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Presentation, discussion, and possible action on recommendation to adopt an Agreed Final Order assessing an administrative penalty relating to Walnut Creek (HTC 00024T, HTC 18420, CMTS 59), and Forest Creek f/k/a Ware Meadows, (HTC 22422, CMTS 5861)
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RECOMMENDED ACTION
recommendation
WHEREAS, Walnut Creek (HTC 00024T, HTC 18420, CMTS 59), owned by LIH Walnut Creek Austin LP, and Forest Creek f/k/a Ware Meadows (HTC 22422, CMTS 5861), owned by LIH Forest Creek Preservation, LP, had uncorrected compliance findings relating to the applicable land use restriction agreements and the associated statutory and rule requirements;
WHEREAS, TDHCA identified findings of noncompliance during its regularly scheduled 2024 National Standards for the Physical Inspection of Real Estate (NSPIRE) inspection at Walnut Creek, and referred that noncompliance for an administrative penalty when it was not timely corrected;
WHEREAS, the referred NSPIRE noncompliance was fully resolved on July 28, 2025;
WHEREAS, TDHCA identified findings of noncompliance during its regularly scheduled 2024 file monitoring review at Forest Creek, and referred that noncompliance for an administrative penalty when it was not timely corrected;
WHEREAS, the referred file monitoring noncompliance was fully resolved on May 15, 2025;
WHEREAS, an Enforcement Committee informal conference was held on June 17, 2025, and Owner agreed, subject to Board approval, to enter into an Agreed Final Order assessing an administrative penalty of $1,500.00 for Walnut Creek and $2,000.00 for Forest Creek; and
WHEREAS, staff has based its recommendations for an Agreed Final Order on the Department’s rules for administrative penalties and an assessment of each and all of the statutory factors to be considered in assessing such penalties, applied specifically to the facts and circumstances present in this case.
NOW, therefore, it is hereby
RESOLVED, that an Agreed Final Order assessing an administrative penalty of $1,500.00 for Walnut Creek and $2,000.00 for Forest Creek, substantially in the form presented at this meeting, and authorizing any non-substantive technical corrections, is hereby adopted as the order of this Board.
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BACKGROUND
PROPERTY INFORMATION: Walnut Creek received a 2000 4% HTC award and a 2018 4% HTC award, both for the rehabilitation of 98 units in Austin, Travis County, with all units restricted at 50% AMI. There are nine buildings. The 2018 HTC LURA was effective in 2023. The 15-year federal HTC Compliance Period expires December 31, 2033, but the state HTC Extended Use Period runs 30 years, and is set to terminate on December 31, 2048.
Forest Creek is a 2022 4% HTC award for the rehabilitation of 104 units in Longview, Gregg County, with 16 of those units restricted at 30% AMI and 88 of those units restricted at 60% AMI. There are eight buildings. The HTC LURA was effective in 2023. The 15-year federal HTC Compliance Period expires December 31, 2038, but the state HTC Extended Use Period runs 30 years, and is set to terminate on December 31, 2053.
OWNERSHIP AND PROPERTY MANAGEMENT: Walnut Creek is owned by LIH Walnut Creek Austin LP, which is controlled by Jacob Levy, the founding partner of LEDG Capital. It purchased the development on November 2, 2018. CMTS lists Jacob Levy as the primary contact for the Owner. Rainey Property Management is the property manager, and is unaffiliated with ownership.
Forest Creek is owned by LIH Forest Creek Preservation, LP. It purchased the development on November 30, 2021. Its general partner is controlled by Commonwealth Multifamily Housing Corporation, a Pennsylvania 501c3 nonprofit corporation, which is controlled by Neighborhood Development Collaborative, a District of Columbia 501c3 nonprofit corporation. Both entities are controlled by David P. Cole. Its limited partner, which has primary control authority, is controlled by LEDG Capital, LLC, a Nevada limited liability company controlled by Jacob Levy and Dmitry Gourkine. CMTS lists Jacob Levy as the primary contact for the Owner. WinnResidential is the property management company, and is unaffiliated with ownership.
REFERRED VIOLATIONS SUBJECT TO ADMINISTRATIVE PENALTIES:
1. Walnut Creek: National Standards for the Physical Inspection of Real Estate (NSPIRE).
TDHCA conducted a physical inspection on November 5, 2024, and the Compliance Division set a corrective action deadline of February 5, 2025. The property submitted a timely response, but it was incomplete, and Compliance issued a letter on October 4, 2024, setting a further 10-day cure deadline of February 16, 2025. The owner requested a good cause extension, which Compliance granted through April 6, 2025. Most noncompliance was timely corrected, but twelve items remained unresolved and were referred to the Enforcement Committee (the Committee) on April 7, 2025. Further corrective documentation was submitted on May 15, 2025, after intervention by the Committee, resolving all noncompliance except for broken main and secondary vehicle perimeter gates. At the time of the informal conference on June 17, 2025, owner had contracted for the required gate repairs in March, but they were not yet complete. Final evidence of correction was submitted on July 28, 2025. A complete list of referred noncompliance is attached to the Agreed Final Order.
2. Forest Creek: File Monitoring. TDHCA conducted a file monitoring review on December 11, 2024, and the Compliance Division set a corrective action deadline of March 16, 2025. Owner failed to reply, and the following noncompliance was referred to the Committee on April 17, 2025: failure to provide evidence of eight points worth of supportive services, failure to provide the Tenant Rights and Resources Guide to 11 households, and failure to incorporate required lease language for 20 households. Complete evidence of correction was submitted on May 15, 20256, after intervention by the Committee, however, the Tenant Rights and Resources Guide Acknowledgments and lease documents were signed earlier. The majority of lease amendments included in that submission were dated between December 2024 and January 2025, and the Tenant Rights and Resources Guide Acknowledgments were all dated between December 2024 and January 2025.
