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Report on Third Party Requests for Administrative Deficiency under 10 TAC §11.10
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BACKGROUND
Pursuant to 10 TAC §11.10 of the 2024 Qualified Allocation Plan related to Third Party Requests for Administrative Deficiency (RFAD), an unrelated person or entity may bring new, material information about an Application to staff’s attention. Third parties may request that staff consider whether an Application should be the subject of an Administrative Deficiency, based on the information submitted with the request. At the time of filing the request, requestors must provide all briefings, documentation, and other information that the requestor offers in support of the deficiency. Requestors must provide sufficient credible evidence that, if confirmed, would substantiate the deficiency request. Assertions not accompanied by supporting documentation susceptible to confirmation will not be considered. The deadline for submission of RFADs was May 3, 2024, and 19 RFADs were submitted by this date.
The following describes the staff determinations for 2024 Competitive Housing Tax Credit (HTC) RFADs received which presented new, material information not present in the Application, and reflects all determinations on active applications made as of June 8, 2024. All requests referenced herein were received and reviewed in accordance with 10 TAC §11.10. Where staff determined that the request substantiated the issuance of a Notice of Administrative Deficiency for the Application, the Applicant was provided the opportunity to respond to the submitted request. Staff has reviewed both the request and response in making its determination.
RFADs are required to present new, material information in order to be considered. In accordance with 10 TAC §11.10(c):
If the assertion(s) in the RFAD describe matters that are part of the Application review process, and the RFAD does not contain information not present in the Application, staff will not review or act on it.
Each of the 19 entries below identifies the HTC development/application identification number (TDHCA ID#), the name of the development, city, region, and the name and organization of the requestor. A brief summary of each request has been included for RFADs that meet the requirements of 10 TAC §11.10, followed by Department staff’s analysis of the request, and finally the staff resolution of the request. Any subsequent RFAD determinations will be reported to the Board at a subsequent meeting.
Though this item is only a report to the Board, the Department’s Governing Board has final decision-making authority on any of the items that may be appealed as a result of the issues reflected herein, and thus these staff determinations may be subject to change; however, an RFAD requester may not formally appeal the staff determination of an RFAD through the Appeals Process. See 10 TAC §11.902(b) and 10 TAC §11.10.
Where staff concluded that a request result in loss of points or other action, the impacted Applicants have already been notified and given the separate opportunity to appeal the staff determination.
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TDHCA ID# |
24018 |
Development: |
Bailey at Stassney |
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City: |
Austin |
Region: |
7 Urban |
|
Requested By: |
Walter Moreau |
Nature and Basis of Request:
The request claims the application does not meet the definition of Supportive Housing and is not eligible for the point and underwriting advantages that come with that Target Population. The request cites the lack of fundraising history of the General Partner, whose sole member has only been registered since 2022. The request also suggests that financial and space constraints may limit the Applicant’s ability to provide on-site services.
Applicant Response to Notice of Administrative Deficiency:
Staff issued an Administrative Deficiency to the Applicant in response to this request, to which the Applicant timely responded. In that response, the Applicant explained how the Application meets the QAP’s requirements to be considered Supportive Housing.
Analysis and Resolution:
Much of this request presents issues that relate to matters already present in the Application, and that are already part of staff’s review (e.g., the provision of required amenities in the site plans). Because RFADs are required to present new information that is not already part of staff’s review, these components of the request will not be addressed in this item. Should the subject Application be competitive, staff will review those items in accordance with normal procedures.
The initial request and the subsequent Administrative Deficiency response from the Applicant are both substantial and nuanced, and it is difficult to meaningfully summarize them. Concerned parties are strongly encouraged to read both, which are attached to this item.
