Travis County Commissioners Court
December 5, 2006
Item 25
Now, number 25 is to consider and take appropriate action on request to consider and approve resolution approving a tax exempt bond financing to be undertaken by strategic housing finance corporation of Travis County to finance the south park apartments, 9401 south first street, one, Texas.
>> good afternoon, judge, cliff blunt with naman howell. I think this is a carryover from a few weeks ago. I think there were some questions left open and I'll let keith hoffpooir with strategic take over.
>> good afternoon, judge, Commissioner members. We are here to answer any additional questions. We were asked to provide information to the court on issues such as service provision for the proposed development along with a more itemized break down of thar's fees and -- issuer's fees and income off the project long with a breakdown. We provided that information. We're here to answer any questions that you may have and to otherwise seek approval of the hearing and approval of the authority to issue bonds for the development of the project.
>> we had a meeting here a little bit ago in my office last week and -- or was it this week? Last week, I was just teasing. But anyway, there was a lot of things that we had discussed, and I hope that the communications -- one thing we did see that was a big, big problem as far as strategic housing finance corporation and also the folks who are our staff persons, such as harvey Davis and the Travis County housing finance corporation is just a lot of information is not -- has not been submitted where they're all on the same wavelength. So as an end result of that we've had a lot of concerns, a lot of issues that I think still may be prevalent. There was a lot of information that harvey Davis submitted to each one of us as far as some of the issues that may still be of significance. As you know, this particular project according to projections will take about $500,000 off of our tax roll, and of course, according to a lot of these things as far as for profit persons that are doing affordable housing and really we need to really define affordable housing. There are for-profits that are dealing with the same issue and they are providing affordable housing in the same price range as strategic according to sources. However, they also remained on the tax roll. So it's really -- it really behooves me that for profits can provide affordable housing at the same price range and still remain on the tax roll. And of course, these tax exempt bonds will begin take $500,000 a year off the tax rolls. Do you that on a 10 year basis, you're really talking about five million dollars that's taken off of the tax roll and the biggest bite out of that apple is of course our school district and all the other taxing jurisdictions that do get a part of this such as county, the city of Austin, the independent school districts and also a.c.c. And of course the hospital district. So you've got a lot of people that are -- entities that are nibbling out of this pie as far as revenue was concerned that comes to us as far as how we deal with the use of the tax dollars as far as providing service. It appears at this point that if strategic housing is going into the service area whereby this money -- of course, if the tax the jurisdiction had control of the $500,000 or the $5 million in a 10 year span, we would be providing services to the community. And so it appears that now we will go into the service oriented portion of utilizing these tax dollars, but also in providing a service. And of course there were a lot of thing that we've looked at in that conversation as far as what is the amount and can we equate what the poor person will get as far as service is concerned? And if har vuf Davis -- if harvey Davis don't mind, can you tell us what per unit cost. We're talking about 192 units and we're talk being an amount of money that is set aside to provide service to poor people. And of course these same poor people will get cheaper rent, lower rent at other for-profit apartments here in Travis County. And that also pays property taxes. So it's kind of unbalanced here. Harvey, could you maybe explain some of that to us?
>> at our meeting we asked them what their budget was for tenant services, and they said it was $24,000 a year, so that -- if you divide that by 192 units, that comes to $125 a year, which is obviously not a lot of expenditure for their tenant service budget.
>> and as far as the cash flow is concerned, what did you -- if you went through an analogy and going through the analogy, if you compare comparable affordable housing to comparable affordable housing, there is maybe a common ground if you end up doing this, but if you compare affordable housing to a market out there that's not affordable or that's really not in the affordable housing range, then you get a whole different line of figures. So I'm kind of concerned about the inconsistency of what we're doing here. And of course in my mind I think we need some kind of policy. It's strange to me that we have policy that we deal with folk that we grant tax abatements and stuff like that. We've got a policy and we look at those things and we deal with them. Yet when it comes to the government al entity that's now in the area of serving the poor in this area and also using tax exempt bonds where we don't collect those taxes anymore in the future, then it appears to me we tiewt have a policy to govern that. Right now there's no policy. And that's kind of bother some to me that we don't have a policy to deal with that. So if you can alieutenant on that, harvey, I would really appreciate it.
>> you know, my question that I distributed a week before the meeting on the 21st obviously raised a lot of questions and concerns, and the intent was not to question whether this project wasn't done on the up and up because the structure of the bonds and the tax credit, all that seem in fine order, but it really -- I think the most important recommendation that we have is that there is not a policy, that there is a great need for the housing authority and the county to get together and maybe outside experts and that we develop some policies that then set some ground rules and expectations of what these public-private partnerships are going to bring to the community in exchange for grangt the property tax -- for granting the property tax exemption. And if we have policies that everyone is in agreement with, then I don't think that we would have these kind of issues coming up and disagreements and we could all work together as better partners in our important mission.
