[00:00:01]
THE MEETING TO ORDER AND ASK, UH, MR. QUINTO TO DO THE ROLL CALL, PLEASE.IF YOU COULD JUST INDICATE WHETHER YOU'RE HERE WHEN I CALL YOUR NAME DIRECTOR SEAN ALLEN.
I'M HERE WITH MY SPECIAL SELLERS DOG,
OH, YOU'RE HAVING HERE SOME CAMERA TROUBLES HERE? YEP.
DIRECTOR BEATRICE MARTINEZ HERE.
UM, I WILL NOW, UH, OPEN THE FLOOR TO ANY PUBLIC COMMENTS ON AGENDA ITEMS FOUR THROUGH SEVEN.
IF YOU ARE, I DON'T, NOBODY'S IN HERE TO SPEAK, BUT IF, UH, IF ANYBODY IS ON ONLINE AND WOULD LIKE TO MAKE ANY PUBLIC COMMENTS ON THOSE ITEMS, PLEASE LET US KNOW.
I THINK THERE ARE NO PUBLIC COMMENTS.
ITEM NUMBER FOUR, APPROVAL OF THE MINUTES FOR THE FEBRUARY 14TH, 2023, CITY OF DALLAS HOUSING FINANCE CORPORATION MEETING.
UM, SO IF I CAN GET, UM, A MOTION TO APPROVE AND A SECOND, THE MARTINEZ MOTION TO APPROVE.
AND DO I HAVE A SECOND? I'LL SECOND.
UM, ARE THERE ANY, UM, CORRECTIONS OR ADDITIONS THAT ANYBODY WOULD LIKE TO MAKE TO THE MINUTES? OKAY.
ITEM NUMBER FIVE, CONSIDER AND ADOPT A RESOLUTION APPROVING A MEMORANDUM OF UNDERSTANDING WITH WATERFORD PROPERTY COMPANY L L C WATERFORD FOR THE ACQUISITION OF DOMAIN AT MIDTOWN PARK, A MULTIFAMILY RESIDENTIAL DEVELOPMENT LOCATED AT 81 69 MIDTOWN BOULEVARD, AND THE CREATION WITH THE TEXAS SECRETARY OF STATE OF A LIMITED LIABILITY COMPANY TO OWN THE DEVELOPMENT WITH THE CORPORATION AS THE SOLE MEMBER TO BE NAMED D H F C DOMAIN AT MIDTOWN PARK LLC AND APPROVING THE FORM OF A LIMITED LIABILITY COMPANY AGREEMENT.
UM, SO WE HAVE ANOTHER APPLICATION FOR THESE ESSENTIAL BONDS, UH, AND WE ALSO HAVE OUR DEVELOPER HERE, MR. JOHN ROTH.
I, DO YOU WANNA COME UP? I HAVE YOUR STATION LOADED.
COME UP OVER HERE TO THE PODIUM ON AND, OKAY.
UM, WE'RE EXCITED TO BE BACK PRESENT A NEW, UM, BOND WORKFORCE HOUSING PROJECT CALLED THE DOMAIN AT MIDTOWN PARK.
UM, DOMAIN AT MIDTOWN PARK IS A 395 UNIT COMMUNITY LOCATED AT 81 69 MIDTOWN BOULEVARD.
UM, ERIN, IF YOU WOULDN'T MIND GOING TO THE FIRST SLIDE.
UM, WHAT WE LIKE ABOUT THIS PROJECT IS THAT IT'S IDEALLY SITUATED FOR THE WORKFORCE HOUSING, UM, PROGRAM.
THE 395 UNITS ARE IDEALLY LOCATED, UH, JUST NORTH OF WALNUT AVENUE, RIGHT OFF THE 75 FREEWAY.
UM, AND THE PROPERTY ITSELF IS A 2017 CONSTRUCTED ASSET THAT HAS PASSE AMENITIES IN UNIT FIXTURES.
IT HAS, UH, TWO POOLS, A, UH, WORKOUT FACILITY, A GOLF SIMULATOR, UM, AND I ACTUALLY HAD THE PLEASURE OF TOURING, UH, AARON THROUGH IT LAST WEEK, UH, WITH THE MANAGEMENT, UH, TEAM.
[00:05:01]
IF YOU DON'T MIND GOING TO THE NEXT SLIDE.SO THIS GIVES YOU A GOOD, UM, BEARING IN TERMS OF THE, THE, THE LOCAL LOCATION.
UM, BUT AS YOU START TO LOOK AT THE LOCATION, THE SITE IS IDEALLY LOCATED ON NEAR PUBLIC TRANSIT.
THE SITE IS 0.6 MILES FROM THE DART STATION RIGHT OFF THE 75 FREEWAY.
IT'S CLOSE TO AMPLE SHOPPING, WHICH INCLUDES A TRADER JOE'S THAT'S 0.5 MILES AWAY, AND THEN IT'S NEAR THE TEXAS HEALTH PRESBYTERIAN HOSPITAL JUST UNDER A MILE.
UM, AND THEN IN ADDITION TO THAT, FROM JUST A A, AN AMENITY STANDPOINT, IT'S NEAR THE HARRY MOSS PARK, UH, UH, TRAIL SYSTEM, WHICH WE THINK IS A GREAT AMENITY OR FOR THE TENANTS.
YOU DON'T MIND GOING TO THE NEXT SLIDE.
SO WHAT WE WANTED TO DO WAS JUST PROVIDE A REALLY GOOD AERIAL PICTURE IN TERMS OF, UM, OF THE SITE RELATIVE TO, UH, PUBLIC TRANSIT.
AND AS YOU CAN SEE ON THE NORTH, UM, UM, PORTION OF THE PHOTOGRAPH THERE, THE SITE IS ADJACENT TO THE RAIL RAIL LINE.
AND FROM JUST A PUBLIC TRANSIT STANDPOINT, WE THINK THIS SITE MAKES A TON OF SENSE FOR, FOR WORKFORCE HOUSING.
YOU DON'T MIND GOING TO THE NEXT SLIDE, ERIN? OKAY.
SO FROM AN AFFORDABILITY STANDPOINT, AND I KNOW THAT I WAS HERE LAST MONTH TALKING TO THE BOARD AND, AND THAT THE BOARD'S VERY FAMILIAR WITH, UM, THE STRUCTURE OF THESE TYPES OF PROJECTS.
BUT WHAT WE ARE PROPOSING TO DO IS TO INCOME RESTRICT HALF THE UNITS, UM, AT 80% AM I OR BELOW.
UM, AND THEN THE, THE ADDITIONAL UNITS WILL BE 40% WILL BE AT ONE 40, AND THEN 10% AT MARKET.
AND SO WHAT WE'VE DONE HERE IS OUTLINE WHAT WE SHOW THE, THE FIRST YEAR RENTAL SAVINGS TO BE, WHICH WILL BE $222 A MONTH AND WILL BE A 12.4 DISCOUNT TO MARKET, UH, IN TERMS OF THE IN PLACE RENTS, UH, TODAY.
SO FROM A WORKFORCE HOUSING STANDPOINT, WE THINK THIS PROPERTY MEETS THE GOALS AND THE NEEDS, UM, OF THE H F C AND THE PROGRAM THAT, UH, THAT YOU'RE ROLLING OUT FROM A POLICY STANDPOINT.
IF YOU DON'T MIND GOING TO THE NEXT SLIDE, AARON.
SO ONE OF THE THINGS WE WANTED TO DO, AND I I APOLOGIZE, IT'S NOT QUITE AS CLEAR ON THIS SLIDE, BUT WHAT WE WANTED TO DO WAS REALLY HIGHLIGHT WHAT THE MAIN DRIVERS OF EMPLOYMENT ARE.
AND SO WHAT YOU SEE, UM, ON THAT EXHIBIT RIGHT THERE IN THE RED, UM, AND I CAN, WE CAN EMAIL THIS TO THE GROUP AS WELL AFTER THIS HEARING, BUT ESSENTIALLY WHAT WE WE'RE TRYING TO DO IS SHOW WHAT THE JOB CLUSTERS ARE.
AND IN THE RED AREA IS WHAT WE CALL THE, THE COMPETITIVE MARKET AREA.
AND IF YOU LOOK AT THE JOBS, THE CLUSTERS OF JOBS, 20% OF THE JOBS ARE ARE HEALTHCARE RELATED COMPETITIVE MARKET AREA.
AND THEN ABOUT 14% OF THE JOBS IN THAT RED COMPETITOR MARKET AREA, UM, ARE SERVICE SERVICE RELATED.
ADDITIONAL MAJOR EMPLOYERS INCLUDE TEXAS HEALTH PRESBYTERIAN, WHICH I MENTIONED, COSTCO, SOCIAL SECURITY ADMINISTRATION, THE I INSTITUTE OF TEXAS, UM, AND THEN OTHER, OTHER MID TO SMALLER RETAIL OR RETAILERS.
SO FROM A A WORKFORCE SETTING AND FROM A, FROM A DEMOGRAPHIC STANDPOINT, WE THINK THAT THIS, THIS, UH, PROJECT IS WELL LOCATED AND REALLY MEETS THE NEEDS OF THE, THE, UH, THE TENANTS THAT YOU'RE TRYING TO SERVE OR THE TENANT COMMUNITY YOU'RE TRYING TO SERVE.
GOING TO THE NEXT SLIDE, AARON.
AND AGAIN, THIS IS, THIS IS FROM OUR MARKET STUDY.
SO THIS IS, THIS IS, AGAIN, A LITTLE BIT HARDER TO SEE ON, ON THIS, UH, PRESENTATION, BUT THESE ARE JOB CLUSTERS, UM, AND IT SHOWS WHERE THE MAJOR EMPLOYERS ARE APPROXIMATE TO, TO THE SITE AND COMMUTING DISTANCES.
AND SO, YOU KNOW, WE'VE SHOWN ADDISON HERE, RED RICHARDSON DOWNTOWN, UH, UM, DALLAS.
AND SO FROM JUST A COMMUTING STANDPOINT, UM, THE SITE'S REALLY APPROXIMATE TO YOU NUMBER THE MAJOR EMPLOYMENT CENTERS, UH, IN THE, IN THE DALLAS AREA.
YOU DON'T MIND GONNA, THE NEXT SLIDE, ERIN? SO ON THIS SLIDE, AND I KNOW A TOPIC THAT CAME UP IN OUR LAST HEARING WHEN WE WERE HERE TO PRESENT ANOTHER PROJECT WAS JUST CRIME STATISTICS.
