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UH, DIRECTOR HOLMES, CHRIS[*This meeting was joined in progress*]
STINSON.[Public Facility Corporation Meeting on December 05, 2023.]
ALL THOSE IN FAVOR? OKAY.ANY OPPOSITION? TAKEN DALLAS PSC BOARD SECRETARY.
AT THIS TIME, I WOULD LIKE TO OPEN THE POSITION OF, UH, SECRETARY OF, SORRY, DALLAS NATION FROM THE FLOOR.
I, UH, DO YOU HAVE ANY OTHER, UH, ANY
IF, UM, WHAT DIRECTOR STENSON HAS A QUESTION.
MY QUESTION IF, UH, AND THIS IS SORT OF PERFUNCTIONARY, JUST KIND OF STATUTORY THAT'S CORRECT.
FOR THE MOST PART, THAT, THAT'S, THAT'S THE REAL, YOU SAID GOTTA SHOW UP AT THE MEETINGS.
CLARIFI WAS LOOKING FOR A WAY OUT, GUYS.
COULD YOU SEND QUESTION THAT WE DEFER THIS ITEM TO? UM, DID YOU SEND THE JOB DESCRIPTION TO EVERYONE? UM, IF ANYBODY, UM, THEN CONVERSATIONS OVER THE NEXT MONTH OR SO, SOMEBODY IN A POSITION.
I MEAN, THERE, THERE ARE THREE AT IT.
I MEAN, THEY'RE, THEY'RE, WE'VE GOT, BUT I DON'T WANNA PUT SOMEBODY IN A POSITION THAT THE, UH, TO DO IT AND IT'S JUST NOT GONNA START WITH THE JOB DESCRIPTION AND, UH, AND FIGURE OUT HIS POSITION TO DO IT.
HE WANTS TO DO IT, TO DEFER, TO GENERATE BEFORE WE DO THAT, UM, UH, THAT THE, UH, SECRETARY, UM, ACCEPT A LOT THAT COMES TO THE, AND ALL OF THAT.
UH, I MEAN, I'LL, I'LL BE THE BYLAWS OUTLINE, YOU KNOW, FOR TERRY WOOD AND, AND WOULD NORMALLY FILL IN THAT ROLE.
IF THE BOARD WISHES TO OPERATION, THAT'S PERFECTLY FINE.
STEP UP AND VOLUNTEER TO DO THAT.
BUT TO THEM THAT THAT IS ALL WITHIN THEIR RIGHT.
WE HAVE A MOTION ON THE FLOOR TO DEFER.
ANY OPPOSITION? HEARING NONE WILL DEFER THIS UNTIL JANUARY.
MOVING ON TO ITEM NUMBER PUBLIC FACILITIES CORPORATION AUTHORITIES, AS DEFINED BY THE PUBLIC FACILITIES CORPORATION.
AND I THANK YOU, JIM, FOR COMING TODAY.
THE NEXT ITEM, UH, WE APPRECIATE YOU COMING HERE FOR US.
UNDERSTAND, ENLIGHTEN US ON A ITEM THAT WE CAN DO.
SHE'S GONNA GIVE YOU A PRESENTATION OF BONDS AND MIKE, UH, DESIRES OF DOING THAT IF YOU ARE GOING TO SEE RECORD DEALS.
CAN YOU HEAR HER OKAY? SUMMER? YES.
CAN Y'ALL HEAR ME? ME IN THE, IN THE CITY HALL BRIEFING ROOM.
SO I'M HERE TO TALK A LITTLE BIT ABOUT THAT.
THE PFC CAN PARTE AFFORDABLE HOUSING WITHIN, YOU KNOW, HOW YOU GUYS ARE CURRENTLY OUT THIS, AT, AT SOME OF THE RETREATS AS, UM, AS THE LANDOWNER OR WORKFORCE HOUSING TYPE.
HALF OF THE, THE, THE UNITS ARE ARE, UM, AT EITHER 50 40, 40%, AT 80%, AT 60% OF A MI STRUCTURE.
UM, IT'S DONE WITH CONVENTIONAL, UH, PUBLICLY OFFERED DEVOUT TODAY.
SO, UM, JUST ORDER 3 0 3 0.071 AUTHORIZES A PUBLIC FACILITY CORP ONES, UM, AND IT APPROVED BY THE SPONSOR ALICE.
UM, SO JUST FOR EVERYONE BELIEVE THERE'S GONNA BE ABOUT THREE THAT, UM, THAT THE PF CONTEXT WITH RESPECT TO HOUSING ON TWO OF THEM.
AND THEN WE'LL TALK A LITTLE BIT MORE IN DEPTH ABOUT THE THIRD.
SO FIRST, THERE'S ESSENTIAL FUNCTION BONDS.
THOSE ARE DIRECT OBLIGATIONS OF THE PFC.
SO THE PFC IS ON THE HOOK TO REPAY THOSE.
THOSE WOULD BE, UM, ISSUED IN CONNECTION WITH A PROJECT THAT WOULD BE WHOLLY OWNED BY THE PFC.
SO YOU WOULD BE THE OWNER AND OPERATOR, UM, OF THAT, UH, OF THAT PROJECT.
AND THE TYPE OF BONDS THAT YOU WOULD ISSUE WOULD BE THESE DIRECT OBLIGATIONS CALLED ESSENTIAL FUNCTION BONDS.
THE SECOND WAY IS THROUGH 5 0 1 C3 BONDS, UM, WHICH CAN BE ISSUED BY THE PC PROVIDED THAT THE BORROWER IS RECOGNIZED AS A 5 0 1 C3 BY THE INTERNAL REVENUE SERVICE.
AND JIM WILL DISCUSS THOSE MORE IN DEPTH WITH YOU ALL, UM, WITH RESPECT TO THE RIVIERA DEAL WHEN THE TIME COMES, IF THAT TIME COMES.
AND THEN FINALLY, THE ONE THAT WE'RE ONLY GONNA TALK ABOUT MORE TODAY, UM, AND WE TOUCHED ON SOME OF THIS, UM, PREVIOUSLY OVER THE SUMMER AT THE RETREAT, UM, OUR PRIVATE ACTIVITY BONDS, AND THOSE ARE BONDS THAT ARE ISSUED BY THE PFC
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ON BEHALF OF A PRIVATE, UM, FOR-PROFIT DEVELOPMENT.THESE ARE THE TYPES OF BONDS THAT ARE ISSUED IN CONNECTION WITH LOW INCOME HOUSING TAX CREDIT DEALS.
AND THAT'S WHAT WE'RE GONNA TALK TODAY.
SO, UM, ON THE, THE PRESENTATION, UM, PFCS THROUGHOUT THE STATE ROUTINELY PARTICIPATE IN LOW INCOME HOUSING TAX CREDIT PROJECTS.
WE'LL TALK A LITTLE BIT ABOUT HOW YOU CAN PARTICIPATE IN THOSE.
THERE'S BOTH 4% AND 9%, UM, 9% PROJECTS WHICH RECEIVE, UM, THOSE ARE MUCH MORE LIMITED.
THAT'S THE COMPETITIVE PROCESS.
UM, THEY RECEIVE MORE EQUITY, AND SO THE AMOUNT OF DEBT THAT IS FINANCED WITH ON THOSE PROJECTS IS VERY LOW AND THERE IS NO TAX EXEMPT BOND REQUIREMENT.
SO FREQUENTLY THOSE ARE FINANCED THROUGH MORE, UM, TRADITIONAL TYPE DEBT STRUCTURES, 4% DEALS.
ON THE OTHER HAND, UM, THERE IS A REQUIREMENT THAT 50% OF THE, AT LEAST 50% OF THE PROJECT BE FINANCED THROUGH THE USE OF TAX EXEMPT BONDS.
UM, AND NOW THERE IS ACTUALLY A LIMITATION, THERE'S A CAP ON THAT.
SO IT MUST BE BETWEEN 50 AND 55% OF THE PROJECT COSTS.
IN ORDER TO, UM, TO ISSUE PRIVATE ACTIVITY BONDS, YOU HAVE TO GET WHAT'S CALLED AN ALLOCATION OR RESERVATION, A VOLUME CAP FROM THE TEXAS BOND REVIEW BOARD.
THIS IS A, A PROCESS, UM, THAT WE HAVE TO GO TO THE STATE AGENCY.
UM, AND THERE'S A KIND OF A COUPLE OF DIFFERENT WAYS THAT YOU CAN GET VOLUME CAP.
UM, THE FIRST ONE IS THROUGH THE LOTTERY APPLICATION.
SO EVERY OCTOBER, UH, PROJECTS ALL ACROSS THE STATE WILL, UM, SUBMIT THEIR APPLICATIONS, AND THEN THERE IS LITERALLY A LOTTERY.
SO YOU'RE ASSIGNED, YOU KNOW, A NUMBER AND THEN THOSE LOTTERY BALLS COME UP IN WHATEVER ORDER.
AND THAT'S WHAT DETERMINES THE TIMING OF WHEN YOU WILL RECEIVE YOUR VOLUME CAP RESERVATION.
UM, THERE'S A FEW NUANCES THERE AND WE'LL TALK ABOUT THOSE AS WELL.
UM, BUT, UH, PFCS GENERALLY HAVE A GREATER CHANCE OF OBTAINING THEIR RESERVATION THAN HOUSING FINANCE CORPORATIONS, BECAUSE OF THE WAY THAT THE FUNDS ARE SEP ARE SEPARATED AT THE BEGINNING OF THE YEAR.
SO PFCS HAVE THEIR OWN, UM, THEIR OWN CATEGORY SUBCATEGORY, WHICH IS CALLED SUBS SEALING FIVE.
AND THERE IS A LOT MORE MONEY IN THAT CATEGORY THAN FOR THE HOUSING FINANCE CORPORATIONS AND HOUSING FINANCE CORPORATIONS ARE DIVIDED BY REGION WITHIN, SO THERE'S A CERTAIN AMOUNT OF MONEY ALLOCATED TO THE DALLAS REGION, A CERTAIN AMOUNT ALLOCATED TO SAN ANTONIO, AUSTIN, HOUSTON, ET CETERA.
AND, YOU KNOW, THE MORE RURAL AREA AREAS OF THE STATE AS WELL.
BECAUSE OF HOW THAT WORKS, IT MEANS THAT THERE'S REALLY VERY FEW PROJECTS THAT ARE GETTING, UM, THAT ARE GETTING, UH, FUNDED IN THE BEGINNING.
AND SO, UM, AS YOU CAN SEE HERE ON THE SLIDE, DALLAS IS IN REGION THREE, WHICH HAS APPROXIMATELY 200 MILLION, UM, WHICH WAS ABOUT FIVE PROJECTS IN JANUARY OF 2023.
UM, AND PFC CATEGORY WAS 1 BILLION.
SO THERE WERE 70 PROJECTS IN 2023.
OF COURSE, IT IS STATEWIDE, SO THERE IS COMPETITION THERE.
UM, BUT GENERALLY SPEAKING, WHAT WE HAVE SEEN IS THAT THESE, THIS CATEGORY, THERE'S A LOT OF, THERE'S A LOT MORE MONEY.
SO THERE'S A GREATER CHANCE OF GETTING FUNDED IN THE BEGINNING, AND THEN THERE'S A LOT MORE TURNOVER BECAUSE THERE ARE ARE ALSO LARGE INDUSTRIAL PROJECTS THAT FIT INTO THIS CATEGORY THAT FREQUENTLY TAKE A VERY LONG TIME FOR THEM TO GET THEIR FUNDING.
SO ONCE YOU RECEIVE YOUR RESERVATION, YOU HAVE 180 DAYS TO CLOSE.
IF YOU ARE UNABLE TO CLOSE WITHIN THE 180 DAYS, THEN YOU HAVE TO GIVE BACK THE RESERVATION SO THAT MONEY WILL GO BACK INTO THE POOL AND THE NEXT PROJECTS IN LINE WILL BE FUNDED.
BECAUSE THESE LARGE DEVELOPMENT, THESE LARGE INDUSTRIAL PROJECTS FREQUENTLY TAKE YEARS.
