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Presentation, discussion, and possible action regarding a waiver of 10 TAC ?13.8(b)(4) of the 2022 Multifamily Direct Loan rule for Rio Manor
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RECOMMENDED ACTION
recommendation
WHEREAS, Rio Manor was previously approved for a $1,257,000 loan of HOME funds which is structured as fully repayable with an interest rate of 0.50%;
WHEREAS, the Department is in the process of closing that loan, and the borrower has requested that the Department subordinate its loan to an $8,645,000 unsecured, non-amortizing bridge loan from Wells Fargo Bank, NA;
WHEREAS, 10 TAC ?13.8(b)(4) may prohibit the Department's loan from subordinating to non-amortizing loans during the construction period, and therefore, the closing of the loan cannot proceed as requested without either a waiver of this rule, or a determination from the Board that the proposed financing structure complies with the rule; and
WHEREAS, staff is unable to determine that compelling reason exists for a waiver, and the ability to have a waiver is not allowed per the language in 10 TAC ?13.1 without amending the Department's One Year Action Plan; however, does believe that the proposed financing structure could be read in a manner to comply with the existing rule;
NOW, therefore, it is hereby
RESOLVED, that the waiver for Rio Manor is hereby denied, and instead, the Board determines that the proposed financial structure complies with 10 TAC ?13.8(b)(4) if the Wells Fargo loan is ahead of the Department's loan in payment during the Development Period only, but in no case more than four years from the Contract Execution Date .
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BACKGROUND
Rio Manor has previously been approved for a $1,257,000 loan of HOME funds for the reconstruction of 60 units in Del Rio, Val Verde County. The loan is fully repayable at 0.50% interest. The Department is in the process of closing that loan, and the borrower has requested that the Department subordinate its loan to an $8,645,000 unsecured, non-amortizing bridge loan ...
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