Travis County Commissioners Court
June 1, 2010,
Housing Finance Corporation
good afternoon.
let's call to order the Travis County housing finance corporation.
first item is to consider and take appropriate action on request to approve contract for Travis County to perform administrative accounting and clerical services from October 1st, 2010 to September 30th, 2011.
>> and good afternoon, harvey Davis, manager of the corporation.
and the contract I知 asking you to approve is a two-year contract, which is the same length of contract we've had for the last -- for many years in the past.
the amount that we're recommending in the contract that the corporations pay Travis County is $231,728.
and we came up with that amount, there's an attachment to the contract, that shows our calculation -- calculation, but we came up with that amount by calculating how much in our office they spent on corporation work, you know, based on employees and different office expenses.
the amount for the Travis County -- and that amount we're recommending for both years, fy '11 and fy '12.
and the amount that the Travis County housing finance corporation share is $175,228.
that figure is calculate understand a different way from the past contracts.
the past contracts has been based on the ending fund balance proportion among the corporations.
we decide that had that wasn't the best way to do it this time because so much of our work is done by -- for the Travis County housing finance corporation because it is administering more grants, different grants than it has in the past.
and it's not issuing bonds like it has in prior years.
so what we basically did was took the average of the other corporations and had them pay that amount and then the balance went to the Travis County housing finance corporation.
so it's paying a higher share of the expenses to Travis County than the other corporations.
>> now, my office may have concluded that that 2012 date was a typo and that you meant 2011 as the agenda item says.
but we in fact mean a two year contract.
>> yes, sir, two-year contract.
>> through September 30th, 2012.
then let's try to do that and if there's anything initial with that we'll deal with it later.
questions?
do you see what I知 saying?
>> it says October 2010 to September 2011 on the agenda item.
>> the agenda item is changed to one year.
but you want a two-year contract.
>> yes.
>> through 2012.
now, we're doing a budget, which we annually do yearly, however this is a contract for a two-year period.
and we don't think those numbers will change.
>> no.
>> second year.
>> no.
>> then let's alter our mindset, colleagues, and think globally for two years rather than just one.
questions?
move approval of the proposed contract with the the -- ending date of September 30th, 2012.
>> second.
>> discussion?
all in favor?
that passes by unanimous vote.
with director Gomez absent.
absent for the entire meeting.
number 2 is to consider and take appropriate action on request to approve minutes of board of directors meetings of April 27, may 4, may 11, 2010.
>> move approval.
>> second.
>> discussion?
corrections?
all in favor?
that passes by unanimous vote.
item number 3 is to consider and take appropriate action on request to approve a letter to the Texas department of housing and community affairs requesting an amendment in the program design of the neighborhood stabilization program.
>> and I知 here with michael willard, who is the executive director of Austin habitat and mike gonzalez, who will make his presentation.
>> good afternoon.
today we're before you to request an amendment to our contract with the Texas department of housing and community affairs.
there are two requests.
one is to reallocate 150,000 from eligible use a, which is financing mechanisms, to eligibility use e.
the second request is to request a waiver of the purchase discount requirement limit from the current five to 15 percent down to one percent.
there is going to be -- the reason we're requesting the change in allocation, one thing that we've discovered as we continue to implement nsp is there seems to be a significant bottleneck at the state for processing all the loans that we submit to them.
one of -- part of our original program design was to really target and focus on assisting households that were below the 50% ami.
below 50 percent ami they qualify for 100% financing from the state, so the state accuses as a lender.
so what we do we get all the loan underwriting together, up load it to the state and the state reviews it.
we're facing significant challenges in getting responses back from the state.
frankly, they're a little bit understaffed over there.
so that is presenting some challenges for us spending these nsp funds in a timely manner.
so we still want to focus on the 50% or below ami and that's one thing that working with Austin habitat was pretty advantageous.
Austin habitat, they're going to go ahead and they have households predominantly that are below 50% ami and we're trying to provide nsp assistance so they can actually construct homes for these -- for the Austin habitat households.
but that requires a change in our contract from home buyer assistance down to redevelopment.
the reason we have to change the eligible use is because the lots that Austin habitat is going to construct these new constructions are not foreclosed properties, first of all.
so the change is required because the lots are not foreclosed.
and under the current eligibility use a, our contract is that -- it does not allow new construction.
so habitat would be doing new construction on current lots that have not been foreclosed, but all this would be redevelopment in existing residential subdivisions that do meet nsp requirements.
