Travis County Commissioners Court
May 15, 2007
Item 2
2. Receive comments regarding the proposed issuance by the capital trust agency of its multifamily housing revenue bonds in the aggregate face amount not to exceed $70,000,000, the proceeds of which will be loaned to theop, llc to finance or refinance the acquisition, development, rehabilitation and ownership of affordable housing facilities located within Travis County, Texas
>> move to open the public hearing.
>> second.
>> all in favor? That passes unanimously.
>> good morning, I'm harvey Davis, manager for the Travis County housing finance corporation. I'm here with clifton bowling who is our attorney, cliff blunt is -- had another engagement. But clifton is substituting for cliff. This is a complicated transaction. It is also a transaction that is similar to one that was approved in 2005. Let me just briefly explain what the transaction -- what the proposal is. American theop, which is a wholly owned llc of american housing foundation owns five apartment complexes in Travis County. They purchased the apartments in 2003. Theop is a chdo or a non-profit housing organization, so these -- these five apartments, theop does not have to pay property taxes on the five apartments. Theop, when they purchased the apartments they issued taxable bonds to finance the purchase. They are requesting that the county get permission for capital trust agency to issue tax exempt bonds for these five apartment complexes. So they are -- it's basically a refinancing of their current debt. Capital trust agency is a -- is a government housing organization from -- created by the town of gulf breeze, florida. So the -- so this public hearing is required by the internal revenue code and the proper notice was -- was published in the Austin american-statesman more than 14 days ago as is required. The american housing foundation has offered if the county approves this transaction and approves an interlocal agreement with -- in addition if the Travis County housing finance corporation approves an interlocal agreement with capital trust agency to permit them to issue the tax exempt bonds, that -- that they will provide a -- a $300,000 donation to the housing finance corporation to fund a scholarship program. That payment would come when the bond close on June -- trying to close June the 7th. And then they would -- starting July of 2008 -- would fund the scholarship program at the rate of $25,000 a month. So it would be, which would equal $300,000 a year. In addition, they have offered to donate 31 apartment units, which is 2 percent of the apartment, the Travis County apartments, 31 units to be used for -- for very low income disabled, elderly, our families in meeting severe financial crisis. They have over the last year or so they have -- they have actually gone ahead and executed an agreement with family elder care to donate some of these units. These units would be donated-- on the donation would include rent-free and utility free plus they would furnish the units. So the value of that donation is probably at least $20,000 a month. This transaction, which makes it even more complicated is part of a pool when they purchased the apartments in 2003, there was a pool of 17 apartments, five of which was in Travis County, other apartments, two are in Williamson county, there's some apartments in dallas, tulsa, oklahoma and I believe in arizona. So this is -- this is part of a pool and the -- the entire pool refinancing is -- will be about 200 -- $200 million. The -- the bond holder and the credit enhancement would be given by freddie mac. And -- and the money that would be donated for the ongoing scholarship payment would come from the rents paid out of the 17 apartment pool. So if there's sufficient revenue produced by the apartments, then there would be money available for the scholarship program. Of course the priority payments would basically be of course the operating expenses of the apartments. Plus the debt service of the apartments.
>> any way we can separate --
>> [indiscernible] radar. What's happened here. I would like to see some guarantees to make sure that Travis County residents be -- as far as the scholarship fund is concerned, recipients of those scholarship funds. That was one of the things that caught my ear when the foundation first came to Travis County for us to participate in this type of transaction. But my concern is to the point where the low income, the single parents, the first time college, persons to be in the college for the first time, higher education things, something that we looked at as far as categorizing who will be the recipients of this particular money from this refinancing scheme. Even though I hear that you are saying that the money that's being paid back from the pool of all of these apartment complexes, not only here but in Travis County, we will have to ensure that those particular operations are to point where they will be able to do this. It was $25,000 a year for a month. It's something that's a big deal. But my question is how can we make sure that Travis County residents that would love to participated in this the scholarship program are not shortchanged by whatever happens outside of Travis County? Is there any way they can guarantee that? Because when you looked at the Austin american-statesman yesterday there was a lot of stuff that came out on that. Other entities having trouble with some of the things that we're doing with this particular company. I understand that's supposedly cleaned up, have been cleaned up, I don't really know. I do know that I would like to see some ironclad
>> [indiscernible] as far as in writing that would guarantee that Travis County residents will get some -- some
>> [indiscernible] for this particular advent as far as what we are doing. Residual. There is a residual in the scheme of things, refinancing --
>> okay.