UM, AND ONE OF THE THINGS WE WANTED TO HIGHLIGHT, UM, ON THIS PROJECT IS, IS THAT WHAT WE WERE ABLE TO DO WAS PULL, UM, STATISTICS FROM POLICE BEAT, UH, 2 41.
AND SO WHAT WE'VE DONE IS WE'VE LOOKED AT CRIME STATISTICS THIS YEAR RELATIVE TO, TO LAST YEAR, AND CRIME STATISTICS ARE DOWN.
UM, WE'VE GOT AMPLE DATA ON IT.
UM, I KNOW THIS WAS A TOPIC IN THE, IN THE LAST MEETING, SO WE JUST THOUGHT WE WOULD PROVIDE THAT TO SHOW THAT, UH, UM, THIS AREA, UM, CRIME
[00:10:01]
IS GOING DOWN, YOU KNOW, IT'S NOT A HIGH CRIME AREA RELATIVE TO OTHER, UH, BEATS IN THE DALLAS AREA.IF THERE'S ANY ADDITIONAL QUESTIONS, WE'RE, WE'RE HAPPY TO PROVIDE THAT DATA.
SO THE BIG, THE BIG THING THAT WE WANTED TO HIGHLIGHT FOR THIS PROJECT IS IN ADDITION TO THE RENTAL SAVINGS, WHICH WHAT WE'RE SHOWING IN AN AGGREGATE RENTAL SAVINGS OVER THE TERM OF THE BONDS, WHICH IS 40 YEARS, WILL BE, UM, $83,000,184 AND 141, OR EXCUSE ME, $83,184,141.
SO THAT'S WHAT WE'RE PROJECTING TO SHOW THE RENTAL SAVINGS, UM, OVER THE LIFE OF THE WHOLE PERIOD.
NOW, OBVIOUSLY, IF YOU WERE TO DO A 15 YEAR HOLD, YOU WOULD, YOU WOULD JUST REDUCE THAT, UH, FROM THERE.
UM, BUT OVER THE LIFE OF THE DEAL, WE'RE SHOWING THAT THERE WILL BE 277,282,000 OF NET SURPLUS PROCEEDS, UH, TO THE CITY, UH, ONCE THE BONDS ARE PAID OFF.
SO FROM A INVESTMENT STANDPOINT AND FROM AN AFFORDABILITY STANDPOINT, WE THINK THAT THIS PROJECT MAKES A LOT OF SENSE.
SO WE SHOWED THIS SLIDE LAST, LAST MONTH.
UH, UH, DON'T NEED TO, TO HIT HOME TOO MUCH ON IT, BUT YOU KNOW, REALLY THE GOAL OF THIS PROGRAM IS TO FIT THE NEEDS OF, OF THE HOUSING NEEDS FOR, FOR MIDDLE INCOME FAMILIES.
AND SO IN OUR PORTFOLIO, UNDER THIS FINANCING STRUCTURE, WE HAVE 4,014 UNITS.
AND IF YOU LOOK AT THE DEMOGRAPHICS OF THE TENANTS THAT WE'RE WE'RE SERVICING, UM, IT TRULY IS MIDDLE INCOME FAMILIES.
SO IT'S PUBLIC SAFETY EMPLOYEES, IT'S HEALTHCARE PROFESSIONALS, IT'S NONPROFIT EMPLOYEES, IT'S MEMBERS OF LABOR, UM, IT'S, UH, UM, CIVIL SERVANTS.
AND SO FROM A A TARGET DEMOGRAPHIC STANDPOINT, WHEN WE LOOK AT THIS PRO PROPERTY, YOU THINK THAT IT'S WELL LOCATED TO FIT THIS, UH, THIS DEMOGRAPHIC.
YOU DON'T MIND GOING TO THE NEXT SLIDE.
UM, AND AGAIN, FOR THOSE OF YOU THAT DON'T REMEMBER, UH, SO OUR COMPANY'S WATERFORD PROPERTY COMPANY, THE CO-FOUNDER, UH, WE HAVE 6,500 UNITS IN OUR PORTFOLIO.
IT'S A MIX OF TRADITIONAL TAX CREDIT, AFFORDABLE HOUSING TO MIDDLE INCOME HOUSING TO MARKET RATE HOUSING.
FOR THIS PROJECT IN PARTICULAR, WE'LL BE WORKING WITH GOLDMAN SACHS AS OUR BOND UNDERWRITER.
AND THEN WE WORK WITH GRAY STAR AS OUR PROPERTY MANAGER, WHICH WE HAVE A DEEP RELATIONSHIP, UH, WITH GRAY STAR.
YOU DON'T MIND GOING TO THE NEXT SLIDE.
HERE'S A SAMPLE OF OUR, OF OUR PORTFOLIO THAT WE'VE DONE UNDER THIS FINANCING STRUCTURE.
UM, THESE ARE ALL CLASS A PROJECTS SIMILAR IN SIZE AND SCOPE TO, UH, THE, THE PROPERTY THAT WE'RE HERE TO, TO DISCUSS WITH YOU TODAY.
UM, SO WE DO HAVE AMPLE EXPERIENCE, UM, IN THIS FINANCING STRUCTURE AND THIS ASSET CLASS, I THINK.
AND THEN JUST FROM AN HFC CONTROL STANDPOINT, UM, OBVIOUSLY I DON'T NEED TO TO WALK YOU THROUGH THE STRUCTURE, BUT ESSENTIALLY THE HFC WILL, UM, WILL OWN THE ASSET.
WATERFORD WILL BE RETAINED AS THE PROJECT ADMINISTRATOR.
THERE WILL BE A REGULATORY AGREEMENT THAT GOVERNS THE AFFORDABILITY IF GETS RECORDED ON TITLE.
UM, THE FINITE WATERFORD WILL BE RESPONSIBLE, RESPONSIBLE FOR PROVIDING, UM, FINANCIAL REPORTING, ALL THE ASSET MANAGEMENT REPORTS, UM, TO THE H F C.
UM, AND THEN AT THE END, UM, ALL THE PUBLIC BENEFIT IN TERMS OF RESIDUAL EQUITY REVERTS BACK TO THE H F C.
AND THIS IS, THIS IS JUST A TESTIMONY OF SOME OF OUR EXISTING TENANTS, UM, THAT ARE AT SOME OF OUR PROPERTIES AND THE DEMOGRAPHIC TYPES, UH, THAT OUR PORTFOLIO CURRENTLY SERVES.
UM, WHICH AGAIN, I'M HAPPY TO, TO GO INTO FURTHER DETAIL IF THERE'S QUESTIONS ABOUT THAT.
AND WITH THAT, UM, I'M HAPPY TO ANSWER ANY QUESTIONS.
UM, REALLY EXCITED TO BE BACK HERE AND, UM, WE THINK THAT THIS IS A GREAT PROJECT AND REALLY PUTS THE NEEDS OF THE AGENCY.
WE APPRECIATE YOU MAKING ANOTHER TRIP.
YEAH, I KINDA LIKE THE LOCATION BETTER AS WELL.
UM, SO, UH, WE WENT THROUGH THIS LAST TIME, BUT UM, I SAW SOME DISCREPANCIES BETWEEN THE, I GUESS IT WAS LIKE THE PRESENTATION AND THE MEMORANDUM OF UNDERSTANDING.
UM, SO THE, UM, IN ONE OF THE DOCUMENTS IT SAID THAT THE PROPERTY ADMINISTRATION FEE WOULD START IN YEAR FOUR AND THE HFC FEE WOULD START IN YEAR FOUR.
BUT THEN IN THE MEMORANDUM OF AN UNDERSTANDING, IT SPECIFICALLY SAYS THAT
[00:15:01]
THE, UM, THAT THE, UH, PROPERTY, UM, THAT YOUR THE WA WATERFORD FEE WOULD START IN YEAR ONE.AND IT DOESN'T SAY, IT DOESN'T SPECIFY FOR THE HFC.
SO, SO YEAH, SO, SO THAT, AND THAT'S A NUANCE IN, IN WHERE THAT GOT CONFUSED WAS IN THE UNDERWRITING.
AND WHAT I MEAN BY THAT, WHAT WE DO, WE'VE, WE'VE DONE 15 OF THESE TRANSACTIONS AND WHAT WE'VE LEARNED IN WORKING WITH GOLDMAN IS, IS THAT THERE'S CERTAIN WAYS THAT YOU CAN CARRY THOSE FEES.
SO IF YOU LOOK AT OUR MODEL, WE'VE CAPITALIZED THE HFCS FEE AND WATERFORD'S FEE THE FIRST THREE YEARS INTO THE BOND ISSUANCE THAT SITS IN A RESERVE ACCOUNT.
THAT MEANS THAT WE DON'T GET THAT DAY ONE, BUT THAT GETS CAPITALIZED INTO THE BOND ISSUANCE RATHER THAN PAYING THAT THROUGH CASHFLOW.
AND I THINK THERE WAS SOME CONFUSION ON HOW THAT WAS TREATED AND LEGAL COUNSEL WAS LOOKING AT THAT.
BUT TO BE CLEAR, THE HFC WILL GET THEIR FEE STARTING DAY ONE AS DOES WATERFORD, AND THE FIRST THREE YEARS WILL BE PAID OUT OF A RESERVE ACCOUNT, UHHUH AND DRAWN OFF THAT.
AND THEN STARTING IN YEAR FOUR, YOU'RE PAYING THROUGH CASHFLOW ON, ON THE ASSET.
DIDN'T YOU WANT INSTALLMENT THAT EARLIER? YEAH, NO, IT, IT'S, IT'S, IT'S BASICALLY IT'S A MONTHLY FEE.
SO YOU GET A MONTHLY FEE ACTUALLY FOR THE LIFE OF THE DEAL.
HE'S SAYING THAT THAT THE, THAT THE FIRST THREE YEARS, UM, ARE IN A RESERVE.
AND THEN STARTING IN YEAR FOUR IS OUT OF CASHFLOW, IT'S OUTTA CASHFLOW.
BUT I WOULD LIKE, UM, UH, RYAN, I WOULD LIKE, UH, FOR THE PART OF THE, UM, MEMORANDUM OF UNDERSTANDING THAT TALKS ABOUT THE HFC FEES, I'D LIKE THAT ONE TO SAY STARTING YEAR ONE AND ALSO, UM, OH, AND ALSO I WOULD LIKE IT TO SPECIFICALLY SAY THAT THAT'S PAID OUT AS AN OPERATING EXPENSE.
SO THOSE TWO THINGS WERE LEFT OUT OF THE MOU.
