The Senate Committee on Intergovernmental Relations met to take up the interim charges relating to the Low-income housing tax credit program, federal housing review, infrastructure resiliency and the monitoring charge on SB 1310 (Landowner rights), SB 1474 (Private Activity Bonds) and SB 2330 (simplifying disaster assistance).
This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.
Opening Statements:
Sen. Lucio, Chair
- Sen. Lucio- the interim charges for today include affordable housing, disaster recovery & resiliency and the Private Activity Bond Program.
- Members of the committee continued making opening remarks.
- Committee rules were adopted
- Today will provide an overview for the interim charges by state agencies
- Next month will hold more in-depth meeting with stakeholders and the public hear their feedback.
Texas Division of Emergency Management
Nim Kidd, Chief
- Started off with charge number three, disaster recovery and infrastructure resiliency, and discuss hurricane Harvey.
- Introduces the report done by the governor’s commission to rebuild Texas. The said document has 44 recommendations to legislature.
- Of the 44 recommendations, 43 were impacted by legislation. The 44th recommendation did not need legislation and was additional support.
- 17 of those bills effect TDEM directly.
- Notes the recommendation are the roadmap for the interim and will be reporting out on every quarter at legislative briefings.
- Provides an overview for TDEM’s charges including task forces, study groups, action plans, fund distribution models, and TMAC committees. Each of these groups will be chaired by a local judge. 41 reports are due to the legislature next session.
- Sen. Lucio- will look report over very carefully, it appears to be comprehensive.
- In terms of mitigation for charge number three, we studied the Government Accountability Office’s Disaster Resilience Framework. This framework is focused on information, integration and incentives.
- Local partners have noted confusion on which state agency they can get mitigation project funding from. Agencies have made plans to work together in order to streamline funding.
- Have worked on a compact so there is one place in Texas for a local official to come ask for mitigation funding
Texas General Land Office
Mark Havens, Deputy Land Commissioner for TX GLO
Heather Lagrone, Deputy Director of CDR
- The
Department of Housing and Urban Development awarded the state $5.6 billion
dollars in community development plot grants-disaster recovery (CBDG) in June
2018 with an additional $652 million in February of 2019.
- A large portion of these funds were restricted for housing recovery with some set aside for infrastructure.
- The GLO manages these funds directly in 48 of 49 impacted counties.
- City of Houston/Harris County received over $1 billion they are managing
- Outlines
the three major programs for housing recovery: Homeowners Assistance Program,
Homeowner Reimbursement Program and Affordable Rental Multi-Family.
- HAP has been the largest program, and at this point, a little more than 1k
homes constructed or under construction
- Success of program has led to an over subscription of the program
- HRP allowed those who paid for re-building upfront to be reimbursed and $29 million has been approved for 929 applicants.
- ARMF is for those who were renting, 68 multifamily developments planning to reconstruct
- HAP has been the largest program, and at this point, a little more than 1k
homes constructed or under construction
- Sen.
Nichols- concerning HAP, you began taking applications in November of 2018. Out
of the 14,000 that applied, only 1,700 have been approved. Have a bulk of these
been rejected, or what is taking so long?
- Lagrone- we will ultimately build 6,000 houses from those funds. We are over-subscribed in that program. About 2,200 of those applications were ineligible (duplication of benefit or ownership, etc). This is faster than we have done before, but yes, the federal application process is a lengthy process.
- Sen. Nichols- I go to these areas where there is still a real urgency to many people who are waiting to hear back, so I want to know if the agency has that same urgency.
- Lagrone- yes, and now we are seeing that there are 17,000 of our Harvey households have also been affected by Imelda and that is something we are keeping in mind as well.
- Sen. Alvarado-
very recently, the city of Houston’s program was pulled back from the city and
the GLO will be in charge. Is that correct?
- Havens- not at this time, we have not pulled back, but we have talked about the lack of progress in building homes. We have not taken it over at this time, but maybe at some point we would step in to take over. Notes the confusion due to an RFP released this week.
- Sen.
Alvarado- who determines if and when the GLO takes the city’s program over?
- Havens- it would be in discussions with HUD where they would examine progress.
- Sen.
Alvarado- so what was the purpose of the RFP released on December the 2.
- Havens- that was if we had to take over, we would have contractors ready to step in. We can have that running in the background, and we could cancel at any time.
- Sen.
Alvarado- my concern would be delaying relief. I do not know what audits you
are talking about, but is that something that would be available that would
lead to the take over?
- Havens- it could be so; HUD came in to meet with us to discuss their concerns with Houston. We have not received an audit yet.
