Travis County Commssioners Court
November 18, 2003
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Housing Finance Corporation
Now let's call to order the Travis County housing finance corporation. 1. A. Public hearing concerning amendments to trust indenture and loan agreement related to multifamily housing revenue bonds (town vista apartments project) series 2002; and. B. Public hearing concerning amendments to trust indenture and loan agreement related to multifamily housing revenue bonds (woodway square apartments project) series 2003.
>> move that the public hearings be opened.
>> second.
>> all in favor? That passes by unanimous vote.
>> cliff blunt with thomp so co council to the corporation. I would like to state that notice of these public hearings was published in the american-statesman as required by the general revenue code approximately 14 days ago. Real briefly these are two amendments that have already been approved and when the final numbers were being represented to finish up the documentation, there was a technical tax issue that required this public hearing for tax purposes. But nothing has changed. These are very technical amendments to remove some of the capital appreciation or all of the capital appreciation bonds originally issued and make all of the bonds on both of these projects current interest bonds. All of the parties involved, the bond holder, the letter of credit provider, the trustee, all of the parties have approved this as conveyed to you all a few weeks ago, approximately a month ago when we had this item on for approval.
>> so specifically what are we amending now.
>> well, the amendments are to the trust indenture and to the loan agreement for the town vista and wood scare apartments, two types of bond issues, capital appreciation bonds and current interest bonds, these amendments remove the capital appreciation bonds. It was just the waiing accounting calculation of how the bonds paid off, the borrower will not see any difference in their payments and it will not ultimately end up changing how the bonds are paid off.
>> okay. Any down side that we should be concerned about as board members?
>> no, sir.
>> would anyone like to give testimony during this public hearing? During these two public hearings? First a public hearing regarding town vista apartments? Town vista apartments public hearing. Then the woodway square apartments project. Public hearing.
>> move public hearing be closed.
>> all in favor? That passes by unanimous vote. Now, item no. 2 is to consider and take appropriate action on request for a resolution approving the issuance of multifamily housing revenue bonds (ahf affordable housing portfolio) series 2003 in the amount of no more than $96,000,000 for the acquisition of five apartment properties in Travis County, Texas by theop, llc, an affiliate of american housing foundation, a 501(c)(3) nonprofit corporation. We've had this on the agenda a few times before. There was a public hearing a few weeks ago, an item on the week before the public hearing, there's been a considerable amount of discussion about this project, I'm not sure if you all have any additional questions or want to discuss --
>> that's what I was kind of thinking whether we wanted to review and go back through everything that has been said before. And I'm not interested in doing that. And i've given this a lot of consideration. I have looked at the proposals that have been turned in as a result of the public hearing. And I -- I have not changed my mind. I would move that we reject the request.
>> I second that.
>> I would appreciate -- I appreciate the fact that there's a motion on the table. But I would like for the record because the deal is not what it was the last time we looked at it. And I would like for the record for it to be laid out so that we very clearly understand what it is that we are rejecting or not.
>> okay. That's a motion and second to reject. We are here for discussion. Part of the discussion is that you do have a new proposal or you have a written summary of various aspects of revisions to the proposal?