>> especially to take care of the needs of people in this community who are needing to find some -- a place to live. And a place that is at least affordable. What I see with this particular housing proposal is that it's going to be in that south -- far south Austin area where I don't think we have anything available yet for them. It's also in a place where there are some places where they can go work. They have places where they can get a job as well. Walk to the job and then walk back to their house. I think that if we have a question about them needing to add some more money to after school programs or other services, then I think we ought to just say that. We'd like to see a little bit more investment in that kind of service because the county provides that in the other projects that we approved. But so what's so terribly wrong to say this is what we'd like to see, but let's not try to hold up an application for housing proposal which is really needed in Austin and Travis County. People are getting -- people are getting priced out of this -- out of Austin and Travis County, and about the only way that some family make it nowadays is to go out and live outside of Travis County and come back to work inside of Travis County. So if that's what's happening for a lot of working families, you can just imagine what the market is doing to people who don't make as much as some of us around here. So that's my concern of -- and I think coming up with a policy would be great -- a great thing to do, but let's give everybody lots of time to work on that policy, but right now we have the urgency of getting this application through. And I want to certainly make room for a lot of these families who will walk to work in that area, can keep their children in the schools that are close by and not have to ride a long way to go pick up their children. There's a bus line there as well. We've asked them to follow all of the rules that we followed with every other housing proposal. Talk to the schools, talk to the neighborhoods. And especially the schools because they know of some of these children who need to have some additional services after school in their home and with their parents. So I'm for coming up with a policy, but let's work on that together and let's get that done as soon as possible, but in the meantime let's not -- let's not stop a housing proposal that will come closer to addressing the needs that families have in that southeast quadrant or wherever else they live. But if they want to go live in that area, fine. There are schools, there's a bus line, they can walk to work. And they can also maybe have some services in their home when they come back home. And I'm interested in keeping these families together. They don't need to be coming home late at night and then trying to get ready for school and work in the morning. I just think that the location is a good location, but -- I'm for ufk proving the proposal, but let's not delay it.
>> can you tell me the five areas of concentration as far as services are concerned for the clients? This 60% -- let me say this so everybody knows exactly what we're saying here. This is 60% median family income. That's basically what we're talking about here. And for one person you're talking about a little more than $29,850. For two person you're talking about 32,140. For three person you're talking about 38,300. And for a family of four your talking about 42,000. And this is according to the 2006 Austin-san marcos metropolitan standard area. That's exactly what we're talking about now. Now, I guess my question is there are five categories that have been mentioned as far as some of the services that we render to the poor, and my heart goes out to the poor in this community because they really don't have no voice except us down here to speak for them. And I'm going to do it as long as I'm here. Now, again taking those tax dollars off the tax rolls of course is something that I'm strongly, strongly looking to make sure what we can exchange for it. So I guess I'm asking this question now, what are the services that you're rendering? Right now I understand we're only talking about $24,000 a year annually,, which is about $125,000 per yiewnt for those families. That is not very much money. And of course, looking at that, what would be those five categories that you're concentrating in as far as providing services for the poor?
>> I agree, the areas that we would intend on providing service to would be areas such as family skills development, job training, job search, assistance, educational services, health, nutrition services, leadership skills, and generally just -- I think the service provider refers to them as activities such as arts and crafts or more social activities. Those are the types of services that we would bring to this type of development. And as we discussed in the meeting that you were kind enough to have with us, the 24,000 a year is a number that we chose based on the fact that there are some underriding concerns, but this is also within a range that you will see for service provision. That is not a hard and fast number. I think that's something that's very important to me that I would like to point out to the court. We can provide, to the extent the budget allows as the property continues to develop, we can provide additional money into that budget, but this is an amount to start with. And then as we see and determine what the needs of that community will be, we can modify that. And that is a decision that strategic housing finance corporation has the authority to make. So that is something that we are in control of. Additionally I think what you will see is that it there will be other services that are brought on board through partnerships with different community organizations. That's something that's not unusual to see. So while we do have a number of 24,000 a year that's reflected in the budget, that's certainly not something that's carved in stone for the next 10 years or 15 years or 20 years.