- Sen.
Alvarado- what kind of information on the audit would cause GLO to let Houston
manage their own programs?
- Havens- would like to see substantive and more applications come through. If we could see their HAP-equivalent numbers increasing, that’s what we are looking for.
- Sen.
Alvarado- what was the issue with the bedroom, the two-bedroom waiver.
- Havens- HUD says you have to look at reasonableness of funds. We would only be looking at the need of their current living situation as in the number of people living in the house. This waiver allows for exceptions in this rule.
- Sen.
Alvarado- so the city of Houston knows this will be considered on an individual
basis?
- Havens- yes.
- February
2018 $4.2 billion appropriated in mitigation dollars
- Had been waiting for Federal Register publication to come out which did this year in August
- Working now on action plan; holding public comment currently to give input on how to use mitigation dollars
- First time HUD has ever done mitigation dollars in this way
- Sen.
Alvarado- on the mitigation action plan, what are your restrictions?
- Havens- who can apply, what are eligible actives and what types of projects can be funded.
- Moving forward on getting action plan out and published. HUD has noted this is a record amount of funds and wants large-scale plans because of the amount of money that was allocated.
- Sen.
Nichols- on the regional drainage plans, I met with the leaders in the counties
surrounding Jefferson. They recognized they need a regional approach and not a
county-by-county approach. Some of these studies are not project-specific and
will take a long time.
- Havens- within 6 years, we have to spend half of this money. We have already set aside $2 billion for just projects not studies. We also have drainage districts who can directly apply.
Texas Department of Housing and Community Affairs
Bobby Wilkinson, Executive Director
- Provides an overview on TDHCA’s assistance programs including affordable housing, rental assistance and community-based service.
- The tax
credit program is most related to your interim charge. It is a federal tax
income credit for your federal corporate tax.
- Outlines the 9% and 4% tax credits and the timeline from application to when those are passed out.
- We have a regional allocation formula for 13 regions. Each region has a rural subregion and there are allocations for each.
- For the
9% program:
- This year we awarded approximately $81 million in the 9% tax credit, so it has a par value of $810 million.
- The cash the developers receive covers approximately 70% of the apartment complex.
- We are required by statute to put a land use restriction agreement for at least 30 years.
- Rents are restricted by HUD and we have an extensive monitoring program.
- Gives examples of 50-60% area medium income for families of four.
- For the
4% program:
- Covers about 30% of the funding necessary for development.
- This program is active and last year we issued approximately $36.9 million and that’s a par value of $370 million.
- Discusses in order to get the 4% tax credit, there has to be an issuance of tax-except bonds.
- These work better in larger areas.
- The Qualified Allocation Plan is the set of rules that covers that tax program and is updated every year. Committee received a packet that shows how this plan is developed.
- Concerning the charge that deals with maximizing the use of all federal housing programs, we run a large number of programs.. GLO has the most amount of money.
- Sen. Menéndez-
when you talk about the 2020 final qualified allocation plan scoring criteria,
for the 9% program, you know what was on average the point spread between those
who qualified and those who didn’t?
- In general, the scoring is very flat. A very small point item can have a dramatic effect on who wins.
- Sen.
Menéndez- my concern is that I know San Antonio is short of 100k units for affordable
housing and Harris county about 400-500k short if not more. How many units do
you think you are funding for?
- 8k-9k units
- This year is was approximately 9,400 units per round. That is state-wide in the 9%. For the 4% there were 6,333.
- Sen.
Menéndez- these numbers are state-wide?
- Yes.
- Sen. Menéndez-
have you all done an analysis to catch up to the need we have?
- No.
- Sen. Menéndez- I think that would be beneficial in the long run. We often times see people paying too much proportionally to their income. Is there something that we have built in the QAP that has been an obstacle.
- Sen.
Menéndez- heard cost of land was so high in Houston area, what do you to do
address the cost of land in different markets?
- I know there was a concern in the past that the QAP was causing developers to bid over market rates
- Would like to see more dispersion
- Menéndez- Would want to look at any scoring aspects that may set them up for a problem.
- Sen.
Alvarado- last session I had a bill to address TDHCA requiring resolutions from
both the city and the county for transactions in the ETJ, but it failed. I want
to know if you have opinions on that.
- We do it because it is in statue.
- I do not see that if it is in the ETJ, I do not know why the city has to have a resolution as well.
- Sen.
Alvarado- in the 2020 QAP there has been a point system implemented that
extends the affordability periods to 40-45 years. What is the reason for that
change? Did you talk to the stakeholders it would affect?
