Travis County Commissioners Court
June 13, 2006
Housing Finance Corporation
We do need the Travis County Housing Finance Corporation, so I call it to order. Item number one is for implications for eliminating the lottery system for allocating the state's activity bond program and replacing it with an alternative allocation system that is being considered by the Texas house committee on urban affairs.
>> good afternoon, I’m harvey Davis, manager of the corporation. And the urban affairs committee is having a meeting on June 15th to consider this item. As you know, the allocation of private activity bonds is shared between local housing finance corporations and the Texas department of housing and community affairs. They hold a lottery each October and this lottery determines which projects are considered for private bond financing. I’m asking your permission to attend and give testimony to this committee hearing would be two fold. One is if they do decide on a different allocation system that they should not materially reduce the amount that goes to the housing finance corporation. That we believe that it is good to have the housing finance corporation be able to issue the activity bonds. It provides them local input and local controls over what projects get financed and what doesn't. And also to give testimony -- if they do replace it with another system, we're not sure of what that system would be, and basically the opinion is that it's very good. It's efficient, not costly. There's not a scoring type of deal, and everyone has an equal chance so that the testimony would be that this is a pretty good system and unless there's some compelling reason that this is not working, then our recommendation would be to not make material changes. I’ve included in an backup a summary with about the Travis County housing corporation, so I would be asking your permission to give this one page summary to the committee members.
>> is there something prompting the question being asked that it ought to be eliminate snd do we know what's behind all this or is this just reconfirming we're doing something good and need to ask this question every now and then. Then?
>> well, I have worked with the state organization that has been formed by local housing finance corporation, and they've been -- they have worked with the committee to really find that question. And it appears there may be some complaints perhaps that this system -- there should be more yolz crolz in place so that unsuitable projects do not get private activity bond financing. And if they maybe raised the floor, in other words, have some items that a developer has to have before it can get into the lottery, then that would be some positive thing. So other than that, we're a little unsure of what may be their thinking about.
>> yeah, because there are some pretty strict things, once you get the money you have x amount of time to thread the needle. It almost sounds like if there are indeed problems that a higher, more up front work in terms of prequalification, but once you're in the lottery, you talk about level playing field. It's absolutely that, whereas anything other than that really does start to question whether somebody's got an in with somebody and something gets weighted to somebody else.
>> right. A developer that gets the bond allocation, they do have to go through a process with the state in order to get the four percent tax credit, and as you probably know, there is a nine percent program that is strictly with the state. Those are determined by merits and there historically has been a lot of complaints and a lot of politics on who gets it and who doesn't, how they score it it and those kind of things.
>> boy howdy. Thank you.
>> any objection to mr. Davis going over and testifying in the capacity of manager of the housing finance corporation? Head honcho, right?
>> the manager, just the manager. [ laughter ]
>> remember, they don't like to be lectured to, mr. Davis, while you're over there. You don't necessarily have to go with hat in hand, but be very diplomatic.
>> yes, sir, I will.
>> if there's no objection, we'll authorize mr. Davis to go.
>> it is so ordered. [ laughter ]
>> so that's number one. Enlighten our legislators. Number two is to consider and take appropriate on request to review whether to continue the low income housing subdivision fee reimbursement policy.
>> and this item has been on the agenda for several weeks, and there wasn't --
>> that's not meant to be critical, is it, mr. Davis?
>> no, it's not. It's sure not. [ laughter ] and we did have a discussion and you asked for additional information before making a decision on whether to continue with the funding of the policy or not. And so I have hopefully provided you the information that you asked for. The policy was approved in July 2001. We have completed three plat agreements, briar creek phase 1, 2 and 3. The total fees that were paid on those plats were -- those three plats was $40,766. And the corporation has reimbursed the developer $11,496, so they did not achieve a full reimbursement of the plats that they were 430 lots, 67 lots qualified as low or moderate income home buyers that purchased the home. At this time we have one contract that has been executed. This is briar creek faces 4. That contract terminates August 2007. The developer has paid Travis County $21,668, and that plat has 206 lots. In talking with the d.r. Horton, the developer of briar creek, they did request where if you're going to end this policy, they did ask if the board would consider having the program remain in effect for phases 5 and 6. As you know, our recommendation has been that -- to not continue the policy, and I think our recommendation would be to end it after phase 4.