UM, AND THEN, UM, I DIDN'T SEE ANYTHING IN THE MOU, UM, SAYING THAT, UM, PROHIBITING THE ASSIGNMENT OF THE SPONSOR BOND, BUT I ASSUME THAT'S THE DEAL.
YEAH, NO, WE'RE FINE WITH THAT.
SO IF YOU WANT TO ADD THAT, SO RYAN, YOU COULD MAKE THAT WE'RE HAPPY CHANGES AS WELL.
AND THAT'S JUST SO YOU'RE CLEAR.
SO THAT'S, THAT'S PART OF THE BOND EVIDENCES AS WELL.
SO OUR INVESTORS, THEY DON'T WANT THAT AS WELL.
BUT WE'RE HAPPY TO HAVE THAT IN OUR MOU
AND OH, IT TALKS ABOUT CLOSING JUNE.
I THINK, UM, ERIN, I'LL LET YOU SPEAK TO THAT, BUT I DOUBT THAT THAT'S, I MEAN, I, WHAT, WHAT DO YOU THINK THE CITY COUNCIL AGENDA WOULD BE? UM, WE CAN, WE CAN GET IT ON THE AGENDA BEFORE THEN.
BUT ALL THE, AND HOW ABOUT ALL THE REPORTS? UM, SO REPORTS, SORRY.
SO OUR THIRD PARTY REPORTS ARE ALREADY WELL, WELL UNDERWAY.
SO WE PLAN ON HAVING THOSE DONE IN THE NEXT CANDIDLY 10 DAYS.
SO WE'VE ALREADY DONE OUR FULL PHYSICAL INSPECTION.
SO OUR MARKET STUDY IS COMPLETED.
UH, AGAIN, WE'LL WORK AT THE LEISURE OF THE CITY, BUT WE CAN DEFINITELY MEET THAT TIMEFRAME.
BUT THERE'S THAT GROUP THAT DOES OUR, UM, OUR UNDERWRITING YEP.
WE CAN GET THEM ENGAGED, BUT I DON'T, I DON'T THINK IT'LL TAKE 'EM UNTIL JUNE TO DO IT, ESPECIALLY IF ALL OUR THIRD PARTIES ARE IN.
JUST WANTED TO KNOW REALISTIC AGAIN, WE'RE WE, WE'RE, WERE YOU GONNA SAY SOMETHING? YEAH.
NO, AND LOOK, WE WE'RE JUST HAPPY TO BE HERE.
WE'RE HAPPY TO PARTNER WITH YOU.
THE ONLY THING I WOULD SAY IS, UM, WE ARE SEEING IN LIGHT OF JUST THE WORLD, THE FINANCIAL WORLD WE'RE IN, WE'RE SEEING BONDS RALLY QUITE A BIT.
UM, AND SO, UM, WE WOULD LOVE TO TO CATCH, CATCH THIS WINDOW TO BE ABLE TO FINANCE THIS PROJECT.
BUT AGAIN, WE'LL WORK ON YOUR SCHEDULE.
SORRY FOR, UM,
IT'S, I APPRECIATE YOU SAYING THAT.
I LOVE THAT IT'S NEAR THAT HUGE GREEN AREA, SO NICE.
I WOULD, I WOULD ADD, WE DID TOUR IT LAST WEEK AND THERE'S A LOT OF BRAND NEW THINGS GOING UP RIGHT AROUND IT.
UH, JUST NICE CLASS A PODIUM STUFF.
SO IT'D BE NICE TO GET SOMETHING LOCKED IN AFFORDABLY OVER THERE RIGHT NEAR THE HOSPITALS AND AT THE GROCERY STORE.
[00:20:01]
LOOKS LIKE.SO I THINK IT'S A, I MEAN, IT'S A HIGH QUALITY ASSET.
I THINK IT'S BLACKSTONE OR I LIVE IT'S BLACKSTONE.
YEAH, BLACKSTONE THAT OWNS IT.
THEY'RE NOT THE BUILDER, BUT STILL, I THINK EMORY WAS GROUP THAT EM REALLY BUILT IT.
IT'S A GREAT AREA WHERE VALUES APPRECIATE, I MEAN, THE SAFETY OF THE VALUE APPRECIATION'S PRETTY HIGH, UH, IN THAT LOCATION.
SO I THINK THE CITY WILL GAIN THE UPSIDE, UH, OR AT LEAST THE D HFC WILL GAIN THE UPSIDE FROM THE VALUE APPRECIATION.
AND JUST IN GENERAL, I LIKE THE STRUCTURE A LOT AGAINST, OR RATHER THAN THE PFCS, I LIKE THIS MUCH BETTER THAN THE, UH, PFC PARTNERSHIP STRUCTURE BECAUSE IT IS THE TILES TAKEN, UH, BY A CITY INSTRUMENTALITY, WHICH I JUST THANK ON ON THESE AC ACQUISITIONS, I THINK IS JUST A LOT MORE PALATABLE.
UM, SO
AND THAT'S, THAT'S A REQUIREMENT OF THE BOND OFFERING.
UM, AND ACTUALLY WE, WE'VE ALREADY GOTTEN THE APPRAISAL AN APPRAISED FOR SLIGHTLY HIGHER, UM, THAN, UH, THAN WE'RE UNDER CONTRACT ON.
SO FROM A, UM, LET ME START WITH GOING IN PER UNIT NUMBER.
SO WE WERE, YEAH, IT'S TWO 50, SO 250,000 A UNIT.
UM, AND THEN ON THE GOING IN CAP RATE, WE'RE, UM, ABOUT A 4% ON, ON INPUT.
SO, UM, YOU KNOW, RIGHT NOW, YOU KNOW, THERE, THERE IS SOME TURMOIL IN, IN THE CAPITAL MARKETS, UM, YOU KNOW, IN LIGHT OF WHERE INTEREST RATES ARE, WE'VE SEEN CAP RATES, YOU KNOW, CLASS A CAP RATES IN, UH, THIS MARKET.
WERE ABOUT THREE, THREE AND A HALF, CALL IT SIX, SIX TO SEVEN MONTHS AGO.
SO WE'VE SEEN, WE HAVE SEEN SOME MOVEMENT THAT SAID, YOU KNOW, REALLY WHAT, HOW WE LOOK AT THESE DEALS IS WHAT THE, THE CAP RATE IS ABSENT THE, UM, THE PROPERTY TAX, UM, OR WITH THE PROPERTY TAX EXEMPTION.
SO IF YOU LOOK AT THE, THE CAP RATE ABSENT THE PROPERTY OR ABSENT THE PROPERTY TAXES, WE'RE AT A SIX FOUR.
SO RELATIVE, AND HOW WE LOOK AT THAT IS WHERE WE THINK TREASURIES ARE GONNA GO AND WHERE FINANCING'S GONNA GO.
BECAUSE AT THE END OF THE DAY, YOU KNOW, THE CAP CAP RATE, YOU KNOW, THE METHODOLOGY USED BY BY THAT IS TO REALLY LOOK AT WHAT YOUR LEVERAGE IS AND YOU KNOW, IF IT'S THE APPROPRIATE VALUATION BASED UPON, UM, UM, WHERE THE, THE FINANCING MARKET IS.
AND AT THE END OF THE DAY, IF YOU HAVE A PROJECT THAT'S NEGATIVELY LEVERED, YOU KNOW, YOU SAY, OKAY, UM, YOU KNOW WHAT, WHAT'S CAUSING THAT? BUT WHEN YOU LOOK AT THIS PROJECT OR THIS STRUCTURE, JUST THE WHOLE WORKFORCE HOUSING STRUCTURE, AND YOU LOOK AT IT WHAT THE NEW CAP RATES ARE, MINUS, UM, THE PROPERTY TAXES, THE FACT THAT YOU CAN BUY THE SIX FOUR CAP WITH WHERE, YOU KNOW, THE CONVENTIONAL FINANCING WORLD IS CALL IT AT A FIVE AND A HALF, FIVE AND A QUARTER.
THAT'S HOW WE LOOK AT THESE TRANSACTIONS.
AND AT THAT POINT, YOU KNOW, NOW YOU'VE GOT A HUNDRED TO 125 BASINS POINTS WITH POSITIVE SPREAD.
AND THAT'S WHERE WE GET REALLY COMFORTABLE ON A, ON A PROJECT LIKE THIS.
BUT TO ANSWER YOUR QUESTION SPECIFICALLY, YOU KNOW, I THINK WE'RE GONNA SEE, UM, CAP RATES CONTINUE TO MOVE AROUND, AND THEN DEPENDING ON WHERE THE FED HEAD, THE FED HEADS, AND, YOU KNOW, YOU KNOW, I THINK THAT IN TERMS OF INTEREST RATE HIKES, YOU KNOW, IT'S KIND OF HARD TO TELL.
BUT THAT SAID, TODAY, YOU KNOW, THAT'S WHAT'S SO GREAT ABOUT THIS STRUCTURE IS THAT YOU LOOK AT THE IMPLIED CAP RATE ABSENT THE PROPERTY TAXES, AND YOU'RE, WELL, MORE, I THINK MORE MARKET CAP RATES, YOU KNOW, YOU'LL EVER GO
[00:25:07]
YEP, YEP.BUT IT, SO, YEAH, SO IT'S A GOOD QUESTION.
SO IT'S, IT'S THE CERTAINTY OF CLOSE.
AND WHAT I MEAN BY THAT IS REAL ESTATE, ALL, ALL INSTITUTIONAL REAL ESTATE IS DRIVEN BY THE CAPITAL MARKETS AND THEN THE EFFICIENCY OF CAPITAL.
AND SO RIGHT NOW I'LL GET TO PRICING, BUT I WANT TO GIVE A LITTLE BIT OF A, OF A PREFACE TO MY COMMENTS IS THAT RIGHT NOW WITH WHERE BONDS ARE, WE HAVE A MORE EFFICIENT USE OF CAPITAL RELATIVE TO WHERE EQUITY IS.
AND SO TO YOUR POINT, WE'RE MORE COMPETITIVE.
WE CAN BE A LITTLE BIT MORE COMPETITIVE, UM, IN HOW WE UNDERWRITE.
BUT MORE OF THE POINT, FOR INSTANCE, BLACKSTONE IS THE SELLER WE'VE BOUGHT FROM BLACKSTONE.
WE'VE BOUGHT FROM A LOT OF THE BIGGER INSTITUTIONAL SELLERS THAT THAT'S THE, UM, EQUITY RESIDENTIALS, THE BRS, UM, AND THEY, THEY KNOW WHO WE ARE AND THEY HAVE CONFIDENCE IN US.