YOU KNOW, THEY JUST KEEP ON APPLYING AND APPLYING AND APPLYING, BUT THEY FREQUENTLY DON'T HAVE IT.
SO THERE'S A LOT OF TURNOVER IN THAT CATEGORY AS WELL BECAUSE OF THAT.
UM, SO MANY DEVELOPERS BELIEVE, AND, AND WE ALSO SHARE THIS SENTIMENT, UM, THAT THERE'S A BETTER CHANCE OF RECEIVING THE RESERVATION BY GOING THROUGH THE PFC VERSUS THE HFC, WHICH IS, UM, YOU KNOW, OBVIOUSLY YOU, THE DALLAS HFC IS, HAS BEEN DOING A LOT OF THESE PROJECTS, BUT THIS IS A WAY FOR THE PFC TO ALSO BE INVOLVED TO HELP INCREASE THE AMOUNT OF PROJECTS THAT CAN BE DONE IN THE DALLAS AREA.
UM, AND WE BELIEVE THAT THERE WILL BE MANY DEVELOPERS INTERESTED IN PARTNERING WITH THE PFC WITH RESPECT TO THESE TYPES OF DEALS.
CAN WE GO TO THE NEXT SLIDE PLEASE? SO, WITH RESPECT TO, UM, KIND OF THE STRUCTURE AND, AND THE TARGET, UM, TENANT POPULATION AND THE COMMUNITY BENEFIT, AS I MENTIONED EARLIER, THESE PROJECTS ARE VERY DIFFERENT THAN THE PROJECTS THAT YOU GUYS HAVE BEEN, UH, PARTNERING IN, WHICH ARE MORE KIND OF TERMED WORKFORCE HOUSING
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PROJECTS.THESE ARE TRUE LOW INCOME PROJECTS.
UM, THEY AVERAGE 60% OF AREA MEDIAN INCOME FOR ALL UNITS.
UM, AND ONE, WE'LL TALK A LITTLE BIT ABOUT THE LOTTERY HERE.
SO IF THEY HAVE, IF THEY'RE ABLE TO PROVIDE LOWER INCOME SET ASIDES, FOR EXAMPLE, YOU KNOW, IN THE 30% RANGE, UM, THERE'S KIND OF DIFFERING WAYS THAT YOU CAN INCREASE YOUR OPPORTUNITY TO BE HIGHER UP IN THE, IN THE LOTTERY ORDER.
SO THEY DRAW THE BALLS, UM, AND THEN THEY REORDER EVERYONE DEPENDING ON YOUR PRIORITY.
SO PRIORITY ONE PROJECTS TYPICALLY WILL HAVE 15% OF THE UNITS AT 30% A MI, AND THE REMAINDER WILL BE LIMITED TO 60% OF A MI.
SO THAT'S ONE WAY THAT, UM, THAT YOU CAN HAVE ADDITIONAL AFFORDABILITY.
ANOTHER WAY IS USING INCOME AVERAGING.
AND SO THAT JUST SAYS THAT YOU HAVE TO RE, YOU HAVE TO HAVE AN AVERAGE OF 60%.
SO THAT MEANS YOU COULD HAVE SOME AT 30%, SOME AT 70% OF A MI, SOME AT EVEN AT 80% A MI AND SOME AT 60%.
SO THAT'S, AND THAT IS SOMETHING THAT, UM, YOU KNOW, THAT THE DEVELOPERS WILL, TYPICALLY, DEVELOPERS IN THE EQUITY, UH, WILL TYPICALLY PROPOSE THAT WHEN THEY COME TO YOU TO PARTNER WITH IN ONE OF THESE PROJECTS.
SO BASICALLY, UM, ANY, ANY DEAL THAT HAS THIS LEVEL OF AFFORDABILITY IS REQUIRING A LOT OF SUBSIDIES.
SO THE SUBSIDIES COME IN THE FORM OF, UM, OBVIOUSLY THE, THE TAX CREDIT EQUITY, THESE TAX CREDITS ARE SOLD ON THE, THE, UH, IN, IN THE MARKET, AND THEY RECEIVE THE EQUITY DOLLARS IN RETURN FOR THAT.
UM, THE PFC CAN ALSO, AND WE'LL TALK ABOUT THIS A LITTLE MORE IN IN THE NEXT SECTION, UM, THE PFC CAN ALSO AS WHAT YOU HAVE BEEN DOING, PARTNER IN THIS DEAL AND PROVIDE A PROPERTY TAX EXEMPTION.
UM, YOU CAN ALSO USE ANY PROCEEDS, UM, THAT THE PFC HAS RECEIVED IN PRIOR DEALS OR RECEIVES, UM, IN THE CURRENT DEALS, UM, TO PROVIDE SUBSIDIES AND ESSENTIALLY BUY DOWN THE RENTS AND HELP PROVIDE ADDITIONAL AFFORDABILITY.
UM, OBVIOUSLY WE'RE TALKING ABOUT REACHING VERY LOW INCOME FOLKS AND, UM, IN, IN, UH, IN DALLAS, AS IN ALL COMMUNITIES, NIMBYISM WILL BE A BIGGER ISSUE ON THESE PROJECTS THAN WITH THE PROJECTS IN WHICH YOU'VE BEEN PARTNERING.
THOSE ARE THE DEALS WHERE YOU'VE HAD, YOU HAVE A MARKET RATE COMPONENT, UM, AND, AND YOU'RE SERVING THE 80% A MI, UH, AFFORDABLE BAN.
PRIMARILY THESE DEALS, YOU'RE SERVING A MUCH LOWER AND NEEDIER, UM, POPULATION.
BUT YOU WANNA POINT OUT THOUGH, THIS IS NOT PUBLIC HOUSING.
UM, AND THERE ARE A LOT OF CONTROLS.
SO THE, THESE ARE SOME OF THE MOST HIGHLY REGULATED HOUSING PRODUCTS THAT ARE OUT THERE THAT YOU HAVE CONTROLS AT THE FEDERAL LEVEL THROUGH HUD AT THE STATE LEVEL THROUGH T-D-H-C-A.
AND YOU HAVE ALSO YOUR TAX CREDIT PARTNER, THE EQUITY PARTNER, AND THE DEAL, THEY HAVE MANY CONTROLS.
UM, THESE, THE DOCUMENTS THAT ARE NEGOTIATED FOR THESE DEALS HAVE, THEY HAVE LOTS OF RIGHTS OF REPORTING REQUIREMENTS, UM, CONSENT REQUIREMENTS.
SO THERE'S A LOT OF OVERSIGHT THAT GOES INTO THESE DEALS THAT THE, THE DEBT AS WELL.
AND THEN OBVIOUSLY IF YOU WERE TO PARTNER IN THESE DEALS, YOU WOULD ALSO HAVE THE RIGHT TO RECEIVE INFORMATION AND HAVE CERTAIN CONSENT RIGHTS THAT WOULD HELP CONTROL THESE PROJECTS TO MAKE SURE THAT THEY ARE OF THE HIGHEST QUALITY.
AND THAT IS WHAT WE HAVE SEEN OVER AND OVER AGAIN, IS THAT THESE DEALS ARE IN FACT, HIGH QUALITY DEALS AND, AND HAVE NOT BROUGHT, UM, ABOUT THE END OF SOCIETY AS, AS SOME NIMBY UM, PROPONENTS MIGHT, MIGHT WANT FOLKS TO BELIEVE.
UM, MOVING ON TO THE TAX CREDIT STRUCTURE, IT'S A, IT'S A COMPLICATED STRUCTURE.
SO, UM, THE WAYS IN WHICH THE PFC WOULD HAVE THE OPPORTUNITY TO PARTICIPATE ARE, ARE SEVERAL.
SO FIRST OF ALL IS THE ISSUER OF THE BONDS, WHICH WE WERE TALKING ABOUT EARLIER, SO THAT YOU WOULD ACTUALLY ISSUE THE DEBT.
UM, THAT DEBT IS, UM, IT IS YOUR LIABILITY FOR THAT DEBT IS EXTREMELY LIMITED BECAUSE THESE ARE PRIVATE ACTIVITY BONDS.
THEY ARE SECURED ENTIRELY BY THE PROJECT, MUCH LIKE TRADITIONAL FINANCE.
UM, SO IF, IF THERE WAS A PROBLEM AND THE BONDS WERE DEFAULTED UPON THE BANK'S, ONLY RECOURSE WOULD BE TO GO AFTER THE PROJECT TO FORECLOSE ON THE PROJECT AND TO RECEIVE, UM, ANY REPAYMENT FOR ITS DEBT THROUGH THE FORECLOSURE SALE OF THAT PROJECT.
UM, SO YOUR, YOUR LIABILITY IS EXTREMELY LIMITED BECAUSE YOU'RE NOT PROVIDING THE DEVELOPERS PROVIDE THE GUARANTEES, UPFC DOES NOT.
UM, SO WE'RE VERY CAREFUL IN HOW WE STRUCTURE THAT.
UM, ADDITIONALLY, UM, IF A PROPERTY TAX EXEMPTION WAS SOUGHT, WHICH IS WHAT WE ARE SEEING ACROSS THE STATE ON THESE DEALS, BASICALLY IT'S
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NOT WITH A, GIVEN THE CURRENT, UM, INTEREST RATE ENVIRONMENT DEALS LIKE THESE ARE REALLY NOT FINANCEABLE WITHOUT THE PARTICIPATION OF A PUBLIC PARTNER TO PROVIDE A PROPERTY TAX EXEMPTION.SO YOU WOULD ALSO PARTICIPATE AS THE LANDOWNER, UM, MUCH LIKE YOU DO IN THE WORKFORCE HOUSING DEALS, BUT IN THESE DEALS, BECAUSE THE, THE BUILDINGS MUST BE OWNED BY THE TAX CREDIT PARTNERSHIP, IN ORDER TO RECEIVE THE PROPERTY TAX EXEMPTION ON THE BUILDINGS AS WELL AS THE LAND, YOU HAVE TO SERVE AS THE GENERAL PARTNER, WHICH BRINGS ABOUT, UM, AN, UH, A CONCEPT CALLED EQUITABLE TITLE, WHICH ESSENTIALLY SAYS THAT THE TAX APPRAISAL DISTRICT IS WILLING TO CONSIDER YOU AS THE OWNER IF YOU HOLD EQUITABLE TITLE.
AND ONE OF THE WAYS THAT YOU PROVE EQUITABLE TITLE IS BY BEING THE GENERAL PARTNER AND ALSO BY BEING THE GENERAL PARTNER OF THE PARTNERSHIP, UM, THAT OWNS AND OPERATES THE, THE LOW INCOME HOUSING TAX CREDIT PROJECT.
YOU HAVE ADDITIONAL CONTROLS, AND AS YOU'LL SEE ON THE NEXT SLIDE, ADDITIONAL OPPORTUNITIES TO SHARE IN THE ECONOMIC BENEFITS, UM, THAT, THAT COME ABOUT FROM THESE PROJECTS.
FINALLY, UM, AND THIS IS SIMILAR TO YOUR PFC WORKFORCE HOUSING DEALS, YOU ALSO HAVE THE OPPORTUNITY TO SERVE AS THE GENERAL CONTRACTOR TO BRING ABOUT A SALES TAX EXEMPTION.
UM, WE'LL TALK JUST A SECOND ABOUT 9% DEALS.
I KNOW THAT'S REALLY NOT THE SCOPE OF THIS PRESENTATION, BUT I JUST WANTED TO MAKE SURE THAT YOU'RE AWARE THAT THAT IS ANOTHER WAY IN WHICH YOU CAN PARTICIPATE IN AFFORDABLE HOUSING.
IN, IN THAT INSTANCE, WHAT YOU WOULD BE BRINGING WOULD BE THE, THE PROPERTY TAX EXEMPTION SIMILAR TO YOUR WORKFORCE HOUSING DEALS.
UM, BUT YOU WOULD BE ALSO THE GENERAL PARTNER OF THE PARTNERSHIP THERE AS WELL.