FACTORS CONSIDERED TO DETERMINE ADMINISTRATIVE PENALTY: The Committee analyzed the required statutory factors for determining an appropriate administrative penalty as follows:
1. The seriousness, extent, and gravity of the violations, and whether a hazard is posed to the health, safety, or economic welfare of the public: For Walnut Creek, the security gate noncompliance is a serious safety concern, and the owner received application points for agreeing to provide full perimeter fencing and controlled gate access. However, the property does have onsite security at night from 8:00pm until 6:00am, mitigating the seriousness of the security concern for broken gates. The remainder of the referred violations all related to unit 126, which had been vacant since May 30, 2024. Most of the referred noncompliance for unit 126 was cosmetic, such as interior holes and damaged cabinets caused by the tenant. Per the owner, the unit required extensive repairs totaling $40,000.00 due to damage caused by the tenant, along with delays and expenses for asbestos abatement.
For Forest Creek, most of the referred noncompliance related to missing language in leases, which is a less serious violation, and the submitted corrections were signed between December 2024 and January 2025, during the original corrective action period. Supportive services are also a less serious violation, although the Committee noted that some of the selected services do have economic benefits to tenants, such as the notary public and food pantry services.
2. History of previous violations: LEDG previously signed an Agreed Final Order for final construction inspection noncompliance at Wurzbach Manor Apartments (HTC 19413 / CMTS 3277) in 2023. LEDG complied with the terms of the order by correcting the noncompliance as required, and paying an administrative penalty of $2,500.00.
Commonwealth previously jointly signed an Agreed Final Order for file monitoring noncompliance at Oso Bay (HTC 20620 / Bond 20620B / CMTS 5670), final construction inspection noncompliance at La Merced Homes (HTC 21424 / CMTS 5733), final construction inspection noncompliance at El Rosario Homes (HTC 21423 / CMTS 5732), and Uniform Physical Condition Standards (UPCS) noncompliance at Las Palmas Apartments (HTC 21438 / 2727) in 2024. All noncompliance was corrected at the time that the order was signed, and Commonwealth complied with the terms of the order by paying an administrative penalty of $4,000.00.
Two out of 17 additional actively monitored TDHCA properties controlled by LEDG have been referred for final construction inspection noncompliance and Uniform Physical Condition Standards (UPCS) noncompliance during the past three years, but were resolved informally. No additional actively monitored properties controlled by Commonwealth have been referred during the past three years.
3. Efforts made to correct the violations: Only the security gate noncompliance for Walnut Creek remained unresolved at the time of the informal conference. All other referred noncompliance for Walnut Creek and Forest Creek was resolved as of May 15, 2025.
The Committee noted that owner should have communicated better for Walnut Creek since Compliance would have granted an additional good cause extension if the owner had submitted documentation supporting their need for more time to repair the perimeter gates. Owner did not submit a response within the corrective action period for the file monitoring review for Forest Creek, but did submit complete corrections upon intervention by the Committee, and most of those corrections were signed in December 2024 and January 2025. It appears that communication with TDHCA is the primary problem for both referrals.
4. Any other matters that justice may require: Walnut Creek was built in 1972, and rehabilitated in 2000 and 2018. The NSPIRE inspection score was 86 out of 100. Owner states that the broken perimeter gates were damaged by residents running into the gate; the noncompliance was not due to maintenance issues. The cost to repair both gates was approximately $30,000.00, and was contracted in March, but not yet complete at the time of the informal conference. The cost to repair tenant damage and perform asbestos remediation in unit 126 was approximately $40,000.00, and the overall repair timeline for the unit was long due to remediation permitting and inspection requirements. All referred NSPIRE repairs are now complete.
Owner did not respond to correct any of the 2024 file monitoring noncompliance until after the development was referred for an administrative penalty, suggesting that their internal processes were not working for this development to ensure timely TDHCA responses. The onsite manager has been replaced and LEDG is working more closely with the property management company, with weekly calls to discuss findings of noncompliance, and improvements in tracking and monitoring processes to prevent recurrence. The Committee also identified a disconnect between the general partner (Commonwealth) and the limited partner (LEDG); Commonwealth has been deferring to LEDG, with no clear supervisory structure or defined oversight by the general partner. Both Commonwealth and LEDG appear to be taking this matter seriously, with senior staff and executives for both organizations attending the informal conference.
5. Amount necessary to deter future violations: The referral for Walnut Creek was less serious and could have been handled as a good cause extension at the Compliance Division’s level if the owner had communicated better about complications such as asbestos remediation and backordered gate parts. LEDG and Commonwealth have each previously signed an Agreed Final Order, and the Committee was concerned about weak responses to questions regarding interactions and oversight between Commonwealth and LEDG for Forest Creek. The Committee also noted that the noncompliance for Forest Creek was less serious and does not support a large administrative penalty, but there was a period during which there were no supportive services provided despite receiving points at application. All referred noncompliance is now resolved. In light of the above factors, the Committee recommends an Agreed Final Order assessing administrative penalties of $1,500.00 for Walnut Creek and $2,000.00 for Forest Creek. There is no recommended forgivable or probated portion to the administrative penalty.
RECOMMENDATION: Accordingly, after consideration of all appropriate factors, the Enforcement Committee and Executive Director recommend an Agreed Final Order for an administrative penalty in the amount of $1,500.00 against LIH Walnut Creek Austin LP and $2,000.00 against LIH Forest Creek Preservation, LP.