title
Presentation, discussion and possible action regarding a waiver of 10 TAC §11.101(b)(1)(A)(vii) of the Qualified Allocation Plan (QAP) relating to the percentage of efficiency and/or one-bedroom units for Bridge at St. John.
end
RECOMMENDED ACTION
recommendation
WHEREAS, the Department received a request for a waiver relating to Bridge at St. John, a proposed 4% Housing Tax Credit application that has not yet been submitted to the Department;
WHEREAS, the unit mix for Bridge at St. John includes more than 35% efficiency/one-bedroom units, which exceeds the threshold allowed in 10 TAC §11.101(b)(1)(A)(vii) of the 2025 QAP, thus rendering the development ineligible; and
WHEREAS, staff has reviewed the request and specific factors related to the proposed development as further detailed herein and is neutral in its recommendation to the Board;
NOW, therefore, it is hereby
RESOLVED, that the Board may make a determination regarding a waiver of §11.101(b)(1)(A)(vii) of the 2025 QAP relating to the allowable percentage of efficiency and/or one-bedroom units for Bridge at St. John.
end
BACKGROUND
General Information: Bridge at St. John is to be located in Austin, Travis County, and involves the new construction of 201 LIHTC units that will serve the general population. A Certificate of Reservation from the Bond Review Board has not been issued or applied for yet, but is expected sometime in 2026. The applicant has indicated that the development will include a mix of units with rents restricted between 50% and 80% Area Median Income (AMI). More specifically, 104 units will be rent and income restricted at 50% of AMI, 45 units will be rent and income restricted at 60% of AMI, 20 units will be rent and income restricted at 70% of AMI, and 32 units will be rent and income restricted at 80% of AMI.
Waiver Request: Pursuant to §11.101(b)(1)(A)(vii) of the QAP, “any New Construction, Reconstruction, or Adaptive Reuse Development proposing more than 35% efficiency and/or one-Bedroom Units will be considered ineligible. This requirement will not apply to Elderly or Supportive Housing Developments.”
While a bond reservation has not been issued, and a tax credit application has not been submitted for the proposed development, the potential applicant has decided to request a waiver of §11.101(b)(1)(A)(vii) in advance of application submission. The unit mix for Bridge at St. John consists of 36 efficiency units, 107 one-bedroom units, 43 two-bedroom units, and 15 three-bedroom units. The number of efficiency and one-bedroom units comprises 71.14% of the total unit count. The applicant has requested a waiver of the aforementioned rule, so that the development may be eligible without necessitating a change to the currently proposed unit mix.
According to the waiver request submitted, the development was originally designed by an entity unrelated to the applicant, intended to include 526 total units of workforce housing, and utilize a financing structure that did not include 4% LIHTC. Because LIHTC were not part of the originally contemplated financing structure, the development was not designed with the requirements of the QAP in mind. However, due to financial constraints and increased construction costs, the configuration and financing structure of the development are being adjusted to help with financial feasibility. The number of workforce units is being reduced to 325, and a separate portion of the development will utilize the 4% tax credit program to construct 201 LIHTC units. This means that the portion of the development that will utilize 4% HTC must adhere to the requirements of the 2025 QAP. The current unit configuration does not adhere to §11.101(b)(1)(A)(vii) of the 2025 QAP, and, therefore, a waiver is necessary.
According to the applicant, the design plans that include the currently proposed unit mix have already been submitted to the City of Austin, and have progressed through a significant portion of the permitting process. The applicant claims that redesigning the development plans at this point to include a unit mix that adheres to the requirements of the QAP would greatly impact the expected timeline for project completion by adding three months to the redesign the construction plans, followed by an additional 12 months to complete the permitting process with the City of Austin. Additionally, the applicant notes that the current unit mix was supported by a market study, which will be included with the forthcoming tax credit application.
Per §11.207 of the QAP, a waiver request must establish that:
(1) “the need for the waiver is not within the control of the Applicant or is due to an overwhelming need.”
(2) “granting the waiver . . . serves the policies and purposes articulated in Tex. Gov’t Code §§ 2306.001, 2306.002, 2306.359, and 2306.6701, . . . than not granting the waiver.”
(3) The Board does not “waive any requirement contained in statute.”
Based on the aforementioned factors, the applicant contends that the need for a waiver was not within the control of the applicant because the Development was originally contemplated and designed without the intent to utilize Housing Tax Credits and the applicant was not part of the original design process. The unit mix was supported by a market study that identified the needs of the submarket and was approved by the City of Austin. Of the 526 total units proposed under the original structure, a total of 263 units would have been affordable serving households at a combination of 50% of AMI, 60% of AMI and 70% of AMI levels, while the remaining 263 units were at market rate. Under the new configuration/design, there will be a total of 295 affordable units between the LIHTC and workforce portions of the development. However, only the LIHTC portion, which represents 201 total units, will be covered by the prospective TDHCA LURA and restrict affordability for a minimum of 30 years.
The applicant further contends that granting the waiver better serves the purposes articulated in Tex. Gov’t Code §2306.001(2) by providing quality affordable housing to meet the needs of individuals and families and §2306.001(3) by contributing to the development of neighborhoods and communities. According to the applicant, while most of the units are efficiency/one-bedroom units, the average size exceeds the threshold provided in the QAP. The efficiency units are approximately 38 square feet larger, one-bedroom units 55 square feet larger, two bedrooms are 259 square feet larger, and the three bedrooms are approximately 330 square feet larger.
Staff is neutral in its recommendation to the Board regarding whether a waiver of §11.101(b)(1)(A)(vii) be granted.