UM, WE TALKED ABOUT THE ISSUING BONDS AND THE FACT THAT THE LIABILITY IS EXTREMELY LIMITED, AND THEN YOU WOULD CREATE THE LLCA SINGLE MEMBER, LLC, THAT WOULD BE THE GENERAL PARTNER IN THE DEAL.
SO THAT WOULD HELP, UH, INSULATE YOU FROM ANY LIABILITY FROM SERVING AS THE GENERAL PARTNER IN THE PARTNERSHIP.
WE WOULD ALSO RECOMMEND THAT YOU CREATE, UM, AN LLC TO, UH, TO, TO OWN THE, THE PROPERTY AS WELL, THE REAL ESTATE AS WELL.
UM, DEVELOPER WILL RUN AND MANAGE THE PROJECT, UM, AND THEY WILL PROVIDE ALL THE GUARANTEES, AS I MENTIONED EARLIER.
AND THEN IF WE CAN GO TO THE NEXT SLIDE, I'LL TALK JUST BRIEFLY, UM, ABOUT A HYPOTHETICAL FEE STRUCTURE.
SO THEN THESE ARE JUST TYPICAL TERMS, UM, THAT WE WOULD SEE.
AND THIS IS OBVIOUSLY BASED ON, UM, SOME JUST VERY GENERAL NUMBERS.
SO IF WE WERE TO ASSUME AN $80 MILLION PROJECT, UM, YOU WOULD RECEIVE, COULD RECEIVE AN ISSUER FEE OF 1% OF THE BONDS, UM, THAT'S $400,000 ON A $40 MILLION ISSUANCE, ASSUMING A 50%, UH, FINANCING OF, OF THE TOTAL COST OF THE PROJECT.
UM, WE WOULD ALSO EXPECT THAT YOU WOULD SHARE IN THE DEVELOPER FEE, WHICH ON THESE DEALS, UM, IS, IS A PRETTY LARGE NUMBER.
IT'S TYPICALLY ABOUT 15% OF THE HARD COST OF THE PROJECT.
UM, AND SO HERE YOU WERE TO RECEIVE 30 TO 40% OF THAT, WHICH WOULD BE AN AVERAGE NUMBER, UH, YOU WOULD RECEIVE BETWEEN 2.5 AND 3.3 APPROXIMATELY A MILLION DOLLARS.
SOME OF THAT IS PAID AT CLOSING, THE REST IS DEFERRED OVER 15 YEARS.
THAT REALLY DEPENDS ON KIND OF THE FINANCING OF THE PROJECT INTEREST RATES.
UM, IT IS REQUIRED THAT THE DEVELOPER FEE BE PAID DURING THE FIRST 15 YEARS OF THE PROJECT IN ORDER FOR THE PROJECT TO RECEIVE ITS TAX CREDITS.
THAT IS VERY HIGH UP IN THE WATERFALL.
WE WOULD ALSO, UM, EXPECT SOME SORT OF A GENERAL CONTRACTOR FEE.
UM, WE SAY SOME ANYWHERE BETWEEN 25% SALES TAX SAVINGS AND OR THE HAR 1% OF THE HARD COSTS DURING CONSTRUCTION.
AND ON A DEAL LIKE THIS, WE'RE LOOKING AT, UH, ANYWHERE FROM 400 TO $600,000 APPROXIMATELY.
AND AGAIN, THESE ARE VERY GENERAL NUMBERS, JUST KIND OF BACK OF THE NAPKIN MATH.
UM, AND THEN THAT THOSE FEES WOULD BE PAID, UM, DURING CONSTRUCTION.
THERE'S MANY DIFFERENT WAYS TO STRUCTURE THAT, BUT IT WOULD BE WITHIN THE FIRST TWO TO THREE YEARS OF THE PROJECT.
AND THEN FROM THERE, UM, BECAUSE YOU SERVE AS THE GENERAL PARTNER, WE WOULD EXPECT THE CASH FLOW TO BE SPLIT APPROXIMATELY 50 50 WITH THE DEVELOPER.
AND I'M NOT, I DIDN'T ATTEMPT TO GIVE YOU GUYS ANY NUMBERS ON THAT BECAUSE IT'S VERY DEPENDENT UPON, AGAIN, THE CURRENT ENVIRONMENT AND THE INTEREST RATES.
THE DEALS THAT WE'RE SEEING RIGHT NOW DON'T HAVE AS MUCH CASH FLOW AS DEALS THAT WERE CLOSED, YOU KNOW, TWO TO THREE YEARS AGO.
UM, SO IT'S IMPOSSIBLE FOR ME TO GIVE YOU, UH, REALLY HARD NUMBERS ON THAT.
AND THEN ADDITIONALLY, UPON ANY SALE OR REFINANCING, WE WOULD ALSO EXPECT THAT TO BE SPLIT APART APPROXIMATELY 50 50 WITH THE DEVELOPER.
UM, ADDITIONALLY ON THESE DEALS, THERE IS AN OPPORTUNITY TO NEGOTIATE IN A ROFER OR WRITE A FIRST REFUSAL,
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UM, WHICH WE WOULD TYPICALLY EXPECT YOU TO HAVE ONE.UM, THE REAL NEGOTIATION IS, IS WHETHER IT IS A FAIR MARKET VALUE RIGHT OF FIRST REFUSAL THAT HELPS YOU BOLSTER YOUR CLAIM OF EQUITABLE TITLE FOR THE PROPERTY TAX EXEMPTION, OR WHETHER IT'S WHAT'S CALLED A BARGAIN PURCHASE, RIGHT? WHICH THAT IS SOMETHING, UH, THAT'S UNIQUE TO TAX CREDIT PROJECTS.
SO AT THE END OF THE 15 YEAR COMPLIANCE PERIOD, YOU COULD HAVE THE OPPORTUNITY TO PURCHASE THE PROJECT OUTRIGHT FOR THE OUTSTANDING DEBT, PLUS ANY EXIT TAXES.
SO YOU'RE ABLE TO TAKE ADVANTAGE OF ALL OF THE EQUITY INVESTMENT PLUS ANY DEBT PAYMENTS, DEBT SERVICE PAYMENTS THAT HAVE BEEN MADE OVER THOSE 15 YEARS.
AND YOU'RE ABLE TO BUY THE PROJECT FOR A VERY REDUCED AMOUNT, UM, COMPARED TO ITS, UH, ITS ACTUAL VALUE IN, IN MOST CASES.
OBVIOUSLY, THERE ARE CASES WHERE THAT, THAT IS NOT THE TRUTH.
UM, AND THOUGH THOUGH IT'S NOT SOMETHING THAT YOU HAVE TO DO, UM, OBVIOUSLY IT'S A, IT'S A, AN OPTION, UM, AND IT MAY NOT BE SOMETHING THAT YOU'RE EVEN INTERESTED IN.
SO IN THAT INSTANCE, THAT'S WHERE THE DEVELOPER FEE, WE SAY 30 TO 40%, WE WOULD TYPICALLY SEE 30% OF THE DEVELOPER FEE IF YOU NEGOTIATE IN THIS BARGAIN PURCHASE, RIGHT? OR IF YOU'RE NOT INTERESTED IN OWNING THAT, UM, THEN WE WOULD ASK FOR THE HIGHER DEVELOPER FEE OF 40%.
UM, AND, AND AGAIN, THAT, THAT REALLY IS A, A QUESTION AS TO WHAT YOUR POLICY GOALS ARE IN THE FUTURE.
WE HAVE LOTS OF CLIENTS WHO ARE HOUSING AUTHORITIES AND REALLY WANT TO OWN THOSE.
WE HAVE OTHER PFC CLIENTS WHO ARE ALSO INTERESTED IN OWNING, UH, THOSE PROJECTS AS WELL.
AND THEN FINALLY, UM, THE PROJECT WILL REVERT TO THE PUBLIC FACILITY CORPORATE, THE PROJECT IN ITS ENTIRETY, INCLUDING THE IMPROVEMENTS WE'LL REVERT TO THE PFC AT THE END OF THE GROUND LEASE IF YOU'RE PARTICIPATING AS THE LANDOWNER AND PROVIDING THAT TAX EXEMPTION.
AND I'M HERE TO ANSWER ANY QUESTIONS AS IS GEM SUMMER.
I THINK THIS IS A TOOL WE'RE GONNA SEE IN THE FUTURE.
WE'LL PROBABLY SEE IT, I DON'T KNOW, IN THE NEXT MONTH OR TWO TO COME, UH, FROM OTHER PROJECTS.
UH, I'VE SEEN IT, I SEE IT ALL ACROSS TEXAS.
THIS TOOL IS BEING USED ALL ACROSS TEXAS ON DEALS, ESPECIALLY WITH THE HIGH INTEREST RATES AND, UH, UH, EVERYTHING ELSE THAT, UH, OUR, UH, HOUSING, UH, PROJECTS ARE DEALING WITH RIGHT NOW.
WE HAVE A QUESTION FROM, UH, DIRECTOR CALLAS.
UM, COULD YOU DISCUSS OUR LIABILITY, UH, BEING HIS GENERAL PA UH, PARTNER? I UNDERSTAND THAT, UH, YOU'RE PROPOSING THAT A LIMITED PURPOSE LLC BE FORMED.
WE WOULD BE THE GENERAL PARTNER OF IT, BUT, UM, TAKE A 40-YEAR-OLD APARTMENT COMPLEX THAT, UM, GETS PUT INTO THIS PROGRAM.
WE ISSUE BONDS, UM, TO HELP IMPROVEMENT, UH, IMPROVE IT.
UH, IT'S 55 YEARS OLD, UM, YOU KNOW, AT, AT THE END OF THE LEASE PERIOD.
UM, WHAT HAPPENS IF THE PROJECT FAILS? WHAT HAPPENS IF IT DOESN'T, DOESN'T MEET, UH, THE FINANCIAL EE EXPECTATIONS? WHAT HAPPENS IF THE, UH, IF THE PROMOTER DEVELOPER GOES KAPUTT, RIGHT? SO THERE, SO THERE IS, AND, AND JIM CAN, CAN ALSO JUMP IN AND SPEAK TO THIS AS WELL.
UM, BUT THERE IS THE POSSIBILITY AS THE, AS WITH THE OTHER DEALS THAT YOU'VE BEEN INVOLVED IN THAT YOU KNOW, YOU WILL BE BROUGHT INTO, UH, LAWSUITS BECAUSE YOU'RE, THE, THE, UM, THE LANDOWNER THERE IS THE POSSIBILITY THAT YOU WOULD, AND THAT YOU WOULD BE BROUGHT IN.
YOU KNOW, THAT PEOPLE CAN CLAIM MANY THINGS.
UM, BUT THE WAY THAT WE TRY TO INSULATE THAT, NUMBER ONE IS IN THIS INSTANCE WHERE YOU'RE TALKING ABOUT THE, THE LIABILITY OF THE GENERAL PARTNER, WHICH THEY DO HAVE GENERAL LIABILITY IN THAT STRUCTURE.
YOU'RE INSULATED BECAUSE IT IS A SINGLE MEMBER LLC.
AND IT WOULD TAKE, UH, IT WOULD TAKE MISMANAGEMENT OF THAT LLC BY THE PFC FOR THE THERE TO BE A POSSIBILITY OF THE CORPORATE VEIL BEING PIERCED IN THAT LIABILITY REACHING THE PFC.
ADDITIONALLY, UM, THE DEVELOPER WILL BE, THEY WILL HAVE THE REQUIREMENT TO INDEMNIFY YOU.
UM, THERE WILL ALSO BE A REQUIREMENT THAT THE PARTNERSHIP ITSELF INDEMNIFY THE GENERAL PARTNER UNDER THE LEASE.
THERE IS A REQUIREMENT THAT THE TENANT INDEMNIFIES THE LANDLORD, WHICH IS YOU GUYS.
UM, UNDER ANY CONSTRUCTIVE CONTRACTS, THERE IS A REQUIREMENT THAT THE MASTER SUBCONTRACTOR THAT THEY, UM, INDEMNIFY YOU AS THE GENERAL CONTRACTOR.
SO AT EVERY LEVEL THERE IS A REQUIREMENT FOR INDEMNIFICATION.