>> redevelopment would take place within the unincorporated areas of Travis County or would it actually come across jurisdictional lines as far as the municipality or the city for that type of redevelopment?
>> redevelopment, they can be done in both the unincorporated and incorporated areas within Travis County.
right now what habitat is looking at is different lots that they currently have, and just making sure that they meet the nsp requirements as far as eligible census tracts.
so some of these may be within a city boundary, it may be within the city of Austin.
>> or any other municipality.
>> right.
so that's one thing, as we proceed we're going to have to get more clarification on.
but one thing that has changed is in your backup we did request 150,000 be reallocated, but after further review, we really feel that proceeding with the program as we've been doing is not going to be successful for us simply because there's such a huge bottleneck at the state.
we're just not getting -- we're not getting good return time on everything we submit.
so what we're requesting for the board instead of 150,000 be allocated from eligible use a to e, that we actually do 951,000.
that will equate to about 32 units.
the assistance will take the form of a 30,000-dollar forgivable loan for each unit that habitat constructs.
one thing on the change, though, there is a requirement under nsp contract that at least 35% of the funds go to assist households that are below 51% ami.
and the property that they -- that is used to acquire with nsp funds also have to be foreclosed.
because the habitat households are below 50% or a good portion of them are going to be below 50%, but the property that they acquire is not foreclosed, it's not going to count towards us meeting that 35% set aside.
so right now the way we have projected, if we follow through with the 951,000 going towards habitat, we'll probably be at about 19% set aside requirement versus 35% requirement.
but we've been in pretty close contact with habitat and the state.
the state is really -- for lack of a better word, it's looking forward to seeing this amendment.
they seem to be fairly supportive of it.
and there seems to be a little bit of flexibility for us on that 35% set aside requirement.
>> well, would that also -- well, I guess if you look at the cumulative effect and the total number of units that are made available for these persons that are eligible, I guess my question is we can basically keep up with the tally cumulative effects as far as the total number of assistance that we provide, but if I were to look at the whole big picture is -- are the other municipalities, if this thing crosses jurisdictional lines, are they doing something similar, and if so, would it be added to the tally at the end of the day so you could really see the cumulative effect of this program?
>> the -- in Travis County as far as -- are you talking specifically for nsp funds?
>> yeah.
>> in Travis County it's only the city of Austin and Travis County that were awarded nsp funds.
I知 not quite sure what the city of Austin is doing with their nsp allocation as of yet.
my understanding is what they originally had proposed to do with the funds for whatever reason fell through and they weren't able to follow through on it.
but one advantage of pretty much leveraging our funds with habitat is that we'll actually be able to help more households below 50%.
>> and I don't agree.
it's just that if a governmental entity was dealing with it, it would be good to see what the total impact would be on the program itself.
that's basically what I was trying to get to.
>> okay.
>> and could michael give a brief explanation of how this would work on their side?
>> right.
again, my name is michael willard, president and coe of habitat for mu manty.
let me go back to ron's question and say that my understanding about what the city of Austin is doing with their funds is around multi-family units and not -- they would be towards rental.
and our program would be towards home ownership.
so that there is a difference in how the funds will be invested.
I知 not sure currently where the city stands on their plan, but with the county funds we will be able to assist more families that are below 50% ami and that's going to have a significant influence on those families who are able to work with.
we will take these funds and use them for construction, and then be able to create at the end of the construction process a forgivable loan that will be the obligation of that home buyer, forgiven over 10 years while they live in the home.
so it's a great way for these county funds to be able to be invested and really helps some low income families become homeowners in our community.
>> okay.
>> and let me add that the -- that the nsp requirements are that the state has to commit the funds by September.
if they don't commit the funds, it's given back to h.u.d.
h.u.d.
has initiated an nsp 3 program that will recycle nsp 1 funds and allocate it to areas that they consider in most need.
so most likely if the -- if our nsp funds aren't spent in Travis County, they'll be reallocated by h.u.d.
to another area of the country.
so this -- we feel that working with habitat that we will -- that it's easier to commit the funds because the commitment is when the -- when they're ready to -- when they have a lot and they're going to start construction.
so once the funds are committed, then you have a lot of time to do construction, close on it and do the whole process.
you're not under the same time commitment.
whereas what we're experiencing today in the financing is that we're having a lot of -- we have a lot of interest, we have a lot of people that want to use the program, and we're sending files to the state and they can't -- and they can't process them.
they're doing the best they can, but they -- there's this backlog.
and so there's a significant question of really how much could be -- we could commit under the original concept of the program.