>> well, how is that other -- other entities -- other nonprofit, for-profit, whatever, are able to up front say this is what we're going to have as far as the services to the poor. Right off the top they do that, right off the bat. And of course I guess it still gets fwook the question of how is it that you need to take taxes off the tax roll and we have nonprofits that are doing the same, similar thing with the same range of affordability on the homes and you're not able to do that? I won't say you're not able, but you're not doing it.
>> I understand.
>> so what is the difference in that? And of course, can you answer that? Because I have a follow-up question about your prioritizing as far as how you really prioritizing your use of the revenues that's generated from the bonds that are being issued. So that's another question, but go ahead and answer that for me, please.
>> all right. And I'll ask -- I'll ask greg to add in any comments that he feels need to be made, but I think one of the thing to take into consideration is that some much these developments are quite a bit older. They were built and constructed and financed when market conditions were substantially different than they are now, when land costs were substantially different than they are now. And in the case of a property that was financed with nine percent credits as onsed to four percent and bonz, there was a significant amount of additional equity provided into that deal that helps that property -- that help that property at the time and continues to pay dividends to it at this time. This development has been conceived and underwritten based on today's costs, and while some of the comparables that were in one of the examples, were reflective of class a properties, some of the market rate properties probably still have some depressed rents, but I can assure you that as the rental market continues to improve, those rents will continue to go up. Under this development those rents are set and reserved for a certain income population for the life of the development. So you won't see those types of rent escalations taking place as you would in a private, a full private sector development. And I think it's also important to remember that the services are absolutely a crucial part of these developments. It's one of the thing that sets them apart from a market rate development, but the other incredibly substantial benefit is the production of the housing itself. And the reserving of the rents for that housing at affordable rates for the long-term. That the housing itself is a huge benefit to the community, and as has been mentioned, this is a development that is in a location where there is substantial commercial growth, there's also substantial single-family growth, and those working families will be able to work close to many of what will be their employers, and they have public transportation redbly available to them too, which cuts down on their cost of living. So in addition to providing them with affordable housing for the -- which looks at the long-term doacialt of rents -- affordability of rents, we also provide the services and we are providing housing in a location that allows them relatively efficient and low cost access to their employers, so they can live and work in relatively the same area?
>> let me ask you the prioritizing of the way the revenue stream or cash flow I guess that would be looked at in this thing, basically you had it prioritized, per se. And if I'm correct in this, let me know, but the way it's prioritized is basically like maintenance and operations of the project itself, that's one of the top priorities. And then after that is debt service. Then lastly comes the service -- if anything is left over then comes the service that's rendered to the clients of the apartment units there. That's last. So my concern is why isn't that put up front with the top priority if you really are interested in serving low income as you have indicated that you are, why isn't the priority of that service to the low income persons that will occupy this, the poor folks in this community, why isn't that top priority with making this an operation?
>> actually, I will like to correct that. I'm going to let him correct that for you.
>> yeah, there's a mistake in the fact that there is about 20,000 up in the operations side of the equation. There's $20,000 up in the operations numbers for community services in addition to the 24,000. So there's actually about 44,000 available. The 24,000 is after net operating income. The 20,000 is in the expense line before in that operating income. So it's required by this indicator.
>> but as far as priority is concerned, I guess you're still prioritizing. Where does the priority come as far as prioritizing --
>> it's just the same as maintenance as repair.
>> maintenance?
>> it's the same. It's in general and administrative.
>> that's what you're saying?
>> yes.
>> okay.
>> there's $20,000 in there.
>> but this has been brought to my attention, so that's why I brought it up.
>> we just found out half an hour ago.
>> when did you find out?
>> harvey and I were talking before this meeting.
>> thank you, mr. Davis. I see you're doing your job.
>> you're welcome.
>> but anyway, that has been brought up. And I guess my concern is now how can you come up with a set figure? Because the things you mentioned before are just some services that you intend to do, but how can we be guaranteed that you are going to provide these services at an amount of money -- now, Commissioner Gomez, I don't know what amount of noun set aside to make sure that the poor persons of this area get that particular service. And when you really look at it, we're talking about median family income, but that's gross, that's not net. I understand that there are $78, $73 that was set aside to help adjust for utilities, but then what if it goes beyond that. On the utilities per unit, who has to bear the cost over the utility difference that has been set aside if it goes beyond that amount?
>> I don't understand the question, Commissioner. That's a utility allowance that is discounted from the rent to allow for the utilities payment.
>>
>> [ inaudible ]
>> they do, but it adjusted annually and typically they're higher than what they pay.
>> that's what I was concerned about. I didn't know how much it would be over that as far as utilities. What I'm trying to do, Commissioner, is making sure that there is a substantial amount of money just as we require in other projects when they come before us to make sure that the poor have the concerns that they need to have enough noun ensure that the poor persons get the services they need.