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A REQUIREMENT FOR INSURANCE THAT YOU GUYS ARE NAMED AS ADDITIONAL INSUREDS.AND THEN FINALLY, UM, WITH RESPECT TO, I THINK YOUR EXAMPLE SPECIFICALLY IS THAT THE PROJECT WAS TO GO INTO FORECLOSURE, WHICH IS VERY RARE ON THESE DEALS.
AND JIM CAN JUMP IN AS HE'S BEEN DOING THIS MUCH LONGER THAN I HAVE AND, AND HAS BETTER HISTORY OF AND CAN SPEAK TO THOSE, UM, INSTANCES.
UM, AND ONE OF THE THINGS ABOUT THESE DEALS IS BECAUSE YOU'RE SERVING AS THE, THE LANDOWNER AND YOU'RE BRINGING ABOUT A PROPERTY TAX EXEMPTION, IS, IS THAT THEY WILL, THEY WILL FORECLOSE POTENTIALLY ON THE PROJECT.
THE PROJECT WILL BE, THE DEBT WILL BE SECURED BY THE LEASEHOLD INTEREST AND THE LAND AND THE FEE INTEREST IN THE, THE BUILDINGS.
THEY MAY FORECLOSE THAT OUT, BUT BECAUSE YOU HOLD THE LAND AND IN ORDER TO BRING ABOUT THAT PROPERTY TAX EXEMPTION, YOU MUST BE THE GENERAL PARTNER.
THEY WILL COME TO YOU AND THEY WILL NEGOTIATE WITH YOU TO STAY IN THE DEAL.
UM, AND THAT IS ACTUALLY, WE HAVE THAT BUILT INTO THE LEASE AS WELL.
SO IF THERE IS A FORECLOSURE OF THE LEASEHOLD INTEREST, THE EXPECTATION WOULD BE THAT YOU GUYS WOULD STAY IN THE DEAL.
UM, OF COURSE THEY, YOU DO FIND SIGN A FEE JOINDER, SO THERE IS A POSSIBILITY THAT THEY COULD SAY, WE DON'T CARE ABOUT THE TAX EXEMPTION WE'RE TAKING THE PROJECT.
BUT IN TERMS OF YOU BEING RESPONSIBLE FOR PAYING THE DEBT AND HAVING, YOU KNOW, RECOURSE LIABILITY, UH, YOU, THIS IS A, IT IS A NON-RECOURSE LOAN AND IT IS NOT A LOAN OF THE PFC.
THIS IS A LOAN OF THE, THE, THE PARTNERSHIP.
DID THAT ANSWER YOUR QUESTION? IT DOES.
SO I THINK IF I COULD READ BETWEEN THE LINES, UM, I GET A LITTLE SCARED WHEN I HEAR THE WORD INDEMNIFICATION 'CAUSE I DON'T KNOW WHO'S IDENTIFYING ME AND HOW DEEP THEIR POCKETS ARE.
SO, UM, WE COULD, OR I SHOULD, I SHOULD POSE THIS AS A QUESTION.
CAN WE REQUIRE, SHOULD WE BE FAVORABLE TO THIS KIND OF, UH, OPPORTUNITY, REQUIRE THAT ANY INDEMNIFICATIONS BE INSURANCE BACKED AND THAT THE INSURANCE, UM, UH, REQUIREMENTS IN THE LEASE BE SUCH THAT, YOU KNOW, WE ARE PROPERLY PROTECTED, UM, SHOULD SOMETHING HAPPEN, WHICH WOULD INCLUDE ATTORNEY'S FEES IF WE GET SUED? 'CAUSE WE, WE, WE ARE VERY POORLY PROTECTED RIGHT NOW, BUT THAT'S, THAT'S A TOPIC LATER ON IN, IN THE AGENDA, ALAN, IN THESE DEALS, TYPICALLY, WE OF COURSE ARE NAMED ADDITIONAL INSURED ON EVERYTHING.
UM, AND WE DO SET MINIMUM INSURANCE REQUIREMENTS.
UM, IN TERMS OF DAY-TO-DAY LIABILITY, I HAVE NOT HAD A SITUATION WHERE THE INSURANCE OR THE DEVELOPER, THE EQUITY DIDN'T COVER IT.
UM, AND, AND THAT INCLUDES DEATH CASES.
UM, SO FROM AN OPERATIONS PERSPECTIVE, WE HAVE BEEN PRETTY WELL PROTECTED.
UM, I'M NOT SURE THAT YOU CAN BUY INSURANCE DIRECTLY FOR THE INDEMNIFICATION REQUIREMENTS UNLESS THEY'RE OTHERWISE COVERED BY AN INSURANCE POLICY, BUT, BUT WE, WE HAVE BEEN NAMED IN MANY SUITS EVERY SLIP AND FALL THAT HAPPENS AS THE REAL ESTATE OWNER, YOU GET TO DATE, I HAVE HAD NO LIABILITY ON MY PUBLIC FACILITY CORPORATIONS OR HOUSING FINANCE CORPORATIONS FOR ANY OPERATIONAL ACTIVITIES.
UM, ON THE DEBT SIDE, YOU CLEARLY HAVE NO LIABILITY.
YOU DO HAVE A GENERAL PARTNER AND A GENERAL PARTNER IS LIABLE, BUT IT HAS NO ASSETS OTHER THAN THE PROJECT.
AND ONE OF THE THINGS, PARTICULARLY IN THE FIRST 10 YEARS OF OPERATION, THE EQUITY PARTNER HAS MADE A $20 MILLION INVESTMENT AND THEY ARE AHEAD OF YOU IN ALL LIABILITY.
AND SO THEY'RE VERY CAREFUL TO PROTECT THEMSELVES AND TO STEP IN.
UM, AS YOU GET LATER IN A PROJECT, UM, SAY YOU'RE AT 15, 20, 20 YEARS, UM, THAT'S WHEN IT BECOMES EXTREMELY IMPORTANT TO EITHER RE SYNDICATE THESE DEALS, WHICH MEANS YOU KNEW DO A NEW TAX CREDIT DEAL AND REHAB 'EM OR SELL 'EM.
UM, BECAUSE YOU WANT TO BE A PART OF A PRODUCT THAT IS IN VERY GOOD SHAPE.
YOU DON'T WANT TO BE IN A 40-YEAR-OLD RUNDOWN TAX CREDIT DEAL.
[00:30:01]
RULE, WE FIGHT VERY HARD FOR THE RIGHT TO CONTROL THINGS AT THE 15 YEAR POINT SO THAT, THAT WE CAN DO SOMETHING TO EITHER, UM, REHABILITATE THE PROJECT OR SELL THE PROJECT AND GET OUT OF THE DEAL.UM, JUST BECAUSE WE, YOU KNOW, WORST THING IN THESE DEALS IN MY MIND IS THE, THE, THE PEOPLE WHO DON'T TAKE CARE OF 'EM.
AND YOU GET THIS OLD RUNDOWN PROJECT AND WE DON'T WANT OUR NAME ON THAT.
SO THINK WHEN WE GET TO ONE OF THESE, WE'LL HAVE A LOT OF DISCUSSIONS ABOUT HOW WE ARE ADDRESSING NOT JUST LIABILITY, BUT YOUR ABILITY TO PROTECT YOURSELF, TO MAKE SURE THAT THE PROJECTS THAT YOU PARTICIPATE IN ARE PROPERLY MAINTAINED.
I'D LIKE TO, UH, LET THE RECORD REFLECT THAT DURING THIS DISCUSSION OF ITEM SIX, UH, DIRECTOR WINTERS AND DIRECTOR PAS HAVE JOINED US, IF WE COULD MINIMIZE THE SCREEN RIGHT HERE.
I COULD PROBABLY SEE THEM ON THE LARGE SCREEN.
I CAN'T SEE THEM FROM WHERE I'M SITTING, BUT I'M UNTIL THEY ARE HERE.
WE GOOD DIRECTOR? PS YOU'RE HERE TOO? YES, I'M HERE.
UM, ARE THERE ANY FURTHER QUESTIONS FOR ITEM NUMBER SIX? UH, DIRECTOR MONTGOMERY.
ONE OTHER, ONE OTHER ASPECT OF THIS REAL QUICK, KEITH, WE RECOMMEND TO YOU THAT WE DO NOT BEGIN GOING DOWN THIS ROAD OF THESE TAX CREDIT DEALS UNTIL WE HAVE THE CITY COUNCIL PERSON WHO'S PRECINCT OR DISTRICT THE PROJECT WILL BE LOCATED IN THAT WE HAVE THEIR PERMISSION TO PUT THE PROJECT ON THE AGENDA.
UM, I THINK THAT'S VERY IMPORTANT FROM THE NIMBY ASPECT OF THESE DEALS.
I KNOW THAT THE ONE PRIOR DEAL YOU GUYS LOOKED AT, YOU LOOKED AT IT BECAUSE THE CITY OF DALLAS, UM, LET'S SAY URGED YOU TO LOOK AT IT.
AND IT WAS HIGHLY CONTROVERSIAL.
AND I DON'T EXPECT THAT MOST OF THE PROJECTS WE CONSIDER WILL BE IN THAT CATEGORY.
AND I THINK WE NEED TO TRY AND BE PROACTIVE IN MAKING SURE THAT WE DON'T APPEAR TO BE SUPPORTING A TRANSACTION THAT DOES NOT HAVE COMMUNITY SUPPORT.
THAT IS VERY PRUDENT ADVICE WELL TAKEN.
UH, DIRECTOR MONTGOMERY, UM, SUMMER AND JIM ON EQUITABLE TITLE.
UM, WHAT I'M CURIOUS ABOUT THE DELINEATION BETWEEN WHAT WE DO AT THE PFC AND WHAT THE HFC DOES, UM, 'CAUSE THERE, THERE'S, UH, THERE THERE'S THE POTENTIAL FOR SIGNIFICANT OVERLAP THERE.
I MEAN, THEY COULD DO THE SAME DEALS.
UM, SO, AND THE ANSWER MAY BE, HEY, YOU NEED TO COORDINATE WITH THEM AND MAYBE YOU TAKE ONE CATEGORY AND THEY TAKE ANOTHER.
BUT I'M INTERESTED IN YOUR THOUGHTS ON, UM, THE EQUITABLE TITLE AND HOW THAT WOULD, UM, HOW WE MIGHT DELINEATE THAT BETWEEN THE HFC AND THE P PFCS.
WELL, THE EQUITABLE TITLE, IT, IT IS THE SAME THEY CAN DO IN TERMS OF TAX CREDIT DEALS OR ESSENTIAL FUNCTION BONDS.
THEY CAN DO THE SAME THING USING THE SAME STRUCTURE AND THE, THEY ARE GOING TO HAVE A SET ASIDE AT THE BEGINNING OF THE YEAR FOR HFCS WHEN IT'S A $200 MILLION SET ASIDE.
AND, AND, YOU KNOW, WE THINK YOU OUGHT TO USE THAT UP.
DEVELOPERS ON THE OTHER HAND ARE GONNA COME TO US AND ASK US TO PUT IN LOTTERY APPLICATIONS BECAUSE THE, THE SET ASIDE FOR PFCS IS $2 BILLION.
SO THERE IS 10 TIMES THE CHANCE OF BEING SELECTED ON THE PFC SIDE.
THERE ARE TWO OTHER THINGS WELL THAT ARE GONNA DRIVE THIS.
ONE, YOU ARE GOING TO START ACCUMULATING SIGNIFICANT AMOUNTS OF MONEY AND YOU'RE GOING TO HAVE THE OPPORTUNITY TO INVEST THAT MONEY IN ADDITIONAL HOUSING PROGRAMS. AND I'M SURE WE'RE GONNA HAVE A LOT OF DISCUSSIONS ABOUT WHAT THOSE PROGRAMS WILL BE.
[00:35:02]
BUT ONE OF THE THINGS THAT I SEE MANY OTHER PFCS DOING IS THEY TAKE A PORTION OF THEIR FUNDS AND THEY MAKE THEM AVAILABLE TO FILL GAPS IN TAX CREDIT PROJECTS IF THOSE PROJECTS HAVE UNITS AT THE 30% MEDIAN INCOME LEVEL.AND PART OF WHAT THAT DOES IS IT LETS YOU COVER A WIDER RANGE OF INCOME LEVELS.