Much of this matter is predicated on the question as to whether National Community Renaissance of Texas, Inc. (NCRT), the sole member of the General Partner, Developer, and Guarantor of the Development, is eligible to provide Supportive Housing in accordance with program rules. These rules require that the Applicant or General Partner secure sufficient funds necessary to maintain the Supportive Housing Development's operations throughout the entire Affordability Period, provide evidence of a history of fundraising activities reasonably deemed to be sufficient to address any unanticipated operating losses, and meet other requirements related to the provision of this type of housing. NCRT is an organization that was formed in 2022, and therefore may not be able to meet these requirements on its own; however, the rule is clear that either the Applicant or General Partner may meet these requirements. This distinction is important, because the definition of “Applicant” in the QAP includes Affiliates:
Applicant - Any Person or a group of Persons and any Affiliates of those Persons who file an Application with the Department requesting funding or a tax credit allocation subject to the requirements of this chapter or Chapters 12 or 13 of this title and who have undertaken or may contemplate the later formation of one or more business entities, such as a limited partnership, that is to be engaged in the ownership of a Development. (emphasis added)
The QAP’s definition of “Affiliate” includes the specific provision that, “all entities that share a Principal are Affiliates.” NCRT shares Principals, and therefore is affiliated with, several other entities involved with the Application, including National Community Renaissance of California, the property manager, and Hope Through Housing Foundation, the supportive services provider. Information provided by the Applicant in the Deficiency response indicates that this Affiliate relationship may be sufficient to meet the QAP requirements.
Staff’s review of this Application is still in process; however, based on the information provided by the Applicant in response to the Administrative Deficiency, staff does not believe that there is cause for termination of the Application based on the information provided in the RFAD. Additional information may be requested as part of the review, and should staff determine that the Application does not meet threshold requirements, appropriate action will be taken at that time.
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TDHCA ID# |
24019 |
Development: |
Bailey at Berkman |
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City: |
Austin |
Region: |
7 Urban |
|
Requested By: |
Walter Moreau |
Nature and Basis of Request:
This matter is substantially similar to the previous request.
|
TDHCA ID# |
24045 |
Development: |
Bird Creek Senior Living |
|
City: |
Temple |
Region: |
8 Urban |
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Requested By: |
Enrique Flores, IV |
Nature and Basis of Request:
The request claims the Application proposes Unit sizes below the minimum required to claim points under §11.9(b)(1)(A). The architectural plans for the units include closets that contain the Unit’s water heater, the indoor component of the HVAC system, and a small storage area in the calculation of the square footage. The requests claims that these closets must be excluded from the calculation of the square footage under the QAP’s definition of Net Rentable Area on the basis that they are a mechanical closet, and that doing so causes the square footage of the two-bedroom units to fall below the threshold required for points.
Applicant Response to Notice of Administrative Deficiency:
Staff determined that a Notice of Administrative Deficiency was not necessary for this request as a determination could be made without one, although the Applicant did proactively provide a response to the request.
Analysis and Resolution:
Staff disagrees with the assertions made in the RFAD. The definition of “Net Rentable Area” from the QAP is as follows:
Net Rentable Area (NRA) - The Unit space that is available exclusively to the tenant and is heated and cooled by a mechanical HVAC system. NRA is measured to the outside of the studs of a Unit or to the middle of walls in common with other Units. If the construction does not use studs, NRA is measured to the outside of the material to which the drywall is affixed. Remote Storage of no more than 25 square feet per Unit may be included in NRA. For Developments using Multifamily Direct Loan funds the Remote Storage may only be included in NRA if the storage area shares a wall with the residential living space. NRA does not include common hallways, stairwells, elevator shafts, janitor closets, electrical closets, balconies, porches, patios, or other areas not actually available to the tenants for their furnishings, nor does NRA include the enclosing walls of such areas. (emphasis added)
The concept of “Net Rentable Area” in the QAP serves several purposes, many of which rely on the cumulative amount of Net Rentable Area available at the Development. For example, the Cost of Development per Square Foot scoring item is determined by comparing the Eligible Building Costs to the total Net Rentable Area of the Development, rather than making any kind of Unit-by-Unit analysis. Because this definition encompasses the entire Development, functional areas of the Development such as janitor closets, elevator shafts, and stairwells that are not available exclusively for a tenant are specifically excluded. Staff disagrees that this definition would exclude a closet located entirely within a Unit from inclusion in Net Rentable Area, and has concerns that this interpretation of the rule would have significant and negative implications - for example, the area within a Unit that is occupied by the stove is not available for a tenant’s furnishings, but following the logic of this RFAD, one could coherently argue that the stove’s space must be excluded from Net Rentable Area. The closets containing the water heater and indoor HVAC unit are available exclusively to the tenants, are contained entirely within the Units, are heated and cooled, and provide a small amount of storage for items such as brooms. Staff recommends no further action related to this RFAD.