>> somebody talk to me, give me some answers because it's a big deal as far as education is concerned, these low income persons --
>> can somebody answer that question.
>> somebody come talk to me.
>> jeff richards, who is the cfo of american housing foundation.
>> come talk to me.
>> I think can address your question.
>> thank you.
>> thank you. Let me first say I think that I understand what you are saying. What we are doing here is taking a portfolio, the overall 17 asset portfolio that is a performing portfolio and we are increasing the cash flow by taking theop assets, going with tax exempt financing, we estimate that will increase the cash flow from the overall portfolio by about half million dollar a year on average. Okay? What we are suggesting to do is to take that increased cash flow from a permit that's already performing and remember that the fees fund to dallas is and has been for three years receiving payments similar to what we are talking about here from this portfolio. Okay? We paid them a little over a million dollar to date now. But we will take that half million dollars a year, call it, and divert $300,000 of that annually to Travis County for these scholarships. In addition to that, as harvey just explained, we would make 31 units available free of rent, free of utilities, furnished, for certain deserving --
>> I heard that. I understand that and thank you for that donation for family elder care for the disabled and
>> [indiscernible] 31 units. What I'm trying to hammer down right today, when you can help me get there, is to show me how and where in writing are you going to have -- it's stated that we are guaranteed that money to pay for these kids to go to college. Also parents, you know. They have some single parents that would like to maybe pursue higher education. I want to see something in writing of where in this mechanism of what we are doing here that you can tell me that -- is it in an interlocal agreement as far as before the bonds close or what -- where would that language be established in this thing to guarantee the folks of Travis County that this is something that they can look forward to as far as the scholarship is concerned. Talk to me.
>> Commissioner, there's not a specific guarantee outside of the performance of the portfolio and the cash flow being available to do it. In other words there's not a third party guarantee for someone that steps up and makes these payments in lieu of cash flow from the operations of the portfolio. But may I say that --
>> go ahead.
>> we are not taking out of the county's pocket in order to do this.
>> you are refinancing something to make a profit. In other words by getting tax exempt bonds that's adding --
>>
>> [indiscernible] talking about here, tax exempt and these are non-tax exempt, okay, go ahead.
>> let me just jump in. I think that it's accurate that we are doing this restructuring to make a profit. We are doing the restructuring to create a more solid footing for the portfolio. I think jeff's point of saying that dallas has achieved basically every month we have made the deposit to dallas. You will fall in the same point in the waterfall that dallas has fallen. The portfolio that we are restructuring into is much more efficient and will provide more cash flow to this portfolio, meaning your 300,000 is more secure than dallas has been in the past.
>> that's all well and good. I understand that. Cash flow, you know, increasing cash. But my question is still as I asked before, how can we assure that Travis County residents -- the Travis County residents that they will actually see some of this money that we are talking about as far as paying for their education, assistance in education. That was my selling point in all of this was to make sure if we do this, of course you all -- if you do this, then this is what we would like to see happen. Now can someone -- I'm just asking for some type of language to suggest this is really what's going to happen.
>> I mean, what I can say to that, I can't --
>> what can you say?
>> I can't offer to have freddie mac to guarantee your payment. That won't happen. I can tell you that before ahf gets a dime from this portfolio each month, you will get your $25,000.
>> will it be in writing.
>> yes.
>> okay. Now see that's the bottom line. Something in writing, something to suggest that that 25,000ment be here every month for the scholarship program.
>> absolutely. The county will receive its money before the foundation ever gets a dime.
>> all right. If that's in writing, I'm pleased. I'm pleased because I think that this is the bottom line. Now on a lot of this --
>> that's not something that we have to add to the deal. That is the deal. That's not something that we have to add based on your concerns, Commissioner. That's in the deal.
>> pardon me?
>> that's not something we have to add because of your concerns. That's the way that the deal is structured is that you receive your payments before we ever get a dime.
>> okay. Well, I want to make sure of that. I want the public record to hear that because it's a big deal, education is a big thing. We have a lot of folks that need some educational assistance in the community and if this is one way to get there, we are going try to see if we can explore it, getting it in the record. Thank you for answering the question.
>> two questions. Mr. Davis, we have this -- a similar request before us previously.
>> yes.
>> what's the difference between today's proposal and what we had before?