IT LETS YOU ASSIST AT A, AT A VERY LOW INCOME LEVEL.
AND THERE'S, THERE'S OFTEN NOT MONEY FOR THOSE PROJECTS OTHERWISE.
AND I THINK THAT YOU AND THE HFC DO HAVE THE ABILITY TO DO DEALS.
I I DO NOT THINK WE WANT THIS TO BE A COMPETITION.
UM, AND, AND I DO THINK THERE NEEDS TO BE SOME COORDINATION.
AND ONE OF THE ADVANTAGES OF HAVING YOUR HOUSING STAFF IS THEY REPRESENT BOTH.
AND I THINK IT'S IMPORTANT THAT BOTH ENTITIES GET A FAIR SHARE NUMBER OF DEALS.
AND THIS IS NOT VIEWED AS A COMPETITION.
UM, HOPEFULLY WHAT THIS WILL BECOME IS A WAY TO USE UP ALL OF THE HFC SET ASIDE TO THE MAXIMUM EXTENT AND TO EXPAND THE NUMBER OF DEALS THAT MIGHT BE ABLE TO BE DONE UNDER THE PFC SET ASIDE.
SO I THINK THERE'S GONNA HAVE TO BE SOME COORDINATION.
UM, AND, AND, AND I JUST THINK YOU'RE GONNA GET SOME PRESSURE TO DO THESE DEALS BY DEVELOPERS.
UM, AND, AND SO THAT'S PART OF THE REASON WE WANTED TO START THIS DISCUSSION.
AND SO WE'RE NOT HITTING YOU COLD WHEN THESE THINGS COME ABOUT.
AND, UM, YEAH, I THINK YOU HIT THE NAIL ON THE HEAD AND I, I'M THINKING OF COORDINATION WITH THE, THE HFC, HOW BEST TO DO THAT.
UM, AND TO BE CLEAR, THESE WOULD BE GOVERNED NOT BY, UM, THE PFC STATUTE, BUT RATHER BY THE EQUITABLE TITLE STATUTE.
SO IS THAT ACCURATE? NO, IT'S ACTUALLY THE GO'S GOVERNED BY THE PFC STATUTE.
UM, BUT WE USE EQUITABLE TITLE TO GAIN THE TAX EXEMPTION IN THESE STRUCTURES.
AND THE REASON FOR THAT IS, IS SOMER SAID THE PROJECT IS NOT OWNED BY YOU.
IT'S OWNED BY THE TAX CREDITED INVESTOR.
AND, AND THAT IS THE STRUCTURE YOU HAVE TO HAVE SO THAT ON A FEDERAL SIDE, THE TAX BENEFITS ARE GOING TO A THIRD PARTY.
UM, AND YET WE CAN STILL GET A PROPERTY TAX EXEMPTION.
AND, AND JUST, JUST TO BE CLEAR, THE PROPERTY TAX EXEMPTION HAS BEEN BLESSED BY THE TEXAS SUPREME COURT AND THE STRUCTURE, UM, AND IT'S DONE ALL OVER THE STATE.
SO FROM A PRACTICAL PERSPECTIVE ON AC I'M THINKING OF ACQUISITIONS WITH, UH, WITH THIS.
SO FROM A PRACTICAL ASPECT, THE ACQUISITION WOULD HAVE TO CONFORM TO THE, UM, TO THE PFC? UH, WE WOULD OKAY.
I I DON'T WANNA THINK OUT LOUD, SO, OKAY, I GOT IT.
THANK YOU FOR, FOR AN ACQUISITION.
THE, THE PFC WOULD ACQUIRE THE LAND AND THE TAX CREDIT PARTNERSHIP WOULD ACQUIRE THE IMPROVEMENTS ON THE LAND.
AND THEN THE, BECAUSE YOU'RE THE GENERAL PARTNER OF THE TAX CREDIT PARTNERSHIP, THAT IS HOW THE EQUITABLE TITLE IS ESTABLISHED IN THE TAX EXEMPTION IS AWARDED THROUGH THAT.
AND, AND THE ONLY ACQUISITIONS YOU'RE GONNA SEE IN THIS PROGRAM ARE GONNA BE MAJOR REHABS.
THIS IS NEVER GOING TO BE A SITUATION WHERE WE GO OUT AND JUST ACQUIRE APARTMENT PROJECTS WILLY-NILLY AND, AND JUST TAKE 'EM OFF ROLLS AND DON'T DELIVER A VERY HIGH LEVEL OF COMMUNITY BENEFIT.
UM, AND MOST LIKELY A VERY HIGH LEVEL OF REHABILITATION.
I, I, UH, FOR THE DEEPER AFFORDABILITY FOR, YOU KNOW, 10% AT 30 OR, UM, YOU KNOW, AND, AND ALL 60 AND THAT KIND OF THING, UM, ACQUISITION, ACQUISITION JUST SEEMS LIKE THE, UM, A, A MORE PRACTICAL, UM, WAY FORWARD.
BUT YEAH, I WHOLEHEARTEDLY AGREE.
LEMME JUST ADD FOR YOU GUYS FOR THE BOARD'S BENEFIT, UM, ALTHOUGH IT'S, IT'S A LOT MORE COMPLICATED STRUCTURE THAN ITS TRADITIONAL PFC, THERE IS MONEY OUT THERE TO GET DEALS DONE, RIGHT? AND SO IN THIS ENVIRONMENT, IT'S GETTING
[00:40:01]
TOUGHER AND TOUGHER TO GET 'EM DONE.AND SO TO THE EXTENT THAT WE CAN HELP AS A PFC AND, AND SUPPLEMENT WHAT THE HFC IS DOING, I, YOU KNOW, THE CITY STAFF IS, IS EXPERIENCED IN THESE, AND OBVIOUSLY JIM IS, AND WE HAVE SOME VERY GOOD PARTNERS.
SO, YOU KNOW, OBVIOUSLY WE'RE JUST BRINGING THIS TO YOU TO, SO YOU GUYS CAN HAVE THE TIME TO WRAP YOUR HEAD AROUND THAT.
I MEAN, THE REAL PUSH IS IN THE FALL, LIKE THAT'S ALREADY PASSED FOR THIS YEAR, SO I'M, I'M ASSUMING NEXT FALL, YOU KNOW, WE'LL HAVE A BUNCH MORE APPLICATIONS THAT WILL GO IN THIS LOTTERY.
AND BY THAT TIME, HOPEFULLY, WE'LL, WE'LL HAVE BEEN ABLE TO WRAP OUR HEADS AROUND THIS, UH, ENOUGH SO THAT YOU CAN BE COMFORTABLE APPROVING SOME OF THESE AND, AND PARTICIPATING IN THIS PROGRAM, DIRECTOR TOLEDO.
YEAH, APPRECIATE THE PRESENTATION.
UH, THIS IS A QUESTION FOR SUMMER AND JIM, THE, UM, AND I, I HAD A, I HAD A SEPARATE CONVERSATION WITH HILLTOP, UH, SECURITIES A COUPLE WEEKS AGO, AND THEY SAID THAT THESE PROGRAMS AREN'T FOR NEW DEVELOPMENT.
AND THEN YOU JUST MENTIONED, WELL, IT'S FOR SUBSTANTIAL REHAB.
IS THAT, IS THERE, IS THERE A BRIGHT LINE WHY YOU COULDN'T USE A 5 0 1 C3 BOND TO GO BUY BUY LAND, BUT BUILD A BUILDING, ET CETERA? I, I WILL TELL YOU, I DON'T KNOW WHAT THAT COMMENT WAS ASSOCIATED WITH.
UM, AND, AND IT MAY HAVE BEEN SPECIFIC TO 5 0 1 C3 BONDS, WHICH I HAVE NOT DONE A 5 0 1 C3 DEAL IN FIVE YEARS.
UM, THE TAX CREDIT, 4% TRANSACTIONS, I WOULD SAY THAT WE DO 20 NEW CONSTRUCTION DEALS TO ONE REHAB DEAL.
SO THEY ABSOLUTELY ARE FOR NEW HOUSING.
UM, AND, AND I REALLY DO THINK 20 TO ONE IS PROBABLY A PRETTY CONSERVATIVE NUMBER.
ALMOST EVERYTHING WE DO IS NEW.
YEAH, I WAS GONNA JUMP IN AND SAY THE, THE LARGE MAJORITY BY, BY AND FAR IS NEW CONSTRUCTION
DID Y'ALL HEAR MY QUESTION? MY FOLLOW UP FOLLOW UP? YEAH.
VICTOR, COULD YOU RESTATE, I THINK YOUR
SO WHEN YOU SAY, YOU KNOW, ONE OUTTA 20 OR, OR REHAB DEALS, IS THAT FOR 4% LITECH AND 5 0 1 C3? OR IS THAT, ARE THEY ONE AND THE SAME, OR AM I CONFLATING THE TWO? THE, THE, THAT IS FOR 4% LITECH.
UM, WE DO NOT SEE MANY 5 0 1 C3 DEALS AT ALL.
I I, I SERIOUSLY HAVE NOT CLOSED ONE IN FIVE TO 10 YEARS.
IS THERE, IS THERE AN ADVANTAGE FOR A DEVELOPER TO AVAIL THEMSELVES OF ONE OR THE OTHER? I MEAN, SO THEY'VE ALWAYS BEEN HERE SEVERAL TIMES, RIGHT? THEY, SEVERAL DEALS WERE THIS, THE, THE ONLY REASON THAT 5 0 1 C3 WORKS IS BECAUSE IT'S THE AIDS FOUNDATION.
UM, THEY HAVE EXPERIENCE IN OPERATING, UM, AND, AND, UM, THEY WOULD, THEY WOULD RATHER DO A 5 0 1 C3 BOND THAN DO A TAX CREDIT DEAL BECAUSE IT EXPANDS, UH, SOME OF THE TENANTS THAT THEY CAN WORK WITH.
UM, AND SO, UM, THAT THEY'RE TRYING TO REACH A BROADER MIX, UH, UM, INCOME LEVELS THAN A TAX CREDIT DEAL WOULD DO.
UM, BUT THEY, THEY, WE JUST REALLY DON'T SEE A LOT OF 5 0 1 C3 DEALS.
UM, AND, AND, YOU KNOW, MAYBE WE'LL START SEEING MORE OF 'EM, BUT, UM, AND, AND MAYBE THE ONLY WAY A 5 0 1 C3 MAKES SENSE IS AS AN ACQUISITION.
UM, I COULD TELL YOU IN THAT PARTICULAR DEAL, UM, IT, IT IS DRIVEN BY THE FACT THAT THEY WANT TO HAVE BROADER INCOME BANS THAN JUST, JUST A TAX CREDIT DEAL.
DO WE HAVE ANY OTHER FURTHER QUESTIONS FROM THE BOARD? SEEING NONE, UH, JAMES AND SUMMER REALLY DO APPRECIATE YOU COMING HERE TODAY AND SHARING THIS WITH US.
UH, WE'RE YOUR CONTINUING EDUCATION FOR US GREATLY APPRECIATED, AND WE LOOK FORWARD TO, UH, CLOSING MORE DEALS IN THE FUTURE.
[00:45:01]
THANK Y'ALL.THAT CONCLUDES OUR DISCUSSION ON ITEM NUMBER SIX.
MOVING ON TO ITEM ITEM NUMBER SEVEN, I'LL GO AHEAD AND READ IT TO THE RECORD.
DISCUSSION OF APPROVAL OF A RESOLUTION AUTHOR AUTHORIZING THE NEGOTIATION EXECUTION OF A TERM SHEET AND INDUCING THE PROPOSED FINANCING OF UP TO $55 MILLION OF TAX EXEMPT BONDS FOR THE RIVIERA PARTNERS IN PARTNERSHIP WITH SEVO AND AID SERVICES OF DALLAS TO BE LOCATED AT 7 11 700 ODEL ROAD IN DALLAS, TEXANS, AARON.
