Texas Department of Housing and Community Affairs Board Meeting 2006 State of Texas
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TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS BOARD MEETING 2006 STATE OF TEXAS Wednesday, August 30, 2006 Capitol Extension Auditorium State Capitol 1100 Congress Avenue Austin, Texas PRESIDING: BETH ANDERSON BOARD MEMBERS PRESENT: VIDAL GONZALEZ C. KENT CONINE (Vice-Chair) MAYOR NORBERTO SALINAS SHADRICK BOGANY SONNY FLORES STAFF: MICHAEL GERBER, Executive Director ON THE RECORD REPORTING (512) 450-0342 INDEX AGENDA ITEM PAGE CALL TO ORDER ROLL CALL 4 PUBLIC COMMENT 4 AGENDA ITEMS Item 1 Consent agenda 51 Item 2 Presentation, discussion and possible approval of community development block grant HUD disaster recovery items 60 Item 3 Presentation, discussion and possible approval of multifamily private activity bond items 78 Item 4 Rescission of Agenda Item 7a) re Parkwest Apartments 122 Item 5 Presentation, discussion and possible approval of Draft Department Rules to be released for public comment 155 Item 6 Presentation, discussion and possible approval of policy and public affairs items 266 Item 7 Presentation, discussion and possible approval of financial administration items 271 Item 8 Presentation, discussion and possible approval of Single Family Related items 278 Item 9 Presentation, discussion and possible approval of multifamily division items 282 Item 10 Presentation, discussion and possible approval of portfolio management and compliance items 240 Item 11 Presentation, discussion and possible approval of Community Affairs Division 347 Item 12 Presentation, discussion and possible approval of Office of Colonia Initiatives Items 347 ON THE RECORD REPORTING (512) 450-0342 EXECUTIVE SESSION 154 OPEN SESSION 155 REPORT ITEMS Executive Director's Report none ADJOURN 353 ON THE RECORD REPORTING (512) 450-0342 4 P R O C E E D I N G S MS. ANDERSON: Good morning. I want to welcome each and every one of you all to the August 30 board meeting of the Texas Department of Housing and Community Affairs. We appreciate you being here this morning. And the first order of business is to call the roll. Vice- Chairman Conine? MR. CONINE: Here. MS. ANDERSON: Mr. Bogany? (No response.) MS. ANDERSON: Mr. Gonzales? (No response.) MS. ANDERSON: Mr. Flores? (No response.) MS. ANDERSON: Mayor Salinas? MR. SALINAS: Here. MS. ANDERSON: And I am here. We have a quorum, so we can begin. And I know that Mr. Gonzales and Mr. Flores on en route. Someone might want to call them and make sure they are in route. I don't know who we might ask to do that. This is a little earlier than we normally start these meetings, because we have a long and distinguished agenda this morning. So it is the Department's custom -- ON THE RECORD REPORTING (512) 450-0342 5 first of all, we greatly welcome public comment. It is the Department's custom to take public comment both at the beginning of the meeting or, if you potential witnesses prefer, at the actual agenda item on the agenda. I do have a number of people that would like to make public comment during this initial public comment period this morning. And the first witness is State Representative Chuck Hopson. MR. HOPSON: Ms. Anderson, thank you. Board members, thank you very much for allowing us to be here today. In East Texas, when the hurricanes came this time, as East Texans always do, we opened up our hearts, and we opened up our arms, and we opened up our pocketbooks. And we stepped up, and we went to work. We were overwhelmed. When the people started arriving, we ran out of gas. When the people really started arriving, we ran out of electricity. We pumped water with portable generators. We opened up pharmacies with portable generators, so they could fill -- FEMA had assigned certain people to fill prescriptions. The pharmacists said that doesn't make any difference. We will do what we think is best. Our cities responded; our counties responded, ON THE RECORD REPORTING (512) 450-0342 6 but we ran out of housing. We didn't have any place to put anybody. We put people in churches. We put people in high school auditoriums. We put people in band halls. We put people everywhere. And we had no housing. We had no showers. We had no restrooms. It was a mess. We were really overwhelmed. In the State Action Plan that has been approved by this Agency, approved by the Governor, and approved by HUD has a section in there, that it is okay for community shelters. And we would certainly advocate that you letting our local COGs do what they think is best with this money, so the people of East Texas can