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TDHCA ID# |
24069 |
Development: |
Forum Park Family Villas |
|
City: |
Houston |
Region: |
6 Urban |
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Requested By: |
Elizabeth Perrot (1) |
Nature and Basis of Request:
The request claims the applicant did not notify the Alief ISD superintendent by the date the Pre-Application was due. The Applicant instead notified the superintendent of an incorrect district. As this notification is a Tex. Gov’t Code §2306.6704(c) requirement of Pre-Application Participation, the Application should not be granted six Pre-application Participation points
Applicant Response to Notice of Administrative Deficiency:
This Application has been terminated for unrelated reasons. As of the preparation of this item, the Applicant is still within the allowable timeframe in which they may appeal.
Analysis and Resolution:
No further action is recommended at this time, although staff will revisit this matter should the Application successfully appeal and be reinstated.
|
TDHCA ID# |
24069 |
Development: |
Forum Park Family Villas |
|
City: |
Houston |
Region: |
6 Urban |
|
Requested By: |
Elizabeth Perrot (2) |
Nature and Basis of Request:
The request claims the application did not report a Neighborhood Risk Factor. The Development site is less than 500 feet from a census tract (48201433602) with a violent crime rate greater than 18 per 1,000. The request claims the application is now ineligible
Applicant Response to Notice of Administrative Deficiency:
Staff terminated the Application in response to this request. As of the preparation of this item, the Applicant is still within the allowable timeframe in which they may appeal.
Analysis and Resolution:
In accordance with 10 TAC §11.101(a)(2)(A), related to Undesirable Site Features:
For Competitive HTC Applications, if staff identifies an undesirable site feature reflected in clause (i) - (x) of subparagraph (E) and it was not disclosed, the Application shall be terminated by staff.
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TDHCA ID# |
24069 |
Development: |
Forum Park Family Villas |
|
City: |
Houston |
Region: |
6 Urban |
|
Requested By: |
Jennifer Hicks |
Nature and Basis of Request:
This request cites presents numerous issues related to the Application:
• The request claims the Application uses a grocery store for the §11.7(2) Tie-Breaker that does not meet the definition. The Application uses a small store that does sell food, but that may not contain some items mentioned in the QAP’s requirements to be considered a grocery store for program purposes.
• The request claims the Pre-Application did not notify the correct superintendent, and should lose Pre-app points.
• The request claims the application is missing lender acknowledgement letters required under §11.9(e)(9)(A) to claim readiness to proceed points.
• The request questions whether the Application is eligible for Commitment of Development Funding by Local Political Subdivision points under §11.9(d)(2) as no commitment letter from the City of Houston was included.
Applicant Response to Notice of Administrative Deficiency:
This Application has been terminated for unrelated reasons. As of the preparation of this item, the Applicant is still within the allowable timeframe in which they may appeal.
Analysis and Resolution:
No further action is recommended at this time, although staff will revisit these matters should the Application successfully appeal and be reinstated.
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TDHCA ID# |
24091 |
Development: |
Claudette Lofts |
|
City: |
San Antonio |
Region: |
9 Urban |
|
Requested By: |
Carine Yhap |
Nature and Basis of Request:
The request claims the Application in not eligible for points related to Pre-Application Participation as the pre-application identified an incorrect development as the nearest serving the same target population.
Applicant Response to Notice of Administrative Deficiency:
Staff determined that a Notice of Administrative Deficiency was not necessary for this request as a determination could be made without one.
Analysis and Resolution:
10 TAC §11.8 outlines requirements for the submission of a pre-application, and includes the requirement that the pre-application identify:
The name and address of the nearest Housing Tax Credit assisted Development that serves the same Target Population and was awarded 15 or fewer years ago following the calculation established in 10 TAC §11.7(23) according to the Department's property inventory tab of the Site Demographic Characteristics Report.
Critically, the criteria for qualifying for points related to that pre-application are outlined separately at 10 TAC §11.9(e)(3). This section of the rules is very prescriptive about what criteria must be met related to the pre-application in order to qualify for the six associated points. These include, but are not limited to:
• The total number of Units may not increase by more than 10% from pre-application to Application
• The Target Population must remain the same between pre-application and Application
• The Application’s final score may not vary by more than 4 points from what was reflected in the pre-application (inclusive only of items included in the self-score)
This list does not include the component of the pre-application that is called into question by this request. While this list does include a catchall that the pre-application must have “met all applicable requirements,” staff generally interprets the specific items called out in this list as a comprehensive list of the items that would cause an Application to be ineligible for pre-application points, and has allowed other issues to be remedied through the Administrative Deficiency process if necessary. Interpreting “met all applicable requirements” to mean that any error in the pre-application must result in a loss of six points would cause a significant number of Applications to lose these points (for example, 228 pre-applications were submitted this year, and 27 pre-application deficiency packages in connection with those are currently posted on the Department’s website). Staff believes that a rule change would be warranted for such a significant change in the administration of the pre-application, which staff would not support.
