title
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 Providence on Park
end
RECOMMENDED ACTION
recommendation
WHEREAS, Providence on Park was awarded 9% housing tax credits during the 2021 Competitive Housing Tax Credit cycle;
WHEREAS, the Board has previously approved requests for return and reallocation of credits in 2023;
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, 2025;
WHEREAS, the Development placed into service in April 2026, four months after the deadline;
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, 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;
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 2021 Qualified Allocation Plan, Uniform Multifamily Rules, and the 2026 Program Calendar shall be applicable to the Development.
end
BACKGROUND
|
Development |
Providence on Park |
|
Target Population |
Elderly |
|
HTC Award |
$1,522,699 |
|
City |
Lumberton |
|
Total Units |
80 |
|
HTC Units |
80 |
|
Initial Year of Award |
2021 |
|
Extension Requested |
Four months |
Providence on Park is an 80-unit development located in Lumberton, Hardin County. The development received an award of 9% Housing Tax Credits in 2021 and previously was approved for an award of supplemental credits in 2023. As a result, the deadline to place in service was December 31,2025.
Providence on Park completed construction and received certificates of occupancy in April 2026. The project is currently 85% occupied and encumbered by a Department LURA. The owner did not timely request an extension of the deadline to place in service. As a result, the project was placed in service four months after the federal deadline, rendering it ineligible for Housing Tax Credits under its existing allocation. The owner has submitted a request to retroactively extend the placed-in-service deadline, citing weather-related delays resulting from presidentially declared disasters and altered design requirements from the Lumberton Municipal Utility District as force majeure events that caused the deadline to be missed. The owner has requested a new placed-in-service deadline of April 30, 2026, in an effort to retain the completed project's federal eligibility for Housing Tax Credits.
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 government rule changes surrounding the lift constitutes 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 2021 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 September 30, 2026.
• The Development will remain federally eligible for Housing Tax Credits.
If the Board denies the request:
• The current placed-in-service deadline of December 31, 2025, remains in place.
• The Development will be federally ineligible for Housing Tax Credits and the allocation will be returned.
• The Department’s Housing Tax Credit LURA will remain in place.
• 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.
RECOMMENDATION
Staff recommends approval of the request to return and reallocate tax credits for Providence on Park under the force majeure provisions of 10 TAC §11.6(5).