BUT TO YOUR POINT RIGHT NOW, AND CAN, THIS IS, UM, YOU KNOW, FOR THE HFC, YOU HAVE AN AMAZING OPPORTUNITY RIGHT NOW TO ACQUIRE PROJECTS BECAUSE THE BOND MARKETS RIGHT NOW ARE THE MOST EFFICIENT WAY TO FINANCE, UM, CLASS A INSTITUTIONAL MULTIFAMILY.
AND SO THERE'S A WINDOW HERE TO REALLY TAKE ADVANTAGE OF THAT.
TO THAT SAID, YOU KNOW, I, I THINK WE'RE UNDERWRITING THESE PROJECTS TO, YOU KNOW, WHAT WE KNOW IS FINANCEABLE AND WHAT MAKES SENSE.
UM, BUT WHY SELLERS HAVE CONFIDENCE IN US IS THAT A, THEY KNOW OUR TRACK RECORD, BUT B THEY KNOW THAT THE BOND MARKET IS STRONG RIGHT NOW.
UM, AND SO, YOU KNOW, THEY'RE WILLING TO, TO SELL THESE ASSETS TO US.
WAS THIS, WAS THIS JUST DONE FOR THE DIRECT DIALOGUE WITH LIP CORP, BY, UH, BLACKSTONE? WAS THIS PART OF A COMPETITIVE PROCESS AS WELL? THE, OR YOU SAID THIS.
SO THERE WAS, THERE WERE OTHER OFFERS, SO IT WASN'T A FULLY MARKETED DEAL, BUT IT WAS A COMPETITIVE PROCESS.
SO THEY, THEY TALKED TO A COUPLE OTHER GROUPS, UM, BUT LIV CORE CAME TO US AND SAID, WE HAD, WE BOUGHT A DEAL FROM THEM LAST YEAR IN CALIFORNIA IN THE PROGRAM, AND THEY, THEY KNOW WHO WE ARE AND SAID, UM, YOU KNOW, WE WOULD LIKE TO SELL IT.
UM, AND SO OUR PRICE CANDIDLY WAS LOWER THAN THE OTHER GROUPS.
UM, BUT THEY HAD CONFIDENCE IN OUR, OUR ABILITY TO, TO TRANSACT.
ANY OTHER QUESTIONS? ALRIGHT, I WILL ENTERTAIN A MOTION IN THE SECOND MOVE TO APPROVE THE MOU.
DO I HEAR A SECOND? RIGHT? WAS THAT TONY? OKAY.
SO, UM, I WASN'T SURE IF THERE WAS SOMETHING I DIDN'T SEE
CAUSE I JUST HAD IN MY BRAIN THAT, YOU KNOW, WE TABLED LAST MONTH FOR THIS MONTH, AND SO I THINK WE NEED TO DISPOSE OF THAT, BUT, OKAY.
LET ME GO THROUGH FOR THE VOTE.
DIRECTOR GARCIA? DIRECTOR ALLEN IS ACTUALLY HERE.
SORRY, I DIDN'T REALIZE YOU HAD GOTTEN HERE BECAUSE I CAN'T SEE THE FULL SCREEN.
DIRECTOR ALLEN, HOW DO YOU VOTE? IN FAVOR.
UM, AND, UH, DIRECTOR, I'VE HAD THAT.
DIRECTOR DEPA AND DIRECTOR LEWIS.
YOU'RE CORRECT IN THAT ASSUMPTION.
IN FAVOR? IN FAVOR, THANK YOU.
UH, UM, VICE PRESIDENT GARCIA, IN FAVOR, UH, DIRECTOR ELLIS, IN FAVOR? UM, I'M IN FAVOR.
UM, DID DIRECTOR VERNON GET HIS CAMERA WORKING? I'M IN FAVOR.
[00:30:01]
SECRETARY PAGE AND TREASURER MARTINEZ IN FAVOR.NOW I FEEL LIKE JUST UNDER PARLIAMENTARY PROCEDURE OR WHATEVER WE TABLED FOR THIS MEETING, THE OTHER DEAL.
SO WHAT IS OUR OBLIGATION THERE? UM, IT WASN'T BROUGHT BACK TO THE AGENDA, SO I DON'T THINK THAT WE HAVE ANY OBLIGATION.
IS THAT OKAY? I JUST REMEMBER, SEE IN THE MINUTES IT SAYS, YOU KNOW, IT SPECIFICALLY SAYS, KELSEY, ARE YOU ON, UM, FIND MINUTES HERE.
IT, THE ATTORNEY IT SPECIFICALLY SAYS, I'M ON, IT WAS DETERMINED THAT ITEM SHOULD BE POSTPONED MOTION WAS MADE AND PASSED TO MOVE THE ITEM TO THE MARCH 14TH MEETING AGENDA.
SO I WAS JUST THINKING MAYBE WE TECHNICALLY HAVE TO, IS THAT, AND, AND I APOLOGIZE, I'M JUGGLING A COUPLE THINGS OVER HERE, BUT, UM, CHAIR HEALTH END IS THE, IS THE PLAN TO, TO RECONSIDER THIS AGAIN AT A FUTURE AGENDA? NO, JUST TO TABLE IT.
WELL, WE TABLED IT LAST TIME, BUT OUR MINUTES SPECIFICALLY SAY THAT IT'S GONNA BE BROUGHT BACK.
IT SHOULDN'T BE PUT ON THE AGENDA FOR THIS TIME, BUT IT'S NOW BEEN WITHDRAWN.
SO I DON'T KNOW, DO WE JUST REFLECT THAT IN THE MINUTES? KELSEY? KELSEY, JUST TO EXPLAIN HERE, WE HAD A VOTE LAST MONTH TO TABLE SOMETHING FOR THIS MONTH.
NOT THIS VOTE THAT WE JUST DID.
IT WAS SOMETHING COMPLETELY DIFFERENT.
BUT WE'RE WONDERING, DO WE NEED TO OFFICIALLY SAY THIS, THIS ITEM THAT WAS TABLED TILL THIS MONTH IS KILLED? OR SINCE IT'S NOT ON THE AGENDA ANYWAYS, IT'S BEEN WITHDRAWN.
DO WE NEED TO TAKE ANY ACTION? I THINK THAT, THAT'S A GOOD QUESTION.
I'M FEELING LIKE WE COULD JUST RECOGNIZE IN THE MINUTES THAT THE ITEM HAS BEEN WITHDRAWN, SEEMS TO ME THAT WOULD BE SUFFICIENT.
I THINK THAT THAT WOULD BE SUFFICIENT AS WELL.
I MEAN, BY WITHDRAWING THE ITEM, RIGHT? AND BY NOT SCHEDULING IT FOR ANOTHER TIME, YOU KNOW, WE'RE YOU'RE EFFECTIVELY KILLING THE ITEM.
YOU'RE NOT, YOU KNOW, YOU'RE POSTPONING IT INDEFINITELY.
BUT WE DON'T EVEN WANT TO, I THINK WE BROUGHT THAT TO RECOGNIZE THAT IT'S WITHDRAWN.
I THINK THAT, I THINK THAT THAT IS, THAT'S FINE.
I JUST DIDN'T WANNA FORGET TO MENTION THAT, SO NO, THANK YOU.
OKAY, NEXT ITEM IS, UM, ITEM NUMBER SIX ON THE AGENDA RESOLUTIONS FOR ROSEMONT AT MEADOW LANE.
A MULTI-FAMILY RESIDENTIAL DEVELOPMENT LOCATED AT 47 22 MEADOW STREET.
A, CONSIDER AN ADOPT A RESOLUTION APPROVING AN MOU WITH DECO PRESERVATION L L C FOR THE ACQUISITION AND REHABILITATION OF ROSEMONT AT MEADOW LANE, A MULTI-FAMILY RESIDENTIAL DEVELOPMENT.
B, CONSIDER AN ADOPT A RESOLUTION AUTHORIZING THE FORMATION WITH THE CORPORATION AS THE SOLE MEMBER OF ROSEMONT MEADOW LANE, MANAGING MEMBER L L C TO ACT AS THE MANAGING MEMBER OF MEADOW LANE PRESERVATION, L L C, THE PARTNERSHIP REHABILITATING OWNING AND MANAGING THE PROJECT AND APPROVING THE FORM OF A LIMITED LIABILITY COMPANY AGREEMENT.
C, CONSIDER AN ADOPT A RESOLUTION APPROVING THE CREATION OF A LIMITED LIABILITY COMPANY AND THE, WITH THE CORPORATION AS THE SOLE MEMBER WITH THE TEXAS SECRETARY OF STATE TO BE NAMED D H F C, ROSEMONT MEADOW LANE DEVELOPER L L L C AND APPROVING THE FORM OF A LIMITED LIABILITY COMPANY AGREEMENT.
D CONSIDER AN ADOPT A RESOLUTION APPROVING THE CREATION OF A LIMITED LIABILITY COMPANY WITH THE CORPORATION AS THE SOLE MEMBER WITH THE TEXAS SECRETARY OF STATE TO BE NAMED D H F C, ROSEMONT MEADOW LANE LANDOWNER, L L C AND APPROVING THE FORM OF A LIMITED LIABILITY COMPANY AGREEMENT R.
UM, SO LET ME GIVE YOU A LITTLE BACKGROUND ON THESE.
HOPEFULLY YOU GUYS WERE ABLE TO STUDY OUR BOARD PACKET OF MATERIALS.
SO THESE TWO NEXT TWO DEALS, ROSEMONT AT MIDDLE LANE AND THE PASANO.
UM, THEY WERE BOTH APPROVED FOR INDUCEMENT, UH, A FEW MONTHS AGO.
AND WE REFRAINED FROM NEGOTIATING AN M O U JUST BECAUSE OF THE UNCERTAIN NATURE OF GETTING A BOND RESERVATION.
UM, SO THESE ARE BOTH 4% LITECH DEALS.
UM, THEY ARE HEAVY REHAB COMPONENTS.
THIS PARTICULAR ONE IS A 264 UNIT DEAL.
DEVCO WILL BE OUR, OUR M MOU RIGHT NOW.
THE PROPOSAL IS TO PARTNER WITH DEVCO AND ALL OF THESE RESOLUTIONS ARE THE BACKGROUND AND THE, UH, PROCEDURAL KIND OF
[00:35:01]
FORMATION OF THESE COMPANIES AND HOW WE STRUCTURE OUR DEALS.AND SO FEW BOARD MEMBERS THAT ARE NEW, UM, BASICALLY WE HAVE THE OWNERSHIP GROUP THAT OWNS THE PROPERTY.