SO THE DEVELOPER HAS REQUESTED THAT THIS ITEM BE MOVED TO A LATER AGENDA DATE AS THE AMEND APPLICATION.
WE HAVE A, DO WE NEED A MOTION TO, UH, TABLE THIS OR MOVE IT, OR, UH, THAT WAS, IF IT WAS WITHDRAWN BY THE DEVELOPER.
YEAH, I WAS, I MEAN, ESSENTIALLY IT'S WITHDRAWN FOR NOW, SO, UM, WE CAN JUST, I JUST, I JUST AS A, THIS PROJECT BEING IN DISTRICT 10, AND I WAS UNABLE TO MAKE THE, UH, PRIOR BOARD MEETING, WHICH THIS WAS ON THE AGENDA, I JUST WANTED TO THANK MY, UH, FELLOW DIRECTORS OF DEFERRING IT AT THAT TIME TO MAKE SURE THAT, UH, DISTRICT 10, UH, REPRESENTATIVE, NOT ONLY MYSELF, BUT COUNCILWOMAN STEWART, HAD AN OPPORTUNITY TO, TO AT LEAST CREATE A DIALOGUE, UH, WITH THE DEVELOPER AROUND THIS DEAL.
AND, UH, MOVING IT TO A LATER DATE AND CONTINUING THAT DIALOGUE WITH THEM, UH, SOUNDS LIKE THE RIGHT APPROACH AT THIS TIME.
AND JUST AGAIN, MY THANKS TO THE, UH, DIRECTORS FOR DEFERRING ACTION TILL WE COULD, UH, MAKE THAT HAPPEN.
THANK YOU VERY MUCH, DIRECTOR HOLMES.
MOVING ON TO AMENDMENT EIGHT, DISCUSSION AND APPROVAL OF DIRECTORS AND OFFICERS INSURANCE COVERAGE FOR THE DALLAS PUBLIC FACILITIES CORPORATION BOARD OF DIRECTORS AND OFFICERS.
UH, THIS IS AN ITEM THAT, UH, I WANTED TO HAVE INCLUDED ON THE AGENDA BECAUSE WE'VE DISCUSSED IT, UH,
AND I WOULD LIKE TO KEEP IT ON THE AGENDA UNTIL WE HAVE IT RESOLVED.
THAT WAY IT'S IN FRONT OF EVERY, WE ALL KNOW IT'S HERE.
UM, IF WE HAVE TO, IF WE DON'T HAVE INFORMATION TODAY, WHICH I DON'T BELIEVE WE DO, UM, WE AT LEAST KNOW THAT WE WILL ACT ON IT NEXT MONTH OR AT THE TIME THAT WE HAVE THE INFORMATION READY.
I WOULD, I WOULD LIKE TO RECOGNIZE TREASURER TELLIS AT THIS TIME.
UM, JUST TO BRING EVERYONE UP TO DATE, UH, SAM MCDANIEL AND I HAD A RATHER LENGTHY CONFERENCE CALL, UH, WITH A INSURANCE BROKER BASED IN DALLAS, UH, WHO WAS VERY VERSED IN THIS AREA.
UM, THEY NOT ONLY ARE GONNA LOOK AT OUR D AND O COVERAGE, BUT THEY'RE ALSO GONNA LOOK AT OUR GENERAL LIABILITY COVERAGE, GIVEN THE FACT THAT WE ACT AS GENERAL CO, UH, CONTRACTOR, AND THEY SHOULD BE GETTING BACK WITH SAM AND I, UM, EITHER LATER THIS WEEK OR SOMETIME NEXT WEEK.
UM, WE HAVE INDICATED TO THEM THAT AS A BOARD, UM, OUR RAW FANNIES ARE SORT OF SWINGING IN THE BREEZE.
THE POLICY THAT CURRENTLY COVERS US IS FOR PUBLIC EMPLOYEES, WHICH, EXCUSE ME, WE ARE NOT.
AND THE AMOUNT THAT'S ALLOCATED, UH, FOR COUNCIL FEES SHOULD THERE BE LITIGATION IS, UM, TERRIBLY INADEQUATE.
SO OUR THOUGHTS ARE, IS WE WILL GET, UH, UH, THE ANALYSIS THAT IS BEING DONE, UM, UH, BY ROACH HOWARD, AND THEN WE'LL SORT OF CALL THROUGH IT.
I WILL TAKE IT TO, UH, THE FINANCE COMMITTEE.
UH, WE WILL CALL, CALL THROUGH IT, AND THEN COME TO THE FULL BOARD WITH OUR RECOMMENDATIONS.
AND THE BOARD AT THAT POINT, CAN, CAN MAKE DECISIONS.
OUR CURRENT POLICY EXPIRES, UH, I BELIEVE THE BEGINNING OF MARCH, AND WE WANT TO GET THIS DONE WELL, WELL IN ADVANCE OF, OF THAT BECAUSE AS WE CONTINUE TO APPROVE PROJECTS, AS WE CONTINUE TO, UM, ENJOY REVENUES, WE CONTINUE TO INCREASE OUR EXPOSURE.
AND, UM, I, FOR ONE, UH, HAVE NOT WORKED FOR THE LAST 50 YEARS SO I COULD GET SUED AND, AND NOT NOT HAVE COVERAGE.
SO ANYWAY, THAT'S WHERE WE ARE.
UM, THE PROCESS IS MOVING VERY QUICKLY AND, UM, YOU KNOW, EVERYONE WILL BE KEPT APPRISED.
AND THE FINAL DECISION AFTER RECOMMENDATIONS ARE MADE BY THE FINANCE COMMITTEE, WE'LL BE THAT O OF THE FULL BOARD.
THANK, THANK YOU VERY MUCH, DIRECTOR TALLAS, AND, UH, DIRECTOR POS.
I WANTED YOU TO KNOW THAT IN FRONT OF EVERYONE THAT I, I'VE HEARD YOUR CONCERNS AS WELL TOO.
AND, UM, THIS ITEM WILL REMAIN ON THE AGENDA.
WE HAVE IT RESOLVED, UH, HOPEFULLY,
[00:50:01]
UH, PERHAPS BY NEXT MONTH.BUT WE WILL SEE, UM, DO I HAVE A MOTION TO, UH, I ASSUME THE TABLE, THIS, UH, ITEM NUMBER EIGHTS UNTIL THE JANUARY MEETING? I ALSO MOVE IT MOVE BY DIRECTOR CALLAS SECOND.
ALL THOSE IN FAVOR SIGNIFY BY SAYING AYE.
OPPOSED? ITEM IS, UH, DEFERRED TO THE GEN NEXT MEETING.
MOVING ON TO ITEM NUMBER NINE, DISCUSSION AND APPROVAL OF THE DALLAS PUBLIC FACILITY CORPORATION 2024 ANNUAL BUDGET.
AARON, SO YOU HAVE A PROPOSED BUDGET FOR 2024.
AS WE END THE CALENDAR YEAR, WHICH IS ALSO YOUR FISCAL YEAR, IT STARTS AGAIN IN JANUARY.
YOU HAVE SOME NOTES ON YOUR COVER MEMO.
AND THEN AS YOU LOOK AT THE BUDGET IN COMPARISON TO 2023, WHICH YOU HAVE SIDE BY SIDE, YOU'LL NOTICE THAT IT'S RELATIVELY THE SAME.
THERE'S ONLY THREE NEW ITEMS, UH, ONE UNDER THE REVENUE, AND THAT IS, UH, LEASE PAYMENTS AS WE EXPECT SOME PROJECTS TO COME ONLINE.
AND THEN THERE'S TWO ADDITIONAL NEW ITEMS IN THE EXPENSE COMPONENT, UH, WEBSITE.
THERE'S BEEN DISCUSSION ABOUT, AS YOU GUYS REMEMBER A COUPLE MONTHS AGO, ABOUT, UH, HAVING A SOCIAL, UH, MEDIA PRESENCE ONLINE SPECIFICALLY FOR THE PFC.
AND THEN THE SECOND ONE IS THIS VERY MINIMAL AMOUNT FOR BOARD EXPENSE, WHICH JUST COVERS LIKE, AGAIN, PRETTY MINIMAL EXPENSES.
THE ONLY AMENDMENT THAT WE'LL MAKE SINCE THIS WAS DISTRIBUTED LAST WEEK WAS, UM, WE HAD A CLOSER PROJECTION AS TO WHAT THE HOUSING REIMBURSEMENT IS FOR STAFF SALARIES.
AND THAT NUMBER IS ACTUALLY 333,277.
UM, SO THAT ESSENTIALLY IS GOING TO REDUCE YOUR EXPENSES TO $511,060 AND 73 CENTS AND INCREASE YOUR NET INCOME TO 4,983,570 97 CENTS.
UM, ON THE SALARIES, UH, OF THE SALARIED PEOPLE, ARE THEY 100% DEVOTED TO THE PFC? NO, SIR.
UH, THE SALARY COVERS TWO CURRENT EMPLOYEES THAT ARE A HUNDRED PERCENT DEVOTED TO THE PFC.
THAT IS MY POSITION AND THE POSITION OF SAM MCDANIEL, THE PROJECT MANAGER, BUT ALSO COVERS PARTIAL POSITION, WHICH IS THE ASSISTANT GM, WHICH I BELIEVE IS THE ASSISTANT DIRECTOR OF THE HOUSING DEPARTMENT.
AND IT ANTICIPATES THE HIRING OF ONE INDIVIDUAL WHO'S NOT, UH, CURRENTLY COME ONLINE JUST YET.
PROBABLY TAKE ABOUT HALFWAY THROUGH THE FISCAL YEAR, AND THAT WOULD BE FOR A PROJECT COORDINATOR POSITION.
AND, UM, ALBERT, COULD YOU, UM, SO FOR 2024, THERE'S THE HOUSING REIMBURSEMENT OF 500,000.
UM, IS THAT THE, THE REQUEST YOU, YOU MENTIONED AT THE END THAT THAT'S WHAT'S BEING AMENDED TO 3 33 2 7 7, SO, OKAY, GOT IT.
ALMOST IN LINE AS TO WHAT YOU BUDGETED LAST YEAR.
MINIMAL INCREASE, VERY SLIGHT.
AS YOU CAN IMAGINE, THE CITY DOES PROVIDE, UM, SALARY ADJUSTMENTS.
UM, AND I WOULD LIKE TO, UM, POINT OUT TO MY FELLOW DIRECTORS THAT, UM, PER THE BYLAWS, THE MAXIMUM THAT, UM, WE CAN BE CHARGED FOR THIS REIMBURSEMENT IS WHAT WE APPROVED IN THE BUDGET.
UM, SO THAT'S GONNA BE A, A REALLY IMPORTANT, UM, FOR THAT REASON.
AND THEN SIMILARLY, UM, THE CITY ATTORNEY'S OFFICE, UM, CAN, UH, ONLY CHARGE US WHAT WE APPROVE IN THE BUDGET.
SO DO I ASSUME CORRECTLY THAT THAT IS, THAT DOLLAR AMOUNT IS COVERED UNDER LEGAL SERVICES? THE, THE CITY ATTORNEYS HASN'T BILLED US, UM, SEPARATELY, UH, SINCE WE'VE BEEN OKAY.
IN OPERATION, SO, OKAY, SO THEN IT, IT WOULD NOT BE, UM, SO THEY, THEY, IF WE ADOPT THIS BUDGET, THEY WOULD NOT BE ELIGIBLE TO, UH, ASK FOR REIMBURSEMENT.
IS THAT, DO I UNDERSTAND THAT CORRECTLY? SO YOU'LL HAVE TWO OPTIONS.
ONE IS YES,
[00:55:01]
I MEAN, I'M SORRY, IN JUNE OR JULY.UH, BUT WE COULD ALSO PLUG IN A FIGURE IN ANTICIPATION AND REACH OUT TO THE CAO AND, AND AGAIN, PUT IN ANOTHER AMENDMENT RIGHT NOW FOR THAT DOLLAR AMOUNT AND BRING IT BACK NEXT MONTH.
