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Presentation, discussion, and possible action regarding the Issuance of Multifamily Housing Revenue Bonds (The Gateway at Trinity Forest) Series 2025, Resolution No. 26-006, and a Determination Notice of Housing Tax Credits
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RECOMMENDED ACTION
recommendation
WHEREAS, the Board adopted an inducement resolution for The Gateway at Trinity Forest at the Board meeting of October 10, 2024;
WHEREAS, an application for The Gateway at Trinity Forest requesting 4% Housing Tax Credits, sponsored by LDG Development and the Dallas Housing Finance Corporation, was submitted to the Department on August 5, 2025;
WHEREAS, a Certificate of Reservation was issued in the amount of $50,000,000 on August 14, 2025, with a bond delivery deadline of February 10, 2026; and
WHEREAS, staff recommends approval of the issuance of a Multifamily Housing Revenue Bonds for The Gateway at Trinity Forest (Series 2025), and the issuance of a Determination Notice;
NOW, therefore, it is hereby
RESOLVED, that the issuance of a Multifamily Housing Revenue Bonds (The Gateway at Trinity Forest) Series 2025 in the amount of $50,000,000, Resolution No. 26-006, is hereby approved in the form presented to this meeting;
FURTHER RESOLVED, the issuance of a Determination Notice of $4,514,387 in 4% Housing Tax Credits for The Gateway at Trinity Forest, 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 Bonds will be issued in accordance with Tex. Gov’t Code §2306.353 et seq., which authorizes the Department to issue revenue bonds for its public purposes, as defined therein. Tex. Gov’t Code §2306.472 provides that the Department’s revenue 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 Gateway at Trinity Forest is proposed to be located at 2050 Dowdy Ferry Road in Dallas, Dallas County, and involves the new construction of 330 units that will serve the general population. The Certificate of Reservation from the Bond Review Board was issued under the Priority 3 designation, which does not have any restrictions regarding the income and rent levels. The application reflects that all the units will be rent and income-restricted at 60% of the Area Median Family Income.
Organizational Structure and Previous Participation: The Borrower is LDG The Gateway at Trinity Forest, LP, and includes the entities and principals as illustrated in Exhibit A. The applicant’s portfolio is considered Previously Approved and was deemed acceptable.
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 September 23, 2025. Representatives from the Department and the Developer were present, and no public comment was made. A copy of the transcript is included herein. 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 in the principal amount of $50,000,000, that will be purchased by Western Alliance Business Trust, as facilitated by R4 Capital Funding, LLC (R4), who will be serving as the construction and permanent lender. The interest rate for the Series A Tax-Exempt Bonds during construction will be fixed prior to closing by a Swap Agreement and will be equal to 79% of 1M Term SOFR plus a spread of 3.00%, estimated at the time of underwriting to be 5.25%. The term of the tax-exempt construction loan is anticipated to be 36 months. R4 Capital will also provide a Series B taxable construction loan in the amount of $23,500,000, also with a term of 36 months. The interest rate will also be fixed prior to closing by a Swap Agreement, and will be based upon the 1M Term SOFR, plus a spread of 3.00%, estimated at the time of underwriting to be 6.65%. The Department is not a party to the Swap Agreements and the Department is not issuing the Series B Taxable Bonds.
At stabilization, the Series A Tax-Exempt permanent loan is anticipated to be in the amount of $50,000,000 with a 16-year term, 40-year amortization, and a maturity date 40 years after closing, approximately January 1, 2066. The Swap will terminate and the interest rate will be equal to the sum of 79% of the 10-year Treasury, plus a spread of 3.40%, and subject to a bond interest rate floor of 5.50%. For purposes of underwriting, an interest rate of 6.02% was used; however, the rate will be fixed at closing. The Series B Taxable Bonds will be reduced to $1,850,000 during the permanent period and will carry a 16-year term and 40-year amortization. The Swap will terminate and the interest rate will be based upon the 10-year Treasury, plus a spread of 3.40%, subject to a bond interest rate floor of 5.50%, estimated at the time of underwriting to be 7.62%. Both the tax-exempt and taxable permanent loans will have a 72-month interest only period.