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Presentation, discussion, and possible action on an extension of the development period for Espero Austin at Rutland
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RECOMMENDED ACTION
recommendation
WHEREAS, Espero Austin at Rutland executed a contract for $3,000,000 in National Housing Trust Fund (NHTF) funds, effective July 9, 2021, with an allowable Development Period of up to 36 months from the loan closing date, which expires on July 21, 2024,
WHEREAS, the final construction inspection has been performed, and the corrective action period for that inspection has been extended to July 21, 2024, which is the longest allowable under the terms of the contract, and which cannot be extended without Board approval of an extension of the Development Period;
WHEREAS, the Applicant has requested to extend the Development Period to match a six-month extension from the construction lender, which would extend the Development Period to February 1, 2025, to allow time for the Development to achieve rental stabilization and convert to permanent financing;
WHEREAS, the Development has begun initial lease-up, with 73 of the Units currently reported as occupied in the Department’s Compliance Monitoring Tracking System;
WHEREAS, staff is requesting approval to extend the Development Period to match the construction lender’s term, which will also allow for the final construction inspection items to be addressed, and for all necessary paperwork related to project completion to be submitted to the Department; and
WHEREAS, such extension will not cause the Department to miss any federal deadlines, although it may delay the Department’s ability to claim the HOME Match funds provided by the Development for one year;
NOW, therefore, it is hereby
RESOLVED, staff is approved to extend the Development Period for Espero Austin at Rutland until February 1, 2025.
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BACKGROUND
Espero Austin at Rutland received a loan of $3,000,000 for the construction of a 171-unit affordable housing development in Austin, Travis County. The contract allows for a Development Period of up to 36 months, which expires on July 21, 2024. Construction has substantially completed, and the Department is in the process of closing out the final construction inspection. The corrective action period for that inspection currently goes to July 21, 2024, which is the longest that staff can approve without a Board extension of the Development Period. The Development Owner is currently in the process of curing the final items from that inspection, including the installation of accessible mailboxes. While it is possible that the items will be in place for the Development to close out by July 21, 2024, staff is requesting approval from the Board to extend the Development Period to February 1, 2025, to match a similar extension provided by the construction lender, and to allow time for the correction of the final inspection items, receipt of necessary paperwork related to the Development’s completion, disbursement the final funds, and the reporting the project as completed to the U.S. Department of Housing and Urban Development (HUD). This extension will also allow the Development time to achieve rental stabilization and convert to permanent financing
24 CFR 93.402(d) requires that the project be reported as completed in HUD’s Integrated Disbursement and Information system within 120 days of the date of the final project drawdown. Because of this, the Department may be required to hold the final drawdown of funds until a date that is within 120 days of conversion and title transfer.
Because construction is substantially complete and the expenditure deadline related to this funding is not until mid-2025, staff has identified no risk to the Department related to this request, although the Department’s ability to claim the HOME Match funds provided by the Development may be delayed by a year. The Development is currently in the process of lease-up, and 73 Units are currently reported as occupied. The extension is administrative in nature, and accordingly, staff recommends approval.