Travis County Commissioners Court
September 7, 2004
Housing Finance Corporation
Travis County housing finance corporation. 1. Consider and take appropriate
action on the following: a. The public benefit of the low-income housing subdivision
fee reimbursement policy; and b. Request from d.r. Horton to waive the two-year
time requirement as set forth in the fee reimbursement agreement. Those two
are interconnected.
>> yes, sir. I知 harvey Davis, manager for the corporation.
In July of 2001, the -- the corporation and Travis County approved a fee reimbursement
policy which is -- which is really a flat fee reimbursement policy. And the
-- and the policy allows a home builder of a subdivision who sells 40% or
more of the homes to -- to families whose income is less than 80% of the Austin
area median income to be reimbursed the plat fee. The policy -- for example,
for a family of four, 80% would be $56,900. Since the policy was approved,
we've had three contracts for -- to -- to try to use this -- this reimbursement.
All of them have been with -- with e.r. Horton and all of them have been at
their brier creek development, phase 1, 2, 3 in manor, Texas. And on phase
1 the developer did not provide the documentation or did not respond within
the two-year time limit that they have once the contract is approved to bring
-- submit the documentation that they have sold the -- the dowmentdation of
the number of homes that they have -- documentation of the number of homes
that they have sold to the low income home buyers. On phase 2 they supply
documentation of -- of half of the 40%, so they were allowed some of the fee
reimbursement of -- of 50%, instead of 100%. And then on phase 3, the two-year
time limit has not expired yet. So -- so e.r. Horton has made a request to
eliminate the two year time limit because they have said, well, we don't --
we're not necessarily going to be able to sell all the homes within two years.
So you are -- you are kind of penal losing us because it's -- penalizing us
because it's harder to meet the 40% threshold if we have only sold out half
of a subdivision. In our opinion, their argument does have some merit and
however I wouldn't -- I wouldn't recommend that we allow the two-year time
limit or to -- to do away with the two-year time limit on the three contracts
that we have going, but perhaps -- perhaps allow a longer time period or --
or allow the home builder to -- to -- to submit the documentation when they
have sold out on the subdivision.
>> how far -- go ahead. I guess my point, though, you know,
when we first visited this in [indiscernible], I think it still is. What I知
concerned about is simply to establish a policy here, how much have we, Travis
County, attempted to let the building [indiscernible] the other buildings,
such as hart and everybody else, we do have a plat reimbursement program on
board. Here's what you do about it. So remember originally I think that came
in under [indiscernible] break down, 10%, 20%, 30%, 40%, it was at the discretion
of the developer.
>> that's right.
>> which one of these percentages could you come up under.
Now, I think they show maybe the 40% range as far as the goal is concern and
basically going into -- into a situation whereby they would be reimbursed
according to the goal that they met within the time frame of those particular
phases. My concern, though, what did we do as Travis County during this same
time period. Let the -- let the folks know that this is a program that --
that's going on whereby we reimburse plat fees, stuff like that, provided
that the builder aggressively seek persons of moderate income to qualify for
the -- I think back then it was $80,000 home. Single family dwellings. I don't
know what it is now. But according to the number of lots and things that are
sold. I知 still concerned about that phase of the marketing aspect of what
we are doing here. Can you answer that for me, please.
>> yes, sir, I can. Our office frankly is -- has not done
a lot of promoting of this policy or -- or trying to advertise it. The --
the plat -- the plats are submitted to t.n.r. Department and to my knowledge
I -- I don't know how much they have tried to promote the policy. But I don't
think it's -- I don't think it's been aggressively promoted. Um ... I guess
it -- to -- to sort of finish, in my, in our opinion, that this -- what I
would like the board to do is to consider whether this is really good public
policy, this -- this plat fee reimbursement. That the fact that -- that the
amount of reimbursement is less than $150 a lot, is -- is really -- in my
opinion, is a drop in the bucket on when you talk about the cost of housing
and that -- whether this -- whether the resources of the housing finance corporation
could be better spent in other affordable housing arenas rather than this
-- this fee reimbursement. We have -- you know it hasn't been widely used.
Like Commissioner Davis rightfully pointed out, we have haven't aggressively
promoted the policy. Perhaps if we were -- if we are doing a better job of
promoting it, more -- more the -- more of the home builders would make use
of it, but I guess I would make the -- the opinion that even if -- if a lot
of people were using it, I知 not sure that -- that it would really provide
more housing for low and moderate income residents. Nathan neese who is with
e.r. Horton is here, would be answer to -- happy to answer any questions.
