Travis County Commissioners Court
December 2, 2008
Housing Finance Corporation
The only item posted. Let's call to order the Travis County housing finance corporation, item number 1, consider and take appropriate action on resolution to waive redemption lockout provision to redeem multi-family housing revenue bonds, fort branch landing project, series 2000.
>> good afternoon, harvey Davis, manager of the corporation and I'm here with cliff blunt, our attorney. In December 2000, the corporation issued $12,318,000 in multi-family bonds for the construction of fort branch landing apartments. They are located at 5800 techni center drive in east Austin. The request is they wish to redeem the bonds on December 29th of this year and the reason they want to redeem them is -- is because they have the opportunity, I believe, to redeem them at a significant discount. The apartments have -- have, according to the owners, have had negative cash flows over the year since 2000. They've had to put in significant amounts of money; however, the owners have paid the annual fee that is due the corporation. The annual fee is equal to 10 bases points of the outstanding bonds, which is 1/10 of 1%. So -- -- which based on $12 million of bonds would be $12,000 a year. The trust indentors provide that the bonds have to remain outstanding until 2017 unless permission is given by the bond holder, which is -- the single owner of the bonds. Muni mac, and the issuer. So if the corporation agrees to -- gives permission for the owners to redeem the bonds, then there would be no future annual fees. The annual fees are due December 1st of each year. And the -- the amount of annual fees that the corporations would not receive if the bonds are redeemed this month between now and 2017 is approximately $100,000. So the issue is -- is whether the board wishes to give them permission to redeem these bonds. We have done one compliance audit. That was in 2003. The records were extremely in good shape. It's a well managed apartment. They do -- the apartment is -- also has tax credits. They are overseen by the Texas department of housing and community affairs. And so they have ymca does service, has after care service at the apartments, but it's a very well managed apartments. It's very nice. It's -- it's kind of across 183 by the ymca over there. Our attorney can enlighten the board on some of the legal questions involved in this request.
>> just real briefly, there's a section of the trust that says the bonds are not to be redeemed until at least December 12, 2017. So for the borrower to be able to do this they will need the consent of the corporation to redeem the bonds early.
>> what are they willing to pay us for that consent? We offer zero, I take it.
>> yeah, we talked to the owners, campbell, yesterday, and I -- I asked him if they would wish to make an offer and he said well, let's wait to see what the board said. Included in your backup is an e-mail from the owner that requests that the board allow them to redeem the bonds and forego the future annual fees. I'd be happy to make a recommendation on my part if you would like.
>> and I will just say this is a little bit of a unusual provision in these bond documents. The corporation did not require that and does not generally require that. This lockout provision was something that was put in by muni may the bond purchaser in 2000 and not the corporation. Although we benefit by the time the bonds are supposed to remain another nine years. It's not something that the corporation normally requires or negotiates into these bond transactions.
>> and the bonds -- and they have waived that? They are waiving that?
>> yes.
>> so was the December 1st, 2008, payment timely paid?
>> it has not been paid. I think they are waiting a decision on this issue.
>> well, not to be greedy, but it seems to me we should get something out of this for the residents of Travis County. What have we asked for -- what if we ask for payment of the December 1, 2008, $12,000?
>> I think 11,800,000 something.
>> get that behind us, plus an additional $25,000. That's the equivalent of a little more than two years. And if we -- if we have $100,000 that we basically give up, seems to me that we ought to try to get 25,000 of the 100 for Travis County residents.
>> okay.
>> I feel real generous with that amount. Consistent with the holiday season. But don't you think? I mean I don't know that I would do it zero.
>> is the entire property
>> [inaudible] below median?
>> the tax credit affordable housing requirements are more strict than the bond requirements. And it's the taxpayer requirement is 100% at 60.
>> just to recap, the reason why they are wanting to do this is because they want to refi based on the lower interest rate?
>> I believe what -- they have an opportunity -- that the bond holder needs money and they are able to -- to come up with the money to redeem the bonds at a significant discount. So the bond holder will -- will let go of the bonds at a significant discount. That's my belief.
>> we haven't been given the details of that transaction, but I think that's what we've surmised from their request and what we know is happening.
>> it involves a lot of money. So will the low-income -- will the low-income tenant requirement remain in effect?
>> yes, sir, the -- the tax credit requirement will stay on until 2015. It was a 15-year requirement starting in the year 2000 and the bond requirement I believe we determined yesterday will stay on till 2016, which is a little less strenuous, but it will still remain in place.
>> I would feel a little better if that requirement would stay in place. It's christmas season, y'all.
>> will we need to come back to the board with --
>> we can have it back on next week.
>> the total amount was $25,000, judge?
>> neither one of us are going to be here next week. Mike can do it. We will be able to have a representative here. Staff will. Mike gonzales.
>> so in essence --
>> thanks, mike.
>> so in essence, the annual fee being a little less than $12,000 per year, what -- what's being requested is the way I'm understanding it in look of that we just seek $25,000. In other words, looking at two years instead of one, which was the annual fee for one year being 12,000 and, of course, another 12,000 or whatever for the next year seeing if we can get that in return for --
>> my understanding and the suggestion was that they pay the amount that's due -- that was due yesterday.
>> which was $12,000.
>> and then an additional $25,000.