UM, AND THEN THE D H F C WILL BE THE GP OF THIS OWNERSHIP GROUP.
AND THEN TO FACILITATE THE PROPERTY TAX EXEMPTION WITH THE PARTNERSHIP, WE WILL BE THE ACTUAL LANDOWNER, UM, AND LEASE THAT LAND BACK TO THE, UH, TO THE PARTNERSHIP.
SORRY, I, I GOT OUR ATTORNEY HERE MAKING SURE I'M NOT LYING.
UM, AND SO THAT'S WHY WE HAVE ALL THESE SEPARATE RESOLUTIONS.
THEY JUST ARE, ARE ALL APPLYING TO THIS ONE DEAL.
UM, SO THIS ONE PARTICULAR ONE, WE INDUCED IT, UH, BACK A FEW MONTHS AGO FOR 45 MILLION I BELIEVE.
AND SO THEY, THEY RECENTLY RECEIVED THEIR ALLOCATION FROM T D H C A AND SO NOW THEY'RE READY TO MOVE FORWARD TO, TO MOVE TO CLOSING.
UM, AND SO THE PROPOSAL IS THAT WE PARTNER WITH THEM.
UM, WE SIGNED THIS MOU WITH OUR INTENTIONS OF, UM, MAKING ALL THIS HAPPEN, PROVIDING THE TAX EXEMPTION, AND THEN IN, IN EXCHANGE WE'LL GET A PIECE OF THE CASHFLOW AND OF THE DEVELOPMENT FEE THAT WILL BE, UH, EARNED UPON CLOSING OF THIS DEAL.
UM, AND I THINK WE ALSO HAVE GRIFFIN ZEL ONLINE FOR ANY QUESTIONS THAT, THAT YOU GUYS MIGHT HAVE.
ALL THIS IS, MY NAME IS GRIFFIN ZEL.
I AM THE DEVELOPMENT MANAGER WITH DEVCO, UH, OVERSEEING BOTH ROSEMONT AT MEADOW LANE.
AND, UH, THE NEXT PROJECT ON THE AGENDA HERE, UH, THE, SO, UM, I SAW A LOT OF DISCREPANCIES BETWEEN THE EXECUTIVE SUMMARY AND THE MEMO THAT WE GOT, UH, COVERING THIS AGENDA ITEM.
FOR EXAMPLE, THE SUMMARY SAYS 96 2 BEDROOMS AND A HUNDRED SIXTY EIGHT THREE BEDROOMS. THE MEMO SAYS SOME GARBLED NUMBER OF ONE BEDROOMS AND 212 TWO BEDROOMS. SO I DON'T KNOW WHAT THE PROPERTY HAS.
DOES ANYBODY THAT, THAT MAY HAVE BEEN A, A MIX UP THERE.
THE, THESE, THESE TWO MOUS, I THINK ARE, I BELIEVE ARE ESSENTIALLY IDENTICAL WITH THE EXCEPTION OF OBVIOUSLY EACH TIED TO DIFFERENT PROPERTIES.
UM, UH, ROSEMONT AND MEADOW LANE IS, UH, A MIX OF TWO AND THREE BEDROOMS. THIS IS A FAMILY PROJECT, AND SO IT'S PROBABLY THE, THE ONE IN THE SUMMARY, 96 2 BEDROOM AND A HUNDRED SIXTY EIGHT THREE BEDROOM.
UH, ROSEMONT MEADOW LANE IS A FAMILY PROJECT AND THE POSITANO IS A SENIOR PROJECT.
AND SO, UM, USUALLY YOU SEE THE, THE SENIOR PROJECTS SKEW MORE TOWARDS THOSE, THOSE SMALLER UNITS IN THE FAMILY PROJECTS WITH, UH, THE TWO AND THREE BEDROOMS. AND THEN IN, UM, IN THE SUMMARY IT'S, OR I CAN'T REMEMBER IF IT WAS THE EXECUTIVE SUMMARY OR THE MEMO TO US, BUT IT TALKS ABOUT THE PROPERTY MANAGER BEING AVENUE FIVE RESIDENTIAL, BUT THEN IN THE M O U IT SAYS H N N ASSOCIATES, L L C.
SO WHICH ONE IS IT? IT IS AVENUE FIVE.
UM, H AND N UH, IS DECO'S INTERNAL MANAGEMENT COMPANY THAT WE HAVE FOR OUR, UH, WASHINGTON STATE PROJECTS.
UM, THAT MAY HAVE JUST BEEN A MIX UP WITH THE ATTORNEYS THERE, BUT AVENUE FIVE IS CURRENTLY MANAGING THE PROPERTY AND WILL CONTINUE TO.
SO RYAN, I GUESS THAT'S A CHANGE YOU NEED TO MAKE.
UM, AND THEN, UM, IN THE MOU ON THE LIST OF, UM, MAJOR DECISIONS THAT WE HAVE TO CONSENT TO, I DIDN'T SEE THE RIGHT TO APPROVE THE CHANGE OF THE MANAGEMENT COMPANY, SO I'M THINKING MAYBE WE WANNA PUT THAT IN THERE.
UM, AND THEN
I ASSUME THERE ARE NO WASHER DRYER CONNECTION.
SO YEAH, THERE ARE ARE CONNECTIONS IN EVERY UNIT.
UM, BUT WE ALSO HAVE COMMUNAL LAUNDRY ROOMS. UH, OKAY.
EACH PROPERTY, BECAUSE MAYBE IT'S THEIR, IS IT THE TENANT'S RESPONSIBILITY TO PUT IN A WASHER DRYER IF THEY WANT ONE? YEAH, EXACTLY.
THEY CAN BRING THEIR OWN IF THEY WANT.
UM, THEN, UH,
AND UM, BUT I THINK IN THE M O U IT SAYS 50%.
SO, UH, FOR ROSEMONT AND MEADOW LANE, THE INTENTION IS, UH, 50% OF THE UNITS WILL BE AT 50% A M I AND 50% OF THE UNITS WILL BE AT 60% A M I.
SO I THINK THAT NEEDS CORRECTION IN THE MOU AS WELL.
[00:40:01]
UM, AND THEN, UH, OH, AND THEN ON THE RESOLUTIONS, THE POSITANO WAS ATTACHED AS THE MANAGING MEMBER RESOLUTION INSTEAD OF THE MEADOW.AND THEN ANOTHER THING THAT I NOTICED IS THAT, UM, WHERE IT, AGAIN, WHERE IT TALKS ABOUT THINGS THAT NEED CONSENT OF THE MANAGING MEMBER, UM, IN ITEM LITTLE XV 15, UM, IN THE MOU AT ONE POINT IT SAYS $25,000, ANY CHANGE OF $25,000 OR MORE IN PLANS AND SPECS OR, AND THEN IN SECTION SIX IT SAYS 50,000 OR AN AGGREGATE OF TWO 50.
SO I THINK MAYBE THOSE NEED TO, I DON'T KNOW WHAT THE, WHAT THE, WHICH ONE IT SHOULD BE, BUT IT SEEMS LIKE THEY SHOULD MAKE, YEAH, I'M NOT SURE.
I WOULD DEFER TO, TO COUNSEL THERE.
WE CAN TOUCH BASE AND CLEAN THAT UP.
I WILL NOW OPEN THE FLOOR TO ANYONE WHO HAS ANY QUESTIONS.
UH, SO PROBABLY GONNA ASK THE QUESTION ON BOTH OF THESE, BUT WE'LL JUST GET TO IT ON ROSEMONT MEADOW LANE.
SO I DON'T HAVE THE SOURCES OF USE IN FRONT OF ME.
WHAT'S THE, THE PARTNERSHIP IS BUYING THE, WHAT IS IN THE BUDGET FOR THE PURCHASE OF THE PROPERTY OUTRIGHT.
IT LOOKS LIKE THIS GOT PURCHASED IN DECEMBER OF 2021.
WHAT WAS OH, THAT WAS POSS YEAH, I CAN PROVIDE A LITTLE GOT IT.
GRIFFIN, THIS ONE HASN'T BEEN PURCHASED YET, OR, SO DECO HAS ACQUIRED BOTH OF THESE PROJECTS OH MY GOSH.
UM, ESSENTIALLY BECAUSE, UM, OF BOND COUNCIL'S OPINION IS THAT, YOU KNOW, UM, IF YOU DON'T CLOSE INTO THE RECENT INDICATION WITHIN 18 MONTHS, YOU CANNOT, UH, TAKE BASIS ON THE ACQUISITION PORTION FOR TAX CREDITS, WHICH EFFECTIVELY WOULD KILL THE DEAL.
UM, AND SO BOTH OF THESE PROJECTS WERE REQUIRED, UM, OR WILL CLO WOULD BE SLATED TO CLOSE AFTER 18 MONTHS OF THE INITIAL ACQUISITIONS.
AND SO WE ARE TRANSFERRING, UH, THESE PROPERTIES, UM, TO NEW ENTITIES, UM, AT CLOSING IN ORDER TO, TO SATISFY, UM, THAT REQUIREMENT.
AND HOW DOES THE PURCHASE PRICE THAT THE PARTNERSHIP, OUR PARTNERSHIP IS PURCHASING THESE AT, HOW DOES IT COMPARE TO THE ORIGINAL PURCHASE PRICE WHEN YOU ORIGINALLY ACQUIRED THESE DECO? YEAH, THEY'RE, THEY'RE BOTH INCREASED.
UM, I, I CAN WE, WHAT WE DID WAS WE HAD APPRAISALS, UH, COMPLETED BY NOVO GRAD AND WE USED, UM, THAT TO SET THE PURCHASE PRICE.
AND THEN WHAT'S THE, WHAT'S THE INCREASE? UM, YEAH, WHEN WERE THE APPRAISALS DONE? WHAT, AND WHAT, HOW BIG IS THE INCREASE FROM THE ORIGINAL PURCHASE PRICE WHEN DECO TOOK TITLE TO IT? YEAH, I WOULD NEED TO, LET'S SEE.
UM, SO MEADOW LANE WE CLOSED ON, UM, ABOUT JUST OVER TWO YEARS AGO.
UM, THE PRICE WENT FROM ABOUT 23 AND A HALF MILLION, UM, TO JUST OVER 30, UM, EXCUSE ME, 31.9.
AND THEN WHERE, UM, MY ASSOCIATE HERE IS, IS PULLING THE OTHER ONES.
I APOLOGIZE FOR NOT HAVING THESE, UM, OPEN IN FRONT OF ME.
UM, YOU KNOW, WE'VE SEEN SOME PRETTY SIGNIFICANT RENT GROWTH OVER THE LAST COUPLE YEARS.