>> it appears to me that today's proposal is a little stronger in that they are financing being backed by freddie mac is seems to me, of course I may be speaking out of turn from our financial advisors, he's not here. But it appears to me that this is a more stable financial proposal than what they were talking about in 2005. We've -- we've had some experience with the donation of the 31 units where I've talked to the basic needs coalition and faiment he would dear care. So we have added a little bit of language to better strengthen assurance that we in fact get the 31 units there. They have plenled has they would actually designate each unit at each complex that is going to be donated to us, so that we would know going in exactly what 31 units that we have that are going to be available to -- to provide housing.
>> okay. And you will with cliff blunt's law firm.
>> yes.
>> what's your name again.
>> clifton -- it's clifton.
>> yes, sir.
>> generally speaking the law governing situations such as this provides what? Exactly what are we doing today in laymen's language so the average Travis County resident will understand.
>> my understanding is that because of this deal, Travis County is not going to incur any liability, neither is the corporation. Travis County is being asked to be the host for the capital trust agency issuing these bonds and as such there is no loibility that's going to be -- liability that's going to be incurred. This is mainly as we understand it a decision of whether the -- whether the scholarship fund that they have offered is acceptable for Travis County to -- to agree to be the host.
>> by being the host, we are authorizing the florida governmental entity to issue $70 million of bonds for which we have no liability.
>> that is correct.
>> and what you are doing really is taking the property currently owned by the entity but there are taxable bonds. You are refinancing taxable bonds by issuing tax exempt bonds.
>> that's correct.
>> you are taking part of the cash flow that results from that and basically sharing it with the Travis County. If these were to go under tomorrow morning, Travis County would not lose anything except the scholarship commitment. Because you wouldn't have any cash flow.
>> correct.
>> but others would basically absorb liability for --
>> freddie mc.
>> what happens to the
>> [indiscernible] in other words, this is chdo, tax exempt property, that's why I kind of -- -- we are asking for because of this property being taken off the tax roll, it is a plus. -- if it does go under, all of these properties with the disposition of the properties as exists now would still be declared off the tax roll.
>> I would like to handle is that.
>> can you answer that.
>> I can handle that.
>> any lender, freddie mac included, if they would be inclined to foreclose on ahf, they would actually not foreclose because if they do so they would lose a tax abatement, they would come and find a different 501 c 3. I see no instance where freddie mac would lose a tax abatement. They would replace ahf before they would actually foreclose.
>> actually, we have had one situation where an apartment complex was a chdo off the tax rolls and the bond holder foreclosed on them, put them in bankruptcy and sold the property and they are now back on the tax rolls. That is not -- that is not normal, I think it was because -- in that situation the property being right on the river was -- had a -- had a different use that they felt they could enhance their profit by -- by going ahead and putting it back on the tax rolls.
>> okay.
>> it will take some time to transition to new ownership.
>> we see people do this on other transactions. What they will do is come in and keep the chdo in place, just change the board makeup of it.
>> whatever the loss is housing, money, et cetera it wouldn't come out of Travis County.
>> no.
>> any other questions for these four before we take comments from others who have come.
>> I have some questions. Actually I have a lot of questions, I don't know if I can get them all answered today frankly because this is a complicated transaction. I have been reading reams of stuff trying to wrap my brain around it. I want to separate the scholarship issue from the financing issue because, you know, educational scholarships are very sexy but the topic here is really whether or not we are providing well y'all are providing affordable housing at a quantity and a quality that's higher than what the for profit taxable market would provide. That's really the issue here. Irrespective of whether or not there is financial risk for us, I think it's our charge to make sure to be the watch dogs. You made one comment that we are not taking any money out of the county's pocket. Well, in actuality it being a non-profit it's exempt from taxes, money is already taken out of our pocket so I want to make sure that it's been taken out legitimate -- justifiablely. So to that what percentage of the cash flow from american housing foundation is going back into these properties?
>> in what form, Commissioner? In terms of -- of rent abatements or -- or property improvement or --
>> in terms of all of it. I imagine we would be looking at maintain, improvement, scholarship programs for your residents, literacy programs, I see that there's some literacy program in Austin with literacy Austin. What I'm looking at is in comparison to your operating budget, looking at your operating budget, what percentage is going back into the properties and the residents who live there in order to provide like I said higher number and a better quality of affordable housing through the private taxable for profit market would provide.
>> can I take a stab at that, jeff. The way ahf is structured, they are not profit. So no cash flow ever leaves the organize. If a profit happens.
