Travis County Commissioners Court
November 21, 2006
Item 29
This morning we indicated our attention to call up number 29. To consider and take appropriate action on request to consider and approving resolution approving a tax exempt bond financing to be undertaken by strategic housing finance corporation of Travis County to finance the south park apartments at 9401 south first street, Austin, Texas. We did get a request this morning to delay action until next week. But to have our discussion today lay out the issues, get whatever questions we have out and hopefully answers, also. And mr. Blunt tells us that our schedule is getting tight.
>> yes, sir.
>> tighter than I expected until today. And what is it by the way?
>> the -- the closing right now is scheduled for December 11th and 12th, which I believe is three weeks actual closing date would be three weeks from today. With the attorney general approval process, we -- we need to have a resolution on this at your earliest convenience. Also this item, the -- for the bonds to be tax exempt, when they are issued, it's required that a public hearing is held and that public hearing was held on October 20th. And that needs to be approved by the -- by the highest elected official in the -- in the county, that being you, judge Biscoe, but I believe the policy has always been for that to be brought before the full court for approval. So that's the item that's here before you today. I understand there's some questions that possibly have been raised about this, so I will -- so I will let -- keep up with the -- with the strategic housing finance corporation begin to address those if that's what you would like to do.
>> thank you, judge, I'm keith strategic vice-president of corporation for housing in Travis County. Seeking approval of the temporary hearing and the ability to issue bonds for the development of south park apartments.
>> it's 192 multi-family unit development, that will be developed near the intersection of south first and slaughter here in Austin. With me at the table today we also -- I also have barrow -- have partnership council, miss cynthia bass. Also mr. Greg
>> [indiscernible] our development partner in this transaction. We have -- we are happy to answer any -- any questions that there might be regarding this project, it is an extremely viable project and to the extent that there is any question regarding that, our financial advisor, ms. Marty miller with miller housing has been kind enough to travel from denver, colorado to be here today to answer any particular questions anyone might have regarding the financial viability of the project.
>> I know that I had a few questions, I really don't want to take action today. I think I need more time on a lot of stuff here. And other research I think that I need to see happen. -- I'm really concerned that -- to a large degree on a lot of things. No one formal is the intended property, if I'm understanding things correctly, is something that the strategic housing finance corporation hasn't really ventured into before that's multi-family housing initiatives. Of course when you came before the Commissioners court sometime ago you came in with the intent in which you did follow your intent of providing affordable housing to -- to low income persons here, but they were actually single -- single occupancy home ownership, lease purchase time of program. Of course dealing with some of the bonds issue, but basically in the -- in the realm of persons really looking for home ownership. Lease purchase. And of course if -- let me ask this question. Under this current scenario, under single family housing initiative that you have started, can you tell me how many homes that you have -- that you have under contract or in the process of being utilized by the -- by the single family occupant because if I'm understanding correctly, if I'm wrong you can tell me. But if I'm understanding this correct limit those homes still have not yet been added to the tax roll, they won't be until after certain period of time have expired for them to be added to the tax base where those persons would be able to pay into the tax base. Right now they are still, if I'm understanding correctly, are still tax -- not tax tree, but not paying taxes. Is that correct or incorrect?
>> that is correct, Commissioner. We currently have over the -- we have finished our origination period for that program as of the end of October, we have assisted 170 families within Travis County with opportunity for -- opportunity for home ownership. Those houses do remain tax exempt under law as property of the housing finance corporation. And will remain so until such time as the -- as the -- as our current program participants qualify as eligible to assume, which would be at the end of the 39 month lease period.
>> so -- so I guess her staggered, each one -- I guess they are staggered, people didn't occupy them all at the same time. They occupied them --
>> yes, sir, they would --
>> so you should have some that in the 39 month periods that should be ready to be added so that you could actually gain property taxes from those homes; is that correct.
>> yes, sir. They are all be coming off. Because they were purchased at different times, they will all be slowly coming off of that list over the course of the next 39 months or less.
>> okay.
>> we have some, we have approximately 16 homes that are ready for their annual walk through inspections. So they already got one year, have one year under their belt.
>> do you know how much property value those homes that are right now off the tax rolls but hopefully will be placed on the tax rolls, how much value, appraised value of whatever property taxes is on these particular homes, ballpark?
>> we originated $22.5 million in mortgages.
>> 22.5 million?
>> yes, sir.