UM, AND THE, THE ADDITIONAL, THE INCREASE IN PURCHASE PRICE, UM, THOSE FUNDS ARE BEING LEFT IN BOTH PROJECTS, UH, IN A FORM OF A SPONSOR NOTE, ESSENTIALLY TO FILL THE GAP IN ORDER TO MAKE THE DEAL FEASIBLE.
UM, GIVEN WHERE INTEREST RATES HAVE GONE OVER THE LAST YEAR OR SO, UM, YOU KNOW, EVER MOST DEVELOPERS IN INCLUDING OURSELVES ARE, ARE SEEING, UH, YOU KNOW, A, A GAP IN, IN FUNDING SOURCES.
AND SO WE WILL BE LEAVING, UM, YOU KNOW, SELLER NOTES IN, IN BOTH OF THESE.
AND, UH, THE POSITANO IT WENT FROM, SO YOU'RE SAYING YOU BOUGHT IT WITH SELLER FINANCES, IS THAT WHAT YOU'RE SAYING? NO, SO WHEN WE, WE ACQUIRED THEM, FEE SIMPLE, AND THEN ESSENTIALLY WHEN WE GO TO CLOSE INTO THE RE SYNDICATION, UM, THAT INCREASE IN PROCEEDS WILL BE LEFT IN THE, IN THE DEAL, UM, TO ESSENTIALLY, UM, FILL THE GAP IN FINANCING.
I THINK THAT SHOULD BE IN THE SOURCES REFLECTED IN THE SOURCES AND USES.
UM, I I BELIEVE THAT WAS PROVIDED, UM, IN THE BOARD PACKET.
[00:45:01]
IS THAT CORRECT, DARREN? YEAH, WE, WE SUBMITTED THE APPLICATIONS TO THE BOARD MEMBERS.SO, SO ARE Y'ALL IN INCREASING THE PURCHASE PRICE IN ORDER TO JUSTIFY MORE TAX CREDITS GOING INTO BASIS TO HELP CLOSE THE GAP ON THIS TRANSACTION? UH, I MEAN, EFFECTIVELY YES.
WE, THE APPRAISALS THAT WERE COMPLETED, YOU KNOW, WE, THOSE ARE COM COMPLETED BY A THIRD PARTY.
WE, WE, YOU KNOW, WE DIDN'T JUST ARBITRARILY COME UP WITH THE FIGURES IN ORDER TO, TO MAKE THE DEAL WORK, UM, THE APPRAISAL WAS COMPLETED AND THAT THOSE ADDITIONAL PROCEEDS YES, DO INCREASE, UM, THE, THE TAX CREDIT BASIS, BUT WE WILL NOT BE TAKING CASH OUT.
SO WHEN WERE THE APPRAISALS DONE? UH, THE APPRAISALS WERE COMPLETED, UH, BACK IN THE FALL BECAUSE WE NEEDED TO HAVE, UH, PSAS EXECUTED FOR OUR, UH, FOR OUR BOND APPLICATIONS TO GO INTO THE, OKAY.
SO THAT WAS ROSEMONT THE NEXT ONE.
POSITANO, WHAT WAS THE PUR, WHAT'D YOU PURCHASE IT FOR AND WHAT ARE WE GONNA BUY IT FOR? UH, DIRECTOR ELSE? I THINK WE HAVE TO WAIT TILL THE NEXT ITEM OKAY.
BUT IT'S THE SAME CONCEPT, CORRECT? RIGHT.
AND I'LL HAVE THAT NUMBER FOR YOU.
I'VE GOT IT IN FRONT OF ME WHEN WE DISCUSS THE POSTIT, I GUESS I WOULD LIKE TO SEE THE APPRAISALS.
SO GRIFFIN, I THINK COULD YOU REPEAT AGAIN? YOU, YOU, YOU'RE SAYING YOU'RE NOT TAKING ANY CASH OUT FROM THIS INCREASE, IT'S JUST HELPING THE DEAL PENCIL, CORRECT? THAT'S CORRECT.
SO THE WAY THE TAX CREDITS WORK, RIGHT? THEY'RE THE BASED OFF OF CERTAIN THINGS, AND MAYBE GRIFFIN CAN EXPLAIN THIS BETTER THAN I CAN SINCE HE'S BEHIND THE DEAL, BUT, UM, TO GET MORE TAX CREDITS, THIS VALUATION HAS INCREASED.
HE'S SAYING BASED ON RENTS HAVE INCREASED OVER THE LAST TWO YEARS.
UM, AND SO THEY'RE, THEY'RE ELIGIBLE FOR MORE TAX CREDIT BASIS.
AND SO TO GET THEIR REHAB PORTION TO WORK AND TO KEEP THIS, YOU KNOW, IN THE, IN THE POSITIVE, YOU KNOW, FINANCIAL SITUATION, UM, THE, THE INCREASED VALUATIONS ARE HELPING THEM, BUT THEY'RE NOT, HE'S SAYING THEY'RE NOT JUST INCREASING THE VALUATIONS TO TAKE A LARGER CHUNK OF CASH OUT OF THE PROPERTY AT THE CITY'S EXPENSE OR, OR AT WHATEVER PROCESS EXPENSE.
BUT, BUT, BUT THE INCREASED, UM, TAX CREDITS COULDN'T BE USED TO APPLY TO THE REHAB, CORRECT? COULD NOT.
THAT'S, THAT'S WHAT THEY ARE BEING APPLIED.
SO, SO IT'S NOT GOING TO DEVELOP A FEE, IT'S GOING TO REHAB.
SO WHERE IS IT REFLECTED WHAT THE ADDITIONAL REHAB IS GONNA CONSIST OF? WELL, THEY'VE, THEY'VE TOLD US LIKE ON, UM, ON MEADOW THE REHAB IS 50,000 PER UNIT.
I DON'T HAVE WRITTEN DOWN THE EXACT, UH, WHAT THAT COMES TO 50,000 PER UNIT AND THERE'S 264 UNITS, CORRECT.
IT, THE, THE INCREASED BASIS, YOU KNOW, GENERATES MORE TAX CREDITS, WHICH IN TURN GENERATES MORE EQUITY FROM THE TAX CREDIT INVESTOR, WHICH CONTRIBUTES TO OVERALL FINANCIAL FEASIBILITY OF THE PROJECT.
WHERE I'M GETTING AT, IT'S USUALLY WHEN WE'RE DOING THESE DEALS, YOU KNOW, WE'RE GOING IN THE DEALS, PUT UNDER CONTRACT WITH THE DEVELOPER.
THE EXISTING OWNER MAY BE GETTING A WINDFALL BECAUSE IT'S GOING THROUGH THE TAXPAYER PROCESS, BUT THEY AGREED TO IT PROBABLY A 12 MONTH CONTRACT PERIOD.
IT'S MORE OF A HIGH RISK CONTRACT PERIOD.
WE'RE GOING, YOU KNOW, RESERVATION PROCESS.
SO GETTING A OVERLY, I WOULDN'T CALL INFLATED, BUT JUST GETTING A HIGH PRICE ON THE DEAL MAKES SENSE CUZ THEY'RE INCURRING SOME THIS TO IT IS A LITTLE DIFFERENT CUZ WE'RE GOING IN WITH A PROPERTY THAT THE DEVELOPER HAS OWNED FOR X AMOUNT OF YEARS.
THEY'RE GETTING, THEY'RE GETTING A WINDFALL, BUT ON TOP OF THAT THEY'RE GETTING THE, THE DEVELOPER BE ON TOP OF THAT.
JUST MAKING SURE THAT THIS IS A MARKET PRICE THAT'S BEING BOUGHT AT IS JUST THE CONCERN GIVEN THE LAST YEAR WE SAW A MASSIVE DOWNTURN IN THE CAPITAL MARKETS AND IMPACT OF PROPERTY VALUES, WHICH HAS HAPPENED, YOU KNOW, IN THE LAST 12 MONTHS.
SO I THINK THAT'S WHAT I'M JUST TRYING TO GET MY MIND AROUND THAT, YOU KNOW, THE DEVELOPER IS GETTING, IF THERE IS A WINDFALL, IT'S JUSTIFIED.
BUT IT SOUNDS LIKE THE GAP BETWEEN THAT 23 MILLION AND
[00:50:01]
WHAT, 31 MILLION THAT'S NOT GOING TO, THAT MONEY IS NOT GOING TO THE EXISTING PARTNERSHIP THAT OWNS THE DEAL.IS THAT WHAT I'M HEARING? OR IS THAT, OR IS THAT, YOU KNOW, AN INCREASE IN PROCEEDS OR IS THAT A KIND OF A WINDFALL THE EXISTING OWNER IS GETTING THAT, THAT INCREASE WILL BE, I I, I DON'T, I I I'M NOT SURE I CAN EXACTLY EXPLAIN THE MECHANICS BECAUSE I THINK TECHNICALLY THE PROCEEDS YEAH, THE 8 MILLION INCREASE, WHERE'S IT GOING? THE 8 MILLION? YES.
THE 8 MILLION DIFFERENCE BETWEEN WHAT YOU BOUGHT IT FOR AND WHAT THE, THE, OUR PARTNERSHIP WE PAYING FOR, WHERE DOES THAT GO? IN THIS, RIGHT, IN THIS, IN THIS TRANSACTION THAT IS GOING TO FUND, UH, YOU KNOW, A, A SOFT NOTE, A A SPONSOR NOTE, UM, THAT IS BEING USED TO DIRECTLY FILL THE GAP TO MAKE THE PROJECT FEASIBLE, TO CAPITALIZE THE EXISTING DEAL.
OH, THE, THE DEAL THAT'S BEING PROPOSED, NOT EXISTING DEAL, THE DEAL THAT'S BEING PROPOSED.
THAT 8 MILLION IS GOING TO HELP CAPITALIZE THE DEAL THAT'S BEING PROPOSED RIGHT NOW, CORRECT? CORRECT.
IT WILL BE LEFT IN AS, AS A A SPONSOR LOAN.
WE, WE, WE WILL NOT BE RECEIVING THAT CA THAT CASH OUT.
IT'LL BE LEFT IN THE DEAL AS A LOAN TO, UH, YOU KNOW, TO COVER THE GAP IN FINANCING.
SO WAIT, SO THERE'S GONNA BE A SPONSOR LOAN THAT'S GONNA, THAT IT'S GONNA HAVE TO BE REPAID? CORRECT.
UM, IT, IT, IT WILL ACCRUE INTEREST UNTIL THERE'S A CAPITAL EVENT, YOU KNOW, POST YEAR 15.