>> and your reasoning is?
>> the reasoning is the amount per lot is under $300 per lot, the amount, and when you compare that to the cost of the home, it is such a small -- when you talk about 120,000, 100,000-dollar home, that a 300-dollar subsidy on a lot is not much -- is not really a substantial incentive to the developer to sell homes to low and moderate income home buyers, and the purpose of spending this money is to help low and moderate income home buyers.
>> so the part we were taking in the 6757 lots that did qualify on the reimbursement was misplaced. You think that would have occurred without our little reimbursement?
>> yes. I’ve been to briar creek development. It is a starter home community and most of the home buyers I believe are -- their income is below 80 percent of the median income, which is the criteria that we use, but that's just -- that's a given because of the type of the development it is, and I don't think these reimbursements make that much difference.
>> so the d.r. Horton folks said they would wish to finish phases 5 and 6 using the same program, is that correct?
>> that's correct. And the reason that they gave for wanting to continue making that request was that they have -- they factored it in in their budgets on these projects. They have sort of geared up to get the documentation that they have to provide us to receive the reimbursement. That was a problem that they had on on phase 1 was they just didn't have -- they didn't have it together to comply with the policy. And that they had designed -- they had made some changes in the designs of the home to comply with the international residential code, which is a requirement of the reimbursement policy.
>> when they informed us of phases 1 and 2, did they advise us of the subsequent phases? 5 and 6? 3, 4, 5, 6?
>> well, they -- when they filed the plat, then at that time is when they should -- the developer should come and also request a contract to -- because they feel like they can comply with the policy. I think on phase 3 they weren't very timely in getting the contract to us and they had -- we had of course a downturn and they had to -- they had to ask for an extension, which was certainly reasonable because they couldn't sell enough homes within the two-year time limit because home sales were slower than they expected.
>> I’m ready to call it a day on this. I think it served its purpose. It called attention to a growing market that really wasn't out there in terms of the whole manor area, but you drive around in eastern Travis County with sh 130 130 going in, it's crazy out there in terms of the number of plats that are going in with very reasonable numbers in terms of come down this road, it's blank, from the 100's, and they do mean the low 100's for people to get in. I think they're getting in anyway, and I think it's becoming too onerous for the developer to have to go through the qualification on the people and it also means that there is stuff on our end as well that I’m ready to call it a day that said we did four good phases and this stuff is going to happen anyway and these folks are going to happen anyway on these same homes is not making a material difference in either the cost of the subdivision or in the price of the home. But it served its purpose. I think it served its purpose by calling attention to a market that was not being served. And we had not figured in what is the cost of mr. Davis having to do mr. Davis having to do follow-up homework of grading these papers.
>> they do the work, you do the review.
>> yes, sir. They have --
>> they don't get approval, they don't get the reimbursement?
>> that's right.
>> what's the status of phases 5 and 6 now?
>> I believe that phase 5 -- I believe they have filed the plat and they would be in a position to put on the agenda a contract. I think phase 6 is -- they're not ready to file a plat.
>> but they have to come to us for a contract for each phase?
>> yes, sir, they do.
>> okay.
>> each phase. To the board and to the Commissioners court.
>> any more discussion of this item? Motion?
>> I’d move that we end the reimbursement policy after fulfilling our contract with phase 4 of briar creek.
>> briar creek.
>> thank you.
>> so we approved a contract for phase 4?
>> yes, we have.
>> so really it's terminating the policy today.
>> right.
>> if there are others out there thinking about a contract because they didn't get to us before today, we would tell them the policy has gone away.
>> well, the corporation is -- does not have the policy. Travis County has the policy. The corporation is the funder of it. So this item is to eliminate the funding, so Travis County doesn't have a funding source for the policy.
>> and the intent of the motion is that no new contracts, and we would fulfill whatever contracts we already have to the end of their contract termination date.
>> right. And we have one contract.
>> have they already filed their -- have they already filed the fifth section of that phase for that subdivision? Have they already filed that?
>> I believe they have, yes.