>> yes, sir. You have been kind enough did over the past several weeks to give us time to express your concerns to us, we have tried to meet those concerns. By laying out a rare concise proposal -- a rather concise proposal of what we are offering in the way of public benefits, at the closing of the bonds we have offered to pay $500,000 in trust with the Travis County Commissioners court to provide scholarships for individuals and families earning 60% or less of the area median income for first generation college students. In addition, with meetings with the Texas education agency and with the chief financial officer of the Austin independent school district, larry thromb, we have agreed to offset the -- the loss to the Austin independent school district by placing $500,000 in payment to Austin independent school district for loss of funds. Additionally, because del valle would lose money the first year until robinhood came in and they were reimbursed, we agreed at closing to pay $100,000 to the del valle independent school district for loss of revenue. In answer to the concerns that you have -- that you have expressed in relationship to fairway village, we have agreed at closing to escrow $400,000 into a repair reserve to make certain that all repairs that need to be made at fair way village are made. Additionally we will be having an issuance fee of 50 basis points of the principle amount of the obligations. On an annual basis we have agreed to pay the issuer $234,619 as issuer fees, $200,000 for residence services, $328,104 per year in rent reductions onset aside units. 377,953,000 for units to be set aside for emergency housing seniors on waiting list, units for domestic violence, police officers. An annual issue or administration fee of 10 basis points for the outstanding principle amount of the bonds which is approximately $86,897. And oversight fee of $38,875 and 50% of any positive cash flow from the properties which is estimated to be $76,139. In addition, we have agreed to place $500,000 with the Travis County Commissioners court for additional scholarships in excess of the first $500,000, the second 500,000 we would pay in over three years. We have also agreed to chair management at fairway village to walden management company. And in reviewing the benefit analysis with mr. Davis this morning, we agreed there needed to be adjustments from the ones mr. Davis previously furnished you. Mr. Davis has shed approximately $133,000. According to joe with the Texas education agency, the first year loss to Austin independent school district was $537,000 as opposed to $738,000. Also it wasn't reflected on mr. Davis' because he wasn't aware of the del valle $100,000. Based on that, the first year positive taxpayer benefit was $315,526. Over the 10 years that the bonds cannot be called, the benefit to Travis County is 7,278,003. Currently this morning we filed with the Travis County appraisal district for these properties to come off the tax rolls based on a taxable transaction if that's the court's discretion to send us that way. That will cause a loss of taxes in the amount of $7,882,341 over the 10 years. The loss of taxes and the loss of public benefit that will be lost by going -- it's taxable bonds is 15,475,870. Once again, I thank you for your input. I appreciate your concerns that you have expressed. We feel like we are a better organization because of the things that we have gone through the last three weeks. Thank you very much.
>> thank you. So you believe that you will go ahead and close the deal, with or without us.
>> yes, sir, I'm sorry we will.
>> what I would like to just throw in here is that I have tried to very carefully listen to what were the goals going into this deal of this Commissioners court and of the folks that came to visit with us. The number one problem that was expressed is the impact on the taxpayers, both to Travis County, city of Austin, aisd and del valle. And Austin community college. Related to aisd who I think is probably in the most severe financial crunch of anybody, the $500,000 is going to virtually cancel out the impact of them coming off the property tax rolls. The same thing for del valle. That was something that although they are not -- I don't believe they are in the property rich category, they still -- that is money and again the money coming forward there. Travis County will more than have the impact of this loss of tax base made up through fees to the corporation. And while a.c.c. Did not get any direct funds, it was a very small amount that they would lose every year, I certainly would think that the one million in scholarships are in part going to be spent at a facility that will enable a whole lot of young people to be able to go to that school. I met with interfaith and I appreciate the concerns they brought forward. Fayway village is not a part of this deal, in terms of that is not one of the properties that's being bought. But there was a way for us to leverage the very unfortunate situation that I think you all were in, which wasn't fair and it wound up coming through the back door through us to try to fix something that I think other should have fixed for you in terms of the issuers, but that's another thing. It was basically so what's going to happen here? We were able to leverage $400,000 to take care of the sewer problem that is still outstanding over at fairway village. There's a changes of management. You all fired yourselves I guess is the nicest way that I could say it out at fairway village. Clean start for the residents over at fairway village. Those things will be lost if this dealings through with somebody else. I know folks yesterday when I talked to ms. Zapata said well we would hope that they would do that anyway. That goes away related to the $400,000 that -- if this deal does not come through our corporation. I feel that we just have a fiduciary responsibility to either eliminate, lessen or cancel out the impact to our taxpayers, we just don't have the luxury to say, we don't need that money. I think the county needs the money. I think aisd needs the money, I think del