Travis County Commssioners Court
May 6, 2003
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Housing Finance Corporation
Let's call to order the Travis County housing finance corporation. First item is to take appropriate action to approve resolution approving the transfer of the tanglewood apartments to berwind property group, incorporated and an agreement and assumption agreement related there to.
>> yes. There is a request made by the berwind property group. They are under contract to purchase the tanglewood apartments, and i've passed out just revised resolution in the backup. There were blanks that we had not gotten information for, so this was the same resolution with the blanks completed. This was a deal that was originally financed in 1985 and has been continuously under the low and moderate restrictions under -- since that time. As you know as you know when one of these properties transfers it requires the consent of the corporation. This berwind property group is a fairly experienced manager and operator of apartment buildings, and we will be receiving before this is final and before the consent is delivered, we will be receiving an opinion of counsel from their counsel, but the deed recentral Texases are enforceable and that they will comply with the low and moderate income restrictions.
>> so as far as you know this is a good thing?
>> yes.
>> reasonable and all?
>> my understanding from mr. Davis is that this property, while at one point did have some compliance problems over the last few years, it's now been in compliance.
>> yes, it has.
>> these blanks that are in the certificate for resolution, when are they filled in, like on the first page?
>> well, see, the first blank would be filled in with none because there's no one absent. And the second set of blanks is just a vote. So however you vote, that's how we'll fill it in.
>> let's see how we're going to vote. I'll approve it.
>> second.
>> any more discussion? All in favor that passes by unanimous vote.
>> thank you.
>> number 2, consider results of compliance audit $9.8 million multi-family housing revenue bonds, series 1991, aspen hills apartment project, and take appropriate action.
>> good afternoon, I知 harvey Davis, manager for the corporation. The board last met in February regarding aspen hills and at that time the board approved sending a 60-day cure letter because the apartment was not meeting the low income tenant leasing requirement. After the 60-day period expires, I did go out to the compleks to see if they had regained compliance. They had not regained compliance. Their requirements are to leave 69 -- lease 69 units to low income tenants. They had about 61 units leased to low income tenants. The reason that they told me that they had not been able to regain compliance was because the market was so poor that they did not have additional tenants to lease to owe. Since that time they sent me an e-mail telling me they had regained compliance, that they had 69 units leased to low income tenants and as a courtesy to them I did go back out to the complex and examined -- i've examined all low income tenant files, all 69, and can now inform the board that they have regained compliance and they do have 69 low income tenants. I was recommending that the board request that the trustee declare the event a default because the deficiency had not been cured, and so I -- I have -- because the deficiency has been cured, I do change my recommendation, but I do recommend that the -- that we reform the trustee of the problems that we've had with this apartment complex. I did discuss -- I have called the trustee, who is bank one, and talked to the trust officer that is responsible for this apartment complex, and so they are aware of it. But I do recommend that the board have our attorney, cliff, write a letter to the trustee with some history regarding this compliance issue and that this apartment unit does require close monitoring in the future. Representatives of the owners, amco, are here in the audience and are available for any questions from the board.
>> let me ask a question.
>> yes, sir.
>> whenever these procedures are set up in order that people have to comply with the special funding, which is basically what this is about, are there any exceptions given due to economic times. I mean, is there any language in the covenants or whatever that would allow for there to be any variance?
>> no, there's not any exception language because this language is driven directly by the internal revenue code and it basically tracks what the internal revenue code says. It does say that they either need to be occupied or held open for occupancy by low income tenants. And I can't remember -- I don't have this document in front of me, but if that's the case, then the apartment owner can just leave units vacant. As they get low income tenants in, they can put low income tenants into the vacant units. So that's another way that they can comply without actually having low income occupancy in a lot of these --
>> what happens, I would suspect that whenever you go out and you check these things that what you might find is somebody that was not low income at one time all of a sudden have lost their jobs and they probably -- you know, if that's what happens when you go out and miraculously they say we found eight or nine people they can submit to you about -- I don't know how you qualify the lower income or whatever.
>> my understanding in this situation is these are all new tenants that they got to come in and lease units. I think the market improved a little bit and then they actually went on a concerted recruiting effort to find tenants that qualified as low income because of the seriousness of this noncompliance with the low income tenant requirements.
>> any comments? Not at this time? If you see the -- if we send a letter to the trustee, I suggest we send it to the property owners and managers so they would know.
>> I would copy them on it also.
>> this is a real important responsibility, and in my view it is up to the federal government and the residents of Travis County. For a long time we did not do this, and when tifs called on our attention, we basically committed to doing a better job and thanks to harvey, since then have been doing it and that's been over the last six to seven years.
>> we started these audits in 1998.
>> five and a half years. [ laughter ] I knew that -- I move that we accept staff's recommendation to send a letter to the owners and managers of this property and in a separate letter that we thank them for basically cooperating with us in this matter, and in the future should they find themselves short, as he called to our attention, if there's something we can do to help, we may be able to do it.
>> second.
>> we may have some ideas. Seconded by director Davis. Any more discussion?
>> one thing.
>> yes, director?
>> one thing is if they need to prove compliance if those units are left vacant, reserved for low income occupancy, does that also mean that they are in compliance even though they're not filled, but they just are made available or they are available?
>> the status of particular units that are vacant is what was the status of the prior tenant. So if the prior tenant --
>> okay. That's a different question. You don't have to go no farther. I don't want anybody to think otherwise. Thank you.
>> all in favor? Passes by unanimous vote. Thank you very much.
>> yes. Sorry about that, y'all. Some items that we had to work on today. Number 3 is to consider and take appropriate action on the policy to invoice apartment owners for staff time to complete compliance audits.