|
TDHCA ID# |
24094 |
Development: |
Freedoms Path Kerrville II |
|
City: |
Kerrville |
Region: |
9 Rural |
|
Requested By: |
Alyssa Carpenter |
Nature and Basis of Request:
Site control is a threshold requirement for a Housing Tax Credit Application. The request claims the Application did not provide Site Control documentation that meets the requirements of 10 TAC §11.204(9). The Application includes as Site Control a letter from the VA stating The Developer has been selected for an Enhanced-Use Lease (EUL) project. The request claims this does not meet the 10 TAC §11.204(9) requirement that the site control be “legally enforceable” and “not subject to any legal defense” because the letter is not a legal contract or option nor is it signed.
Applicant Response to Notice of Administrative Deficiency:
Staff determined that a Notice of Administrative Deficiency was not necessary for this request as a determination could be made without one.
Analysis and Resolution:
The land for this Application is owned by the U.S. Department of Veterans (VA), and the use of that land is being donated to the project. No site acquisition costs are shown on the Development Cost Schedule, and a letter from the VA included with the Application confirms that, “there is no monetary cost to SFV for this leasehold interest.” 10 TAC §11.204(9) states that:
In the case of land donations, Applicants must demonstrate that the entity donating the land has Site Control as evidenced through one of the items described in clauses (i) - (iii) of this subparagraph or other documentation acceptable to the Department. (emphasis added)
The Application in question presents a unique situation, as a federal department is donating the use of the site to the proposed Development. Staff has reviewed the documentation provided by the Applicant and determined that it is acceptable to establish site control.
|
TDHCA ID# |
24103 |
Development: |
Pleasant Pointe |
|
City: |
Mount Pleasant |
Region: |
4 Rural |
|
Requested By: |
Justin Gregory |
Nature and Basis of Request:
The request claims that the Application, a development in Mount Pleasant, claimed Local Government Support points but provided a resolution from an incorrect city that looks to pertain to a prior application. The request also claims the Application used incorrect Tie-Breaker coordinates for several amenities. The request claims the application should lose 17 Local Government points as well as tiebreaker preference.
Applicant Response to Notice of Administrative Deficiency:
Staff determined that a Notice of Administrative Deficiency was not necessary for this request as a determination could be made without one.
Analysis and Resolution:
The correct resolution from the City of Mount Pleasant is included elsewhere in the Application, and staff does not believe it is necessary to disallow points on this basis. The Tie-Breaker coordinates will be addressed in the Administrative Deficiency process should the Application receive a full review from staff.
|
TDHCA ID# |
24110 |
Development: |
Northpark Garden Villas |
|
City: |
Houston |
Region: |
6 Urban |
|
Requested By: |
Greg Whiteley |
Nature and Basis of Request:
The request claims the Development is within the Houston Extraterritorial Jurisdiction (ETJ), and should lose 17 points related to Local Government Support, as it did not provide a resolution from both the County and the City, as is required for ETJ Applications to earn points under 10 TAC §11.9(d)(1).
Applicant Response to Notice of Administrative Deficiency:
Staff determined that a Notice of Administrative Deficiency was not necessary for this request as a determination could be made without one.
Analysis and Resolution:
Applications that are within a municipality’s ETJ, but that have also been annexed through special or limited-purposes annexation, are submitted most years. Different Application requirements apply to Development Sites located in incorporated areas, within ETJs, and in unincorporated areas. This has historically been administratively challenging for staff and confusing for Applicants, as limited-purpose annexation could be interpreted to follow either ETJ or incorporated-area rules. To make the requirements clear to both Applicants and staff, 10 TAC §11.1(d)(94) relating to the definition of Place was updated for the 2024 QAP to state that:
Areas that are annexed by a city, town, or village through limited-purpose annexation are considered to be part of the incorporated area of that city, town, or village for purposes of this chapter.