valle needs the money, a.c.c. Needs tuition paying students. And the question is not whether we can stop this deal in terms of coming off the property tax rolls. It is, it is coming off the property tax rolls, the question is whether we can cancel out that impact taking dollars in lieu of taxes. I think that's -- that's real important. Another question that was asked, very legitimate, well, how do we ensure that they will do what they say because of the concerns raised during the fairway village deal? The checks will be delivered. At closing. So we are going to have those dollars up front as will aisd and del valle. And the other things here are embedded in the closing documents. And so that's something that -- that their entire deal is at risk if they do not follow through with everything that they have promised. And I think quite frankly we are here to ensure that they follow through because our name through the corporation is -- is the banker on this particular deal. So this is not a question of whether it's coming off the property tax rolls. It is. And I think there have been other governments that have had just as vigorous a discussion from what I understand the dallas city council dealing with this same issue. They weren't happy campers, either. But it came down to do we try to lessen or eliminate the impact to our taxpayers or not. And it passed up in dallas on a 13-2 vote. I think everybody was like it was a 13-2 vote, but they protected their taxpayers. And that's -- that's where I'm going to go. And I do respect your feelings on this, but I -- there are too many things here that will be lost. If we don't do this deal, aisd is going to lose out on $500,000. Del valle is going to be out another $100,000. The county will be out for the next 10 years the property tax dollars lost. A million worth of scholarships will be lost and the fairway village money goes away. But you are getting a new manager and that is a good thing to come out even if we are not the ones, but I'm going to try to grab as much as we can in terms of -- of replacing the lost tax value, which is not at issue today. It is a question of whether we are going to recapture what is being lost. And that's what I'm voting for. Thank you.
>> I kind of thought about it I guess it comes down to me. If this were one of our employees and they had the kind of performance record that you have with fairway, and poor families, then we wouldn't be looking to give you an additional benefit package that is really huge. And we would be putting you on a performance action plan to see if you would improve your performance. And so that's the message that we have given employees in this organization. And I think that's what the message we ought to give to people we do business with. The other thing is that -- is that while Travis County removes property from tax rolls when we buy a building, it's taken off of the tax rolls. But in my opinion, there's a distinction here. We take that property off for public good. This is not taking it off the -- the tax rolls for public good. This is for profit. And I believe that I would have given this package a lot more credence if at the beginning you had brought in this proposal. And not sit through our public hearings and hear our objections and then go back and rewriting the proposal. That's -- that doesn't seem right to me. And so -- so like I said, I gave it a lot of thought. It just owe I can't being there.
>> yes, ma'am.
>> I can see, Margaret. I can respect that. If we had been the original issuers of fairway village I guarantee I wouldn't be going there. They have not come through us. I believe people do have the opportunity to have a second chance to do well in this community as they have done in other communities.
>> people know about second chances a lot, I just was not prepared to go there anymore. And if you go down there and you visit the apartments, you see people burning scented candles in order to disguise the mold, the smell of mold. And one of those families, the woman was pregnant. Is pregnant. And that's not -- I won't allow that. I'm sorry. You know, other people may. I'm not. And there's just no excuse for that. We had pictures, we had the tape, but I will not go through that. Just to not continue killing -- or kicking this dog while it's down. But but it's not pretty. At all. And I just wish people could go down there and look at some of those apartments.
>> my more discussion on the motion.
>> [indiscernible] not previous testimony on this particular issue. Phone calls, I don't remember which one of you called me a little bit ago. Was it you?
>> yes, sir.
>> okay. And you know I'm a very, very, very strong supporter of affordable housing. However my testimony is -- I'm going to let that stand. I told you at the time, even though I know [indiscernible] affordable housing, there are things that I saw that just wasn't adding up in my mind to making me feel, be comfortable in voting in support of this. I was very straightforward with it. I think there are other approaches that we can take. Tax rolls are very precious to me. Our folks out there are saying hey, listen, you can't support stuff that's being taken off the tax roll. Again, Commissioner Gomez who represents precinct 4, I respect her opinion of some of the things that -- in her particular precinct. But however two of these properties are in precinct 1 that you are proposing. And of course I know exactly where those properties are. And of course I want to make sure that the protection is given to my community, my precinct just as Commissioner Gomez is speaking in regard as far as what's happening with fairway. Very, very, very critical points. Again, I'm not here to belittle anybody. It's nothing personal. Like I said, you probably won't find a stronger supporter of affordable housing in Travis County as I have been over a number of years. And but it's just this particular situation is just something that I just can't support. I know you all understand that, where I'm coming from. I think that i've made enough comments and testimony in the past for all of us to live on for a while.
