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Presentation, discussion, and possible action on a request for return and reallocation of tax credits under 10 TAC §11.6(5) related to Credit Returns Resulting from Force Majeure Events for The Sasha
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RECOMMENDED ACTION
recommendation
WHEREAS, The Sasha was awarded 9% housing tax credits during the 2023 Competitive Housing Tax Credit cycle;
WHEREAS, the Board has previously approved requests for return and reallocation of credits in 2024;
WHEREAS, the Development Owner executed a Carryover Allocation Agreement that included certifications stating each building receiving an allocation would be placed in service by December 31, 2026;
WHEREAS, the Development Owner has requested an extension to the placement-in-service deadline under 10 TAC §11.6(5), related to Credit Returns Resulting from Force Majeure Events;
WHEREAS, the Department lacks authority to extend federal placement-in-service deadlines and may only reset such deadlines by requiring the credits to be returned and immediately reallocated to the Development, as permitted solely under the force majeure provision of the Qualified Allocation Plan (QAP); and
WHEREAS, the Development Owner has submitted documentation demonstrating that a qualifying force majeure event has occurred;
NOW, therefore, it is hereby
RESOLVED, that the request to treat the matter under the force majeure provisions of 10 TAC §11.6(5) is approved, and that the 2023 Qualified Allocation Plan, Uniform Multifamily Rules, and the 2026 Program Calendar shall be applicable to the Development.
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BACKGROUND
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Development |
The Sasha |
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Target Population |
Supportive Housing |
|
HTC Award |
$1,946,000 |
|
City |
Austin |
|
Total Units |
60 |
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HTC Units |
60 |
|
Initial Year of Award |
2023 |
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Extension Requested |
Six Months |
The Sasha is a 60-unit development located in Austin. The development received an award of 9% Housing Tax Credits in 2023 and previously was approved for return and reallocation of credits in 2024. As a result, the current deadline to place in service in December 31, 2026.
The Sasha is currently under construction and is 75% complete. The project is a supportive housing development that will be owned and operated by SAFE Alliance Austin, a women’s and children’s shelter organization. The construction period initially required under the construction agreement was 22 months, with an initial completion date of October 2026. A multitude of delays resulted in an additional 65 days being added to the construction period. These delays include complications related to the construction of the full-perimeter controlled access gate and fencing, severe weather, and delays related to inspection processes from the City of Austin. As a result, the current anticipated completion date is December 23, 2026, one week before the current deadline. The owner has requested a six-month extension to account for any further unforeseen delays and the receipt of certificates of occupancy from the City of Austin.
APPLICABLE RULE
Under 10 TAC §11.6(5), a Development Owner may return credits and receive a reallocation outside the standard allocation process if the return is the result of a qualifying force majeure event occurring prior to issuance of IRS Form(s) 8609. Pursuant to 10 TAC §11.6(5), the Department’s Governing Board may approve execution of a Carryover Allocation Agreement for the current program year with the Development Owner that returned the credits, but only if the following conditions are met:
(A) The credits were returned as a result of "Force Majeure" events that occurred before issuance of Forms 8609. Force Majeure events are the following sudden and unforeseen circumstances outside the control of the Development Owner: acts of God such as fire, tornado, flooding, significant and unusual rainfall or subfreezing temperatures, or loss of access to necessary water or utilities as a direct result of significant weather events; explosion; vandalism; orders or acts of military authority; unrelated party litigation; changes in law, rules, or regulations; national emergency or insurrection; riot; acts of terrorism; supplier failures; or materials or labor shortages. If a Force Majeure event is also a presidentially declared disaster, the Department may treat the matter under the applicable federal provisions. Force Majeure events must make construction activity impossible or materially impede its progress.
Staff has reviewed this request and determined that the multiple delays explained in the request letter constitute a force majeure event under the rules.
IMPACT OF BOARD DECISION
If the Board approves the request:
• The credits will be returned and reallocated, with the 2023 Qualified Allocation Plan, Uniform Multifamily Rules, and the 2026 Program Calendar applicable to the Development.
• A new Carryover Allocation Agreement will be executed.
• The new placed-in-service deadline will be June 30, 2027.
If the Board denies the request:
• The current placed-in-service deadline of December 31, 2026, remains in place.
• The Development Owner may either meet the existing deadline, return the credits, or have the award terminated for failing to meet the deadline.
• Returned credits will first be reallocated within the original subregion in accordance with 10 TAC §11.6(2). If no pending applications are eligible within the subregion, the credits will be added to the statewide collapse for reallocation.
This request has no impact on any funding source other than the Low-Income Housing Tax Credit program.
RECOMMENDATION
Staff recommends approval of the request to return and reallocate tax credits for The Sasha under the force majeure provisions of 10 TAC §11.6(5).