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Presentation, discussion, and possible action regarding a Material Amendment to the Land Use Restriction Agreement for Ekos City Heights (HTC #20701)
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RECOMMENDED ACTION
recommendation
WHEREAS, Ekos City Heights (the Development) received a 4% Housing Tax Credit (HTC) award in 2020 for the new construction of 179 multifamily units, all of which are designated as low-income units and a target population of Elderly, in Austin, Travis County;
WHEREAS, MHP City Heights, Ltd. (the Development Owner or Owner) represented at application and also executed a Land Use Restriction Agreement (LURA) reflecting a limitation for the elderly population;
WHEREAS, due to severe and ongoing occupancy challenges attributed largely to the elderly demographic restriction, the Development Owner requests to amend LURA to remove the current elderly restriction and instead allow for general occupancy for all ages with all committed incomes and rent limits remaining in place;
WHEREAS, 10 TAC §10.405(b)(2)(C) requires approval by the Board if there is a change to the Target Population; and
WHEREAS, the Development Owner has complied with the amendment requirements in 10 TAC §10.405(b), including holding a public hearing;
NOW, therefore, it is hereby.
RESOLVED, that the requested material LURA amendment for Ekos City Heights is approved as presented at 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
Ekos City Heights received a 4% Housing Tax Credit (HTC) award in 2020 for the construction of 179 multifamily units, in Austin, Travis County. All the units in the Development are low-income units, and the target population is the elderly. The Elderly Limitation requirement in the LURA is the following:
• As determined by the HUD Secretary, is specifically designed and operated to assist elderly persons as defined in and provided under any Federal, State, or local government programs; or
• Is intended for, and solely occupied by persons who are 62 or older; or
• Is intended and operated for occupancy by at least one person 55 years of age or older per Unit, where at least 80% of the total housing Units are occupied by at least one person who is 55 years of age or older; and adheres to policies and procedures which demonstrate an intent by Development Owner and manager to provide housing for persons 55 years of age or older.
The Development is required to lease 100% of the units to individuals and families whose imputed incomes do not exceed an average of 60% of the area median gross income.
Construction of the Development was completed in 2024.
In a letter as of November 10, 2025, Sarah Andre, consultant to the Owner, requests approval to modify the current elderly restriction to allow general occupancy for all ages. Ms. Andre explained that the change is necessary because despite exhaustive marketing, outreach, and operational adjustments over the past year, the Development continues to face severe and ongoing occupancy challenges attributed largely to the elderly demographic restriction. The amendment request letter further explains that, after approval from the City of Austin, 20% of the units were marketed to qualified tenants under the age of 55 in February 2025. Traffic subsequently spiked and once the Development met the allowance of family units to lease, the family marketing was reverted specifically to 55+ in June 2025. Since then, the property traffic and leasing collapsed. As of October 15, 2025, occupancy was 59.8%. It was also mentioned that, at the current absorption rate, the hardship is escalating quickly and presenting an imminent threat of default.
The amendment request includes traffic and leasing data that reflects steady traffic and interest from qualified households under 55 years of age. There are currently 20 individuals and families under the age of 55 on the waitlist for units. The amendment would allow the Development to capture the multiple families on the waitlist and pursue a broader band of qualified households to achieve and maintain stabilization. Furthermore, data from Apartment Marketdata reveals that affordable senior properties in Austin are significantly reducing rents and providing material concessions to lease up and maintain occupancy. Ms. Andre also explained that, at the time of application and award, the market showed a strong demand for senior properties in Austin and that it was unforeseeable or unpreventable in nature to predict the drastic change in market for affordable senior properties. The proposed modification has no financial impact to the underwriting, as the Owner has closed on acquisition and construction financing; however, this change will allow the Development to prevent foreclosure and convert to a permanent mortgage.
The Development Owner held a public hearing on November 13, 2025, to discuss the proposed change to the designation from senior restricted to family Development. Twelve residents attended the hearing, and a representative of the Development Owner received feedback and answered questions regarding the change in residency requirements. Several comments of concern were made about the proposed switch and about the level of security with more non-55+ residents.
Due to financial infeasibility and a potential for default on the financing and possible loss of LIHTC affordable units through foreclosure by the lender, staff recommends a conditional approval of the requested material amendment to the LURA for the Development. As a condition for this approval, the Department is recommending and the Owner has agreed to provide written notice to all households residing at the Development by February 28, 2026, that there will be no penalty under their lease for terminating the lease early if the household provides the Owner by April 30, 2026, that they wish to terminate the lease early and providing an effective termination date because of the property switching from a Elderly Development to a General Development. Likewise, a notice will be provided to any household on the waiting list by February 28, 2026, that the Development is switching to a general development and that if the household notifies the Owner by April 30, 2026, that they wish to be taken off of the waiting list, any nonrefundable deposit or application fee will be refunded to the household.