>> in mortgages?
>> yes, sir.
>> okay. But as far as the tax revenue from that, we really wouldn't know what that is, I guess, until the appropriate time comes. But that's still a significant amount of -- of millions of dollars that's not on the tax roll. So I guess my next question is, I'm leaning toward where are you going now, going into a multi-unit type of situation. But in this particular regard, the property and what you just -- vacant land at this time, but after improvements have been placed on this property, what do you value that property to be with -- with land plus improvements as far as assessment value?
>> well, I believe that estimate would be right about $20 million.
>> would you -- yes.
>> and if I might answer another concern that you have expressed, we have been involved in multi-family development now for approximately 3 years. Beginning with the manor town apartments, which is in your precinct and you were kind enough to attend the grand opening with. We also have -- have another 208 units of -- of multi-family senior's housing under construction in Pflugerville, Texas that Commissioner Sonleitner was -- was kind enough to support for us. And -- and that is currently under construction, that's about -- about 12 to 13% completed. And it is on time and on budget. This -- this type of development actually would not be new to us from -- from the standpoint of us not having any experience at all in doing it before.
>> my question, though, was that -- that this is -- this instance that you brought up, I'm glad you brought that up, senior citizen type of situation, which we do try to provide for senior citizens. But my question is how much of that that we talk about today is under the
>> [indiscernible] of improvement plus land, how much of that is taken off of the tax roll? As far as you saying 20 million, is that improvements plus land?
>> yes.
>> combined?
>> that is correct.
>> okay. And it's tax exempt for how long? Forever?
>> it is tax exempt under section 394 of the tax local government code, for so long as strategic housing finance corporation is the owner of the property.
>> okay.
>> so in essence, do we ever come up with any -- any accrual of how much taxes are we talking about? Taking -- as far as the -- as the amount of tax value? Do we have any cost on that? Any projected cost?
>> we are going to check, just a second. Over a 10 years period it is I believe 5.7 million is the example that we have.
>> represents what now?
>> that would be property taxes, that would for the have been paid based on the value of the development.
>> over the first 10 years?
>> yes, sir.
>> okay.
>> this -- this project has our financial analyst -- as our financial analyst could attest to, would not be anywhere close to possible without that tax exemption provided by law.
>> okay.
>> I also want to point out that's a high estimate because that's based on overall costs.
>> speak into that microphone, please.
>> that's the high estimate that usually they won't value at the whole entire cost of the project with soft costs.
>> okay.
>> and I am just trying to determine now under the -- the Travis County housing authority, which -- which we have operated and looked at and kind of blessed things of that nature, in fact I was told that the project was directly a part of the Travis County housing authority. I remember you brought that particular subject matter up. It didn't come to my attention that it was the strategic housing authority that was involved with that. It basically come through the arms of the Travis County housing authority. I'm saying all of that to say this. That I'm concerned about the amount of getting away -- getting away from the -- the single family dwelling, going into other massive, large venture housing initiatives, especially in the multi-family situations whereby you -- you are taking significant amount of property off the tax rolls. So I'm kind of concerned about that. And we -- you know, we have to -- we have dealt with the situation before we dealt with chodos, things of has nature, that was something that the legislature kind of looked at before. Of course I didn't want to make sure that we do not get ourselves in a position where we are -- where we are looked at as chodo's as far as taking property off the tax roll, saying that you are going afford the -- as far as the persons receiving the services of the particular housing units. Of course at the end of the day they have not really met the test of doing that according to what we are seeing investigators, eyesores, established here in Travis County. I'm very nervous about a lot of this. That's basically some of my concerns. That's additional research that I'm going to look for as we go through this process. I really do not want to sign-off and allow the taxpayers of Travis County to have to soak up a lot of this here nothing given in return, in my opinion, that's satisfactory to what the taxpayers are looking for. So I'm kind of concerned about that. I hope you all understand where I'm coming from. It was a lot of questions that unfortunately harvey Davis is not here today, hopefully he will be back next week. But it's still a lot of unknowns, a lot of gray areas in my mind that still need to be flushed out and so that's why I'm really not so anxious to take any action today until those items in my mind, I need a week to flush a lot of things out, before I say yea or nay on this. Of course the other situation before, I don't want you to divorce what you originally intended to do when you came before the Commissioners court. That was to provide affordable single family homes to those persons that would like to have a home, affordable home, and you get them into a lease purchase situation where they will actually realize home ownership. The jury is still out what you have done as far as a single family dwellings are concerned. And hopefully one of these persons of the 100 some odd that you have mentioned, hopefully one of these persons under the lease purchase scenario that you represented to us would actual own and return this property back to the taxpayers. I'm kind of leary about you losing property to the tax base, especially when we are under the gun tremendously without having any return on some of the stuff that we lose. As long as you are in existence we are going to collect taxes. I'm kind of concerned about that. That's basically where I'm coming from. I hope that you understand where I'm coming from.