In talking with him, I think e. Relevant horton does -- e.r. Horton does feel
that they want to continue to use this policy. They had some issues at the
beginning with being organized to -- to get the proper documentation. And
that was -- that was some of their problems with phase 1 and phase 2. But
-- but he's sort of the person with d.r. Horton that is responsible for submitting
the documentation to us now. So ...
>> on [indiscernible], I assume that we thought the public
benefit would be that -- that more low to moderate income families would be
able to take advantage of home ownership. That would have to be what we thought
the public policy would be, the result would be, right?
>> as I recall, the discussion, more than three years ago,
I mean there was some discussion about how expensive the -- the land cost
is for -- for providing low income housing and that this was a step in the
direction of lowering the land costs and that -- that they -- that the people
that were presenting the policy felt that this would make a difference in
--
>> we thought it would promote --
>> the incentive for the developer to have a development
like briarcreek.
>> that was supposed to be a softball. We were trying to
promote home ownership by low to moderate income families. One question for
the horton representative when he comes from, whether in his view that in
fact has been the case. In b, there was a two-year time limit because we didn't
want this to take forever. The other thing is that some work was required
on our part. T.n.r. And a little bit from the office. So we did not intend
to staff up to make this happen. We planned to receive various reports, when
claims were made for the -- for the waiver of the $150 development fee.
>> right, yes, sir, that's right. I think --
>> I知 sorry.
>> excuse me. I think at that time economic times were better
and nobody thought the two years was going to be an impediment --
>> talent a drop in the bucket was a drop in the bucket.
>> yes [laughter]
>> now you are wondering whether $150 is a little bit more.
Plus it's taken some effort I guess for your office to try to keep up with
this.
>> some effort.
>> okay.
>> yes. That's right.
>> the horton representative. Come enlighten us. Why the
public benefit here is worth the program. Two, why you are requesting a waiver,
why the 24 months was not enough. And assuming that you would not include
a waiver forever, elimination of the policy, but a postponement. Waiver of
the 24 months, but putting in its place another 26, 9 or 12, certainly not
beyond that.
>> well -- certainly not beyond that [laughter]
>> would be just at the time of closeout. Of --
>> when will that be?
>> um, you know, it might be under two years if the homes
are selling well or it might be three and a half years, I wouldn't see it
going anywhere longer than that. I don't know that it would add any work for
the Travis County finance corporation to keep up with. We would just send
the documentation once the neighborhood was closed out. So when all of the
homes in the neighborhood are sold --
>> it's done on a section by section basis. Once section
one was closed out, we would send in the documentation there. Once section
2 was closed out, so forth.
>> how many homes are in section one?
>> I believe 140.
>> 161 I知 sorry. 151.
>> 151.
>> right.
>> you would want to sell all 151 homes and make whatever
claim you have?
>> yes, sir. We believe at least at that point we would have
time to get documentation and to have the appropriate time to sell to the
-- to the right income -- people that are in the income range that is the
goal for this policy.
>> how many completed homes do you have in Briarcliff excuse
me, brier creek, phase one, completed homes.
>> they are all completed.
>> have they all been sold?
>> yes.
>> what sense do you have of how many of those folks would
qualify for the reimbursement?
>> I believe that the numbers -- can I borrow this real quick?
>> sure.
>> I believe that we would qualify for reimbursement, meaning
at least 40% would qualify.
>> how long have those homes been sold now.
>> this is the older of the two subdivisions. I would say
-- I couldn't give you a real accurate date, but I would -- I would say sometime
back in 2002 they were sold. Late 2002.
>> that's the problem. This is two years later.
>> that is two years later. I know that the retroactive postponement
of the two year commitment was -- was union something that we would hope for
obviously. So we could go back and try to find documentation. But -- but I
guess the real point would be for sections 3, which we are selling right now
and 4, 5, 6, if we could make an agreement for those sections. To where there
wasn't a two-year requirement.
>> I just think that it's going to be near impossible for
them to go back two years in time to be able to recreate the economic verification
that's necessary. But I do want to focus on ones where in terms of 3, 4, 5,
6, 7, 8 --
>> those are the most important.
