AUSTIN—Changes in the at-risk and U.S. Department of Agriculture Rural Development (RD) set-asides are some of the most notable changes proposed in the Texas Department of Housing and Community Affairs’ (TDHCA) 2008 draft qualified allocation plan (QAP), according to Robbye Meyer, director of multifamily finance.

The percentage of low-income housing tax credits (LIHTCs) set aside for at-risk and RD projects would remain the same, at 5 percent and 15 percent, respectively.

Instead of the set-asides being taken from the allocation for each of Texas’s Uniform State Service Regions, the percentage would be subtracted from the state housing credit ceiling, said Meyer. Texas has 13 of these regions, which are based on geography and determined by the state comptroller, said Meyer.

That means that all at-risk and RD projects would compete statewide for tax credits. An at-risk development is one that has received a subsidy in the form of a below-market interest rate loan, an interest rate reduction, a rental subsidy, Sec. 8 housing assistance, a rental supplement payment, or an equity incentive.

The QAP also proposes widening the definition of a rural area to include an area located within a metropolitan statistical area that has a population of 5,000 or less instead of 2,000 or less. Rural developments would also be redefined in 2008 to exclude new construction projects that have more than 80 units.

TDHCA proposes awarding more points to developments targeting households earning 30 percent of the area median income or below, said Meyer. Also, the draft QAP places restrictions on where developers can build affordable housing. TDHCA does not want concentrated areas of lowincome housing, said Meyer.

Like other LIHTC allocating agencies, TDHCA is proposing that developers incorporate Energy Star appliances into their projects to receive LIHTCs.

Developments planned in areas designated as part of the Gulf Opportunity (GO) Zone (which includes 22 counties in southeast Texas) that receive LIHTCs would need to be placed in service by Dec. 31, 2010, according to the 2008 draft QAP. The scoring categories would remain the same for 2008: Financial feasibility, community input, income levels, size and quality of units, local funding, state elected official input, rent levels, cost per square foot, supportive services, and developments located in disaster areas.

"We anticipate an increase in rehabilitation and reconstruction developments [in 2008]," said Meyer. "More housing authorities are using the tax credit program to demolish and rebuild public housing units."

2007 recap

Affordable housing developers in Texas requested about $95.6 million in LIHTCs in 2007. More than $48.6 million was reserved. Fifty-nine projects received reservations in 2007. That represents 5,782 tax credit units out of 5,863 total units. Acquisition-rehabilitation projects accounted for 27 percent of 2007 LIHTC allocations.

Tax-exempt bonds

Texas is expected to have a taxexempt bond volume cap of $2 billion, with $440 million of that amount going to multifamily housing projects, according to Teresa Morales, multifamily bond administrator for TDHCA.

TDHCA has a pre-application and scoring system for multifamily bonds. Local housing agencies can also allocate private-activity bonds, and approximately 70 percent of the volume cap, or $307.7 million for 2007, goes to them.

The Texas Bond Review Board is the actual administrator of the bond program in Texas.

To receive bond reservations, developments must be feasible and meet bedroom-size requirements. The land needs to be correctly zoned. Developers must also have executed site control.

In addition, developments must meet requirements for public notification, construction quality, and resident amenities and services.

In 2008, all developments will be required to have Energy Star appliances and include 9-1-1 emergency telephones. The latter was formerly an optional amenity for points, but is mandatory for 2008, reported Morales.

Among the proposals for bond recipients is a decrease in the capture rate for elderly developments from 75 percent to 50 percent to prevent a concentration of developments targeting seniors.

Another proposal is to limit a concentration of affordable units in any one area. The proposal is similar to the city of Houston’s recently established concentration policy, said Morales. No more new units could be developed in census tracts with more than 1,432 multifamily units per square mile and where the primary market area is located in a census tract where the total number of rental units in buildings with three or more units exceeds 1,000 per square mile.

Applications for developments located in the GO Zone will receive a 30 percent boost in eligible basis. The TDHCA is encouraging pooled bond transactions, especially in rural areas, reported Morales.

TDHCA said it expected to award bond financing to 10 developments in 2007. As of mid-October, local issuers had awarded bond financing to 26 developments, and 11 more are expected to receive bond financing by the end of the year.

Texas’s total volume cap was more than $1.9 billion in 2007, with $439 million set aside for multifamily projects. TDHCA had a set-aside of almost $88 million.

The majority of the developments receiving bond financing were new construction projects.


  • 2008 LIHTC authority (est.): $5.1 million
  • Application deadlines: Feb. 29, 2008
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