>> Commissioner Davis I absolutely do understand where you are coming from. I would like to give you some clarity on two point. First of all the manor town apartments that we built in manor, that one actually is built and was built and developed under the housing authority of Travis County. So it is not an hfc development.
>> but you stated earlier that it came through your
>> [indiscernible] through the strategic housing finance corporation.
>> okay. Well I'm --
>> that's what you stated.
>> I misspoke. I misspoke. That's the only development that we have done through the housing authority.
>> all right.
>> but it is a housing authority property. As I originally told you.
>> okay.
>> how many units is manor.
>> 33.
>> was that debt issued.
>> 1.2 million in debt issued on that.
>> thanks.
>> the second item is I feel your concern as to our purpose as an hfc. We have been -- we have been nothing less than straightforward and nothing less than consistent in representing it is our goal to provide affordable housing through the development of both single family initiatives and multi-family initiatives, but on a multi-family side those would be initiatives that will be owned by the sfhv. We agreed that we would not serve as a third party issuer to developers. By law I think we cannot issue mortgage revenue bonds. We have put that in writing to the court as well.
>> but my point is this, though, earlier we stated that the Travis County housing authority, which we -- has been around here with us for a while, they have been doing a lot of wonderful things. Not knocking them. They have also established the senior citizens situation out in manor. Which fine that's all
>> [indiscernible] it appears to me that -- that they are doing it and here you are coming around doing the same thing and when you came to this court, I remember very distinctly, when this particular organization came to this Commissioners court, you came in with the auspices that you were going to provide affordable housing, never did I hear in any conversations that we had, I respectfully say this, that you said that we were going into multi-family situations to take property off the tax roll, exempt the property off the tax roll by building multi-family. I never did -- that never did come into conversation. If it did, I must have stepped off the dais. But I have got a pretty good memory.
>> I'm not questioning your memory.
>> did you or did you not come before the Commissioners court and say that this was other than lease purchase for persons to purchase homes out there. Low income person to have home ownership, all of these other kind of things. Did you ever mention in those conversations where you came before this Commissioners court about looking at multi-family housing units that would in result end up taking property off the tax rolls. The people in Travis County --
>> I would be very surprised if we did. I do not recall discussing multi-family at that time because the purpose of us coming before this body was to -- to number one seek approval for the creation of the shfc and that -- for our first initiative which was the lease purchase program. We have provided 170 opportunities for affordable single family ownership through that program at this point. I -- I absolutely agree with you. We are only halfway done because we really haven't been truly successful unless those people actually become homeowners. But that is what we represented at the time. And the hfc is a subdear of the housing -- subsidiary of the housing authorityy. While we are two different entities our source is the same. We don't compete with the housing authority for activity.
>> first off thank you very much for meeting with me several weeks ago to lay out this project and answer a lot of my questions. But let's go ahead and and get some of these things into the public record. In terms of multi-family, you mentioned the ones that you have specifically built. But you all have had a history at least the 12 years that I have been on this court on the sweetwater project on wells branch parkway. About how long is the -- that innovative project been there, which is a mixture of the affordable rent and market value.
>> I believe we acquired that around 1995. As part of acquiring it, we made sure that -- that there were insolutions made for affordable percentage of the units to be affordable in that development. We -- we only own that development, we also manage it. And we continually stay in the high -- high 90s with regard to occupancy. I believe when our most -- most recent occupancy report reflects that if you include lease up along with units occupied we are at 100% occupancy right now.
>> so if somebody is trying to say oh, gee I'm concerned about something owned by the housing authority coming into my neighborhood, do you think anybody could tell the difference between the sweetwater project and any other apartment complex on wells branch parkway?
>> absolutely not.
>> in terms of the $575,000 a year that has been mentioned in terms of lost property taxes, who pays the property taxes when you are in a rental situation? Isn't that borne by the people who rent the apartments? Passed on to them?