>> so what's the deadline again for committing the funds?
>> the state's deadline is in -- this September.
>> so that's the deadline?
I believe the deadline is for the state, right?
September 1?
>> h.u.d.
has told the recipients, the state of Texas is the recipient, we're a subrecipient of the state.
you have to commit the funds by September.
if you have uncommitted funds, they come back to us and we're going to reallocate, recycle them in an nsp 3 program.
>> so if the state approves our request, we believe we can commit these funds by September 30th?
>> yes.
>> and on that, I guess how long --
>> my other question is --
>> sorry.
>> that's all right.
>> I知 looking at a June 2010 memo that the president of the corporation is asked to sign.
and I heard mr. Gonzalez make several changes in the amounts.
so is our backup accurate as of today?
>> the backup is not accurate.
so we're asking -- we're asking you to allow the president to execute a request, a different request that will essentially say that we're going to spend the 951,000.
>> 506.
>> that's substituted for what number?
>> 150.
>> I don't see 150 on my memo.
I see 458.
that's in the middle, highlighted.
are we looking at the same memo, a page and a half?
>> it has to do with the category.
the way under the contract it's reported is it's total home buyer assistance, but it's not really broken out by different categories.
what we were doing under the original allocation, we're moving -- there's three categories, permanent financing, home buyer assistance and in this case we're adding redevelopment to it.
under the original one we were moving 150,000 from an hba category to a new category of redevelopment.
right now since we're actually drawing in more than what we had originally put in hba, that is where that extra funds come.
if you look at exhibit b in the backup, before the permanent financing made up 987,000 and the balance was that 177.
but so the new change, just to be clear, if you're looking at exhibit b, the permanent financing we're proposing to be 242,580.
home buyer assistance will be 113,095.
and the redevelopment would be the 951,506.
so the total contract amount does not change, 1.3 million, just we're adding one new category.
and on the addition as far as time lines, the redevelopment category has a much more extended requirement for when funds actually have to be fully spent.
it's actually through the three-year, towards the end of the contract.
so that's one advantage of switching uses.
so again, the total amount of the contract has not changed.
we're just moving funds from the permanent and the hva down to redevelopment.
>> so the exhibit b change is not the letter?
>> exhibit b will change in the letter, will have to change correspondingly also.
we're changing the number of units.
originally the 150 was to assist five habitat --
>> I may be getting a lot more explanation than I would like.
so I can -- we can expect a different set of numbers in the memo plus the attachment.
plus the exhibit.
>> the letter and the attachment will reflect all the numbers that were stated here today.
>> this board trusts us implicitly, mr. Gonzalez.
>> I didn't get any backup on that?
my office wrote no backup.
>> it came out on Friday.
it was placed on the late backup hanging file.
>> judge, one more question.
I guess this is to the Austin habitat for humanity.
I guess with the emergence of the -- with the $951,506 for redevelopment, my question is when will the timeline be allowed -- new construction versus redevelopment, two different things.
what timeline would be looked at as far as making sure within the three-year period, even though we've adjusted some things, but coming up on the redevelopment, what kind of timeline are we looking at as far as making sure that that particular money is spoken for and also used?
>> good questions, Commissioner Davis.
let me first of all say that underneath the tuca's contract language and h.u.d.'s contract language, redevelopment -- a definition for redevelopment is new construction.
>> is new construction --
>> that's why we're asking for this change in repurposing of the funds to redevelopment so it can be used for new construction.
and then we'll be drawing the funds down as we start construction on a unit.
so you will see us starting to spend these funds as soon as this contract gets approved later this summer, throughout the remainder of the year and through next year.
and so we'll have -- we'll have time to pull it down, and I would say it would be easy for us to report back to you say at the end of the year where we are in terms of spending it down and then report back either quarterly or every six months just to let y'all know where we are in that construction.
>> that would be good to know because if I heard you earlier -- I値l shut up after this, but if I heard you earlier as far as looking at where the municipality, the city of Austin, for example, dealing with multi-family units, where there's some contract to what we're doing, looking at single-family units, but for ownership situations.
it would be good to know where we are because it really -- it's a real big deal for folks in this community to own their homes.
and I understand you need both, multi-family rental units, just as necessary as these are, but for those that can acquire home ownership, it's a real big deal.
so I壇 like to keep abreast of that.
>> okay.
thank you.
>> director Eckhardt?
>> wow.
heavy title.
