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Presentation, discussion, and possible action on a request for an extension of the previously approved deadline to Place in Service for Sunset Ridge
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RECOMMENDED ACTION
recommendation
WHEREAS, Sunset Ridge was awarded 9% housing tax credits during the 2024 Competitive Housing Tax Credit cycle and then approved for force majeure treatment in 2025;
WHEREAS, as part of that approval, the Governing Board imposed a deadline of June 30, 2027, for the Development to place in service, which is six months shorter than would have been allowed federally; and
WHEREAS, the Development Owner has requested that the deadline be extended to December 31, 2027;
NOW, therefore, it is hereby
RESOLVED, that the request to extend the previously approved deadline for Sunset Ridge is approved.
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BACKGROUND
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Development |
Sunset Ridge |
|
Target Population |
General |
|
HTC Award |
$868,951 |
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City |
Burnet |
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Total Units |
36 |
|
HTC Units |
36 |
|
Initial Year of Award |
2024 |
|
Extension Requested |
Six additional months (a six-month extension was previously approved in October 2025) |
Sunset Ridge is a 36-unit development located in Burnet, Burnet County. The Development received 9% housing tax credits in 2024, and the Board approved a request to reallocate the credits with a six-month extension to place in service in 2025. As a result, the current deadline to place in service is June 30, 2027.
The project is currently on track to be completed by June 2027; however, because little cushion exists in the construction schedule, the syndicator has restructured its equity payments in a way that negatively affects the Development. The request includes a letter from Boston Financial that states it has, “restructured its equity installment payment schedule to hold back nearly all equity until the receipt of an additional six-month force majeure or the completion of construction. This holdback of equity will increase costs to the development due to increased construction loan draws and so increased construction loan interest.”
APPLICABLE RULE
Under 10 TAC §11.6(5), a Development Owner may return credits and receive a reallocation outside the standard allocation process if the return is the result of a qualifying force majeure event occurring prior to issuance of IRS Form(s) 8609. Pursuant to 10 TAC §11.6(5), the Department’s Governing Board may approve execution of a Carryover Allocation Agreement for the current program year with the Development Owner that returned the credits, but only if the following conditions are met:
(A) The credits were returned as a result of "Force Majeure" events that occurred before issuance of Forms 8609. Force Majeure events are the following sudden and unforeseen circumstances outside the control of the Development Owner: acts of God such as fire, tornado, flooding, significant and unusual rainfall or subfreezing temperatures, or loss of access to necessary water or utilities as a direct result of significant weather events; explosion; vandalism; orders or acts of military authority; unrelated party litigation; changes in law, rules, or regulations; national emergency or insurrection; riot; acts of terrorism; supplier failures; or materials or labor shortages. If a Force Majeure event is also a presidentially declared disaster, the Department may treat the matter under the applicable federal provisions. Force Majeure events must make construction activity impossible or materially impede its progress.
The Applicant previously met this standard to the Board’s satisfaction when a request under this provision of the rule was approved in October 2025. Because the current request only asks to extend the previously approved extension to the fully allowable federal deadline of December 31, 2027, the Developer is not strictly required by rule to qualify under one of these standards. This request appears to be driven by the syndicator’s policies.
IMPACT OF BOARD DECISION
If the Board approves the request:
• The new deadline to place in service will be December 31, 2027.
If the Board denies the request:
• The current placed-in-service deadline of June 30, 2027, remains in place.
• The Development Owner may either meet the existing deadline, return the credits, or have the award terminated for failing to meet the deadline.
• Returned credits will first be reallocated within the original subregion in accordance with 10 TAC §11.6(2). If no pending applications are eligible within the subregion, the credits will be added to the statewide collapse for reallocation.
This request has no impact on any funding source other than the Low Income Housing Tax Credit program.
RECOMMENDATION
Staff recommends approval of the request to extend the deadline to place in service.