>> all right. And they are expecting -- they're expecting to have -- to continue to participate in this reimbursement program. That correct or incorrect?
>> the information is --
>> the question is did the d.l.r.r. Horton, did they indicate to you that they wanted to continue to participate in the program?
>> yes, definitely.
>> all right. And I’m just wondering when they asked for that, they say I want to continue it, did they also file their section 5 and I guess also 6 when that comes up that they are looking forward to dealing with us' this policy that we have existing today? That's my concern. And thirdly, are they the only ones that have participated in the reimbursement program of Travis County? Are these the only folks that have participated or has anybody else came and asked for these?
>> okay. They have filed plat phase 5 and they have paid $24,800, and they have not filed phase 6. They would like to continue the program through phase 5 and phase 6, and nobody has contacted my office regarding no other developer has contacted my office regarding this program. I did make a presentation to the home builders association a couple of months ago. I did not receive any follow-up call or information, and my understanding was -- and I gave them a handout -- that this was distributed to builders through their newsletter type of thing.
>> I would like to see this particular phase of the d.r. Horton out at briar creek, they've indicate that had they already want to use the program and apparently there has been some progress in making things happen as far as the plat reimbursement phase of this. So if they're the only ones involved in this, we had should allow them to exhaust their phase 5 and also 6 in this particular regard. So I’d like to make that as a motion, substitute motion, I guess, if anybody seconds your motion. That would be in the form of a substitute motion.
>> the substitute motion is to terminate the policy after phases 5 and 6?
>> yes. After it's been exhausted -- since they indicated they they wanted to use it and filed it with the intent of continuing to use the policy.
>> let me ask a question. When you said they had paid the plat fee for phase 5, what's the importance of that as to the contract?
>> well, once they pay the fee, then we can execute a contract with the developer for possible reimbursement.
>> did they advise you that they were relying on the policy for phase 5?
>> they have informed us that they would like to execute a contract on phase 5, yes.
>> this still allows them to do that, right?
>> no. [overlapping speakers]
>> I’m willing to go there as a compromise rather than saying to 4 and not to 6, I could do it with five because five is already in the house there. I could consider that in process to be a compromise between the two.
>> and Commissioner Davis, your substitute motion fails. Now --
>> I’m willing to go back to my main motion.
>> is your motion to go through phase 5?
>> is that friendly, Commissioner, for phase 5?
>> yes. I think that's a nice cut.
>> they've already filed it. I didn't want to leave that out.
>> so we terminate the policy, but we allow them to go through phase 5 if they choose to. They have not submitted a contract yet. But after phase 5, and I guess for all other developers who were looking at this opportunity, but didn't act on it, this policy would cut them off if this passes. Right? Any more discussion of the motion? Do you understand it? All in favor? That passes by unanimous vote.
>> number 3 is to consider and take appropriate action on request to approve minutes of board of directors meetings of April 18th, may 9 and and may 16th, 2006.
>> so moved.
>> second.
>> all in favor? That passes by unanimous vote. Number 4, consider and take appropriate action on request to approve, one, release of lien on a home down payment assistance loan; and two, reimbursement payment to Texas department of housing and community affairs due to repayment in full of a home down payment assistance loan.
>> this item is similar to many we have brought before. We have received the 2,000-dollar repayment. This loan was made in April 1997, and by our contract with the state, we are required to pay the state the $2,000 that we have deposited, and so I recommend that the board approve the payment to the state and the release of the lien on this home buyer.
>> so moved.
>> second.
>> discussion? All in favor? That passes by unanimous vote.
>> number 5 is to consider and take appropriate action on request to approve contract for Travis County to perform administrative accounting and clerical services through October 1, 2006 -- from October 1, 2006 to September 30th, 2008. We've been doing this every year, haven't we?
>> the contracts are two-year contracts. This contract is very similar to many contracts that we have done over the prior two-year period. In that we --
>> and everything's working well. That's why I move approval. Discussion? Not to cut you off, mr. Davis, but I don't want you to talk us into a negative vote. [ laughter ] all in favor? That passes by unanimous vote.
>> move adjourn.
>> second.
>> all in favor? That passes by unanimous vote.
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Last Modified:
Wednesday, June 14, 2006 9:58 AM