>> these properties or another property, it gets plowed back into these properties or another property. A good case is fair way village.
>> let me stop you for one moment. I understand what you are saying. However a certain percentage of your cash flow of course goes to fees, which isn't inside the organization. A certain percentage of your cash flow would go obviously to salaries, I understand there's about five employees for american housing foundation and one temporary or part-time employee. That also would be separate from what's going back into the properties. There are other categories. So I am looking for that specific category.
>> let me answer. Fair way village was a problem, I think that you need to think of it globally, we will get down to the nitty-gritty and answer your question for a for profit entity at fair way village, the only source of money for them to fix to that property would have been from cash flow to the property. There was none. An organization like ahf would -- would -- they take cash flow from other properties, pile it back into a fair way village. To say these five assets specifically what percentage of the excess cash flow is going to get poured back into it. It's not really how the organization was run.
>> what about the percentage globally that goes back into your properties across the board?
>> I would say of their excess cash flow, you know, I don't know a percent, well over 50, 75%, I don't know.
>> I don't have a number, but aside from the foundation's administration, all of the cash flow goes back into the properties, Commissioner. There's no cash distributed out of the foundation and we are engaged in affordable housing.
>> right. That's not a specific --
>> that's not giving you a percentage I know. I don't have that figure with me right now as to what would globally if you average it altogether throughout portfolio wide what percentage goes back in. That's not a calculation that we run. I don't know -- I have never been asked that question before. I imagine we could go back and run such a calculation for you.
>> how is it that -- again, like I said I may not be able to get all of my questions answered today. I'm still trying to wrap my brain around it. In my view I'm trying to figure out how to determine whether an entity -- who is in the business of providing end tall housing -- rental housing is -- is earning their non-profit and tax exempt status and I would imagine that one way to -- to determine that is to see how much of their cash flow they are pouring back into the properties that they are managing. So how does the federal government and the state government make the determination of your non-profit status and therefore your eligibility for rolling things off the tax rolls? I can't imagine that number asks how much you put back into the properties to see -- because otherwise hypothetically you could have an organization where they are paying their five employees half a million dollars each and leaving the apartments to -- to disintegrate. I'm not saying you all are doing that, I'm saying hypothetically if nobody is asking that question at the federal or the state level, then how do we know --
>> there are certain things we need to do to maintain non-profit. One is to watch very closely the salaries that we pay within the foundation. Each year we do a pretty extensive study to make sure that we are well within the threshold of other similar sized and similarly focused 501 c 3's and the salaries that we pay. In addition to that, last year we had a very extensive i.r.s. Audit done on the entire foundation that was extremely comprehensive field audit that basically came in and found no changes and almost no flaws whatsoever. In the way we were conducting business, what we were doing, the way we kept our records and everything else that they looked at.
>> I did hear that you were audited and came out clean.
>> an audit is in some respects the lowest common denominator to make sure that your t's are crossed, I's are dotted, I'm looking for something more rigorous than just the i.r.s. Audit.
>> [multiple voices]
>> I definitely need a week.
>> hold on. Why don't you get your questions, share those with the court, send them to -- are you the one to get the questions?
>> that would be perfect, yes.
>> give us the answers in writing, share them with the whole court. And we just won't take action today. How many came here to give testimony on this item? As part of the public hearing?
>> okay.
>> two? Okay. Do you have other questions?
>> just a couple more.
>> by the way, sounds like we need to see a pie chart that shows basically revenue and expenses for the units in Travis County or all of the units?
>> I believe what you are saying is that the more valuable statistic is for your entire portfolio and not just for those in this --
>> that's what I would say because it's hard to segment --
>> there are a lot of things that we do in terms of resident services that are not accounted for in the property specific basis.
>> are you able to give that in writing by 5:00 Friday.
>> sure.
>> what would be most advantageous to us, I think, is to see the whole portfolio, what it is for these 19 properties.
>> 17 property.
>> then break it down per property. Those three perspectives I think have different value.
>> the key would be how do you allocate overhead.
>> there are certain things that we can break down because they are accounted for per property. But the others would be basically on a pro rata basis. So it's --
>> that would be valuable.
>> an overall expense --
>> that would be valuable to know. And let's see. A couple of other things that I had.
>> again, I'm trying to understand why gulf breeze florida's capital trust agency is -- is financing an affordable housing project in Texas.