The Development site is in the Houston ETJ but also is in the Limited Purpose area of the City of Houston, having been annexed in 2002. Because of that, the Application is treated as part of the incorporated area of Houston under the QAP, with those requirements being applicable.
|
TDHCA ID# |
24136 |
Development: |
Moore Grocery Lofts |
|
City: |
Tyler |
Region: |
4 Urban |
|
Requested By: |
Alyssa Carpenter |
Nature and Basis of Request:
The request claims the Application cannot be awarded as doing so would violate §11.6(3)(C)(iii) of the 2024 QAP, which states that, in Urban subregions, no more than 50% of credits shall be awarded to Applications proposing Rehabilitation or Reconstruction unless only Rehabilitation or Reconstruction Applications are eligible in the subregion. The Application proposes Rehabilitation and has requested more than 50% of the available credits in the subregion. There are two New Construction applications in the subregion.
Applicant Response to Notice of Administrative Deficiency:
Staff determined that a Notice of Administrative Deficiency was not necessary for this request as a determination could be made without one.
Analysis and Resolution:
The Award Recommendation Methodology is separated into several steps in the QAP. These are:
1. USDA Set-Aside Selection
2. At-Risk Set-Aside Selection
3. Initial Application Selection
4. Rural Collapse
5. Statewide Collapse
6. Contingent Qualified Nonprofit Set-aside Step
The award process is intricate, but certain rules and requirements apply at each phase of the allocation. The limit on credits allocated to rehabilitation developments is a specific subsection of Step 3 of the allocation process. During the initial allocation of credits within a region, the rule in question would apply. This rule is not mirrored in other steps of the Award Recommendation Methodology, and therefore, would not apply if the Application in question were to become eligible for an award during those steps.
The distinction being drawn here is made clear in the QAP when analyzing another credit allocation limit, which is the limit on credits that can be allocated to elderly developments in certain subregions. This limit is stated in Step 3 of the Award Recommendation Methodology, and is then restated in Step 5. The absence of this restatement of the rehabilitation limit in steps other than Step 3 indicates that the limit only applies to that step. When making award recommendations to the Board, staff will determine that the Application is ineligible for award at Step 3 of the process, but will not otherwise find it ineligible.
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TDHCA ID# |
24146 |
Development: |
Stella Haven |
|
City: |
Denton |
Region: |
3 Urban |
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Requested By: |
Elizabeth Perrot |
Nature and Basis of Request:
The request claims the applicant uses a Denton ISD school playground as the closest park for the §11.7(2) Tie-Breaker. The request claims this does not meet the definition and the feature should be disqualified.
Applicant Response to Notice of Administrative Deficiency:
Staff issued an Administrative Deficiency in response to this request. The Applicant timely responded, asserting that the park in question qualifies under the rule.
Analysis and Resolution:
Staff has reviewed the response and determined that the park in question does meet the letter of the rule. If the current tie-breaker is recommended for inclusion in the 2025 QAP, staff anticipates adding clarifying language related to this issue.
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TDHCA ID# |
24146 |
Development: |
Stella Haven |
|
City: |
Denton |
Region: |
3 Urban |
|
Requested By: |
Adrian Iglesias |
Nature and Basis of Request:
The request claims the applicant uses a Denton ISD school playground as the closest park for the §11.7(2) Tie-Breaker. The request claims this does not meet the definition and the feature should be disqualified.
Applicant Response to Notice of Administrative Deficiency:
Staff issued an Administrative Deficiency in response to this request. The Applicant timely responded, asserting that the park in question qualifies under the rule.
Analysis and Resolution:
Staff has reviewed the response and determined that the park in question does meet the letter of the rule. If the current tie-breaker is recommended for inclusion in the 2025 QAP, staff anticipates adding clarifying language related to this issue.
|
TDHCA ID# |
24171 |
Development: |
Sherry Pointe Apartments |
|
City: |
Arlington |
Region: |
3 Urban |
|
Requested By: |
Elizabeth Perrot |
Nature and Basis of Request:
The request claims the applicant uses an Arlington ISD, school playground as the closest park for the §11.7(2) Tie-Breaker. The request claims this does not meet the definition and the feature should be disqualified.
Applicant Response to Notice of Administrative Deficiency:
Staff issued an Administrative Deficiency in response to this request. The Applicant timely responded, asserting that the park in question qualifies under the rule.