>> okay. Like I said, we've been doing these audits since July of 1998, and we have historically have passed on the -- our legal fees that have related to these audits as in-- have invoiced the apartment owners for those out-of-pocket expenses of the corporation. And this agenda item is to present for the board's consideration the idea of charging the apartment owners for staff time to these audits. If the board approves doing this, the staff would keep the timesheet of how much time we spent on each audit. We have that well documented. And sent an invoice based on an hourly rate that would be compute the for the employee's hourly rate, plus benefits, plus indirect costs. I think am I right if I said the indirect costs approved on December 26th, 2001, at that time I didn't realize that was updated each year, so it would be the current indirect cost rate for the county. I think that is a rate that's approved -- that is used for grant reimbursement process. So it would be this hourly rate and then we would envoice the property owners for our time in doing these audits. We have two kind of categories of apartments. One is the earlier bonds in which they paid one basis point closing fee, but there is no annual fee. And then in our current bonds that we've issued for multi-family for apartment complexes, they paid a 50-basis point closing fee, plus 10-basis point annual fee. And so there could be an argument made that since they're paying an annual fee, that should cover the staff time for the -- for doing compliance audits. That would be a rationale for not charging for the compliance audits. What I have recommended is that for the apartment complexes that do not pay the annual fee, we charge them for the staff audits from the beginning to the end. And for the apartment complexes that pay the annual fee that we would not charge for the initial visit on the audit, but if there were issues that required additional staff time due to their negligence or there were issues that we had to deal with and it was ongoing, then we would charge the apartment complexes for the additional time spent. I also want to make it clear that the bond documents do allow the issuer, the housing finance corporation, to charge for these fees.
>> what authority do we have to put such a requirement into the loan documents?
>> well, the documents are all written so that all of the issuer's reasonable costs and expenses are to be paid by the various borrowers and that's in every one of our bond documents. So --
>> what authority did we have to put that in every one of our loan documents?
>> it's just a matter of negotiation and a matter of contract, but that's pretty standard language under all these deals that both the interim trustee and all of the parties that are not, I guess, making a profit off the apartment complex, get reimbursed for all of their costs involved in the complex. Maybe I知 not understanding your question.
>> I understand we've always done it, but we ought to be able to trace any fee authority to a specific legal authority. Do you understand what I知 saying? In a lot of cases we've been charging fees that when we scrutinized later on had a hard time coming up with specific authority. That's why I asked the question. Now, it may be that we can contract for this in exchange for whatever benefits you get, you agree to pay certain fees, including bonding fee, etcetera. But it seems to me whatever we rely on we ought to know.
>> I can send you a memo. There is an authority in the housing corporation financing act -- there is a statutory question for housing finance corporation to charge those fees.
>> does that make sense? Let's just confirm that and send it to us. The recommendation was if you pay an annual fee for the initial visit, you pay this fee. But we run into the issues that require additional time and then we bill you according to the hourly rate that you describe in your memo.
>> yes, sir, that's exactly right.
>> if you did not pay an annual fee, then for the initial bill that we bill you, the legal expenses. And if we have not been doing this historically, how do the apartment owners and managers know about this change?
>> well, I will inform them when we initiate the audit that there will be a fee, an audit fee involved in the process.
>> will it be simple for us to put together a form letter that is sufficient and we send it to those who have the housing projects under our jurisdiction? Do you see what I知 saying? I mean, I think if I got notice and you show up 90 days later, I would feel better than if you call me at five one day and say I知 i'm coming out tomorrow morning and by the way, there will be a fee. [ laughter ]
>> I do that all the time.
>> the advance notice.
>> it makes your welcome a whole lot warmer if you do that.
>> i'll do that.
>> it's the same letter, right? And what are we talking about, 1516? -- 15, 16.
>> apartments? Yes.
>> that would be my recommendation that we follow staff's recommendation, but we also send out notice almost immediately of what we plan to start doing and explain why basically. I would think that -- is there any way to approximate the expense?
>> I don't think so. If we go out and everything is just squeaky clean, it will be a nominal expense, no expense if you pay the annual fee. But it could run into quite a process. As you know, we've had several situations that required many follow-up visits and several agenda items and lots of time.
>> I would say that and say a detailed statement will be sent with invoice. Because I would think if I received this, my first question would be, well, how much are they going to charge me? And if we tried to describe that up front, I think I would feel better.
>> plus there are things they could be doing in advance to make sure your visit is quickly wrapped up and then that's to their advantage to try to make that easier as opposed if they had only known they could have made the second visit not necessary.
>> and I would say this, if an apartment complex is squeaky clean that an audit should be completed in one afternoon. Certainly the site visit part of it.
>> okay.
>> we have a motion. I don't think we have a second.
>> i'll second it.
>> okay. All in favor. That passes by unanimous vote. Number 4 is to take appropriate action to approve an invoice from wells fargo corporate trust services for trustee services on the Travis County housing finance corporation single-family mortgage revenue notes 2001-1.
>> the amount of this invoice is $1,800. If the corporation approved and paid a similar invoice last year to wells fargo for $1,800. This is -- because the note program is a three-year program in which the corporation is aaccumulating funds for future single-family bond programs and not really the trustee services does have to be paid out of the corporation's funds.
>> we owe them money.
>> we owe them money.
>> for services provided.
>> right.
>> which is the second one. I guess we have one more coming next year.
>> no. This is paid in advance, and this is paid for the third year. The first year was paid when the bonds were closed.
>> okay. Any more discussion? Move approval.
>> second.
>> all in favor. That passes unanimously. I vote we adjourn the corporation meeting. All in favor? That passes unanimously also.
Last Modified: Wednesday, May 6, 2003 7:52 PM