>> cliff blunt can confirm that next Tuesday. The Travis County housing finance corporation is not authorized to refinance debt that you did not original namly issue. If we did not authorize we would not be going through cta, we would be coming through a bond resolution for asking you to approve.
>> this is why we don't have any financial liability on this, because we are basically the Texas host for a florida refinancing?
>> even if you were the direct issuer, it would be a non--- you guys would be a conduit issue. You still would not have financial liability.
>> uh-huh.
>> I might add that the reason cta is because they were involved in the original issue on the florida assets. They are already an issuer in this portfolio. Their charter allows them to issue across state lines.
>> I'm sure that they're -- they need to do some issuing, I understand that they had only issued about 20% of their $350 million in bonds which was a problem because it represented a black box issue.
>> that's a separate deal. That's a problem that they have.
>> not your problem because you all are actually using the money
>> [multiple voices]
>> this is a separate deal than that deal. I can tell you freddie mac and their attorneys looked very closely at cta about the validity of them as an issuer, particularly issuing across state lines. They are about to lend $200 million, you can bet they looked very closely. They basically, you know, gave them a thumbs up.
>> uh-huh. Okay. I have more questions, I will get in more detail with you all.
>> okay.
>> so if we think of other questions after submitting written questions, we can phone one of you. Get the answer between now and next Tuesday.
>> did cliff blunt and lad patillo look at this transaction for us.
>> he has looked at it to some degree. I'm not sure to what extent because he just came back in town last night.
>> do we want lad here next week?
>> I think it would be valuable. My questions, clearly we don't have any financial liability here. My bigger more global question is should we sign on as a host to this then --
>> if the answer turns on the financial circumstances, maybe the expertise of a financial advisor would help.
>> that would be very helpful.
>> judge, I believe that lad is going to be out of town next Tuesday. Unfortunately.
>> then thank god we got valid's telephone -- lad's telephone, number, e-mail address.
>> he will be able to see us this week before he goes out of town. That it is all that I need is to talk to lad before he leaves.
>> okay.
>> thank you all, we will need at least two of those chairs, we have two on the end. Who would like to give testimony during this public hearing? Please come forward. Give us your full name, we would be happy to get your comments. For the record we will postpone item 32. If you look at the agenda, you will know whether it's next week or two weeks, really depends on a lot of other facts, I think.
>> yes, sir.
>> my name is wanter moroe the director of foundation communities. Thank you, judge, and Commissioners for the opportunity to comment about this proposal. I think that you have made a wise decision to take testimony now, have a public hearing, ask more questions. This is a big transaction. Even though your liability may be limited, there's significant issues here that really deserve a lot of scrutiny. I am a firm believer in the world of affordable housing, sunshine and scrutiny is very, very important to make sure that good affordable housing is created where people have opportunities and they are proud of where they live. The problematic deals are usually the ones that run from the sunshine, the really good projects and developments aren't shy. They are willing to come forward, be very forthcoming about their projects. I have some real deep concerns about this proposal. And questions. I have shared a lot of those with harvey, some of you. I want to say right up front that I personally, foundation communities, has no financial benefit by speaking out about this project. Our properties frankly are -- are more affordable in different parts of town with long waiting lists. No benefit to pose this. Actually probably taken a risk sticking my neck out, speaking out publicly, saying, here's what I think that you need to look at. I want to be very up front and clear about that. I'm concerned a lot of information has not been forthcoming about the transaction. Just in the last two weeks since the presentation, there's been very thin financials. Those are important to determine are you likely to get the $300,000 a year? What is the cost to the taxpayers? This is $55 million in bonds. The interest say at 7% right now. This being paid to -- paid to the bond holder, they have to pay taxes on that income? I believe that that's roughly about a million in federal tax revenue. So if you put your name on this as a host issuer and bless this transaction, it will cost all of us as federal taxpayers a million a year. You may get in return based on cash flow a $300,000 scholarship program. And some additional units for family elder care and basic needs coalition. So there's -- there's a -- there's a basic cost benefit, public cost, public benefit test that I think that you need to analyze. I don't believe that they have been forthcoming about the real benefit of this transaction to them. I've heard that it's a half a million. It's not clear to me whether that's just these five properties or does your approval actually facilitate the restructure of all 17 properties and just based on some numbers that harvey had -- had put together in the backup, it looks like that saves them millions of dollars in cash flow. So you are getting $100,000 and -- $300,000 and this portfolio is benefiting in the millions. It's not clear what the debt payments are now, and then what the debt payments are after the deal is restructured. It's not even clear are these properties performing and what level. On one hand they are performing great, that's why you know that you are going to get your scholarship, on the other hand they are not performing very well, that's why this restructure is so essential. There's not --
>>
>> [indiscernible] demonstrate performance.