>> I think this probably has less to do with sales than the
sale of the company. And a changing over of complete management. I feel a
feeling this was one of those programs that kind of got lost in translation
at the same point that our swimming pool we had hoped was going to happen
was also delayed. And I think that it's just there's a reorganization going
on, a new group of folks, a takeover of the company. Which I get. But I don't
-- I don't know how you can go back in time two to three years to get the
kind of verification that harvey is going to need. But I知 certainly interested
in looking at it in terms of where we are right now and looking perspectively.
But I don't know how you are going to be able to find those kinds of records.
>> I agree with you. And we would like to concentrate mostly
on the -- the current sections in the future.
>> yeah, yeah, yeah.
>> harvey, I知 -- actually, tom this question, I was rereading
final plat. Was it final platted in sections or one gigantic plat, that would
mean two years, clicking on section 1, even though there may have been a section
5, 6, 7, 8.
>> takes done in phases, but then we did a different agreement
on each phase. The two years runs for each phase.
>> okay.
>> all right.
>> so you don't have an agreement now on phases 3, 4, 5 --
>> we have it on phase 3, 4, 5, 6, not yet. We would like
to do that, obviously.
>> on phase 3, the -- the two year time period runs out March
of 2005? That's 118 lots, nathan told me as of today they have sold 36. They
are in the last quarter of the two-year time period and they -- they even
sold -- hadn't even sold half their lots.
>> all right. 40%, 40% of that -- how many -- well, let me
ask you this question, nathan. In that phase 3, how many total lots are within
phase 3, I guess?
>> looks like phase 3 has -- has approximately 118 lots.
>> okay, approximately 118.
>> to date we have -- these are approximate numbers, but
I would say we sold 30 to 36 homes in that -- in that phase. And of those,
36 homes, you know, 40% would have to qualify for us to get 100% reimbursement.
>> 40% of that 118 would be about how many, about how much?
>> 40% of that would be about 44, 45.
>> 44, 45.
>> somewhere around there? So you are right at the door of
--
>> if 100% of what we sold so far qualified and we had documentation
for it, correct. But we are having trouble getting the documentation and that's
just administrative problems that we are trying to iron out.
>> okay. Well, I guess my point, though, is -- is duke those
problems, you can show movement as close to the 40% as possible, I don't know,
each particular phase according to the way I understand this, it stands on
its own merit.
>> correct.
>> if that's the case then, that means that maybe if it's
not 40%, maybe it need to be 30%, 10%, whatever. But each agreement stands
on its own.
>> right.
>> and I know 40% was the goal, appeared to be the consistent
goal of each phase that come online. What I知 trying to get to is whatever
those administrative hurdles that you apparently are having some difficulty
with at this time, do you think that you can iron it out to reach this agreement
that you are up under right now under phase 3?
>> I think so. Right now we are doing a lot better job of
getting the proper documentation in. I have a lot more waiver requests that
I am going to be sending to harvey when we are close to the two-year requirement.
However, I would say -- I don't have exact numbers, but definitely not 40%
of everything that we've sold.
>> no.
>> is in the requirement yet.
>> right.
>> so we would have to -- that's one of the things -- why
I知 asking for a longer time. When we finally sell all 118, I feel confident
that we will have 40% in the right area. If two years has come up, we have
only sold half the lots in there, I don't know that we will have 40%. 40%
of the homes that are in the total section is the way the agreement is written.
Not 40% of what we sold.
>> but -- but I guess -- I知 trying to hear exactly -- I
kind of understand what Commissioner Sonleitner brought up, also, that is
the difficulties in transitioning of the operation change and of ownership,
a lot of things occurred that may not have been in the best interests of you
acquiring the necessary documentation to get to you that 40%. Correct, we
hope that we have got that worked out, that we are getting enough of these
request forms back that are filled out properly now. We have a bunch more
from section 3 than we had in section 2 considering the time. That we have
been selling in there. So it's looking better. A compromise kind of thought
here. To me it's really difficult to get stuff that's perhaps two to three
years old. That's just really difficult. So to me I would move away from phase
1, it's kind of like a lost opportunity that you learned a lot. I知 looking,
if I read mr. Davis's backup information that your termination of the -- of
the phase 2 contract was in July. Just ended, is that correct, harvey if.
>> that is correct.
>> and my thought is that as we've done with some of our
folks who are trying to get income certifications for us on our rental side
of the house, is that we give them six weeks to could your darnedest and if
you can -- if you can make a lot of good head way in that time period, great.