>> yes, sir.
>> but thank you all very much.
>> Commissioner?
>> I would like to thank you all for -- for your professionalism that you have done in this project. I will be voting against it, I don't think that's any surprise to you all. I have tried to keep you fully apprised of where I have been with this. My major objection is that I'm sorry that you can take it off the tax rolls even without us. I think that it is unfair in a community that has as large of an industry as we are talking about with apartments. Because it does -- it does put some pressure on the apartment complex in general. I guess the thing that is most perplexing to me is why you work so hard when you can do it anyway. I mean, it's just -- you know, I'm not always looking for a reason because I'm -- i've been a businessman my whole life. And I -- I certainly am not going to dog you for making money on something. That's how the world goes around. So I don't have -- I don't have a problem with that. But -- but with the tax rate issue, what we have to deal with, I know rick, I mean, as you have said, you have been an elected official before, you know what it's like to sit here and try to juggle all of the needs of a community and you know ad valorem taxes is basically all we have with the county. I mean, it is our major income stream. And you know I just -- I mean, I think that it's a bad precedent. And I probably am going to be as equally difficult with everybody that comes to me about taking things off the tax rolls. I mean, this community has struggled and it's not just prop 41. I mean, I think that this community would struggle whatever funding mechanism that we are going to have for public education. Because we have just got too many folks in this state that can't pay for public education. And I think that we have -- I mean, we have got to find a way to -- to deal with some of these issues. But boy i'll tell you that the one way that I think that we are moving backwards is by taking things off the tax rolls. Obviously there are other people thinking that because that's the reason this legislation was passed this last time that's going to end the whole -- chodo deal. I'm not saying you all are part of why this has come about. But I wish you luck. I have been very sympathetic, I'm sympathetic with the people that live at fairway, but I'm also sympathetic with you guys because you obviously bought a project that had a whole lot more problems with it than you thought. You know what as a guy who bought some things in my life where I thought it was going to turn out a lot different, you know, there's a balance there about how you make something work and still, you know, try to keep your head above water. I hope that you do the right thing with fairway. I think you all have heard from this community loud and clear that there are some issues that you all need to take care of. But I -- but the bottom line, I appreciate your approach, it's always been very professional with me and I know that you spent a lot of time and effort and money doing this project. Thanks.
>> the motion is to deny the application. All in favor of the motion? Show Commissioners Gomez, Daugherty, Davis, those against the motion, Commissioner Sonleitner, yours truly present by not voting. Thank you all very much.
>> thank you, sir.
>> thank you. 3. Consider and take appropriate action on approval of: a. A budget transfer; and. B. Request for $270.66 out of town travel reimbursement.
>> I'm harvey Davis. Manager of the corporation and I'm request knowledge board approval to make a budget transfer from administrative line item to out of town travel and this is in order to reimburse myself for the travel that I -- the trip that I made to houston to inspect the -- the apartments at american housing foundation. In your backup is copies of the receipts, which basically was airline ticket and rental car. And gas.
>> so in terms of the transfer, you want to transfer it into a travel line item?
>> yes, sir.
>> from where, though?
>> from an administrative expense line item.
>> move approval.
>> second.
>> of a and b. B is to get you paid, basically. [laughter]
>> to reimburse me.
>> reimburse. [laughter] I would say reimburse. All in favor? That passes by unanimous vote.
>> move we adjourn.
>> second.
>> all in favor? That passes by unanimous vote.
Last Modified: Wednesday, November 19, 2003 7:32 AM