the Owner’s representative, explained that direct construction costs were underestimated at the time of application, as the applicant did not have actual construction bids at that time. Additionally, there were several change orders and material price escalations, which also increased the direct construction costs. There was also an erroneous Geotech report; the initial Geotech report was flawed and required additional excavation and deepening of piers. There was also an upgraded insulation package associated with Green Building codes. The Owner also stated that there was the need for the excavation and elimination of an unknown city sewer line that was not initially disclosed by the City of Austin (the City). Furthermore, the City delayed the project more than six months due to internal miscommunications related to permitting. General Conditions and Overhead costs increased due to lengthened construction schedule. Construction delays caused an increase to financing costs such as construction interest and financing fees. Developer fee also increased due to the increased costs.
Staff’s analysis of this transaction at cost certification has concluded that the Development supports an annual tax credit allocation of $1,712,224, and that the requested increase is necessary for the financial feasibility of the project and its viability as a qualified low-income housing project throughout the credit period. This results in a 35.37% increase from $1,264,833, the original annual HTC amount in the Determination Notice. In accordance with 10 TAC §10.401(d), Board approval is required because the requested tax credit amount exceeds 120% of the HTC amount reflected in the Determination Notice. The Development Owner will be required to submit the Tax-Exempt Bond Credit Increase Request Fee required in 10 TAC §11.901(8) for the increase to the HTC amount prior to issuance of Forms 8609. Additionally, all required pending documentation for the cost certification review must be provided for the issuance of 8609s.
Staff recommends approval of the increase in the tax credit award as presented herein.