>> that's what it is, judge? Okay. So it's 37,000.
>> well, the 12,000 is --
>> it's already due.
>> it's due already, right. So on top of that 25.
>> I'm looking into the future and thinking with $12 million at stake here, and we will get $100,000, basically give up the right to the 75 in exchange for immediate payment of 25, and basically we bless the transaction.
>> okay. So it's 25 on top of that what is due on the 1st. Is that correct?
>> it's already due.
>> it's already due, well, it's due right now.
>> and we have oversight -- we have oversight obligations to ensure that they are meeting their 60% m.f.i. Throughout the 15 years?
>> that's correct. Plus, if the bonds were to be examined, I mean just because they are redeemed does not mean they can be examined for the whole affordable housing period.
>> even though the bonds are redeemed, they will still be subject to revisions of the bond documents where they would pay the cost of the corporation if there was an examination or if harvey or his staff go out and perform an audit, that sort of thing. We'll still be obligated to pay those expenses.
>> I see. So the annual fee is designed to cover what?
>> just a fee to the corporation for providing the conduit financing.
>> okay.
>> the fee is based on our giving them authorization to issue these bonds.
>> yes, sir, it's agreed to at the time the bonds are issued.
>> by waiving this provision, we're no in way -- are we in any way harming our recoup on the administrative costs for oversight?
>> no, they will still be obligated to pay any costs incurred between now and the end of the regulatory agreement period which will be 2016.
>> yeah, in prior years like from the mid-90s back, the corporation used to charge an issuer fee of 1%. When bonds close, we charge a 1% issuer fee. But we changed the fee structure to where we charge 50 bases points or one-half of one percent at the closing of the bonds and then we have this 10 bases points annual fee.
>> okay. Okay.
>> and that gives us, the corporation, an income stream to hopefully cover ongoing costs and expenses that the corporation has. So it is a loss that we don't, you know, have this regular money coming in when we lose one of these.
>> city of Austin had a role to play in this
>> [inaudible] situation. I remember when the neighborhood and community came together with this particular setup looking at some of the amenities that went into this particular housing unit. At that time the city was also playing a role. Is this impacting anything that they had to do with it as far as the city of Austin or was it just something outside of what we're dealing with? Because I know the city was present in that groundbreaking, with that opening ceremony, in fact.
>> that's right.
>> but there is basically no relationship with what we're doing as far as with the city of Austin.
>> the city is not a party to any of the bond documents.
>> okay. I just want to make sure.
>> and I'm not sure if it was zoning issues or if they actually provided cdbg funding.
>> okay.
>> put the Biscoe suggestion in the form of a motion.
>> second.
>> discussion? All in favor? That passes by unanimous vote. Number 2 is to receive sum are you report from Travis County emergency services district number 3 regarding the success of the fire academy class number 6 cadet programs.
>> if you'll recall in the spring the corporation approved a $15,000 grant to provide five scholarships of $3,000 each for cadets as part of the agreement they were to make a presentation of the success of the class and so I'm here with chief willig, who will -- I will turn it over to him.
>> good afternoon, court.
>> good afternoon.
>> this is chief willig. We're before you this afternoon presenting a few representatives, our graduating class from fire academy number 6. They are joined by chief warren and district chief robert hardigan. What we would like to present to you today is just to see, again, a small representation of the class. We graduated 19 cadets, and that's after a long seven and a half month process. If you'll recall previously when you approved the funding of the scholarships for us, our program is designed to allow people to continue working while they seek out a new career. So our small group today is because most of our folks are out working their regular jobs for now. Our program is designed to work evenings and weekends so that people can continue providing for their families, continuing on with their current careers before they hopefully make a change into the fire service and give back to the community. Of the folks here today, the three scholarship candidates that completed the process are here. Mr. Contraas, justin Davis and david martinez.
>> can we see who they are by a show of hands?
>> certainly.
>> congratulations.
>> if it's all right with you, we would like to allow cadet Davis to present a little bit of information on behalf of the class.
>> myself along with the rest of the cadets would like to say thank you for the opportunities for the scholarships given us. It's something we definitely wouldn't have been able to do without it and it means so much because it's all we've wanted to do our entire lives and this is giving us the knowledge and tools to have just successful and a safe career. So thank you.
>> thank you.
>> thank you.
>> who has -- who has a full-time fireman job already? Anybody? Who is looking for one?
>> [laughter] all of you looking for one?
>> yes, sir.
>> keep up the good work. Congratulations.
>> [applause]
>> so they did the education and training and worked on other jobs to support families at the same time.
>> quite a few of them, yes, sir. Most of them. That's right. We're very proud of them. And I know in some of your backup material you also noticed their test rate with the Texas commission on fire protection, the regulating agency, they have to take a test with them in order to be a career paid firefighter in this state. Their overall class average was 85.4, which is worthy of special recognition from the commission.
>> [one moment, please, for change in captioners]
>> any reason we should not did this, chief? We're already recruiting for that class andni it will be successf.
>> all those in favor. That passes by unanimous vote.
>> appreciate it, thank you very much.
>> move we adjourn?
>> second. >2r all those in favor? That passes by unanimous vote. And Commissioner Daugherty missed today's meeting in itsni entirety.
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Last Modified:
Tuesday, December 2, 2008 3:10 PM