- Like many issues, there were those who wanted to extend the period to 50 years or longer. The developers were concerned about the viability of a complex if it did not get an injection of funding later for rehab.
- Sen.
Alvarado- did you look at how we can maintain financial feasibility and upkeep
by extending it to the 40-45 years.
- I can get back to you on this.
- Sen.
Alvarado- are there any provisions that allow, say, them to re-finance 20 years
in?
- There is nothing preventing, but there is nothing in there. I could not have anything that could guaranteed due to tax instability.
- Sen. Alvarado- is there anything in there that shows that could be considered?
- I mean the developers know. They commonly come back and there is a danger that are getting at. I agree that could be a problem. The 55 year incentives have gone away and now we are trying 45 years.
- Would be happy to look at it and see if it needs to be revised
- Sen.
Alvarado- was there any particular reason why you picked 45 years?
- There is success in other states who have a longer affordability periods. It was board-driven mostly.
- Sen. Alvarado- it was the whole board or
just one individual who was particularly excited about it?
- There was at least one who was excited about it, and it was before I held this position. I think this is something that we will be looking at starting in January for next round.
- Sen. Alvarado- I would urge you to write a re-financing option at 20 year point written in your policy.
- Sen.
Menéndez – understanding that when development in 9% is being built, one of few
places to ask for a whole binder to be turned in even if nothing has changed,
hear other states are more efficient at this; can something be done that makes
it less cumbersome
- Will be happy to review and make sure they don’t go too far beyond federal guidelines
- Menéndez – thinks its more internal
- Sen.
Alvarado – maximum tax credit request is 1.5, have you considered moving it to
2%?
- 2% is statutory cap, Not opposed
- Will be very willing to take a strong look at moving it to 2
- Sen.
Alvarado – how does an negative letter from an elected official impact?
- As a practical matter it usually kills the deal
- Menéndez – have you heard from HUD on this allowing one legislator to veto an affordable housing project
TX State Affordable Housing Corp.
David Long, President
- 1st
charge – believes program most valuable tool to creating affordable housing,
complimentary program to what is already provided
- Focused on preserving certain USDA properties
- 757 units working on to preserve
- Tax credits also play a role in creating permanent supportive housing developments (people who have or at risk of experiencing homelessness)
- Support SB 1116 that was offered by Sen. Lucio last year – creation of state tax credit program
- Based on partnership with HHSC, understand that MCOs want to play a role in supportive housing because it helps reduce cost to the health delivery system when individuals with chronic conditions are stably housed
- 2nd
charge – again refers to collaboration with HHSC on creating more housing
opportunities for Texans with chronic health conditions, other states are using
federal health dollars to support housing
- Will continue to explore how other states are accomplishing this
- 4th charge – thanks for including TSAHC, monitoring bill SB 1474 and its impacts starting Jan 2020 cycle
- Sen. Menéndez – agrees SB 1116 was a great bill, caught his attention with remark on helping people with chronic health conditions; provided an example of state where individuals were able to age in place in their community
Texas Bond Review Board
Braxton Parsons, Financial Analyst
- Sen. Lucio- could you provide us an update on the reforms we undertook and an insight on how your agency implementation is going on these statutory changes?
- Reviewed
the Private Activity Bond Program and changes because of SB 1474
- Low-income mortgages, student loan bonds, etc
- SB 1474 had quite a few changes, around 20
- Changes in education code allowed for changes to student loan bonds
- Many other changes were to move program up in program year, full program year was used
- Sub-ceiling 4 regional collapse moved May 1st to March 1st for earlier usage and gave additional time for reservations to close
- Moved project limits up so program will increase project limits as program grows
- Have not started program year yet but have received 34 applications
- Created Reassignment of carryforward designations – hopeful new statute will allow for additional flexibility
- Have
been some challenges
- Don’t know total state ceiling until census data is released in mid-December but did get a workaround until then
- Don’t know sub-ceiling amounts so have looked at prior years to addressed
- Provided upcoming PAB important dates Nov 15, 2020 last day to issue a reservation for 2020
- Actual program year will start in January
- Lucio – notes that Campbell sent her regrets she was not able to be at the meeting, Lucio thanks everyone for all the work to get SB 1474 to the Governor’s office
- Sen. Menéndez – with all of need would like to see carryforward abandoned number at zero, need is great so asked if members need to do anything else so that traditional carryforward is used
- Sen.
Alvarado – number of HUB firms used for transactions?
- Not currently, but will find out and get to them
Tentatively looking at January 23rd for next hearing.