>> yes.
>> thank you. Therefore if all of a sudden this was a taxable property and all of a sudden there was an operating expense of $575,000 that needs to be absorbed by somebody, wouldn't it mean that the rent that would be attached to all of these properties would be that much higher, so if we are trying to assess what is the public purpose here, if it is targeted to folks in the 29,000 to $38,000 range, the area median income, wouldn't that be helpful to folks who are having a hard time trying to find a quality property and yet be challenged in terms of monthly rental.
>> it would. Otherwise that burden would be passed on to the tenants.
>> in terms of using bonds like this to go into affordable housing on multi-family, this kind of sounds familiar. It sounds like exactly what the city council proposed and what was overwhelmingly approved by voters in terms of a mixture of strategies which included multi-family to be able to get more folks into affordable, safe and quality housing. Sounds like it's kind of the same thing.
>> it is.
>> finally, there have been legitimately concerns about there being chodos, which thank you have gone the way with the change in state law. But in this case the position of the which hod on in terms of who is going to be overseeing this, that would in fact be the housing authority of Travis County.
>> yes, it would be the housing authority and hfc combined.
>> we've had issues of chodos congress in here, do -- coming in here, doing one thing, perhaps doing something else. In this case people could be held in front of the Commissioners court, excuse me, housing finance corporation to say what's the deal, keith, that would be the housing authority of Travis County and that would be folks that have been appointed by this same board and Commissioners court; is that correct?
>> that is correct.
>> in terms of the accountability that goes into this particular project as opposed to others who have spun a tale, this would actually be one where there would be more accountability because you all would own the land and after a sufficient period, I think it's 15 years, the improvements and ownership of these -- of this project would stay with the housing finance -- with the housing authority and therefore the extension of -- of providing quality affordable housing to folks who need it would continue beyond the 15 years.
>> absolutely. That's one of our goals. A long-term open is to see that those properties are maintained in the same way that our sweetwater property is maintained. When you drive down the street, these properties don't look like people sometimes have a tendency to -- to envision affordable housing developments appearing.
>> two last questions. In terms of this area that you have talked about, south first at slaughter, is that kind of an area where we see that there is a need for quality, safe and affordable housing?
>> yes, there is. Our market study bears that out. In all actuality you just have to drive down there to see commercial retail development that is ongoing in that area. The complexion seems to be changing daily and most of those jobs will be provided through -- through those types of -- of employers are -- are service related jobs. Those working people need reasonable rents in places that they live.
>> my final question is tied into that, in terms of proximity to things like bus lines, major employers, retail, all of those thing, is this strategically no pun intended located so that folks would be closer to the kinds of services that they not only might work at, but might also need in terms of just running a household.
>> yes, they will.
>> I'm done. Thank you.
>> Commissioner Daugherty? Keith, I guess the only problem that I have, that I would sure like to see a good marriage between our manager and this project and obviously there is a disconnect somewhere. I mean -- when push comes to shove, I would like to go there to say you guys are really, the real eyes and ears for -- for the board here so to speak. I don't know where that's gotten off. When you read this couple of pages of questions and obviously there is a -- there is a disconnect somewhere. And that doesn't make me feel comfortable. You all came in and very eloquently laid it out to me, made sense. Just -- just heard the recap of that, Commissioner Sonleitner, I'm glad I got to hear it twice. , you know, it -- on the surface it seems to -- to make all of the sense in the world which is the reason why -- I would like to sit down and fufertly I mean we are going to take a little more time to look at this because I would like to get you know harvey in and find out exactly, I mean, somebody needs to level with me as to why there are some things not, you know, not gelling here. So I mean for whatever that's worth, you know, I know that you have had conversations, conversations with them, but I think it makes at least one fifth of us up here makes us feel more comfortable when there is unit in that. Whatever it could take to do that in the next week I would suggest that -- that you putt forth the good old american try.