I知 totally in favor of this because I知 concerned that we are able to utilize all this money before we go into the third phase because my hunch is that we're going to not be included in the third phase because we are in relatively better economic circumstances than the rest of the country.
but I did have a couple of questions so I can kind of understand the bigger picture.
this money has no local match.
this is all just federal cash, right?
>> right.
>> since it's only the city of Austin and Travis County who are utilizing it, I understand that there were some other municipalities that were eligible, but chose not to.
what does our foreclosed property stock look like at this point?
is there a lot of foreclosed property out there?
>> there is a lot of foreclosure activity.
one of the target neighborhoods we looked at, foreclosures made up 60 percent of all sales transactions over the last six months period.
so there are a lot of foreclosures hitting the market.
one of the things we're seeing, and a lot of it could have been the tax credit program that was running how they are being absorbed by the market fairly fast.
>> so it's not really needing the spur of this nsp in order to keep the neighborhoods stabilized, which is the point.
is that a fair -- the market is absorbing this faster than we can get our hands on them.
>> the market is absorbing the choice properties.
there are some that linger on the market a little bit longer.
and oddly enough sometimes they don't meet nsp requirements.
that's kind of where we're at.
>> and which I imagine is a good thing.
it's nice that the nsp program is structured in such a way that it's not just reabsorbing dogs that the market doesn't want.
and also that it's flexible enough for us to move it over to redevelopment from home buyer assistance of previously foreclosed properties.
the other question I had was with regard to the overall housing stock.
my understanding is that we still have -- we still have a glut of housing stock.
our starts are down.
so what does -- what effect, if any, or if any that we could tell, would moving 9 twist thousand dollars, is that even going to be a blip on the screen as far as increasing the housing starts in our area?
>> one thing I think that I actually support this is it's my understanding these lots are in existing subdivisions.
for whatever reason the builder didn't finish them out.
you can imagine we have a homeowner who bought a home in a subdivision and now they're looking at vacant lots and they may not be developed for awhile.
it does not really do much to improve property values.
and that's tying into the other requests we're doing to remove the discount requirement.
it's kind of counter intuitive when you're forcing a 15% discount to the nsp program.
what that actually does is drive down values because you're forcing a 15% discount at purchase.
well, that purchase now becomes part of the next cma that was done when someone else tries to purchase in that subdivision.
so habitat has the opposite effect where they're actually infilling vacant lots and actually improving values.
>> that's good news.
and in terms of the 50% area median income, is the area the -- how is the area defined?
because I知 thinking some portions of the county the median income is significantly different.
>> metropolitan area.
>> it's the metropolitan area.
okay.
thanks.
>> one question, one piece of advice.
so if the state approves our two requests, we believe that h.u.d.'s approval is not required?
>> it is not required.
>> now, I participated in a telephone conversation with h.u.d.
officials about the timeliness requirement for us to spend our cdbg money.
they are serious about the deadline.
and so I think we need to make sure we understand their definition of what committed is and whether that's sufficient to tie up the funds.
because -- they not only read us the riot act, but they kind of said hey, you don't do it by this date, basically your future funding is jeopardized.
so they didn't speak in terms of taking back what they had awarded us, but they figured if you have a hard time spending it, we will skip you the next cycle and give it to communities that clearly need it because they spend it.
so part of their definition of need is whether or not you obligate or spend it.
and so I really was kind of surprised that they were so adamant about that, but h.u.d.'s position is congress told them to spend the money and congress also told them that if you make awards to communities who don't use it, the money ought to come back and go to the communities that not only need it, but will use it.
>> that's good advice because nsp is under cdbg rules.
>> if you will talk with christie moffett and sherri fleming, she will be a whole lot more forceful about h.u.d.'s position than i, I believe.
we were all involved in the same conference phone call.
>> okay.
>> and these are h.u.d.
people from washington, d.c.
we were talking with.
so the people in san antonio were accommodating or more accommodating than the people in washington, d.c.
the washington, d.c., we were saying tyler had a real bad understanding about not spending the money.
>> that's free.
>> move froofl.
>> second.
>> and that we authorize the county judge to sign and the president of the corporation to sign the letter requesting these changes on behalf of the board.
>> second.
>> discussion?
all in favor?
that passes by unanimous vote.
>> thank y'all.
>> there being no further business for the housing finance corporation...
>> move adjourn.
>> second.
>> all in favor?
that passes by unanimous vote.
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Last Modified:
Tuesday, June 1, 2010 6:30 PM