Analysis and Resolution:
Staff has reviewed the response and determined that the park in question does meet the letter of the rule. If the current tie-breaker is recommended for inclusion in the 2025 QAP, staff anticipates adding clarifying language related to this issue.
|
TDHCA ID# |
24171 |
Development: |
Sherry Pointe Apartments |
|
City: |
Arlington |
Region: |
3 Urban |
|
Requested By: |
Chris Applequist |
Nature and Basis of Request:
The request claims the applicant uses an Arlington ISD, school playground as the closest park for the §11.7(2) Tie-Breaker. The request claims this does not meet the definition and the feature should be disqualified.
The request also claims the ESA does not meet 10 TAC §11.305 threshold requirements as it does not include blast zone information for two natural gas transmission lines that run through the site. Additionally, the request suggests that these pipelines constitute and Undesirable Site Feature, and therefore may render the Application ineligible.
Applicant Response to Notice of Administrative Deficiency:
Staff issued an Administrative Deficiency in response to this request. The Applicant timely responded, asserting that the park in question qualifies under the rule.
Regarding the pipelines, the Department issued an Administrative Deficiency related to the pipelines in question as part of the normal review process for the Application. The Applicant timely responded and included correspondence from Phase Engineering, the Environmental Site Assessment provider. In that correspondence, the provider confirms that the pipelines do not carry highly volatile liquids, and therefore does not constitute an Undesirable Site Feature. The correspondence concludes that, “Based on HUD standards, the property and proposed development are located at a safe distance from each of the identified hazards within 0.25 miles. The underground pipelines are also not considered a hazard, therefore acceptable separation distances would not be depicted on the attached blast zone exhibit.”
Analysis and Resolution:
Staff has reviewed the response and determined that the park in question does meet the letter of the rule. If the current tie-breaker is recommended for inclusion in the 2025 QAP, staff anticipates adding clarifying language related to this issue.
Regarding the pipelines, staff has reviewed the response from the Applicant and has concluded that no further action is warranted.
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TDHCA ID# |
24174 |
Development: |
Villas at Primrose |
|
City: |
McAllen |
Region: |
11 Urban |
|
Requested By: |
Alyssa Carpenter |
Nature and Basis of Request:
The request claims the Application uses a grocery store for the tie-breaker established at 10 TAC §11.7(2) that does not meet the requirements for being considered a grocery store. The Application uses a Target that does not appear to carry several key items mentioned in the definition, such as fresh meat and produce.
Applicant Response to Notice of Administrative Deficiency:
Staff issued an Administrative Deficiency in response to this request. The Applicant responded timely, asserting that the availability of frozen foods, as well as Target’s offering of same-day delivery for the remaining required items, qualifies this Target location as a grocery store for tie-breaker purposes.
Analysis and Resolution:
The QAP is prescriptive about what must be offered for a grocery store to be eligible for the tie-breaker in question:
A full service grocery store of sufficient size and volume to provide for the needs of the surrounding neighborhood including the proposed Development; offering a wide variety of fresh, frozen, canned and prepared foods, including but not limited to a variety of fresh meats, poultry, and seafood; a wide selection of fresh produce including a selection of different fruits and vegetables; a selection of baked goods and a wide array of dairy products including cheeses, and a wide variety of household goods, paper goods and toiletry items. (emphasis added)
The Applicant’s response to the deficiency acknowledges that fresh meats, poultry, seafood, and produce are not available at the Target location submitted for the tie-breaker, and instead suggests that the availability of these items being delivered by Target meets the requirements. Staff disagrees that a delivery service meets the definition, as those items are not offered at the location itself. Additionally, if a home-delivery service were to qualify, then proximity to the physical location of the store becomes immaterial, as any proposed Development Site within the delivery-area of any grocery service would provide the exact same convenience to tenants. The Target in question does not meet the letter of the rule, and therefore, staff recommends excluding it from consideration in the tie-breaker.
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TDHCA ID# |
24183 |
Development: |
Navasota Manor |
|
City: |
Navasota |
Region: |
8 Rural |
|
Requested By: |
Tracey Fine |
Nature and Basis of Request:
The Application in question was submitted in both the USDA and At-Risk Set-Asides, but the request suggests that it is only eligible for the USDA Set-Aside. Eligibility for At-Risk is defined in state statute and further clarified in the QAP. In summary, a Development must have previously received the benefit of certain types of subsidy, and the resulting affordability of that subsidy must be nearing expiration or, for HUD-insured mortgages, the loan must be eligible for pre-payment, thus eliminating the affordability. The request asserts that the automatic renewal of USDA subsidies disqualifies the Development from consideration, as the subsidy is not nearing expiration.