YEAH, I MEAN, YOU GUYS, YOUR BUDGET IS UP TO YOU, SO IF AT ANY TIME YOU WOULD LIKE TO AMEND IT OR CHANGE OTHER THINGS BASED ON NEW INFORMATION, THAT'S, YOU KNOW, THE BOARD CAN BRING THAT BACK AT ANY TIME.
UH, BUT ALSO, LIKE ALBERT SAID, YOU WANT TO JUST BUILD IN SOME CONTINGENCIES JUST SO YOU DON'T HAVE TO COME BACK.
I MEAN, THEN UNDER THE LEAVE IT, I JUST WANTED TO BE CLEAR THAT WHAT, WHAT I WAS DIRECTOR STINSON.
UH, JUST ONE QUICK QUESTION UNDER, UM, THE EXPENSE HERE, YOU, YOU NOTE, UH, CONFERENCES AND TRAVEL, IS THAT PRETTY MUCH FOR STAFF? WHAT HAS BEEN BUILT IN HERE? IT'S FOR STAFF AND BOARD MEMBERS.
SO, UM, BEING IT'S HOW YOU GUYS MAY BE PARTICIPATING IN TAX CREDIT TRANSACTIONS NOW, I THINK IT'S A GOOD IDEA FOR BOARD MEMBERS.
YOU KNOW, THE WAY WE DO IT WITH THE HFC IS THAT YOU JUST PUT IT OUT THERE TO THE BOARD.
HEY, ANYBODY WHO WANTS TO COME TO THIS CONFERENCE, YOU KNOW, LET US KNOW AND, AND WE CAN REIMBURSE YOU FOR THAT EXPENSE, THE TRAVEL AND, AND THE HOTELS AND THE CONFERENCE, UH, QUEUES.
AND, UH, IT'S, IT'S ACTUALLY A GOOD HELP.
UH, SO IF ANY YOU WOULD LIKE TO DO THAT, OBVIOUSLY IT'S, IT'S UP TO Y'ALL AS A BOARD AND IF YOU'RE GONNA WANT TO PARTICIPATE, BUT, UM, YOU KNOW, THAT'S, THAT'S CERTAINLY SOMETHING THAT I WOULD RECOMMEND.
DOES THAT INCLUDE PER DIEM TOO? YEAH, SO THE WAY THAT, I MEAN, THIS WOULD BE UP TO YOU.
THE WAY THAT THE HFC DOES IT, IS THEY JUST USE THE GSA PER DIEM.
SO BASED ON THAT, UH, WHEREVER CITY YOU'RE, YOU'RE GOING TO BE, THEY WILL ALLOW YOU THAT MUCH.
UM, AND THEN THEY'LL JUST REIMBURSE YOU THAT, THAT AMOUNT PER DAY.
AND, UH, QUICKLY, YOU, YOU FACTORED, UH, 25,000 FOR A, UH, A WEBSITE DEVELOPMENT AND MANAGEMENT.
UM, HOW DID YOU COME UP WITH THAT AS WE JUST, UH, THE PERSON WHO, UH, SPOKE WITH US A FEW MONTHS AGO, SHE, SHE STATED FOR HER PARTICULAR SERVICES, IT WOULD BE FIVE, 6,000 A MONTH, IF I'M CORRECT.
SO THOSE WERE A LITTLE DIFFERENT OF A SERVICE.
SHE WAS TALKING JUST ABOUT A SOCIAL MEDIA KIND OF, UH, MANAGER ROLE.
THIS WOULD BE AN ACTUAL WEBSITE THAT'S HOSTED.
UM, YOU COULD GO TO WHATEVER, WWW.DALLASPUBLICFACILITY.COM, YOU KNOW, YOU'RE THEIR OWN SEPARATE ENTITY AND THEY WOULD BUILD THAT OUT AND, AND DO THE WHOLE MAINTENANCE OF THINGS.
I, I CAN'T SEE, UH, MEMBERS ONLINE.
DO WE HAVE ANY ONE ONLINE? UM, THE QUESTION, I BEG YOUR PARDON? YES.
UM, IN, AT THE JANUARY MEETING, CAN WE SEE THIS BUDGET AGAIN WITH THE ACTUAL FOR 2023? YEAH, THEY, THEY WILL, UH, WE WILL GET ALL THE, UH, FINANCIALS WRAPPED UP AT THE END OF THE YEAR AND, UM, HAVE THE ACTUALS PREPARED.
DIRECTOR P ARE, ARE YOU STATING THAT YOU, UH, ARE LOOKING TO, UH, DEFER APPROVE OF THIS UNTIL JANUARY MEETING? JUST BECAUSE MAKING SURE, UH, NO, I DIDN'T SAY THAT.
I JUST WANNA MAKE SURE THAT WE SEE THE ACTUAL, I KNOW THE, THE INSURANCE COST IN 2023 WAS ONLY AROUND 14,000, UM, AS OPPOSED TO THE 2020 THAT WAS BUDGETED.
SO, UM, I JUST WANNA TAKE A LOOK AT WHAT THE ACTUAL EXPENSES WERE COMPARED TO WHAT NEXT YEAR LOOKS LIKE.
DO WE HAVE ANY OTHER COMMENTS OR SUGGEST ON THE FLOOR FOR MEMBERS? IF NOT, DO WE HAVE A MOTION ON ITEM NUMBER NINE? I SO MOVE.
WE HAVE A MOTION, A MOVE BY DIRECTOR CALLAS.
I, I'D LIKE TO CLARIFY THE, UM, THE, UM, REIMBURSEMENT, SORRY.
'CAUSE YES, IT'S, IT'S IN OUR PACKET IS 500,000 MM-HMM.
AND, UH, ALBERT, YOU, YOU SAID IT'S 3 33.
I WANNA MAKE SURE THAT THAT'S THE BUDGET WE'RE APPROVING, NOT THE ONE THAT'S IN OUR PACKET.
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CLARIFICATION, WE HAVE A SECOND FROM DIRECTOR IN MONTGOMERY.UM, I'D LIKE TAKE A, A VOICE VOTE ON THIS AS A BUDGET.
AARON OR SAM, ARE YOU TAKING A VOICE VOTE OR A ROLL CALL? A ROLL CALL PLEASE.
SAM, DO YOU HAVE THE ROLL? YOU CAN MAKE SURE YOUR MIC'S ON WHILE YOU READ.
ITEM NUMBER NINE PASSES AND WE LOOK FORWARD TO SEEING, UH, BOTH THE FIGURES AT 2023 AND 2024 AT THE NEXT MEETING.
MOVING ON TO ITEM NUMBER 10, REVIEW AND DISCUSSION OF THE LSPS TREASURER REPORT, ALBERT? SURE.
THIS IS JUST A DISCUSSION ITEM, SO I'M GONNA GET IT EVERY MONTH.
UH, JUST TO NOTE THAT IT'S FOR THE EIGHT MONTHS ENDING IN AUGUST.
SO YOU HAVE TWO DOCUMENTS, STATEMENT OF REVIEWS, EXPENSES, AND IN NET POSITION, OTHERWISE KNOWN AS YOUR INCOME STATEMENTS, YOU HAVE TOTAL EXPENSES OF 30,540 AGAINST OPERATING REVENUE OF 1,817,873.
AND THEN AT THE BOTTOM OF THAT PAGE, YOU SEE THE CHANGE IN THAT POSITION.
THE SECOND DOCUMENT HAD STATEMENT OF NET POSITION, YOUR BALANCE SHEET, TOTAL ASSETS DATE 20,385,138, TOTAL LIABILITIES 142,826.
AT THE BOTTOM OF THAT PAGE, YOU CAN SEE ALSO THE CHANGE IN THOSE POSITIONS AS WELL.
PRESIDENT
I DIDN'T HAVE MY MICROPHONE ON.
UM, TO REPEAT, UM, SEEING NO FURTHER DISCUSSION ON REVIEW OR ON ITEM NUMBER 10, WE'LL MOVE ON TO ITEM NUMBER 11.
SO ITEM NUMBER 11, YOUR PIPELINE REPORT.
AND IN THIS INSTANCE, I JUST SUMMARIZED IT ON THE, ON THE COVER PAGE MEMO, SO I'M NOT SURE IF ANYBODY HAS ANY QUESTIONS, BUT KIND OF RUNNING FROM TOP TO BOTTOM.
TOTAL PROJECTS APPROVED BY COUNCIL 21, FOLLOWED BY TOTAL EVALUATION.
THE NUMBER OF UNITS ARE INCLUDED IN THOSE PROJECTS AS FOLLOWS.
THOSE ARE DESIGNATED AS AFFORDABLE UNITS, AVERAGE PROJECT SIZES LONG ALONG WITH THE COSTS.
AND YEAH, THOSE PROJECTS BROKEN DOWN BY COUNCIL DISTRICT AND FOLLOWED BY THOSE WHICH ARE UNDER CONSTRUCTION DIRECTOR MONTGOMERY.
SO THOSE THAT ARE UNDER CONSTRUCTION, WHEN IS THE, THE FIRST ONE GONNA BE IN PRODUCTION START AT LEAST IN AUGUST 1ST QUARTER? JUST FIRST QUARTER, 2024 FIRST QUARTER? IS THAT, UM,
SO WHAT GIVES ME, UM, HEARTBURN RIGHT NOW IS, UM, WHEN THOSE ARE, ARE IN PRODUCTION, WE START LEASING OPS IS OUR OVERSIGHT OF THOSE PROPERTIES AND COMPLIANCE WORK.
UM, THE LEASE, UM, OBVIOUSLY, UM, THE AMENDED STATUTE HOUSE BILL 2071.
UM, SO WHAT, WHAT IS OUR, UM, PATH FORWARD ON COMPLIANCE? SO RIGHT NOW WE'RE WORKING WITH THE CURRENT COMPLIANCE TEAM THAT CURRENTLY EXISTS IN THE HOUSING DEPARTMENT.
AS YOU CAN DO, IMAGINE THEY DO COMPLIANCE FOR ALL OF OUR FEDERALLY FUNDED PROGRAMS. UH, SO, UH, WE'RE DEVELOPING A PLAN RIGHT NOW AND WE PLAN TO HAVE IT READY BY THE END OF DECEMBER, UH, WHICH IS A FEW WEEKS, THREE TO FOUR WEEKS OUT.
UH, BUT IT PROBABLY, ONCE WE HAVE THAT PLAN READY, I'LL PROVIDE THE DETAILS IN TERMS OF HOW THEY MONITOR PROJECTS THAT ARE
SO IS THAT OFFICE OF BUDGET? NO, NO, THAT'S WITHIN THE HOUSING DEPARTMENT.
WE HAVE A STAFF OF APPROXIMATELY, IT'S A LITTLE BIT SHORT STAFFED RIGHT NOW, BUT THERE'S PROBABLY NORMALLY ABOUT SIX TO EIGHT PEOPLE ON THAT STAFF AS WELL AS AN
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INSPECTION GROUP.WE STILL HAVE ANOTHER SIX TO EIGHT INSPECTORS THAT TYPICALLY MONITOR OUR PROJECTS IN THE HOUSING DEPARTMENT AS WELL AS PARTICIPATING IN HOME SOLUTIONS.
AND, AND THERE IS A PLAN TO HIRE A COMPLIANCE PERSON TO COVER THE H FFC AND PFCA THIRD PARTY, NO, ANOTHER HOUSING STAFF.
I DON'T, I DON'T THINK YOUR MIC'S ON FOR THE PEOPLE.
ANO ANOTHER HOUSING STAFF MEMBER.
THERE'S, THERE'S A PLAN TO HIRE SOMEONE ELSE TO COVER THESE TWO ENTITIES.
ANY FURTHER DISCUSSION ON, ON ITEM NUMBER 11? I HAVE A QUESTION, MR. CHAIR.
ALONG THOSE SAME LINES, I'VE OFTEN WONDERED, UM, WHEN WE HAVE A PROPOSAL THAT COMES BEFORE US AND IT'S AT A CERTAIN UNIT MEET, UH, WITHIN THAT STRUCTURE OF COMPLIANCE, WHO SAYS THAT, UH, WHO VERIFIES? WE'VE GOT SOME FEEDBACK.