>> I understand. And I understand the housing needs to be built in such a way that they also -- neamz don't make a lot of money have access to a safe house and a place close to live to their job. The other thing that probably needs to be added to the services that are being proposed besides the budgeting workshops, perhaps the education about -- which all of us need to receive obviously is how to use energy more effectively. We had a program where we were trying to replace bulbs in our homes so that they're more energy efficient. So it's not just poor people who need that education. All of us need it. And so it's part of budgeting workshops. And I've worked with families, I've talked to families who -- not just poor people, but all families need budgeting workshops. And so that's all part of the service that needs to be offered, and I would guess that you offer that as needed. Not everybody is going to want to get that kind of education, but probably all of us need it. Even though we may not want it. And so it's just other things that are needed for the parents as well as for the kids in that household. But for me it's do they have a place where they are safe, where they feel safe, where they're close to their job and close to the school and close to the transportation line.
>> I guess my point, though, is I'm wondering how much are you willing to put up front to make sure that we've got guaranteed amounts of money to provide these programs that we're looking at.
>> based on the underwriting that has taken place we're prepared to --
>> how much are we going --
>> -- start off with the amount that's in the budget. We will then canvass our tenants and make sure that the types of services we would be bringing to the property would be appropriate for what their needs are and what we see from the tenant population. We are able to -- we are able to adjust that over time. If we're -- if there are other services that we can provide, then we will look for ways to do that.
>> but you are not making guarantees. I'm looking for some guarantees. You gave a range from 24,000 to 60,000 that I just heard awhile ago that there was another $20,000 on top of the $24,000. So that's $44,000. So it's moved since I've been sitting here, unless I'm terribly mistaken on what I'm hearing. What is it? Now you're saying budget 24,000, but I've heard an additional 20,000 on top of the $24,000.
>> well, those funds may be there depending on operations, but what I can guarantee you is the same thing that anyone -- pretty much anyone in these development cz guarantee you is we will be providing these services and we will not be -- we will not be lax is a dais kel or less than committed to providing them. We are also required to provide them under law, i.r.s. Law as a matter of fact. And those services are also audited and reviewed by the Texas department of housing and community affairs to make sure we are providing them, but --
>> but by law the i.r.s. Does not require a certain figure.
>> no, they do not.
>> so let's get it straight. The i.r.s. Does not determine a certain figure for you to start out with, so you can say $500 and it would still pass the test as far as the i.r.s. Is concerned. You.
>> what I'm trying to say is $24,000. What I'm trying to do is get more money for poor people that need to be served, $24,000 is not going to cut it for 192 units at $125 per unit. That's not sufficient sufficient.
>> your commitment today is $24,000?
>> yes, sir.
>> is there another $24,000 that can be used for the same purpose?
>> yes, sir.
>> he's saying yes. Commissioner Daugherty? .
>>
>> I almost feel defensive about the applicant because the applicant -- I guess I ought to ask, greg, what's your roi on this thing? I'm not going to beat you up over that. I realize what we're trying to do here. Now, if we are trying to on the backs of the private sector say if you're going to come in here and for the benefit of having tax exempt property, well then we're going hammer you on making sure that you've got $44,000. I mean, that's the difference -- that may be something different that we need to sit down and send a message to the private sector in this community wrarz to coming to Travis County -- wrar to coming to Travis County an wanting to deal with our housing finance corporations. I understand where you are on this dial. I understand that -- that some people want you to put a lot more money in it. I do know from a business standpoint there is a number in there somewhere where it makes sense for us to be doing this thing. You do give yourself the ability to say, do you know what, the first obligation they've got do is they've got to repay my note. I mean, in order to do that, and if I'm going to get my rents down to where the benefit to doing this is for the private sector to be enticed to come and do this, so government doesn't have to put up government housing all over this country, and if we're going to find a way to entice the private sector to come, then we need to -- maybe we need to sit down and hammer a little bit more on the numbers, greg. I don't need to be in your business that much. If I were to say what is your return on investment on this thing over a 15 year period, and if you told me it was 9.6, I would say that's pretty good. Maybe can you live with a 7.2 so that you could take more money and you could put it into all of the other services that we're saying that we need. Judge, here's what I'm willing to do. Before I make the motion to move forward for poofl of this, I -- for approval of this. This, I do think that we need to put in motion coming one a committee that puts this together for us. A lot of thing I hope will come out of this committee, judge. And the committee -- not to put him on the spot, but I'm going to ask harvey if he would at least pull the committee together with a number of folks that you think that need to be on this committee, and that's everybody from the housing finance corporation, the strategic housing corporation. The other public sector folks in the community. Let's pull together that committee. You all amongst yourselves pick a chairman. I don't think that the committee -- I think that the major goal for the committee is to come up and to identify the charge for how we are going to take these things on where it's presented to the Commissioners court and obvious throi the bore as to how we move from this point forward. I mean this one, I think there's a lot of water under the bridge and we need to move forward with this, which is the reason that I recommend that we approve this, but if we could set something up, judge nrks this one motion to say, harvey, I need for you to identify the people that would be --
>> that will have to be posted.