>> that would be good if we got that backup because I don't know if they got the backup that -- that was supplied through harvey Davis and of course looking at that backup, he supplied, I looked at it, that's why I'm squawking up here because there are things that do not add up. I'm just not up here for the comfort of just being here. But there are things that -- that aren't adding up I'm going to squawk about it. You may not have a chance to look at that backup. That's why I think we need more time for you to look at it. Commissioner Daugherty hit it on the head as far as there's a disconnect. Whatever those things are, you may not have an opportunity to look at that. I have to some degree, additional stuff, I don't think there's nobody here on this court that's not a big proponent of affordable housing, bringing affordability to low income persons here in Travis County. I don't believe that. In the same token, it has to be done, done right. All of the I's dotted, t's crossed. To make sure that the person on the receiving end were at a disadvantage. That's why I am here for. All of us here for the same thing. This may look sometime on the surface, sometime there's some under towing things that don't add up. That's -- that's the -- that's why I'm saying what I'm saying. Okay.
>> Commissioner Gomez?
>> well, I think that when things don't add up, I think that I always look at the attorney and I would say, you know, counsel blunt is there something here that I need to be really concerned about that isn't on the up and up? Because -- yeah I want to sign-off on -- on a project on affordable housing and especially increasing because that is my main job to do here when I'm elected and then when I come on this court I look at all of the projects throughout the county because people everywhere in this county need affordable housing. So -- so as far as you know, is everything on the up and up?
>> yes, ma'am. This -- this is a structure and a -- that has been done numerous times in the state over the last couple of years. I think it's become pretty well accepted among those in the affordable housing industry. My understanding, I have not talked to mr. Davis specifically about this and the memo he sent out last week mainly because he has been out --
>> talking about harvey Davis, not you.
>> harvey Davis, not Commissioner Davis.
>> I understand. Mr. Davis. Harvey Davis.
>> but I -- I kind of feel like some of those issues are more from a policy perspective that they need to kind of get together on. I do not have any legal concerns about this structure or the project or how it's been done. Like I say, I believe they are policy issues that maybe the staff of strategic and housing authority have maybe a difference over with harvey.
>> and when this idea or this strategy came up and I was -- I was informed about the project, I went out to see the property as well. I asked you all about the questions that we normally ask all of the projects that come in. Did you meet with the schools, the neighborhoods and all -- it's there a bus line and there is one and we had looked at a bus line from capital metro's perspective some time back because of the way the area was developing. So you did all of those things that I know that -- that we asked about. And then of course I think it's a good strategy. Different people have different need. Some want a single family dwelling, some want a multi-family dwelling. They are not quite ready to go into the single and yet even when they go into the single home, people still need some education and you provide that. I'm very proud that you do. Because we can't just put people in single home ownership and just leave them there. I have seep that happen before. It doesn't work. I don't think that we do them any favor -- people any favors by doing that, taking that approach. A hands off, you are on your own and -- and then the other thing is because the need is so big throughout the county, I would think that every -- every organization, yours, ours, the Travis County housing authority, the -- the -- the county's housing finance corporation as well as yours, I would think that we could do all kinds of projects and not interfere with each other. And so -- so that's -- that is something that I'm just -- I've -- I've learned to look at and I've learned that there is really no -- no need to ever -- ever trip each other up. And so I'm pretty happy with -- with the location, I'm pretty happy with all of the home work, due diligence that you all have done to make sure that -- that the -- that the project is successful. And I hear every day from people who want multi-family. They are not quite ready to go into single, but we would hope that they would start there and then grow into a single family household. So thanks very much. But I think cliff you answered what I need to know.
>> okay. Thank you.
>> judge Biscoe?
>> yes, sir.
>> if I could trouble you for just a few more minutes. I would like to have ms. Marty miller our financial advisor just address some of the issues that have been raised regarding project viability. If that would be all right. This project has been underwritten by ourselves, by miss miller, but tax credit cinderella indicators. By bond purchasers. I don't think there was much question that this is a viable project and the professionals that get paid to do that have done it. In order that all of you be comfortable with that fact since she's come from denver, probably won't be able to come back a week from now. I would like for her to address some of the financial point of the development, if that's all right.
>> miss miller, who are you with?
>> miller housing advisors, I do financial cull knowledge and represent strategic housing as their financial advisor.
>> okay.
>> one point that I wanted to address is just that -- that the financial viability of this project without the property tax exemption, this project would not be viable. It's bringing affordable housing to -- as a multi-family project to a lot of people in need that need the affordable housing and without each $100,000 of income, generates an additional 1.5 million of financing capability approximately. So in this transaction we are talking about from the tax savings of around 500 to 5.7 thousand, we are talking over 7 million of additional financing that this project needs in order to be built. So without that 7 million of additional financing, you would see a gap in this project, that project would never be built, no affordable housing for these -- for low income families would be available. And I think that's a very important fact in that -- you are talking about losing tax income for the city, but in reality that tax income won't be there because this project couldn't --
>> [multiple voices]
>> worried about the city.