Applicant Response to Notice of Administrative Deficiency:
Staff determined that a Notice of Administrative Deficiency was not necessary for this request as a determination could be made without one.
Analysis and Resolution:
The At-Risk Set-Aside is a statutory requirement for the Department to allocate not less than 15% of the annual 9% Housing Tax Credit ceiling to currently-affordable Developments that are at-risk of losing that affordability. Qualification for this Set-Aside is technical, and Tex. Gov’t Code §2306.6702(5) establishes which specific programs qualify. These include certain HUD, USDA, and IRS programs. The USDA assistance in question is definitively a qualifying subsidy.
Statute includes a second requirement that must be met in order to qualify for the At-Risk Set-Aside. These Developments must meet the following requirement:
(ii) is subject to the following conditions:
(a) the stipulation to maintain affordability in the contract granting the subsidy is nearing expiration; or
(b) the HUD-insured or HUD-held mortgage on the development is eligible for prepayment or is nearing the end of its term
Because “nearing expiration” is undefined in statute, the Department has established by rule that any expiration that occurs within two years of July 31 of the year the application is submitted is “nearing expiration.” The QAP also specifically includes any Housing Tax Credit Development that is eligible to request a qualified contract sale, which would eliminate the affordability.
Because the USDA subsidy in question is a qualifying subsidy, what remains is the question of whether it is “nearing expiration.” The Applicant claims that the subsidy expires and must be re-applied for and renewed annually, although the RFAD in question suggests that the subsidy renews automatically each year, to the extent that sufficient funds are available. Staff acknowledges that this matter is nuanced; however, the subsidy’s expiration without guarantee of being renewed (7 CFR 3560.255(b)(2) explains procedures that must be undertaken in the event that a renewal request is denied due to a lack of funding), does appear to meet both the letter and the intention of statute.
Separately, the USDA loan is eligible for pre-payment, which would eliminate the affordability at the Development. Staff is uncertain as to whether this would qualify the affordability as nearing expiration, but believes that this may be worth consideration for the 2025 QAP. This eligibility for pre-payment did not factor into staff’s determination regarding this matter.
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TDHCA ID# |
24215 |
Development: |
Athens Trails |
|
City: |
Athens |
Region: |
4 Rural |
|
Requested By: |
Justin Gregory |
Nature and Basis of Request:
The request claims the Application failed to disclose Heavy Industry that is within 500 feet of the Development Site. Hubert Glass Oil Co, a business registered for petroleum storage tanks of up to 14,000 gallons, is 325 feet away. Request also claims the Application used incorrect Tie-Breaker coordinates for several amenities.
Applicant Response to Notice of Administrative Deficiency:
Staff determined that a Notice of Administrative Deficiency was not necessary for this request as a determination could be made without one.
Analysis and Resolution:
Tie-breaker coordinates may be addressed through the Administrative Deficiency process, so long as the rules regarding tie-breakers are otherwise adhered to.
Regarding the potential presence of heavy industry within 500 feet of the site, staff reviewed the business in question and determined that, while it does appear to have fuel storage tanks, it does not fit the general characteristics of heavy industry. A screenshot of that business is provided for the Board’s review:
|
TDHCA ID# |
24221 |
Development: |
Dashwood Trails |
|
City: |
Houston |
Region: |
6 Urban |
|
Requested By: |
Elizabeth Perrot |
Nature and Basis of Request:
The request claims the applicant uses an Alief ISD track & field as the closest Park for the §11.7(2) Tie Breaker. The request claims this does not meet the definition and the feature should be disqualified.
Applicant Response to Notice of Administrative Deficiency:
Staff issued an Administrative Deficiency for this issue on May 21, 2024, to which the Applicant timely responded. The response notes that the Application includes a second version of the form that does not use Alief ISD as the closest Park for the §11.7(2) Tie Breaker. The response states the Applicant intended to use the alternate form, but also included the version provided at pre-application should staff determine an update that increases the total distance §11.7(2) under was not permissible.
Analysis and Resolution:
Staff will rely on the second version of the Tie Breaker form that does not use Alief ISD as the closest Park and the exhibit referenced in the request has been struck.