>> what is the current net operating income, what is the debt service coverage on these three bonds? These are all answerable questions with specific financial information that your financial advisor should be drilling down and analyzing very, very closely. Closely. Vacancy rate, revenue, expenses.
>> it's not rocket science. I tell you, though, based on the backup information from the presentation two weeks ago, even though I work in the world of affordable housing, finance, complicated transactions I couldn't understand the swaps, the synthetic variable rates, the 15 bucket waterfall, the host issuer, the interlocal agreement, this is a slick complex transaction. That need to be understood. Somehow this should all be put down into common, understandable information. What is the cost to the taxpayer, what do you get out of it? How do you know there will be money to pay for the scholarship program? This 15 bucket waterfall, I haven't seen it. You know the devil is in the details on how cash flow is defined. They keep saying they won't pull out a dime, but the backup today said they earned $900,000 in asset fees, asset and management fees. So I don't know if that's a contingent fee after the scholarship programs or before the scholarship programs. I'm very curious in the backup today about the nature of the services. They said they spent $685,000 at their Austin properties last year for social services. What are those? And not just what they spent, but what are the outcomes? If you -- I get asked about our work all the time and I can tell you very readily the million dollar plus we spend on our seven learning centers, 600 kids a day in after school care that we serve, the 300 families that we serve individuals and families that are homeless and the value of that program, the 25 social work staff that we have, not five for portfolio that is massive. I think that it's hugely important that you read and understand and have explained to you through your council the interlocal agreement. Cta out of florida has -- has had a lot of negative press. There's a lot of questions about their activity. And they are getting based on the backup $98,000 a year. And I'm not sure what they do and what your connection to them will be if you put your name on this.
>> hopefully we won't have it next year with them, right?
>> I'm sorry.
>> hopefully we won't have a connection with it. We are relying on the freddie mac backing the -- the florida entity is just another governmental recent tee. They are all over the place. If Travis County doesn't do this, my guess is another governmental entity would. I guess from the beginning I saw our involvement as being a lot more limited than --
>> they are using your name as host issuer. Your name means something, you --
>> I understand, right.
>> I want to -- I think your question is very important about if we don't do this, they will go and find someone else to do it. They need a local issuer to get the bonds in a non-taxable status. To my knowledge there's only three possibilities. One is the city of Austin, one is the Texas department of housing, and the third is the Texas state affordable housing corporation. If there's another --
>> I think they could go to one of the two housing authorities.
>> that might be possible as well. Frankly, I think that they have come to you, I think they have the smoothest pass to get this done. They were able to get through this in 2005, I wasn't aware of it, nobody else was raising questions. I think that it's unlikely that they would go to the city of Austin because of the time and the scrutiny that their housing staff would apply and the public nature of their process.
>> you are not saying that harvey Davis is not scrutinizing it close enough.
>> let me retract that statement. I think harvey has tried very hard to look at all of the pros and cons and drill down on some of this. I have pushed him.
>> but you didn't come to court and testify, though, in 2005?
>> I didn't know anything about it. And in 2003 myself and Austin interfaith and a lot of groups were here because at that time they wanted you to issue the bonds non-taxable and that really facilitated these going off the tax rolls. The scenario is a little different this time around.
>> okay.
>> what I mean is that any project that goes to city hall for approval it's a longer process. Texas department of housing and community affairs issues bonds for construction project, Texas housing corporation has already done millions of bond issues with american housing foundation and those bonds have had a troubled history. That's why I think they are here. I'm not aware has there's another entity that's -- I think you're it. Actions speak louder than words. They can tell you this, that and the other. I think in the world of affordable housing you have to look at the tract record, as a service provider, as a landlord, as a bond borrower, as a taxpayer. You've got some of the articles about american housing foundation the lobbying activity, private jets, slow tax payments, little troubled bond deals, the issues with fair way village, the issues with cta out of florida, and -- you need to look at all of that. So let me sum up. I -- I hi there's significant concerns and reasons why you should oppose this project. To the best that I can ascertain right now, this is a net loss to the taxpayers of a good $700,000 a year. And I think that you are being asked to put your name on something that you don't really have control over. At the very minimum, if you are going to say yes for a deal like this, you are in a position to negotiate, not that I think that's something that you should do.