>> I'm sorry. For the county.
>> they are second.
>>
>> [laughter]
>> I apologize. But in reality the taxes would not be available in this type of capacity, a different project could be built there because it would not have the same, not necessarily be worth the $20 million that this is, this type of project is worth. So I think that's a very important aspect of not only are you providing affordable housing, but it wouldn't be available without the tax savings. And I used to work for -- for a lender out of new york city, that specialized only in affordable housing a lot of the projects with bond financing would not be throughout the country. And would not be viable without this type of financing. Which is being done everywhere.
>> in these types of projects not only do they provide affordable housing, but they also provide a list of services that they would not receive were they have to find to housing and market rate developments.
>> any questions from miss miller.
>> we appreciate your coming down.
>> now, I have a few questions. The -- the first one is so that we are providing 192 units.
>> yes, sir. And what residents are we targeting for -- for tenancy.
>> these units would be developed for our tenants at 60% and below median income.
>> 100% of them. 60
>> [indiscernible] below median income roughly for a family of four that would be --
>> about 38,000.
>> 38,000.
>> 38,000?
>> okay.
>> and the -- and the total cost is $20 million.
>> yes, sir.
>> the strategic housing would issue 15 million worth of bonds.
>> yes.
>> and the rest would come from the partner to your left?
>> well. The rest would -- the rest would come from 4% tax credits. That accompany those bonds. Strategic issues 15 million worth of bonds, five million comes from -- from --
>> approximately -- approximately five minutes, a little bit less than five million comes from tax credits.
>> that's the federal government basically.
>> yes, sir.
>> it's actually -- it's actually private investment, private equity coming from a private firm. That is coming in as a capital contribution as equity for this project. In return for that equity, that investor receives federal income tax credits.
>> that private invest store puts up five million and receives in return five million in tax credits from the federal government. Is that true?
>> more. Yes.
>> a little bit -- a little bit more, they pay a little bit less than the dollar for dollar on -- on the investment versus the tax credits. The tax credits, judge Biscoe, are received over 10 years. So it is a long-term investment that -- that this party is making.
>> okay. So strategic at this point has issued -- well, strategic at this point, if it issues 15 million more, will have how much debt outstanding?
>> 35, 45rbgs 50 million -- 45, 50 million, including the lease purchase program.
>> 50 million. On those we will redeem 10 or $12 million worth, right?
>> yes, sir. On the lease purchase program that is still collateral rised by cash for the amount of loans that were -- the amount of single family loans that were not purchased between the -- was it 22.5 and the 35 million? Plus freddie mac certificates. Those bonds are fully collar rised at this point.
>> how much debt drops off to 50 million once we redeem whatever amount of bonds --
>> those bonds will all go away at the end of -- of the lease purchase period, which is about another -- I guess it was 39 months from the end of October.
>> yes.
>> trying to remember exactly.
>> how much debt drops off the 50 million? When that happens.
>> 35.
>> 35.
>> all of it?
>> yes, sir.
>> how can that be with the 22 memorandum of understanding worth of mortgages out there.
>> the way that -- that happens is that the -- the certificates are used to provide cash that will pay off the -- for the bonds, all of the lease purchase bonds once strategic no longer owns any single family homes, they have all been purchased by the current tenants, those bonds will need to go away because they will no longer be tax exempt bonds.
>> 50 million today, but 15 million real soon after 35 million.
>> yes, sir.
>> drops off.
>> okay. That's a lot more better looking for a debt -- does the strategic corporation have a debt policy? Does it have a debt issuance policy?
>> we have a policy that covers how we go about issuing debt, what our fees are, it's an issuer's policy. We do have that. With regard to the amount of debt to issue. We have not established a policy for -- for a dollar amount on that.
>> okay.
>> what -- who actually regulates projects such as this? The a.g., the federal government, the -- who?
>> well, the attorney general will review the bond transcript for the issuance of the bonds, make sure that all is in order, legal for the issuance of the bonds. They will be enforceable, uncontestable. Once that bond issuance is done and the attorney general issues its approval, there won't be any ongoing monitoring of that. Then it just -- the -- the debt payments come through the test indenture or the trustee that is responsible for handle all of the money and so forth.