do the job when they need to do it. And thank you for letting me appear here before you today. And I would be happy to answer any questions. Thank you. MS. ANDERSON: Thank you, sir. Mr. Darrell Jack. MR. JACK: Good morning. My name is Darrell Jack, and my firm is Apartment Market Data. We do a large number of market feasibility studies for the TDHCA. The reason I come to you this morning during the public comment time is that later today, on Item 5A, you are going to be approving the 2007 draft of the ON THE RECORD REPORTING (512) 450-0342 7 Underwriting Rules and Guidelines that affect the market feasibility studies. There are several changes that have happened from 2006 to this draft. Originally conceived at the market analysts roundtable, the rules had a few minor changes. A few days later, staff included some sweeping changes, making the entire affordable housing rental program much more restrictive. This falls into three major categories. The first is, determination of rents not meeting the maximum program rents, making a project infeasible. This is going to have some pretty wide- ranging effects. The most significant one is that it is going to drive affordable housing out of the lower income areas into higher income areas. Not meeting specific needs in low income areas. The next item was lowering the capture rate to 50 percent for all but urban family projects. And that, and the third one, requiring a capture rate by unit type. This third one effectively has a potential of shutting down the entire affordable housing program. If you look at this sheet that I have distributed to you, the TDHCA says that the Houston MSA market study commissioned ON THE RECORD REPORTING (512) 450-0342 8 by the Department demonstrates that demand may exist for one unit type. For example, two-bedroom units at 40 percent of AMI, while no demand exists for three-bedroom units at 60 percent AMI. If you would turn to the last page of this, you will see that the three-bedroom 60 percent units in Houston are 93.5 percent occupied. So the Department has taken a poorly conceived study on the Houston area, and now we are making policy based on that poorly conceived idea. You know, I have included a large packet that covers all the major metro areas for the state. If we list the rents, the occupancies, by sub-market, within those different cities, and when I went through it, I didn't see particular unit types or incomes that stood out as not being in demand. So what I did, is I went and took some of the projects that we worked on in the past. Many of those that were approved, and have leased up successfully to determine what impact this has on the market. MS. ANDERSON: If you can just wrap up. MR. JACK: If you will look at the legal page, we took six different projects. Some approved, some in the process right now. And basically, ran it through the ON THE RECORD REPORTING (512) 450-0342 9 new traps. And five out of six of these properties wouldn't have made the underwriting. Now what that tells me is, this is a bad idea. And talking to staff, when these rules came up and as late as last week when I was discussing my findings with them, they haven't run the traps to find out what impact these capture rate requirements are going to have on the entire program. But as you will see, five out of six of the properties wouldn't have met this test. If you look at the last project, Willowbend, the developer is going to speak here this morning to that one. That project leased up in six months. They were doing 40 plus leases a month when they opened their doors. Yet because of the way that -- MS. ANDERSON: Mr. Jack, I need to ask you to go ahead and wind up. MR. JACK: Because of the way that the new rules were applied, that project would have never made. So you know, I would like to make the recommendation as you come to number 5A today, that you either table that item until the Underwriting Department has run the traps to know how this affects the program or vote it down completely. ON THE RECORD REPORTING (512) 450-0342 10 The 2006 rule served us well this year, and they can certainly do the same for us in 2007. Thank you. MS. ANDERSON: Thank you. Mr. Dan Allgeier. MR. ALLGEIER: I am Dan Allgeier. I am speaking today on behalf of Key West Village Phase II application for 2006 credits. It is 060140. This project is located in Odessa. And it is an application for $215,000 in tax credits for the construction of 36 units of additional housing for seniors. It is a Phase II, Key West Village, which is a successful seniors project, which is owned in part by the Housing Authority in Odessa.