You are already 50% there, you have already gotten 50% of what you would have
qualified for already done. You don't really have that far to go to get to
where you could be. But I知 willing to look at like a six-week extension simply
for the completion of paperwork on things that have already occurred, but
that's it. I mean, it is what it is. But since you now kind of -- the program
down, then everything else is perspective. You've got time and I think the
best advice we can give you, you need to have that as part of your closing
documents. You need to get that with those folks there, their full attention
to get those documents, because it's very difficult to go back yard. From
three and on you have the opportunity to be successful within your contract.
>> correct. Let me clarify that on phase 2 they have already
been reimbursed.
>> exactly.
>> one-half the plat fee.
>> right. They sold 150 of the 161 lots, but they were able
able to get documentation of about 60 of them. A lot --
>> yeah.
>> the majority of the lots fell through the cracks, so to
speak, with the -- with their getting the documentation.
>> all I知 saying they don't have too much work to go to
get their numbers up. Maybe they will get into the next category, but they
are capped out in terms of how much more, but I知 willing to look at like
a six week extension just administrative extension to get your final paperwork
in, but that's it. And you do the best you can. And hopefully that will help
you as you go into phase 3, 4, 5, 6, that you need to get information up front
because because it's difficult to impossible to get afterwards. That's where
I can go.
>> do we have contracts in place on three and four?
>> if we do on three, they have not submitted plats -- my
understanding for 4 and beyond.
>> 3.
>> there's a separate contract on each phase.
>> yes.
>> or section.
>> yes, sir.
>> so six weeks drop dead on sections one and two.
>> just on two.
>> one is more than two years old. There's no way that they
are going to get documentation. On stuff that's more than two years old. There's
just not.
>> do you want one and two or just two?
>> I think two is -- two is fair.
>> two is fair.
>> you are the one doing the work, two is fair?
>> two is fair.
>> contract on three, but not on the others, I assume we
put two years in place because we didn't want to wait forever. Any inclination
to extend two years to a longer period or leave two years in place? Commissioner
Sonleitner's motion is on section 2 to grant an additional two weeks.
>> six weeks.
>> six weeks, sorry. Six weeks.
>> I second that.
>> to get whatever documentation you can muster in and we
will evaluate that and determine what -- what fee waivers you are entitled
to.
>> righ
>> the second part of that is as to is as to three and thereafter
--
>> yes, judge.
>> there is a second.
>> yes, judge. Along with that, I want to make sure if there
is anything that will prohibit you administratively from getting the necessary
documentation, I think we need to, you know, kind of let harvey know up front
that you are having some difficulty, see if we can smooth those things out.
Probably some good suggestions, good recommendations that can be made if there
is any further assistance that may be needed. Because I think the goal of
40%, which is the top percentage of the percentages within each agreement.
>> right.
>> is something that's applicable to address low income single
family homeowners, so in the spirit of what we are doing here, I still would
like to see that flavor interjected into this direction. So -- so any problem
please let us know.
>> okay.
>> do we have a calendar there? And six weeks from today
is what exact date? Mr. Davis will be looking at the calendar every day, we
want to help him. October 19th. October 19th.
>> does that seem like a good compromise here?
>> that is a good compromise. I appreciate that. I know we
will be able to get some extra documentation in.
>> once you get a system going, blowing and going.
>> thank you.
>> all in favor? That passes by unanimous vote. Thank you
very much. Good luck to you. 2. Consider and take appropriate action to approve
resolution authorizing sale of mortgage-backed certificates and redemption
and payment of single family mortgage revenue refunding bonds (gnma and fnma
mortgage-backed securities program) series 1994a and series 1994b, approving
execution and delivery of necessary documents to carry out the purposes of
the resolution and containing other provisions relating to the subject. And
our lawyers are still at work [laughter]
>> yes, sir.
>> good afternoon.
>> I知 here with mark o'brien and cliff blunt. I believe
mark if it's okay will make a presentation on this.
>> it's okay.
>> judge, Commissioners, mark o'brien, with the bond underwriter
for the Travis County housing finance corporation, single family bonds. The
-- in 1994 you issued 1994 a and b bond issue, approximately $28 million worth
of bonds to provide below market rate mortgage loans, low to moderate first
time home buyers. When the bonds were issued 10 years down the road you had
the option to redeem all of those bonds, many that were remaining outstanding
at a price of 103%. So the first optional call date was 10 years down the
road, which is April 1st of this year. We first looked at this issue last
fall. And reported their findings to harvey [indiscernible] it didn't really
make sense to do it last fall. Last fall there wasn't that much equity in
the program. But that -- first option this spring, April first of this year.