>> it would have to be?
>> yes.
>> I would agree that --
>> [overlapping speakers].
>> I will work on that.
>> and judge, I would like to serve on that committee because one of the things that I've always been interested in is affordable housing in this community. I don't want Travis County families to have to leave Travis County in order to be able to live, exist with their kids. But I've always been told that in order to have affordable housing not in government, but out in the private sector that we needed the participation of the private developers. And yeah, I totally agree with you. Then we need to really not beat you over the head for stepping up. And so we have a lot of work to do on it. But I would be really interested in working on it.
>> let me say something real quick. And I agree that there's a lot of water under the bridge on this project. In my opinion the affordable housing needs are at people below the 60% income level. That we should be giving property tax exemption where there is an important component in serving people that are 30, 40 and below. These are the people that are standing in the long lines trying to get section 8 vouchers and there's not enough. These are people that live on social security or disability and can't find housing. And even my office, I get calls all the time from penal desperate for rental assistance.
>> and that's the reason this committee is so needed.
>> right. And that's one of the reasons why I kind of raised concern about this is because --
>> I think the committee can address that.
>> so right now we're at $40,000, and I guess my next question then would be if we're at -- 44,000, sorry. How much time would you need to come back to this Commissioners court whereby we could revisit this and actually see what the real needs -- not real needs, but what the needs that have been identified. Because I looked at some of the backup and I see that there's an organization out of houston that's dealing with some of this stuff and I'm wondering why we didn't go locally with so many great organizations that we have, nonprofit organizations that we have in this community that have done a heck of a job here in Austin, Travis County, Texas and we didn't have to go outside of the Austin area. So I guess my question is just those two whrks can we come back with additional, not less, but additional amounts of money to address the needs of those persons that are 60 percent below median family income for these particular units or services? When can we come back, time line?
>> I'm not sure I can give you an answer to that question today, Commissioner. And my reason for that is there are a lot of investment partners that are involved in this development and I can't decide how to change the budget around without talking to them. And I'll be happy to get with mr. Thorson and do that. I also think that -- I certainly hope I'm not speaking how far turn, but I certainly think that this is a policy decision, not so much a time to reunderwrite this deal which has been underwritten self time, and it works at a level that the as I understand indicators are -- the syndicators are comfortable with, the bond raters are comfortable with, the investors are comfortable with, and we are willing to do whatever we can to provide the highest quality and level of services that we can and we'll be happy to get back to you with specific services that we will provide on that property. Past that, I do not feel from a legal or business standpoint that I'm in a position to start haggling numbers today.
>> [one moment, please, for change in captioners] that the county will look for a policy. We are going to try to initiate a policy, as we do other folks around here that are looking for -- for abatements, tax abatements, all of these other kind of policy directives that we come up with. I don't think it should be any different from y'all.
>> no, sir much one of the things that I would like to make clear about -- I know we mentioned in our meeting with you, our vice chair did, that -- that our board has a committee that has already started looking at least from the hfc's perspective, as to what are the types of criteria that we want specifically to see the developments that we become involved in. I think that -- that you know our need to -- to see that done internally is kind of a reflection of -- of the concern that you have as a body about us -- looking at that type of a policy from a larger perspective. But I want you to know that -- that we are already taking that action internally. So -- so we'll certainly be happy to work with -- work with the county or anyone else.
>> then I think we can comment on that and what I would like to do, though, is let you know that -- that a lot -- the precinct that I represent is -- they have the poorest of the poor in Travis County.
>> yes, sir.
>> precinct 4 is next. Then all around the bend. You can see why I'm so concerned because a lot of my constituents are very poor. Of course I'm going to try to the make the best of what I have got to deal with for the poor people here in Travis County.
>> you can understand where I'm coming from. Thank you.
>> a motion to approve and a second. Anybody else here on this item that would like to be heard? 44,000.
>> to begin with.
>> all in favor of the motion? That passes by unanimous vote. Thank you all very much.
>> thank you.
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Last Modified:
Wednesday, December 6, 2006 9:34 PM