>> then it kicks into the Texas department of housing you and community affairs, which has compliance oversight responsibility doing annual reporting and periodic auditing to ensure that the property is being leased to the tenants, that it's supposed to be leased to to make sure that it is charging the rents that it is supposed to charge with the ultimate regulation actually coming from the internal revenue service in that -- in that if the department of housing and community affairs finds an event of non-compliance, during the -- during the 15 year compliance period, then that event is reported to the internal revenue service. And can impact the investor that is taking those tax credits. So not only is there governmental oversight, but there's another layer of oversight which would be the private investor that wants to ensure that -- that if benefits are received over the long term, it has an asset management and monitoring function as does -- as cliff indicated the lenders, the bond trustees, and of course -- of course as Commissioner Sonleitner indicated the -- the strategic housing finance corporation itself, so there are -- there are multiple layers of oversight to ensure that the property is remaining viable and that most importantly it is -- it is serving the correct populations. So after the ag really about three others.
>> we don't regulate this and don't claim to. But others do and those basically are the ones that put up the money, those charged at the state level from a regulatory perspective to do just that.
>> yes, sir.
>> okay? Those are my questions.
>> two more.
>> I just wanted to say thank you, I just wanted to make sure that everybody got it. I have a 31 page memo from wylie in response to the very good due diligence questions that harvey Davis asked in relation to tell us a little bit more in terms of how can we find out more about you, what's being talked about, risks and responsibilities, rents, due diligence, conduit issuer, I mean a lot of the questions that were raised in harvey's memo. I think are answered in a 31 page memo. What is -- what is probably a little confusing is that harvey's memo to us is dated the 21st. As in today. In actuality it's clearly written before today. It's the same memo that I do believe that you all got and therefore a memo that is dated the 20th from wylie is in exact sons to the very question that harvey Davis raised and said please give us more information so that we could have that before us today. Is that correct?
>> that is correct.
>> and my -- my last question is -- there seems to be -- I don't know if I asked this question. Where does this land come from? Owned by the housing authority or strategic, which one. How is that happening?
>> the land is not currently owned by strategic, but strategic will purchase the land at the bond closing.
>> from the housing authority?
>> no, it's from -- I'm not sure who --
>> private ownership.
>> it's taken off the tax rolls then. It will be taken off the tax roll?
>> this is owned by a private community.
>> kind of like -- let me -- the last question. As we -- I'm glad that you guys were here, you saw what was happening on one of the other items just a few minutes ago. That is something that came through the housing finance corporation was -- was two projects. Mixed -- it wasn't 100% of those projects that chose to come through our housing finance corporation. It was mixed. There's only a very small percentage of things that were -- that were affordable housing in terms of targeting folks out -- at a certain percentage of the median family income and what happened? The second, the 15 year gig was up, they refied, sold, now we don't have that opportunity anymore. We have lost some set aside units. Whereas in this particular case it is going to continue to stay in the hands of people who are the business, have the accountability directly to this Commissioners court to basically ensure that that -- that the affordable housing opportunities do not end the second the obligation is up.
>> did I get that right.
>> exactly right.
>> thanks.
>> I'm going to try to get can --
>> [indiscernible] the particular properties muhammad what I'm trying to get to is again that property especially with the experience of the lease purchase opportunity that we have dealt with where we have property returned back to the tax rolls. Of Travis County. After -- after the 39 month period. Expires. Staggering as it may be, these particular lease purchase homes I think are a clear signal to me to -- to see exactly the success of this program like I said the jury is still out on that. To make sure that those properties, even though taken off, return to the -- to the property tax base here in Travis County, which we of course definitely need tax revenue. So I'm looking forward to -- to when those particular homes are eligible to be added back to the tax base it would be good to know what those things are. And so -- so I'm going to be looking forward to that. I guess when harvey Davis returns there's still a few other things that I need to get clear in my head. I want you to really understand the fact, as we stated up here, I don't think no one has ever suggested that. It's a way of how we get there, also the impact that it has. I think all of those things need to be flushed out, I think we owe the public, a debt to the public to let us know we are trying to do the best we can. At the end of the day, how did we do those things. No -- no -- no bad feelings or reflection on anything I just want to let you know that. I don't think nobody will -- will judge me on that. But that he that's my point of view. Thank you.