AT WHAT RATE? UH, LONG-TERM A F R I MEAN, I MEAN IT'S, I I THINK WE'RE JUST ALL CONFUSED BECAUSE WE'VE NEVER HAD A SPONSOR LOAN IN ONE OF OUR DEALS.
SO THEN IN THE END, WELL, WHAT WE THOUGHT WAS GONNA BE LIKE A, UM, 70 30 SPLIT OR WHATEVER OF SALE PROCEEDS ISN'T REALLY GOING TO BE CORRECT.
MY UNDERSTANDING IS THAT THE, I I'M NOT SURE EXACTLY WHERE IN THE, THE WATERFALL, THE, THE SOFT NOTE SITS, UM, BUT IT WILL NEED TO BE REPAID AT THE END, CORRECT? YEAH.
I GUESS, UM, I THINK THE OTHER THING THAT'S CAUSING OUR CONFUSION IS THAT MAYBE WE HAVEN'T REALLY SEEN A PROFORMA.
AND SO I THINK MAYBE WE WOULD ALL HAVE A BETTER UNDERSTANDING OF THIS WITH A PROFORMA, RIGHT? WE TALKED ABOUT YEAH, WE'RE HAPPY TO PROVIDE THAT.
I, YOU KNOW, ERIN OR BRAXTON WAS I THOUGHT WE'D PROVIDED ONE TO YOU.
YEAH, I MEAN THIS, THIS, THIS PROFORMA, WE, WE HAD A, BACK WHEN WE PREVIOUSLY CONSIDERED THE DEAL, LIKE IT, IT CAME WITH THE APPLICATION.
SO, BUT WE NEVER GOT THE APPLICATION, THE FULL APPLICATION ON EITHER OF THESE DEALS, I BELIEVE.
I DON'T BELIEVE, UH, WE CAN, WE CAN RE RESUPPLY THAT TO EVERYONE.
SO I'M NOT SURE THAT, WELL, I MEAN BOTH.
YEAH, I MEAN, LOOK, I'VE, WE HAVE TALKED ABOUT THIS BEFORE.
WHENEVER DEALS COME UP FOR US, EVEN IF IT'S THE BOND INDUCEMENT OR, UH, UH, FOR A PARTNERSHIP, WE JUST GOTTA HAVE PROFORMA, YOU KNOW, THE 15 YEAR, HOWEVER YEAR PERFORMER, UH, LOOKING AT THIS AND THE SOURCES OF USES, I MEAN, THAT JUST, IT'S A VISUAL THAT HELPS US ASSESS THIS DEAL.
AND PROBABLY WE COULD HAVE SPOTTED THIS AND MAYBE UNDERSTOOD THIS A LITTLE BETTER PRIOR TO THE MEETING AND MAYBE WE COULD HAVE, YOU KNOW, HAD THESE QUESTIONS ANSWERED.
SO I THINK, LOOK, SELLER FINANCING IS HAPPENING IN THIS, IN THIS ERA TO GET DEALS DONE.
AND WE DO GET A LOT OF SOFT LOANS, LIKE, WHAT DO YOU CALL THE BLOCK? COMMUNITY LOANS, WHATEVER WE DO, CDBG, YOU KNOW, LOANS.
THIS IS JUST SOMETHING WE'VE NEVER
[00:55:01]
DONE WHERE OUR DEVELOPER WE'RE PARTNERING WITH IS LENDING THE PARTNERSHIP MONEY.SO THAT'S SOMETHING NEW AND SOMETHING WITH ACCRUING INTEREST.
IT'S JUST SOMETHING WE'VE NEVER, UH, SEEN.
SOUNDS LIKE, AT LEAST NOT NEVER, BUT I DON'T, IT LOOKS LIKE THE BOND RESERVATION EXPIRES OVER THE BEGINNING OF JULY.
FROM A TIMING PERSPECTIVE ON THIS FIELD, DO WE HAVE BANDWIDTH, THE SCHEDULE TO POSTPONE THIS FOR A MEETING SO WE CAN GO THROUGH THE PROFORMA AND MAKE SURE WE DON'T RUN OUT THE RESERVATION? YEAH, I THINK WE JUST WILL NEED TO HAVE THE MOU IN PLACE PRIOR TO CLOSING.
UM, YOU KNOW, WE'RE HAPPY TO PROVIDE SUPPLEMENTARY INFORMATION, UH, SO THE BOARD CAN MAKE A, YOU KNOW, AN INFORMED DECISION.
I DON'T EVEN KNOW IF IT'S SUPPLEMENTARY.
I THINK IT'S COMPLETE INFORMATION, RIGHT? IF IF YOU'RE ASKING FOR A VOTE, YOU'VE GOTTA PROVIDE THE BOARD WITH COMPLETE INFORMATION TO REVIEW.
NOT, THERE'S A DIFFERENCE BETWEEN SUPPLEMENTARY MEANINGS, SOME, AN EXTRA INFORMATION THAT WASN'T PREVIOUSLY REQUESTED.
BUT I THINK THERE'S AN EXPECTATION THAT PERFORMANCE ARE JUST STANDARD INFORMATION THAT'S PROVIDED.
AND I, I THINK THERE'S CONFUSION.
I THINK WHEN WE VOTED FOR THIS PREVIOUSLY, I THINK THE ENTIRE APPLICATION WAS EVALUATED WITH THE PROFORMA AND IT, AND THIS MAY NOT HAVE COME UP UP BECAUSE WE WEREN'T VOTING ON THE MOU PERCENT.
AND SO THAT'S ON STAFF, THAT'S ON US TO RESUPPLY THAT.
AGAIN, UM, WE'RE JUST, WE WERE BRINGING BACK THE MOU TO DISCUSS THE DEAL TERMS, NOT ALL OF THE OTHER PREVIOUS ITEMS. SO, UM, AGAIN, THAT'S ON ME, BUT AS IT IS, UM, WE HAVE GRIFFIN HERE FOR, FOR ANY MORE QUESTIONS, UH, THAT YOU GUYS MIGHT HAVE.
SO I'LL OPEN THE FLOOR FOR ANY OTHER QUESTIONS.
AND THIS IS JUST ON MEADOW RIGHT NOW.
I, I DON'T HAVE A QUESTION, BUT I DON'T FEEL COMFORTABLE WITH, WITH NOT HAVING ALL THE INFORMATION.
I AM A PICTURE PERSON, YOU KNOW, THAT'S JUST ME.
AND THEN ALL THE QUESTIONS THAT WERE, UM, ASKED.
SO WE NEED TO CLEAN THIS UP BEFORE WE VOTE ON IT.
SO I'M IN FAVOR OF TABLING IT.
I'LL SECOND, UH, THE MOTION TABLE.
SO THERE'S A MOTION ON THE FLOOR.
UM, OKAY, SO LET'S GO THROUGH AND SEE, OH, AND I THINK LAST TIME, I'M SORRY, I'M SORRY TO INTERJECT.
UM, KELSEY SFO, CITY ATTORNEY'S OFFICE.
UM, GOING BACK TO THE IDEA OF THE, UM, NOT WANTING TO, TO ACCIDENTALLY POSTPONE THIS TO AN INDEFINITE TIME, JUST IF IT IS THE MOTION ON THE FLOOR TO POSTPONE IT TO A CERTAIN TIME OR TO POSTPONE IT AF TO UNTIL AFTER A CERTAIN ACTION IS TAKEN TO NEXT MONTH'S MEETING.
AMENDING TO NEXT MONTH'S MEETING.
AND THE SECOND IS OKAY WITH THAT SECOND.
SO THERE'S A MOTION ON THE FLOOR TO TABLE THIS ITEM, UM, UNTIL NEXT MONTH'S MEETING, WHICH IS APRIL.
WHAT? IT WAS EASY WHEN IT WAS FEBRUARY AND MARCH CUZ IT ALWAYS MATCHES, BUT
DIRECTOR ALLEN, CAN YOU HEAR ME? YES.
UH, IN FAVOR OF POSTPONING TO NEXT MONTH.
UM, DIRECTOR GARCIA IN FAVOR OF TABLING
IN FAVOR, DIRECTOR COLLINS IN FAVOR OF TABLING FOR NEXT MONTH.
UM, VICE PRESIDENT GARCIA, IN FAVOR, UH, DIRECTOR ELLIS.
IN FAVOR? UH, I'M IN FAVOR, UM, DIRECTOR VERNON IN FAVOR, UM, SECRETARY PAGE IN FAVOR AND TREASURER.
OKAY, SO THAT ONE IS TABLED IN, I SUSPECT, YOU KNOW, WE HAVEN'T READ THROUGH THE AGENDA ITEM, BUT I SUSPECT IT'S GONNA BE THE SAME FOR THE NEXT ONE.
BUT I'LL GO AHEAD AND READ THROUGH THE AGENDA ITEM.
UM, SO THIS IS THE AGENDA ITEM NUMBER SEVEN,
[01:00:01]
RESOLUTIONS FOR THE POSITANO, A MULTI-FAMILY RESIDENTIAL DEVELOPMENT LOCATED AT 25 19 JOHN WEST ROAD.A, CONSIDER AN ADOPTER RESOLUTION APPROVING AN MOU WITH DEGO PRESERVATION L L C FOR THE ACQUISITION AND REHABILITATION OF THE POSITANO, A MULTI-FAMILY RESIDENTIAL DEVELOPMENT.
B, CONSIDER AN ADOPT A RESOLUTION AUTHORIZING THE FORMATION WITH THE CORPORATION AS THE SOLE MEMBER OF D H F C, POSITANO MANAGING MEMBER L L C TO ACT AS THE MANAGING MEMBER OF POSITANO APARTMENTS L L C, THE PARTNERSHIP REHABILITATING OWNING AND MANAGING THE PROJECT AND APPROVING THE FORM OF A LIMITED LIABILITY COMPANY AGREEMENT.
C, CONSIDER AN ADOPT A RESOLUTION APPROVING THE CREATION OF A LIMITED LIABILITY COMPANY WITH THE CORPORATION AS THE SOLE MEMBER WITH THE TEXAS SECRETARY OF STATE TO BE NAMED D H F C, POSITANO DEVELOPER L L C AND APPROVING THE FORM OF A LIMITED LIABILITY COMPANY.
IN AGREEMENT D, CONSIDER AN ADOPT A RESOLUTION APPROVING THE CREATION OF A LIMITED LIABILITY COMPANY WITH THE CORPORATION AS THE SOLE MEMBER WITH THE TEXAS SECRETARY OF STATE TO BE NAMED D H F C, POSITANO LANDOWNER, L L C, AND APPROVING THE FORM OF A LIMITED LIABILITY COMPANY AGREEMENT.