SOMEBODY HAS, UH, THEIR MIC ON, UM, WHO VERIFIES THAT, UM, UPON COMPLETION OF THE PROJECT, THAT THEY ACTUALLY KEEP THAT UNIT MIX AND THAT THOSE PARTICULAR INHABITANTS, THE TENANTS ACTUALLY HAVE THAT NECESSARY, UM, INCOME.
THERE IS A, UM, A STRUCTURE IN PLACE FOR THAT FOREST COMPLIANCE? NO, THERE, THERE IS, THE COMPLIANCE TEAM DOES ADDRESS ALL OF THOSE.
SO THEY WILL, THEY WILL, UM, LOOK AT THE PAPERWORK.
THEY WILL VISIT THE PARTICULAR SITE AND VERIFY BY DOCUMENTATION, MEANING A REPORT THAT THAT PARTICULAR DATE, UH, THIS IS WHAT IS IN PLACE.
SO THEY ACTUALLY START, YOU KNOW, AS, AS SOON AS THE DEVELOPER BREAKS GROUND, AND AARON CAN SPEAK MORE TO THIS, UH, BECAUSE OBVIOUSLY THEY PARTICIPATED SIGNIFICANT WITH THE HOUSING FINANCE CORPORATION ON THE PROJECTS THAT THEY'VE ALREADY DEVELOPED.
BUT OUTSIDE OF THE HOUSING FINANCE CORPORATION ARE PROJECTS THAT ARE TYPICALLY JUST, AGAIN, FEDERALLY FUNDED.
THE COMPLIANCE COMPONENT STARTS, YOU KNOW, PRE-CONSTRUCTION, RIGHT? THEY'RE CHECKING, UH, YOU KNOW, MAKING SURE THAT WE NWBE REQUIREMENTS FOR THE CITY.
THEY JUST MAKE AN ACT REQUIREMENTS AND THIS ALL SORTS OF STUFF.
AND AS IT MOVES INTO THE LEASE UP, THEY ARE CHECKING THOSE RENT ROLES.
THEY ARE MONITORING OR INCOME ELIGIBILITY.
AND THEN IT CONTINUES, YOU KNOW, FOR THE TERM OF, OF THE, OF THE AGREEMENT.
THE, UH, THE NEXT QUESTION IS PRETTY MUCH THAT, UM, THEY CAN'T NECESSARILY, OR, OR THEY HELD TO A CERTAIN RENT STRUCTURE FOR THE LIFE OF THE PROJECT.
I KNOW YOU HAVE RENT INCREASES, YOU KNOW, PER YEAR OR WHATEVER, BUT, UM, DO, DOES THAT COMPLIANCE TEAM ALSO MAKE SURE THAT THE RENT STRUCTURES, UH, GRADUATE AS THEY SHOULD? TYPICALLY THE ONSITE, UM, MANAGEMENT TEAM, THEY'LL BE IN CHARGE OF QUALIFYING THOSE RENTERS INITIALLY.
SO THAT'S, THAT'S LINED OUT IN THE TERMS OF OUR LEASE AGREEMENT.
UM, AND JIM CAN SPEAK TO THIS.
I DON'T KNOW IF HE'S BEEN ITCHING TO SAY SOMETHING, BUT, UM, OUR, OUR PROPERTY MANAGEMENT TEAM WILL BE REQUIRED TO QUALIFY EACH RESIDENT, UM, AT THOSE RESTRICTED RATE UNITS BY THE, THE PROPER INCOME LIMITS FOR JIM, UH, SPEAKS HERE IF HE HAS SOMETHING TO SAY.
WE ONCE TALKED ABOUT HAVING, UH, BEING ABLE TO, UM, UM, KNOW OR DE OR DENY A PARTICULAR APPLICATION IF THEY HAD NOT STARTED CONSTRUCTION WITHIN LET'S SAY 18 MONTHS.
UM, DID I, I'M NOT SURE WHETHER WE ACTUALLY, UH, VOTED ON THAT.
WE JUST DISCUSSED IT BECAUSE IF A PROJECT COMES BEFORE US AND CORPORATION AWARDS, UM, OR THE COUNCIL GOES AHEAD AND GIVES THEM THAT, UH, EXEMPTION, THAT TAX EXEMPTION, AND NOTHING HAS STARTED WITHIN THE NEXT 18 MONTHS.
UH, WE HAD DISCUSSED MONTHS AGO ABOUT PULLING THAT TAX EXEMPTION BACK.
I WOULD ASSUME THAT WOULD COME UNDER COMPLIANCE.
AND, AND DID WE HAVE ANYTHING, UH, HARD AND STRUCTURED THAT, THAT WE HAD DECIDED UPON? YES.
I MEAN, SO FAR WE'VE ONLY DISCUSSED IT.
IF, IF WE WOULD LIKE TO DO THAT GOING FORWARD, OBVIOUSLY IT'S UP TO, UP TO THE BOARD.
UM, AND WE CAN INCORPORATE THAT EITHER TO OUR LEASE AGREEMENT
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OR EVEN TO THE CITY COUNCIL RESOLUTIONS THAT APPROVE THESE PROJECTS.UH, UH, JIM, BEFORE YOU RESPOND, WE SEE IF, UH, YOUR RESPONSE MIGHT ALSO HAVE TO DO WITH, UH, MARY POS, DIRECTOR PO'S QUESTION.
UM, I, I THINK DIRECTOR STINSON BRINGS UP A REALLY GOOD POINT AND WE PROBABLY SHOULD DISCUSS THAT AGAIN.
I WAS GONNA ASK, UM, IF, UH, WE COULD ADD SOME INFORMATION ABOUT THE, UH, TYPE OF UNIT MIX, PARTICULARLY THE RATES, UH, THAT ARE ANTICIPATED TO THAT REGULAR MONTHLY REPORTING.
UM, AND ADDITIONALLY, I RECALL THAT, UM, ABOUT A YEAR AGO, UH, YOUR PREDECESSOR ERIN, UH, TOLD US THAT, THAT, UH, IF THERE WERE EVER ANY MAJOR CHANGES OR SIGNIFICANT DEAL POINTS THAT CHANGED RELATED TO A PROJECT THAT WAS APPROVED, UH, AFTER IT WENT INTO FINAL APPROVAL, UH, PROCESS, UH, BUT HAD ALREADY GOTTEN THE APPROVAL FROM THE BOARD THAT WE WOULD BE BRIEFED ON THAT.
SO I WOULD LIKE TO GO BACKWARDS, UM, AT THE NEXT MEETING IF POSSIBLE, AND GET A BRIEFING ON ANY SIGNIFICANT CHANGES THAT HAVE OCCURRED TO ANY OF THE PREVIOUSLY APPROVED, UH, PROJECTS, FOR EXAMPLE, I WOULD THINK THAT CHANGING THE ENTIRE ENTITY TO WHICH THE DEAL IS DELIVERED WOULD BE A VERY SIGNIFICANT CHANGE.
CERTAINLY, YEAH, WE CAN, WE CAN DO THAT.
BUT YEAH, I I DON'T THINK THAT SHOULD BE A PROBLEM.
THANK YOU VERY MUCH, MR. PLUMMER.
UM, SEVERAL THINGS YOU SHOULD KNOW, IF YOU GO DOWN TO OUR CHART OF PROJECTS, UM, IT'S NOT QUITE UP TO DATE.
WE HAVE CLOSED BANYAN, WE HAVE CLOSED SINGLETON, AND WE HAVE CLOSED BISHOP RIDGE.
UM, AND SO THERE ARE AT LEAST FOUR DEALS, UH, THAT HAVE RECENTLY CLOSED.
AND SO, UM, ONE OF THE THINGS I WILL POINT OUT IS THAT YOUR FINANCIALS WERE AUGUST 31, AND THEY WILL SIGNIFICANTLY IMPROVE BECAUSE OF THOSE FOUR DEALS.
UM, MS. PASI WILL NOTE THAT THERE HAVE NOT BEEN MAJOR PROJECT CHANGES, UM, DIFFERENT FROM OUR TERM SHEET.
UM, WE'VE BEEN VERY CAREFUL TO TELL DEVELOPERS, NO, THIS IS WHAT OUR BOARD APPROVED.
WE'RE NOT CHANGING IT UNLESS WE GO BACK TO THE BOARD.
UM, SO, SO WE HAVE, WE HAVE BEEN VERY, VERY CAREFUL TO TRY AND MAKE SURE THAT THE DEALS THAT YOU APPROVED OR WHAT'S BEING DELIVERED, UM, IN TERMS OF THE 18 MONTHS, WE DID NOT IMPLEMENT THAT BECAUSE PRINCIPALLY THE BIGGEST PROBLEM IN SOME OF THESE THINGS CLOSING IS THE CITY OF DALLAS.
UM, THERE, THERE ARE CLEARLY DEALS THAT HAVE BEEN PENDING CITY PERMITS FOR EXTENDED PERIODS OF TIME.
AND AS SOON AS WE GET THOSE PERMITS, WE CAN USUALLY CLOSE THE DEALS.
UM, SO HOPEFULLY THAT'S IMPROVING.
UM, BUT, UM, I, I DO THINK WE NEED TO UPDATE OUR LIST AND I DO THINK THAT THINGS LIKE, LIKE IF YOU LOOK AT STANDARD WEST COMMERCE, YOU'LL SEE IT PENDING TCEQ CLEARANCE.
UM, I THINK IT MAKES SOME SENSE FOR US TO BE ABLE TO GIVE YOU A BRIEFING ON, ON WHAT THAT MEANS AND WHY IT'S BEING HELD UP.
UM, 'CAUSE I DO AGREE WE DON'T WANT HAVE PEOPLE COME AND USE US AS A STALKING HORSE AND SHOP DEALS, UH, THAT, THAT ARE NEVER GOING TO HAPPEN.
UM, AND I THINK THERE ARE A COUPLE OF DEALS ON THIS LIST THAT ARE NEVER GOING TO HAPPEN.
UM, SO WE'LL WORK TO GET SOME OF THAT CLEANED UP BY YOUR NEXT MEETING, UM, AND, AND LET YOU KNOW WHAT DEALS WE KNOW ARE EITHER GONNA CLOSE OR NOT GONNA CLOSE.
AND THEN LASTLY, UM, WE'RE GONNA CLOSE BISHOP EIGHT, EIGHTH AND MAPLE BY THE END OF
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THE YEAR.UM, SO THERE WILL BE QUITE A FEW MORE DEALS MOVED UP TO THE UNDER, UNDER CONSTRUCTION CATEGORY, UM, BY THE END OF THE YEAR.
AND, UH, I KNOW STAFF WILL MAKE SURE THAT WE, WE HAVE THOSE, UH, ON THE PIPELINE UPDATED, UH, FOR BEFORE OUR NEXT MEETING.
UH, SO I REALLY, I DON'T BELIEVE WE HAVE ANY MORE DISCUSSION OR COMMENTS ON ITEM NUMBER 11.
UH, BEFORE WE MOVE TO ADJOURNMENT, I JUST WANTED TO, UH, MAKE SURE THAT EVERYONE RECEIVED AN INVITATION AS PART OF OUR OUTREACH TO THE DALLAS PUB FROM THE DALLAS PUBLIC SPILLAGE PREPARATION TO THE HFC.
UH, NEXT TUESDAY AFTER THE HFCS MEETING, UH, WE SHOULD HAVE ALL RECEIVED AN INVITATION TO A, UM, A HOLIDAY EVENT HERE AT CITY HALL.
AND IF YOU CAN MAKE IT, UH, PLEASE DO COME, UH, WITH NO OTHER FURTHER FURTHER BUSINESS MOVE.
MOVE BY DIRECTOR MONTGOMERY, SECONDED BY DIRECTOR TOLEDO.
ALL IN FAVOR SECOND FOR SAYING AYE.
ALL OPPOSED, THE MEETING IS NOW ADJOURNED.
THANK YOU VERY MUCH AND HAVE A HAPPY HOLIDAY.