title
Presentation, discussion, and possible action regarding a waiver of 10 TAC §11.101(b)(1)(A)(viii) for Travis Street Plaza
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RECOMMENDED ACTION
recommendation
WHEREAS, Travis Street Plaza is a proposed 2026 9% Housing Tax Credit Application for the acquisition and rehabilitation of 192 Units in Houston, Harris County;
WHEREAS, to ensure the best use of the Department’s limited resources, 10 TAC §11.101(b)(1)(A)(viii) establishes that a Competitive Housing Tax Credit Application is not eligible if it involves the rehabilitation of an existing Housing Tax Credit Development that has any building that placed in service on or after January 1, 2006;
WHEREAS, Travis Street Plaza placed in service at the end of 2012, and therefore is not eligible to compete without a waiver of the age requirement; and
WHEREAS, the Applicant has requested such a waiver;
NOW, therefore, it is hereby
RESOLVED, that the waiver of 10 TAC §11.101(b)(1)(A)(viii) for Travis Street Plaza is denied.
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BACKGROUND
Travis Street Plaza is a proposed 2026 9% Housing Tax Credit Application for the acquisition and rehabilitation of 192 Units in Houston, Harris County.
The 2026 Qualified Allocation Plan (QAP) includes a new provision that makes the following Applications ineligible:
(viii) Competitive Housing Tax Credit Applications that involve any existing Housing Tax Credit Development that has any building that placed in service on or after January 1, 2006, for its most recent award of Housing Tax Credits.
This rule was added to prevent Developments that have already been funded with Housing Tax Credits from prematurely applying for additional Rehabilitation funding. 2006 was chosen as a cutoff, as twenty years is a general benchmark for when some major systems and components such as roofing and HVAC should be replaced.
Travis Street Plaza was initially funded with Housing Tax Credits and placed in service in December 2012. Because of this, the project does not meet age requirements to be eligible to apply for a new award of tax credits. The Applicant has requested a waiver of this requirement on the basis that current conditions at the Development represent an overwhelming need. Specifically, the request asserts that the project was initially built incorrectly by the General Contractor, which has caused continuous and ongoing water penetration issues with the building’s windows. To support this, the applicant has submitted an Award of Arbiter judgment, as well as several diagnostic reports and repair proposals from various companies. The judgement determines that the General Contractor was at fault for the water penetration issues; however, it does not award the Owner the full amount of claimed damages on the basis that the Owner did not, “did not provide by a preponderance of evidence that the problems in the building were in fact systemic.” In total, approximately $840 thousand in damages were awarded to the Applicant as part of this arbitration.
The Board may grant waivers of non-statutory rules if certain criteria are met. The waiver must demonstrate how it better serves the policies and purposes outlined for the Department in Tex. Gov’t Code §2306, which are general in nature and include items such as assisting local governments in providing essential services, providing for the housing needs of those with moderate incomes, and contributing to the preservation and development of communities. The waiver must also demonstrate that the need for it is either outside of the control of the Applicant or is the result of an overwhelming need.
Staff has reviewed the information provided by the Applicant. The project’s current condition is complex, and the Department does not hold a position in the dispute between the Owner and the former General Contractor. In evaluating this request, staff is unable to determine that the Department’s policies and purposes are better served by granting this request, nor can staff determine that the LIHTC program is better served by allowing a 14-year-old project to be rehabilitated with additional tax credits. Accordingly, staff recommends that the Board deny the request.