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Presentation, discussion, and possible action regarding a material amendment to the Housing Tax Credit Application for 380 Villas (HTC #22609)
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RECOMMENDED ACTION
recommendation
WHEREAS, 380 Villas (the Development) received an award of 4% Housing Tax Credits (HTCs), a multifamily direct loan, and private activity bonds for the new construction of 220 multifamily units in McKinney, Collin County;
WHEREAS, SDC Throckmorton Villas, LP (the Development Owner or Owner) requests approval for a material amendment to the Application for an increase to the number of units from 220 to 260;
WHEREAS, Board approval is required for a modification of the number of units or bedroom mix of units, a significant modification of the architectural design of the Development, and for a modification of the residential density of at least 5%, as directed in Tex. Gov’t Code §2306.6712(d)(2), (5), and (6) and 10 TAC §10.405(a)(4)(B), (E), and (F), and the Owner has complied with the amendment requirements therein;
WHEREAS, Board approval of this amendment does not constitute a waiver of any of the rules or statutes applicable to the 2022 HTC Application, including but not limited to the accessibility requirements stated in Chapter 1, Subchapter B; and
WHEREAS, the requested changes do not negatively affect the Development, impact the viability of the transaction, impact the scoring of the Application, or change the amount of the tax credits awarded prior to cost certification;
NOW, therefore, it is hereby
RESOLVED, that the requested amendment for 380 Villas is approved as presented at this meeting, and the Executive Director and his designees are each hereby authorized, directed, and empowered to take all necessary action to effectuate the foregoing; and
FURTHER RESOLVED, that following staff’s review of the cost certification, if the amount of tax credits determined to be necessary as required by §42(m)(2)(D) exceeds 120% of the amount of tax credits reflected in the Determination Notice, an increase not to exceed 120% of the HTC amount estimated in the underwriting analysis for this amendment is hereby approved under 10 TAC §10.401(d), and will require no further Board action but will require the Owner to pay the fee under 10 TAC §11.901(8).
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BACKGROUND
380 Villas received a 4% HTC award, a multifamily direct loan, and private activity bonds in 2022 to construct 220 affordable units in McKinney, Collin County. In a letter dated November 4, 2022, Joseph Agumadu, representative for the Owner, requested approval for an increase to the total number of units from 220 to 260. As originally proposed, the Development would have 11 buildings and 12,000 square feet of retail space, and this proposed amendment is to add a 12th building and replace the retail space with residential units. The intended 40 units will be comprised of four studio, 15 one-bedroom, and 21 two-bedroom units. The revised unit mix for the Development will be 36 studio, 82 one-bedroom, 120 two-bedroom, and 22 three-bedroom units. The increase in units has increased the HTC units at 30% of Area Median Income (AMI) units by seven and the 60% AMI units by 33. The Direct Loan units at 50% AMI and 60% AMI have each increased by one, and the Direct Loan units at 80% AMI units have decreased by two.
The increase in the number of units results in an 18.18% increase in the residential density, which will increase from 15.56 units per acre to 18.39 units per acre. This change in the number of units will also result in an increase in net rentable area from 190,399 square feet to 225,014 square feet, which is an increase of 18.18% or 34,615 square feet.
The enclosed table compares the site plan of the Development at Application and the revised site plan after the amendment.
The Owner explained that the Development had been zoned in 2017 under a differently constituted City Council as a planned development with a mandatory requirement for 12,000 square feet of retail space; however, the City Council provided a resolution of support for the Development with an informal request that the Development be re-designed to replace the retail space with residential units. The process and timelines for that re-design was in direct conflict with the July 2022 expiration deadline of the Development’s bond allocation. In July 2022, the City approved an amended zoning that permits replacing the retail space with residential units.
The Owner provided updated financial information that has been analyzed by the Real Estate Analysis (REA) Division. REA’s analysis of the updated financial information indicates that the Development is still feasible. The currently estimated development costs support an annual HTC amount of $3,187,017, which is $580,897 (22.29%) greater than the amount in the Determination Notice, $2,606,120. The final costs will be confirmed at cost certification, and any credit increase fee will be paid at that time.
Staff has determined that the proposed changes noted above would not have impacted the selection of the Application for an award.
Staff recommends approval of the amendment request as presented herein. Staff further recommends approval to administratively approve at cost certification an HTC increase of up to 20% from the HTC amount estimated in the underwriting analysis for this amendment, subject to the payment of the applicable fee under 10 TAC §11.901(8) and staff review and approval of the final cost certification.
Approval of the material amendment is conditioned upon the applicant executing all bond documents that may be necessary, including but not limited to, a First Amendment to the Bond Regulatory and Land Use Agreement as well as payment of the bond compliance fee ($25/unit) for the additional 40 units, in the amount of $1,000.