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Presentation, Discussion, and Possible Action regarding Approval of a Contract for Phase II of the Multifamily Management System
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RECOMMENDED ACTION
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WHEREAS, Tex. Gov’t Code §2261.254 requires approval by the governing body of a state agency before the agency may enter into a contract for the purchase of goods or services with a value exceeding $1 million, unless such authority has been delegated as provided by statute; and
WHEREAS, the 89th Legislature appropriated $3,915,360 for the 2026-2027 biennium for Phase II of the Multifamily Management System (MMS), including system development and implementation, data migration, and project management costs; and
WHEREAS, following a competitive procurement process, the Department selected a vendor to provide a pre-configured software-as-a-service (SaaS) solution for the administration of the Department’s multifamily programs, including application intake, underwriting, asset management, and compliance; and
WHEREAS, the Department anticipates entering into a contract with the selected vendor in the amount of approximately $1,983,875 and seeks authority for a contract and purchase order in an amount not to exceed $2,000,000;
NOW, therefore, it is hereby
RESOLVED, that the Governing Board approves the Department entering into a contract for Phase II of the Multifamily Management System in an amount not to exceed $2,000,000, and the Executive Director and his designees are each authorized, directed, and empowered to take all necessary action to effectuate the foregoing.
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BACKGROUND
The Department began development of the Multifamily Management System as a custom software solution to modernize administration of its multifamily programs. Prior to beginning Phase I, the Department evaluated several software-as-a-service (SaaS) products but did not identify an existing solution that adequately met the Department’s multifamily program requirements. Based on the available options at that time, the Department proceeded with development of a customized front-end and back-end system for TDHCA, with Phase I focused primarily on application intake and underwriting.
Over approximately two years, staff worked with the vendor to incorporate the numerous federal, state, funding program, and Qualified Allocation Plan (QAP) requirements applicable to the Department’s multifamily programs. As development progressed, it became clear that continued custom development would require significant additional time, cost, and resources. The increasing complexity of the custom build also raised concerns about achieving the functionality and user experience originally envisioned. Feedback received through user testing reinforced the importance of integrating established Excel-based industry processes within the application.
Based on the Department’s experience during Phase I, staff revisited the SaaS market to determine whether additional industry-specific products could provide a more efficient and sustainable alternative to continued custom development. This additional research identified viable options designed specifically for affordable housing program administration that warranted further evaluation through a competitive procurement.
In preparation for Phase II, the Department issued a competitive Request for Offers (RFO) and received nine responses. Following evaluation under the requirements and criteria established in the RFO, the Department selected a vendor offering a pre-configured SaaS platform designed specifically for affordable housing program administration.
Rather than continuing to build and maintain a customized system specifically for TDHCA, Phase II will implement an established SaaS platform and configure it for TDHCA-specific requirements and business processes. The platform provides functionality for application intake, underwriting, compliance, and asset management across LIHTC, HOME, National Housing Trust Fund (NHTF), and other funding sources.
The Department expects the SaaS approach to provide a more functional and user-friendly system on a shorter implementation timeline. It also provides a more sustainable long-term technology model because system maintenance, technology upgrades, product enhancements, and ongoing improvements are supported across the vendor’s broader customer base rather than developed and funded solely by TDHCA.
Work completed during Phase I, including business requirements, process analysis, data structures, and feedback from staff and external users, informed the Phase II procurement and will be utilized as applicable during implementation. Phase II will provide functionality across Multifamily Programs, Real Estate Analysis, Asset Management, and Compliance without requiring the Department to separately develop each function from the ground up. The Department anticipates implementation during the first half of 2027.
CONTRACT AND FINANCIAL INFORMATION
The negotiated vendor contract totals up to $1,983,875 and includes initial configuration and implementation, data migration, and licensing and hosting through 2029. The amounts below assume the maximum permitted 5% annual increase in licensing and hosting costs:
• Initial configuration and implementation: $250,000
• 2027 licensing and hosting: $550,000
• 2028 licensing and hosting (assuming maximum 5% increase): $577,500
• 2029 licensing and hosting (assuming maximum 5% increase): $606,375
• Total anticipated vendor contract: $1,983,875
Under the proposed contract, annual licensing and hosting costs may increase by up to 5% per year; the Department is not contractually committed to an automatic 5% annual increase. After 2029, licensing and hosting costs are anticipated to become part of the Department’s ongoing operating expenses.
Staff requests Board approval for a contract and purchase order in an amount not to exceed $2,000,000, providing limited flexibility during final contracting and implementation.
Separate from the vendor contract, the Department anticipates approximately $633,360 in continued project management costs. Assuming the maximum permitted annual licensing increases, total estimated Phase II expenditures are approximately $2,617,235, compared with the $3,915,360 appropriated by the 89th Legislature-approximately $1.3 million below the amount appropriated.
SUMMARY
Staff requests Board approval to enter into a contract and issue a purchase order in an amount not to exceed $2,000,000 for Phase II of the Multifamily Management System, as required by Tex. Gov’t Code §2261.254.
The proposed contract follows a competitive procurement in which the Department received nine responses and selected a pre-configured SaaS solution designed specifically for affordable housing program administration. Phase II represents a shift from continued custom development to implementation and configuration of an established platform, which is expected to provide improved functionality and user experience, faster implementation, and a more sustainable long-term technology and cost structure.
The maximum anticipated vendor contract is approximately $1.984 million, assuming the maximum permitted annual licensing increases. Including separate project management costs, total anticipated Phase II expenditures are approximately $2.617 million of the $3.915 million appropriated by the 89th Legislature for the 2026-2027 biennium.
Staff anticipates implementation during the first half of 2027.