>> tell me one good thing about this proposal.
>> I think that you can get a $300,000 scholarship program if it gets funded every year. Some additional units. So I understand why this is, you know -- this has come before you, that's the deal that they have thrown out there.
>> we have got your issues, we will dig deeper between now either next week or the week after.
>> let me respond a little bit to my friend walter. Walter didn't prod me to -- to do this, but I did request and get detailed financial perform, their form 990, their audited financial statements, we do have details cash flows, on the -- on the history of -- of their apartment complexes and then a 10 year cash flow of -- you know, what they proposed -- what the new financing will result in. Because lad has been out of town all week, you know, that has hindered our, you know, being able to -- my being able to work with him. Not only out of town, but has not been able to communicate because of being on a boat trip. That's hindered our ability to really do the proper analysis that he needs to do to -- to really answer these -- what I see is the important question is -- is how comfortable can -- can we be that -- that this cash flow is accurate and that these funds beyond -- beyond the initial $300,000 that these funds are going to be realized at -- at beginning July 2008.
>> do we have any time constraints? When do -- do we have a week or two weeks.
>> a week. I don't know if two weeks is going to cause them a problem or not.
>> two weeks would create a problem. We can go another week.
>> questions?
>> harvey also shared with me the -- the dallas housing finance corporation scholarship program may be paid up, capital area housing finance is not. Another fundamental question is with where do they stand with promises and commitments to others.
>>
>> [indiscernible] dallas, repeat that.
>> it's not clear to me that the dallas scholarship program may be receiving payments on time, but the other housing finance corporations that were part of this transaction in 2003 are not paid up.
>> I did talk with jim shaw can the capital area housing finance corporation who issued bonds for the two apartment complexes in Williamson county. He told me that he is receiving his -- his normal issuer fees annual fees, he is receiving those, but there was a -- if you will recall in 2003, there was going to be a -- a sharing of excess cash flows with -- with the issuers and he is -- there was not cash flow to be shared. You know, the apartments, the performance was not what they expected in 2003. So if -- that was the same proposal that was presented to the housing finance corporation in 2003. Theop audited financial statements, there would not have been excess cash flows this year with the corporation.
>> there is a way to outline all of these issues, basically whatever the facts are, to enable us to make a comparison by next Tuesday. I agree with you we ought to do that. Yes, sir, your name and comments.
>> my name is steven gothier. I reside in one of the public housing I guess that you would call it in Williamson county. Has these gentlemen are financing, whatever. I just wanted to come in and tell you that the complex that I live in is absolutely beautiful. They are doing a lot of major construction right now, which has made everybody really happy on the property. Out of all of the properties that I have seep in Austin, seen in Austin and Williamson county, I think that I found one of the best ones. I have been there five years. Staff has been outstanding. At times it's been tough for them to get money to do repairs. I would say in the past few years, they've had a lot of access to funds to straighten up the property. There's like 315 units where I live. We have a -- probably 98% occupancy right now. Generally most people are very happy to live there. Very beautiful. They probably spent 50,000 on -- on tree work in the past two weeks alone. So I just want to say I'm not going anywhere from this property. I'm very glad that the new owners and the financiers have taken over and turned things around a lot. I have seen --
>> you living in Williamson county?
>> yes, sir.
>> okay.
>> and I've really seen the difference in the past three years, a tremendous difference with the ability for the staff to get the funds that it needs. It's not easy, I don't know much about it, but it's not an easy task to do from a non-profit apartment complex. I really didn't understand much of that. But what I do understand is that they are taking action and they are doing it. I am very, very pleased in that. They asked me if I would come down here and represent them, I told them yes because I believe in what they are doing. I think that it's a very good cause. We have probably five apartment units that are for Williamson county sheriff's department for women who have been be abused. They get I think a year free rent, free electricity to better themselves and to move on. Then also we had put like about 50 families from the katrina in our complex last year I believe it was. Those are really quite lucky people. Because they have a beautiful place to stay. Some of them still stay today and are paying now. They don't want to go back home. They actually love it there. The crime has been just very, very minimal at the complex, lights always on. They allow volunteer -- I don't work anymore. I'm a victim of crime from an apartment complex in '92. I was kind of scared to move into a complex again. But this complex is safe. We have security guards living there. And I'm real safe and like I said it's a real clean, clean community. Inch side and out or -- inside and out or I wouldn't be there.