We revisited again this summer and determined that you do have some equity
in there and in the event that we were to call the bonds now, based on current
market prices, sell off the again knee mays, redeem the bonds, keep the remaining
excess for the housing finance corporation, it would be slightly in excess
of $100,000 of net proceeds on this redemption. The reason equity is there
is that the rates are lower than when we deal there, therefore we can sell
the jenny may for more than 100 cents on the dollar. This issue is fine. Doing
well. You don't have to do anything on it. But this was a potential opportunity
that we brought harvey to consider if the board wanted to consider as well.
At this point to opt to redeem these bond in order to realize this equity.
>> so the bond holders are not like john doe and jane doe,
the bond holders are [indiscernible] buyers.
>> yes. In fact six holders, we looked at the list, bond
funds you know smith barneys of the world, large bond funds are the holders,
institutional holders, not individuals.
>> so if we redeem them right now, that means they would
make a little less money, but when they bought the bonds that was clear.
>> part of their deal.
>> that's the way the business is conducted.
>> right.
>> the importance of today, the interest rate could go lower
in which we would earn more, but if the interest rate goes up, which seems
to be the trend we would make less.
>> that's correct, judge. This is based on last week when
we rounded these numbers, based on what we think that we would sell the gnma's
for. However, if rates were to go down fourth, then you're right you could
potentially make more. If rates go up we will not get the same premium on
the certificates . They pay a 7.45% interest rate, above market right now.
If rates rose, they would be less attractive, these again knee mays, that's
right.
>> we thought the court would want to look at this right
now because it seems to be timely. What you are looking for really is some
indication of whether or not to proceed. If we vote today to proceed, it will
take how long to put this together?
>> about 45 days, probably by 11 cash 1 the whole thing should
be -- 11-1 the whole thing should be collapsed.
>> the interest rate on the day of closing is the one that
governs.
>> put these out for bid about 45 days before we actually
call the bonds, probably the interest rate, you assume that approve this ends
of next week.
>> okay.
>> good.
>> that's -- theres our habitat for humanity money.
>> I didn't call it that, but seemed to me [indiscernible]
>> there's a this that looks really, really familiar. [laughter]
that maybe we recall habitat for humanity [laughter]
>> Commissioner Sonleitner's motion to proceed.
>> yes, sir.
>> any more discussion? Basically there is no down side for
us. So -- we are -- worst thing that can happen is --
>> > what -- if we were to bid out and didn't get a good
enough price for them, we wouldn't do the transaction or that could be less,
but I would think that you probably --
>> that wouldn't cost us anything [multiple voices] I was
going to say it's morally neutral. You are asking about the bond holder, that's
what these bond holders are used to optional bond calls after ten years. There's
no down side to that bond holder other than the fact that he made his bet
back 10 years ago, you always had this option to call these bonds at the 10
year call.
>> once you sold the bond then we would know within a couple
of thousand dollars of how much money we would be receiving and it would be
perhaps appropriate for the corporation to -- to anticipate this money by
putting it in their budget.
>> by the end of this month, we would know pretty closely
what would that be, we would get on or about 11, 1.
>> he needs to know by the end of the month while we are
still in this fiscal year.
>> any more discussion of the motion? All in favor? That
passes by unanimous vote. Thank you all very much.
>> thank you.
>> thank you.
>> second.
>> by the way as we have done in the past, on issues such
as this, we basically give the project to those who created or put together
and bring it to us, that would mean those working on it right now are the
ones that we would anticipate would continue to work [indiscernible] that
goes without saying.
>> yes, sir.
>> [inaudible - no mic]
>> thank you.
>> thank you, I知 shocked.
>> director Sonleitner moves adjournment.
>> second.
>> all in favor? That passes by unanimous vote.
The Closed Caption log for this Commissioners Court agenda item is provided by Travis County Internet Services. Since this file is derived from the Closed Captions created during live cablecasts, there are occasional spelling and grammatical errors. This Closed Caption log is not an official record the Commissioners Court Meeting and cannot be relied on for official purposes. For official records please contact the County Clerk at (512) 854-4722.
Last Modified: Thursday, October 27, 2005 10:32 AM