title
Presentation, discussion, and possible action on an amendment to the 2023 One Year Action Plan regarding distribution and allocation priorities for the Department’s multifamily Housing Trust Fund and HOME funds
end
RECOMMENDED ACTION
recommendation
WHEREAS, the U.S. Department of Housing and Urban Development (HUD) requires the submission of a One-Year Action Plan in accordance with 24 CFR §91.320;
WHEREAS, the Texas Department of Housing and Community Affairs (the Department) has developed the draft 2023 State of Texas Consolidated Plan: One-Year Action Plan (the Plan), which reports on the intended use of funds received by the State of Texas from HUD for Program Year (PY) 2023, beginning on September 1, 2023, and ending on August 31, 2024;
WHEREAS, the Department seeks to amend the plan reflect current rules and practices for its Housing Trust Fund and HOME funds, and to update the distribution priorities for those funds;
WHEREAS, the amendment was posted to the Department’s website for public comment from November 3, 2023, to December 3, 2023, and no comment was received; and
WHEREAS, upon approval of the amendment by the Board, the Department will submit it to HUD for final approval before it may be implemented;
NOW, therefore, it is hereby
RESOLVED, that the amendment to the 2023 State of Texas Consolidated Plan: One-Year Action Plan, in the form presented to this meeting, is hereby approved for submission to HUD for final approval; and
FURTHER RESOLVED, that the Executive Director and his designees are each hereby authorized, empowered and directed, for and on behalf of the Department, to make such non-substantive grammatical, monetary and technical changes as they deem necessary or advisable
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BACKGROUND
The Texas Department of Housing and Community Affairs (TDHCA), Texas Department of Agriculture (TDA), and Texas Department of State Health Services (DSHS) prepared the draft 2023 State of Texas Consolidated Plan: One-Year Action Plan (Plan) in accordance with 24 CFR §91.320. TDHCA coordinates the preparation of the State of Texas Consolidated Plan documents. The Plan covers the State’s administration of the Community Development Block Grant Program (CDBG) by TDA, the Housing Opportunities for Persons with AIDS Program (HOPWA) by DSHS, the Emergency Solutions Grant (ESG) Program, the HOME Investment Partnerships (HOME) Program, and the National Housing Trust Fund (NHTF) Program by TDHCA. This plan was previously approved by the Board, and was submitted to HUD by the deadline of July 18, 2023.
The Multifamily Division now seeks to amend this plan to bring it more closely in-line with current Department practices and rules. Many of these changes, which are reflected in the attached black-lined document, are clerical or technical in nature and do not represent substantial changes to the programs administered by the Department - for example, the interest rates on our loan products has been fixed at 2% (although the amendment does state that other interest rates may be offered), and the scoring and tie-breakers listed in the Plan now match those recently approved in the 2024 Qualified Allocation Plan. In addition, several rule citations in the Plan have been updated to reflect current rules.
These changes on their own are minor and would not necessarily warrant stakeholder input or Board action; however, the Department has proposed a change to the method of distribution for Housing Trust Fund. Currently, the Plan states that the Department will follow the Regional Allocation Formula (RAF) to distribute those funds throughout Texas’ 13 Uniform State Service Regions. While this formula works well for large funding sources such at the 9% Housing Tax Credit program, it is not ideal for smaller sources such as Housing Trust Fund. As an example, the State’s most recent HTF grant (approximately $20 million) would be distributed through the RAF as follows:
|
Region |
Urban |
Rural |
Total |
|
1 |
$ 600,000.00 |
$ 600,000.00 |
$ 1,200,000.00 |
|
2 |
$ 600,000.00 |
$ 600,000.00 |
$ 1,200,000.00 |
|
3 |
$ 2,218,957.72 |
$ 600,000.00 |
$ 2,818,957.72 |
|
4 |
$ 600,000.00 |
$ 600,000.00 |
$ 1,200,000.00 |
|
5 |
$ 600,000.00 |
$ 600,000.00 |
$ 1,200,000.00 |
|
6 |
$ 2,122,292.34 |
$ 600,000.00 |
$ 2,722,292.34 |
|
7 |
$ 949,894.79 |
$ 600,000.00 |
$ 1,549,894.79 |
|
8 |
$ 669,026.45 |
$ 600,000.00 |
$ 1,269,026.45 |
|
9 |
$ 1,061,279.43 |
$ 600,000.00 |
$ 1,661,279.43 |
|
10 |
$ 600,000.00 |
$ 600,000.00 |
$ 1,200,000.00 |
|
11 |
$ 1,062,711.53 |
$ 600,000.00 |
$ 1,662,711.53 |
|
12 |
$ 600,000.00 |
$ 600,000.00 |
$ 1,200,000.00 |
|
13 |
$ 670,634.74 |
$ 600,000.00 |
$ 1,270,634.74 |
Given the complexity of working with federal funds and the amount of time it takes to process and close a Housing Trust Fund Application, it is administratively inefficient to make available such small amounts of funding in each region.
The amendment to the Plan proposes that the Department would still use the RAF, but would allow for the combination of several sub-regions into a larger region with more funding available. For example, Regions 1, 12, and 13, which represents the Panhandle and West Texas, could be grouped together for a total of approximately $3.6 million. Staff is optimistic that combining regions in this manner will allow for much more efficient Application processing and loan closing, and that it will allow larger and more meaningful awards of funding to be made.
Upon approval, this amendment will be submitted to HUD for approval. Because this approval is needed in order to distribute the Department’s most recent HTF grant as planned, the NOFA for those funds will not be open until such approval is received, which is anticipated within 30 days of submission.