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Presentation, discussion, and possible action regarding a Material Amendment to the Housing Tax Credit Application for The Manchester (HTC #19471)
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RECOMMENDED ACTION
recommendation
WHEREAS, The Manchester (the Development) received an award of 4% Housing Tax Credits (HTCs) in 2019 for the construction of 280 units of general housing in Austin, Travis County;
WHEREAS, TX Austin Manor, LP (the Development Owner or Owner) has applied for an allocation of tax-exempt volume cap under Priority 1b in 2025 and requests approval to change the rent and income restrictions for the Development by replacing 43 (15.36%) of the units at 60% of the Area Median Income (AMI) with 30% AMI units as a result of a supplemental bond allocation, which leaves 237 units at 60% AMI;
WHEREAS, staff considered this a material modification requiring approval from the Board, and the Owner has complied with the amendment requirements under 10 TAC §10.405(a);
WHEREAS, if the Board approves the requested amendment, the amount of tax credits currently forecasted by the Department (based on total costs and eligible basis not yet fully reviewed by a CPA) will be 68.90% ($1,544,114) greater than the HTC amount in the Determination Notice, which exceeds the 20% threshold for administrative approval by the Executive Director or designee and requires Board approval under 10 TAC §10.401(d); and
WHEREAS, the requested change does not negatively affect the Development, impact the viability of the transaction, or impact the selection of the application for an award;
NOW, therefore, it is hereby
RESOLVED, that the requested material amendment for The Manchester is approved as presented at this meeting, and the Executive Director and his designees are each authorized, directed, and empowered to take all necessary action to effectuate the foregoing; and
FURTHER RESOLVED, that following staff’s review of the cost certification, if the amount of tax credits determined to be necessary as required by §42(m)(2)(D) exceeds 120% of the amount of tax credits reflected in the Determination Notice as forecasted at the time of this amendment, an increase not to exceed 180% is hereby approved under 10 TAC §10.401(d), and will require no further Board action but will require the Owner to pay the applicable fee under 10 TAC §11.901(8).
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BACKGROUND
The Manchester formerly known as Austin Manor Apartment Homes was approved for a 4% HTC award in 2019 for the new construction of 280 units of general multifamily housing in Austin, Travis County. The Development was originally underwritten and approved based on all 280 units restricted at 60% AMI.
In a letter dated January 8, 2025, James R. (Bill) Fisher, representative for the Owner, requested approval for a material amendment to the Application. The request is to revise the set-asides of 15% of the units to those earning up to 30% AMI. The Owner is in the process of obtaining an additional bond allocation, which is now requiring 15% of the units to be targeted to those earning up to 30% AMI. The Owner states that the amendment is in the best interest of the state, the residents, and the Development. Due to a demand for lower income targeted units, this change will enhance overall occupancy and reduce turnover. The proposed amendment identifies 43 units (15.36%) at 30% AMI and 237 units at 60% AMI.
The Owner has provided a letter from IBC Bank, the lender for the Development, and from 42 Equity Partners, LLC, the equity provider, acknowledging the change to the set-asides.
The Development was re-underwritten based on the proposed set-asides and revised financial information submitted. The results of the analysis indicate that the Development remains feasible, but total development cost increased approximately $24.4 million (42.32%). In addition, as a result of the passage of the Consolidated Appropriations Act of 2020, the Development is expected to be eligible for the fixed 4% tax credit percentage upon issuance of a supplemental bond allocation from the Texas Bond Review Board. With these changes, the current analysis supports a recommended annual HTC amount of $3,785,248, which is an increase of $1,544,114 (68.90%) from the original credit award of $2,241,134 in the Determination Notice. Provided the full amount of projected credits is justified following CPA review of total costs and staff’s acceptance of the cost certification package, the credits requested will exceed the 20% increase threshold requiring Board approval under 10 TAC §10.401(d).
Staff recommends approval of the requested material amendment. Staff further recommends that, following staff’s review and approval of the cost certification, if the amount of tax credits determined to be necessary as required by §42(m)(2)(D) exceeds 120% of the amount of tax credits reflected in the Determination Notice under 10 TAC §10.401(d) as forecasted at the time of this amendment, that the Board approve such request not to exceed 180% of the HTC amount in the Determination Notice as part of this amendment, subject to the payment of the applicable fee under 10 TAC §11.901(8).