Presentation, discussion, and possible action on Resolution No. 24-023 approving Assignment Agreements relating to Private Activity Bond (PAB) Volume Cap Authority, and containing other provisions relating to the subject
RECOMMENDED ACTION
Adopt attached resolution.
BACKGROUND
Chapter 394 of the Local Government Code provides for the establishment of local housing finance corporations (HFCs) for, among other things, the issuance of single family mortgage revenue bonds (SFMRBs) or mortgage credit certificates (MCCs). Federal tax law limits issuance of SFMRBs or MCCs through the allocation of Private Activity Bond (PAB) volume cap. Chapter 1372 of the Texas Government Code (the Allocation Act) sets out the rules for allocation of volume cap in Texas.
For 2024, $1,229,664,332 in volume cap is available for Mortgage Revenue bonds (MRB) or Single Family programs. Approximately 33% is set-aside for TDHCA, 10% is set aside for the Texas State Affordable Housing Corporation (TSAHC), leaving approximately 57% of the single family volume cap available for use by local Housing Finance Corporations (HFCs) for the purposes of issuing SFMRBs or MCCs. On August 6, any unreserved set asides collapse into a single family pool on August 7. On August 15, those funds are then made available to the Department, TSAHC, and HFCs for reservation on a first-come, first-served basis.
HFCs were once very active in financing single family homeownership for low and moderate income homebuyers. However, in recent years, it has been difficult for HFCs to successfully issue SFMRBs or to implement MCC programs due to the combination of the up-front investment, interest rate risk, administrative costs, and other factors. As such, for several years now, the single family volume cap set-aside for HFCs has been largely unreserved.
Pursuant to Section 394.032(e) of the Local Government Code, an HFC can assign its volume cap to the Department ". . . to act on its behalf in the financing...
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