>> thank you.
>> from my perspective, when we do one of these deals, we normally see the full amount of money and how -- how it's expended. So what I would like to see is for owe over the $20 million, exactly how you spend it. Okay? So I'm looking for lines that if I add them up will add to $20 million.
>> yes, sir.
>> unless the project, whatever the project total cost is, I'm hearing today it's 20 million bucks, right?
>> yes, sir.
>> basically how is the 20 million being spent. Now, I'm -- I understand that -- that the strategic is not requesting our approval. Our approval is required.
>> it's --
>> it's required by the internal revenue code in order for the bond to be issued at a tax exempt interest rate, yes, sir. Does that answer your question? You are looking at me like I didn't answer your question.
>> very lawyerly you answered my question.
>> it's required by federal law for this transaction.
>> okay. Anything else?
>> one other calculation, if you could for next week, if I read some of the stuff, I'm sorry, think that I have got this in terms of the market represent, are we talking somewhere around 650. What are we talking about in terms of a range --
>> 650 to 670.
>> you know you have got three bedrooms at 925 and 6 auto for the one, that's the range.
>> let's start -- let's go with the 650 that's the cheapest. Can somebody translate that into if you have got a piti of $650 a month, what does that translate into what kind of house you can buy? I'm almost thinking that there's some kind of confusion here of gee, why aren't you doing more single family? The reality is if somebody only has $650, to pay for their rent, knowing that has to translate if you are trying to do a mortgage to piti, principal interest taxes and interest, what is that range of 650 to 900, what does that translate into into kind of a house that we would have to -- to be out there and I'm -- I'm willing to bet that it's 650 a month. Even on a 30 year note. I don't think we have got anything at the corner of south first and slaughter that is even going to come remotely close.
>> that is one thing that I was going to address, also. I think for a -- for providing affordable housing there's kind of steps, multi-family definitely addresses a lower income need than -- usually a stepping stone that we see that's gradual, that people usually would first go into an apartment type of situation when they have the represent, get stabbed, develop their credit, then they can move to a single family project.
>> it's a lot of responsibility.
>> but if you are 60% of median, how do you afford $925 a month?
>> the way the rents are calculated. 30% of the income of the people, tenants that provide it. So you are assuming they can pay 30% of their income for rent. That's the rents are capped at that level. So they are expending 30% of their income.
>> so you make the maximum for a family of four, you will be able to afford the 925 a month rent if.
>> create.
>> that would be around 30% --
>> of their income.
>> okay.
>> per month.
>> it's actually higher.
>> yeah.
>> okay. Anything else today?
>> no. I won't be here next week. But I understand that it needs to be approved by the -- by the 11th. And so I would ask to go ahead and please go ahead and -- and approve the project. It is in precinct 4, I do -- I have seen it, I approve of it. I just can't be here next week. I'll be back on the 5th unless -- unless we can
>> [indiscernible] on the fifth.
>> the time line wise in order to make the December 12th closing if the certificate and resolution or sign the day of the fifth that I could get them to the attorney general's office, I could still make the closing, I guess the other issue that -- there's a lot of effort being made towards getting to this closing and a lot of expense being incurred so -- so this is one of the approvals that has to happen in order for that -- for that to not be money wasted and so -- so it's -- it's kind of that kind of timing, also. It will be very helpful to have approval as soon as possible.
>> it will be on next week.
>> my parting thought is this. The housing authority's board is like the Commissioners court. Except we meet more often. The housing authority's staff is like mr. Davis. He works on housing matters for us pretty much every day. So it seems to me that a whole lot more gets done if the housing authority staff and mr. Davis at least try to work together more.
>> we would like that, your honor.
>> we will work toward it.
>> mr. Davis would like that, too.
>> tell him the court would like to see it.
>> we would like for him to do that.
>> yeah.
>> my get is that we can make -- we can get a whole lot done next week with everybody pretty much coming in saying we see -- we and you will see the green light. Here's how we are going. That's how the one hour discussion becomes five minutes.
>> exactly.
>> five minutes because we will insist on talking five minutes whether we need to or not. That's why we are here, right? Speaking of why we are here, thank you all very much for coming down.
>> thank you.
>> it's a very informal event and hopefully a good project for our community. Informal ending.
>> mccracken: appreciate it.
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:
Wednesday, November 22, 2006 10:29 AM