UM, SO I THINK, UM, THIS ONE IS THE SAME, IS, DOES THIS ONE ALSO HAVE A SPONSOR, A SPONSOR NOTE? YES, THAT'S CORRECT.
AND WHAT IS THE AMOUNT OF THAT SPONSOR NOTE? ONE SECOND HERE.
SO THE, THE, THE CURRENT INCREASE, THE INCREASE, UM, IN ORIGINAL PURCHASE PRICE TO THIS PURCHASE PRICE IS, IS 26 MILLION TO 30.6.
UM, THE SPONSOR NOTE WE'RE AT RIGHT NOW IS, IS 6 MILLION.
SO WE, IT WOULD BE THAT 4.6 MILLION, UM, IN, IN INCREASED VALUE PLUS, UH, ANOTHER 1.4 MILLION OR SO FROM DEVCO, UH, COMING INTO THE DEAL.
UM, SO THAT 1.4 MILLION, YOU'RE SAYING YOU'RE PUTTING CASH OR THAT'S STILL PART OF THE INCREASE IN THE PRICE? NO, SO THE, THE INCREASE IN IN PRICE IS, IS 4.6 MILLION.
THAT IS, THAT IS MONEY THAT DEVCO IS GONNA HAVE TO COME OUT OF POCKET ON, UM, YOU KNOW, ON, ON BOTH AND, AND NOT TO GO BACK, BUT, UH, YOU KNOW, BOTH THESE, THESE DEALS HAVE KIND OF SIMILAR, UM, STRUCTURES IN THAT, YOU KNOW, WITH THIS SPONSOR LOAN, UH, THE INCREASED PURCHASE PRICES ALL BEING LEFT IN AS WELL AS DEVCO NEEDING TO PUT ADDITIONAL CASH TO FUND THE REMAINING DEFICIT.
UH, YOU KNOW, IN THIS ECONOMIC ENVIRONMENT, UH, YOU KNOW, WHERE INTEREST RATES HAVE GONE OVER THE LAST 12 MONTHS, UH, AND WHERE, WHERE WE PURCHASED THESE PROPERTIES AT AND YOU KNOW, WHERE EQUITY PRICING IS COMING IN THERE, THERE ARE GAPS IN ALL OF OUR PROJECTS.
WE HAVE, UH, WE ARE DOING EIGHT RES INDICATIONS ACROSS THE STATE THIS YEAR AND EVERY SINGLE ONE, WE'RE HAVING TO LEAVE MONEY IN THE DEAL, UM, BECAUSE IT'S THE DIFFERENCE IN, IN THE PROJECT GETTING COMPLETED OR NOT.
YOU KNOW, WE BELIEVE IN THE LONG-TERM VALUE OF THE ASSETS AND WE KNOW WE'RE COMFORTABLE LEAVING OUR OWN CASH IN THE DEAL IN ORDER TO GET THE REHABILITATION COMPLETED, STABILIZE THE PROPERTY, AND EXTEND, UH, THE EXTENDED USE LIFE BECAUSE WE BELIEVE, UH, YOU KNOW, THESE ARE QUALITY ASSETS, UM, YOU KNOW, THAT CONTRIBUTE GREATLY TO, UH, THE POPULATIONS, YOU KNOW, IN DALLAS, UM, AS WELL AS HOUSTON AND SAN ANTONIO WHERE OUR OTHER PROJECTS ARE.
AND I, YOU KNOW, WE WHOLEHEARTEDLY AGREE WITH THE FACT WITH, UM, THE BENEFIT OF, UM, REHABBING SOME OF THESE PROPERTIES, UH, THAT HAVE GONE INTO DISREPAIR OR MIGHT, UH, NO LONGER BE, UM, TO SERVE THE AFFORDABLE POPULATION.
I THINK, UM, YOU KNOW, WE'RE ALL FOR THAT.
I THINK WE JUST HAVE TO ANALYZE, YOU KNOW, IF YOU'VE GOT, NORMALLY IF YOU PUT MONEY IN A DEAL, THEN YOU GET AN EQUITY INTEREST, RIGHT? AND SO YOU GET SOME DISTRIBUTIONS OFF OF CASHFLOW.
YOU ALSO GET YOUR DEVELOPER FEE, AND I THINK WE'RE JUST TRYING TO PUT OUR ARMS AROUND THIS ADDITIONAL EXPENSE, YOU KNOW, THAT THAT'S, UH, ADDITIONAL MONEY THAT'S COMING OUT OF THE PROJECT WHEN IT'S SOLD, YOU KNOW, AFTER YOU'VE ALREADY GOTTEN, I'M ASSUMING YOUR EQUITY INTEREST SHOULD REFLECT WHAT YOU'VE GOT
[01:05:01]
INVESTED IN THE DEAL AND YOU'RE GETTING A DEVELOPER FEE.SO I THINK WE JUST HAVE TO GET OUR ARMS AROUND WHERE ALL OF THAT, UM, PANS OUT RIGHT.
AND, AND WE WILL WORK TO GET, YOU KNOW, UPDATED PROFORMAS OVER, YOU KNOW, TO YOU ALL, UM, YOU KNOW, IN BOTH THESE PROJECTS, DF, D H F C WILL BE PARTICIPATING IN THE DEVELOPER FEE WITH US, AND I THINK WE'RE AT 37.5% OF TOTAL DEVELOPER FEE THERE.
UM, YOU KNOW, SO THERE IS AN ECONOMIC INTEREST, YOU KNOW, THROUGHOUT THE LIFE OF THE WHOLE, AND, AND NOT JUST ON THE, THE BACKEND OF THE CAPITAL EVENT FOR D H F C.
UM, BUT WE UNDER, WE UNDERSTAND THAT YOU ALL WANT BETTER, UNDERSTAND KIND OF THE STRUCTURE AND, AND WE'LL WORK TO, YOU KNOW, GET THE UPDATED PROFORMAS OVER, UM, AS WELL AS THE APPRAISALS SUPPORTING THE PURCHASE PRICES.
UM, YOU KNOW, WE, WE WANNA WORK TOWARDS, TOWARDS A, A PARTNERSHIP HERE IS, YOU KNOW, THESE DEALS FRANKLY ARE NOT FINANCIALLY FEASIBLE WITHOUT THE TAX EXEMPTION.
UM, ANY OTHER QUESTIONS? UH, HAVE Y'ALL ALREADY RECEIVED THE RESERVATION ON THE POSITANO? YES, WE SUBMITTED OUR TAX CREDIT APPLICATION LAST WEEK.
ANY OTHER QUESTIONS?
I'LL MOVE TO, UH, POSTPONE THE ANO GO TO CLARIFY.
UH, I WAS MAKING A MOTION, BUT I THINK RYAN, UH, OR THE H S C COUNSEL WANTED TO, HE, HE, HE, I STOPPED AND HE'S, HE IS GIVING US INFORMATION SO THE MOTION'S NOT BEEN MADE.
HE'S GIVING AN POINT OF INFORMATION FOR US, I THINK.
SO, SO THERE IS A, UM, THERE IS A TIMING COMPONENT WITH RESPECT TO THE, UH, MANAGING MEMBER ENTITY ON THIS.
UM, SO I'D ASK THAT PERHAPS THE BOARD CONSIDER ITEM, UH, SEVEN B, UH, TO GRANT, UH, AUTHORITY TO GO AHEAD AND FORM THAT ENTITY.
IT DOESN'T OBLIGATE YOU TO DO ANYTHING, UH, IN THE DEAL OR
DO YOU NEED THAT FOR THE PRIOR? THAT'S ALREADY BEEN DONE ON THE PRIOR.
SO IF YOU WANNA WORD YOUR MOTION THAT WAY.
TO TABLE, I GUESS TO TABLES SEVEN, C AND D.
BUT TO APPROVE SEVEN B AND AGAIN, POINT OF CLARIFY, JUST WANTING TO CLARIFY.
UM, SO THAT, SO THAT WE MAKE SURE THAT WE'RE DOING WHAT WE'RE TRYING TO DO HERE.
APRIL 11TH IS THE MOTION, SORRY, KELSEY SAFO WITH CITY ATTORNEY'S OFFICE IS THE MOTION TO POSTPONE UNTIL THE NEXT MEETING ITEM SEVEN A, C, AND D AND TO APPROVE ITEM SEVEN B, CORRECT? YES.
IS THE MOTION THE MOTION IS TO POSTPONE TO THE NEXT MEETING, CORRECT.
UM, AND OH, LET ME ASK THE CITY ATTORNEY'S OFFICE, WE CAN COMBINE THOSE IN ONE MOTION.
IS THAT OKAY? I THINK IT MIGHT BE SIMPLER TO SEPARATE THEM OUT.
HOW ABOUT I MOVE TO, UH, PASS SEVEN B? IS THAT IT? SEVEN B.
OKAY, LET'S VOTE ON THAT ONE SECOND.
OKAY, SO WE HAVE, WE HAVE DIRECTOR ELLIS MAKING THE MOTION, VICE PRESIDENT GARCIA SECONDING, AND THE MOTION IS TO APPROVE THE FORMATION.
THIS IS ITEM SEVEN B, APPROVE THE FORMATION OF D H F C, POSITANO MANAGING MEMBER L L C.
BASICALLY THAT'S ALL WE'RE VOTING TO APPROVE TODAY.
AND WE'LL HAVE A SEPARATE MOTION
[01:10:01]
ON THE TABLING.I'M GOING THROUGH DIRECTOR ALLEN.
IN FAVOR? I'M IN FAVOR, UH, DIRECTOR VERNON IN FAVOR, UH, SECRETARY PAGE IN FAVOR AND TREASURER MARTINEZ IN FAVOR.
OKAY, NOW WE'LL DO THE TABLE MOTION AND I MOVE TO TABLE UNTIL THE NEXT D H F C MEETING.
SAME MO, SAME MOTION OR, AND SECONDER.
SO I ASSUME THERE'S NO DISCUSSION ON ANY OF THESE.
I'VE KIND OF BEEN ZIPPING THROUGH THEM.
IN FAVOR, DIRECTOR PHARAOH IN FAVOR.
UM, VICE PRESIDENT GARCIA IN FAVOR, DIRECTOR ELLIS.
UM, SECRETARY PAGE IN FAVOR AND TREASURER.
WE'LL PUT DIRECTOR COLLINS NOT VOTING MOTION PASSES.
UM, AND SO, UH, I THINK WE WILL BE ADJOURNED AT ONE 60.