>> how too you feel -- how would you feel in this entity had the -- had to start taking dollars away from your project, the discretionary spending that you say is going on in order to perform on the scholarship program that we need here? Might that be a place where you might go wait, wait a minute, what I like over here are having the -- I mean this is just a cash flow deal guys, that's what it is. I think the company if they have the cash flow, then the trees are done, the scholarships are paid, everything is done, I mean,, you know,, I mean, that's what the program is set up to do. What it really boils down to is do you have an entity that can stay intact to where the economics that we have today, you know, are great, I mean, apartment rents are up, I mean, vacancy is down, everything works. You get trees, you get swing sets you get lighting, you get good security, you get all of the things, what we are really faced with is do we look in the crystal ball and say can this organization trying to -- trying to overlook some of the stuff that they had in the back. Let's face it, being a former business guy, I'm very sympathetic with people that try to be business people, sometimes times are rough, you know. Sometimes the economics of this country, you know, aren't what they are at other times. So I think that we just need to be mindful what we are trying to do is balance the deal where we are going to get some things, you know, out of this. You are going to get some things with the project, I don't think that anybody is unscrupulous, I don't think that anybody is sinister in -- in trying to -- to -- to make this thing work yeah, I mean, they are business people and business people are in business to make money, I mean that's unfortunate to some people to me it's not unfortunate. It's what makes this country work. If the dollars are there to get the cash flow to work, the scholarship is there, everybody gets what they want.
>> to try to answer your question, I um the money is disbursed throughout the properties, you know, I do understand that. I think they are doing a really, really good job of it. When it comes around it's obviously really good. There's times we have to tighten our belts up to help another property. All in all, I don't think they can do any better than what we are doing with the money.
>> thank you very much for joining us today.
>> thank you.
>> thank you.
>> yes, sir?
>> one of my concerns is that how -- maybe you can help me
>> [indiscernible] a lot of questions, but if we look at the cost and benefit ratio, are we looking at the cost to benefit ratio of the 17 properties as far as the
>> [indiscernible] concern or are we looking at the cost benefit of scenarios just strictly here for Travis County? And that's -- in other words do we have to look at the whole deal? There --
>> why don't we do both. We don't want to spend a whole lot of time trying to differentiate next week. If you list all of the properties, just indicate to us in some way which ones are in Travis County.
>> yeah.
>> now, we need whatever you will give us in writing by Friday at 5:00. Give us the weekend to work with it. We need to get you let's say can we get them questions by -- by noon tomorrow? We will try to get you questions by noon tomorrow in writing. And if one of you all has an e-mail address, that is probably better than anything else. And if we think of questions after we submit written questions, we will phone you and ask those. Mr. Davis, you were not planning a vacation between now and next Tuesday, were you?
>> no, sir, I'll be here every day.
>> okay. The simple way for to us do this analysis and comparison, it seems to me, is to list the issues and then do a pros and cons right on down that list. To put the court in a position to come in next Tuesday, do whatever we have to do, say whatever we have to say, then go ahead and take a vote on it. Either we are doing it or we won't. And there are many, many possibilities. But then there's a specific proposal here. Financially, I would guess that -- that if you need an audience with lad patillo or have questions for him, send those questions or phone lad and chat with him. Or get the questions from mr. Davis and we will get written responses from lad. And if lad -- if we think we really need lad here next week and he cannot come, then my recommendation would be that we reduce to writing whatever questions we have that our financial advisor should address for us, get those to lad as soon as possible and try to get lad to give us written responses by 5:00 Friday, also.
>> I believe his schedule is he's here today and tomorrow and leaves on the 17th.
>> lad is good about -- about -- about doing e-mails from wherever he is.
>> yes.
>> and in this country
>> [indiscernible] so if we e-mail lad no matter where he is, my guess is that we would be in a position to fund. The problem is he made need some information with him. If we get the questions to him, if he needs to do further study, we may have to ask him to take the documents with him to study those and then just e-mail responses back to us.
>> well, I have e-mailed him most of the documents that have -- that I have requested and received.
>> okay.
>> yodz I don't see that can he with accomplish any more today. Will be back on next week.
>> move to close the public hearing.
>> all in favor? That passes by unanimous vote.
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Last Modified:
Wednesday, May 16, 2007, 8:00 AM