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Presentation, discussion, and possible action regarding a Material Amendment to the Housing Tax Credit Application for The Bryan (HTC #24168)
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RECOMMENDED ACTION
recommendation
WHEREAS, The Bryan (Development) received an award of 9% Housing Tax Credits (HTCs) in 2024 for the new construction of 113 multifamily units for the elderly population in Mission, Hidalgo County;
WHEREAS, Bryan Development LP (Applicant) requests approval for a 19.47% reduction in the number of units from 113 to 91 units, with a decrease of 13 one-bedroom units and elimination of the nine originally proposed two-bedroom units, resulting in all one-bedroom units;
WHEREAS, this change would result in a revision to the rent and income restrictions from 12 units at 30% Area Median Income (AMI), 23 units at 50% AMI, and 78 units at 60% AMI to 10 units at 30% AMI, 19 units at 50% AMI, and 62 units at 60% AMI;
WHEREAS, the elimination of the 22 units and slight changes to unit sizes would result in a 24.03%, or 18,971 square feet, reduction in the Net Rentable Area, from 78,962 square feet to 59,991 square feet
WHEREAS, at Application, the acreage of the Development site was 3.742 acres with an additional 0.2386-acre easement for site access, and this amendment proposes 3.16 acres with an additional 0.43-acre that will be nonexclusive access easements to the Development that will be shared with future development on the road frontage;
WHEREAS, these changes would result in a significant modification of the architectural design, a reduction of 4,046 square feet (11.16%) to the common area, a 10.72% decrease in the residential density, a reduction in the parking spaces, and modification of the building configuration;
WHEREAS, in addition to the above changes, Cesar Chavez Foundation is being added as a guarantor, and this entity is an affiliate of Rufino Contreras Affordable Housing Corp. Inc, the guarantor proposed in the Application;
WHEREAS, Board approval is required for a reduction to the number of units or bedroom mix of units, a reduction of 3% or more in the square footage of the units and common areas, a significant modification of the architectural design of the Development, and a modification of the residential density of at least 5% as directed in Tex. Gov’t Code §2306.6712(d)(2), (4), (5), and (6) and in 10 TAC §10.405(a)(4)(B), (D), (E), and (F), and the Applicant has complied with the amendment requirements therein; and
WHEREAS, the requested reduction to the number of units will materially and negatively affect the Development;
NOW, therefore, it is hereby
RESOLVED, that the requested amendment for the reduction to the number of units for The Bryan is denied as presented at this meeting; and
FURTHER RESOLVED, the reduction to the acreage and the addition of an additional guarantor are approved as presented, subject to clearance of the previous participation review and financial feasibility, 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
The Bryan was approved for a 9% HTC award in 2024 for the construction of 113 units, of which all are designated as low-income units, of multifamily housing for the elderly population in Mission, Hidalgo County. In a letter dated July 11, 2025, Bronte Bejarano, the representative of the Applicant, requested approval for a material amendment to the Application.
The Applicant requests approval for a reduction in the number of units from 113 to 91 units, which will decrease the one-bedroom units by 13 and eliminate all nine of the two-bedroom units, resulting in all one-bedroom units for the Development. This change would also result in a revision to the rent and income restrictions from 12 units at 30% Area Median Income (AMI), 23 units at 50% AMI and 78 units at 60% AMI to 10 units at 30% AMI, 19 units at 50% AMI, and 62 units at 60% AMI. As a result of the reduction to the number of units and a minor reduction to the unit square footages, there will be a reduction of 18,971 square feet (24.03%) in the Net Rentable Area, going from 78,962 square feet to 59,991 square feet. Additionally, the changes to the architectural design of the Development result in a 4,046 square feet (11.16%) decrease to the common area, from 36,260 square feet at Application to 32,214 square feet.
Additionally, at Application the Applicant proposed a Development site of 3.98 acres, which included a 3.74-acre site on which the building would be located and a 0.2386-acre access easement. The amended development plan proposes 3.16 acres on which the building will be located and access easements at the northeast and northwest corners of the site, being 0.15-acre and 0.28-acre respectively, for 0.43-acre total in easements and 3.59 acres of total Development site area. The change to the acreage and the reduction to the number of units result in a 10.72% decrease to the residential density from 28.39 units per acre to 25.35 units per acre. This will result in a reduction in site cost.
Additionally, the number of parking spaces is reduced from 116 to 95, or an 18.1% reduction. The Applicant indicates this continues to meet the requirements of the City of Mission.
The Applicant indicated that this request is the result of increases in construction costs partially attributable to uncertainty concerning tariffs on key building materials, declining equity pricing, and rising interest rates, which have created a substantial budget gap. As a result of the construction cost increases, the developer requires a larger loan to close the funding gap. At the time of the original Application in 2024, a letter of intent was secured for financing at a 6.25% interest rate. That rate has since increased to 7.10% during the construction period and 6.88% during the permanent period, adding further pressure to the project’s financial feasibility. Compounding the difficulties is a significant drop in equity pricing. The Applicant states credit pricing has been negatively affected by reduction to corporate tax rates and a saturation of energy credits in the market. At the time of the award in 2024, the HTC syndication rate was $0.90 per tax credit dollar, while the highest offer available now is $0.84, representing an 6.7% decrease in equity proceeds.
The Applicant stated it was not possible to regain feasibility and meet underwriting thresholds without reducing the number of units, and that the proposed changes will improve the financial viability of the Development. The Applicant indicated that removal of the two-bedroom units was the best way to reduce construction costs. They reported that they considered alternatives such as reducing the number of Development floors to two, or redesigning to a more simplified building floorplan, but determined that removal of the two-bedroom floor plans was the redesign option that resulted in maximized cost savings, minimized redesign costs, and maximized number of units.
The Applicant provided letters from the lender and syndicator indicating that the proposed changes will strengthen the feasibility of the Development. A letter of support from the City of Mission was also provided.
The Applicant pointed out that, although the 19.47% reduction in low-income units is a larger reduction than the Board has approved in the past, a 100% property tax exemption is not being requested for this Development, as has been requested for other Developments for which the Board has approved smaller percentages of low-income unit reductions.
In addition to the amendment for the design, the Applicant has notified the Department of intention to add Cesar Chavez Foundation as a guarantor. Rufino Contreras Affordable Housing Corporation, which is the Texas affiliate of Cesar Chavez Foundation, was included as a guarantor in the original Application.
Staff confirmed that the revised design plans and parking would continue to meet accessibility requirements. Staff reviewed the original Application and scoring documentation against this amendment request and has concluded that the requested changes would have resulted in the Development likely not having been selected for a Housing Tax Credits award in the competitive round.
Staff recommends approval of the change to the acreage and the additional guarantor, subject to clearance of the previous participation review, so long as the Development can remain feasible, but staff recommends denial of the amendment to the Application for the 19.47% reduction to the number of affordable housing units from 113 to 91 units.
If the Board elects to approve the reduction to the number of units, the approval will be subject to underwriting by the Department to confirm the Development remains feasible with the proposed modifications.