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Presentation, discussion, and possible action on approval of a loan for Stella Haven
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RECOMMENDED ACTION
recommendation
WHEREAS, the above listed development was awarded 9% housing tax credits during the 2024 competitive Application round;
WHEREAS, the Developer applied for additional funds under the Department’s 2025-1 National Housing Trust Fund (NHTF) Notice of Funding Availability;
WHEREAS, the Department is now recommending approval of a loan in the amount of $4,800,000, with proposed loan terms and details concerning the Development’s financials outlined below;
NOW, therefore, it is hereby
RESOLVED, that the that loan of $4,000,000 of NHTF to Stella Haven is approved, subject to conditions that may be applicable as found in the Real Estate Analysis Underwriting Report attached to this Board Action Request, any HUD required environmental conditions, and the conditions as outlined herein.
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BACKGROUND
Development Information: Stella Haven is to be located in Denton, Denton County, and proposes the new construction of 88 units that will serve the general population. The Development will serve households with incomes at or below 30% to 80% of Area Median Family Income (AMFI).
The Development was initially proposed to have 12 30% AMFI units in its 2024 9% housing tax credit Application. As a result of this loan and a related amendment that is also being presented for approval at this meeting, 9 additional units will be converted to 30% AMFI. These deeply affordable units are critically needed and difficult to produce.
Financial Information: The Department’s $4,800,000 NHTF loan is to be structured as fully repayable at 2.00% interest, and is in second-lien position.
The Development was initially awarded $2,000,000 in housing tax credits in 2024. Since the last underwriting, total development costs have increased by $932k, bringing the current total development cost to approximately $29.9m. Credit pricing has remained strong at $0.91, and the interest rate on the permanent loan has decreased from 7.00% to 6.75%. The Department’s NHTF loan will replace $1.5m of the permanent loan, and will fully replace a previously-contemplated $3.5m loan from the Local Initiatives Support Corporation. Annual debt service will be $572,643.
The funds from this loan are sourced from the Department’s 2023 NHTF grant, which has a federal commitment deadline of August 3, 2025. Notwithstanding any other deadline established by rule, the Borrower must submit all required due diligence and provide timely comments on the draft NHTF Contract to ensure execution of the Contract by both parties no later than July 30, 2025. Failure to meet this deadline may result in termination of the award, which will not be appealable to the Board of Directors if the Department no longer has access to the 2023 NHTF funds. The Borrower may also be subject to penalties under 10 TAC §13.11(b).