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Presentation, discussion, and possible action on point penalties for 2024 9% Housing Tax Credit Applications related to the Readiness to Proceed scoring item
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RECOMMENDED ACTION
recommendation
WHEREAS, the 2024 Qualified Allocation Plan (QAP) at 10 TAC §11.9(e)(9) established a scoring item that awards one point for Applications that certify to submitting building permits and closing on the Development Site by March 31, 2025;
WHEREAS, nine Applications selected this scoring item and failed to meet the March 31, 2025, deadline;
WHEREAS, 10 TAC §11.9(f) permits the Board to assess penalties in future competitive rounds for failure to meet non-statutory deadlines, unless it makes a finding that the failure was beyond the reasonable control of the Applicant and could not have been reasonably anticipated;
WHEREAS, staff is recommending that one Application, Freedom’s Path at Kerrville II, not be assessed a penalty due to unique circumstances related to federal site control and the critical nature of housing for homeless veterans; and
WHEREAS, staff is recommending that the remaining eight Applications be assessed a deduction of one point in the 2026 Competitive Housing Tax Credit Round;
NOW, therefore, it is hereby
RESOLVED, that the Board finds that the eight Applications listed below are hereby assessed a penalty of one point for each Application submitted by the identified Applicant or Affiliate in the 2026 Competitive Housing Tax Credit Application Round; and
FURTHER RESOLVED, that the Board finds no penalty is warranted for Freedom’s Path at Kerrville II.
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BACKGROUND
The 2024 Qualified Allocation Plan (QAP) included a scoring item at 10 TAC §11.9(e)(9) known as "Readiness to Proceed," which awarded one point to Applicants that certified to closing on the Development Site and submitting for building permits by March 31, 2025. The QAP explicitly states that the Board will not waive this deadline and that failure to meet it will result in a penalty under 10 TAC §11.9(f), as determined solely by the Board. From 10 TAC §11.9(f):
Staff may recommend to the Board and the Board may find that an Applicant or Affiliate should be ineligible to compete in the following year's competitive Application Round or that it should be assigned a penalty deduction in the following year's competitive Application Round of no more than two points for each submitted Application (Tex. Gov't Code §2306.6710(b)(2)) because it meets the conditions for any of the items listed in paragraphs (1) - (4) of this subsection. For those items pertaining to non-statutory deadlines, an exception to the penalty may be made if the Board or Executive Director, as applicable, makes an affirmative finding setting forth that the need for an extension of the deadline was beyond the reasonable control of the Applicant and could not have been reasonably anticipated.
Forty-five Applications selected this scoring item in 2024. Of those, nine failed to meet the March 31, 2025, deadline. The reasons provided by those Applicants for not meeting the deadline are consistent with what would be expected, with delays caused by financial gaps and the need to apply for additional funding being the most common. Staff is recommending a penalty for the following eight Applications:
• 24023 930 Military Parkway Living
• 24030 2910 Motley Drive
• 24038 3606 S Cockrell Hill Road Senior Living
• 24042 10112 Bissonnet Living
• 24076 New Faith Senior Village Apartments
• 24079 Park at Dogwood
• 24084 Andover Village Apartments
• 24094 Freedom's Path Kerrville II
• 24168 The Bryan
While the rule allows for a penalty of up to two points, staff is recommending a one-point penalty for the above-listed Applications, as the loss of a single point for all Applications in the 2026 round is already a substantial disadvantage for the penalized Applicants.
Staff is not recommending a penalty for Freedom’s Path at Kerrville II, which is a supportive housing development for homeless veterans to be located on a U.S. Department of Veterans Affairs (VA) campus. Due to the complexity of such a project and the extensive reviews required by the VS, developments of this nature are unlikely to ever meet the timelines required by the scoring item. Penalizing such developments would effectively disincentivize future supportive housing projects for homeless veterans on VA campuses. As a result, staff is not recommending any penalty for this Application, and may recommend responsive changes to the 2026 QAP to prevent this situation in the future.
The remaining eight Applications failed to meet the deadline without demonstrating circumstances that would justify an exception. Accordingly, staff recommends that a one-point deduction be assessed to each affected Applicant or Affiliate in the 2026 Competitive Housing Tax Credit Round.