Twenty-three developments across Texas have been pooled into a single bond transaction that will allow the properties to be renovated and preserved.

The Windmill Apartments in Giddings, Texas, is one the affordable housing developments being preserved in a 23-property pooled bond transaction.
The Windmill Apartments in Giddings, Texas, is one the affordable housing developments being preserved in a 23-property pooled bond transaction.

The aging U.S. Department of Agriculture (USDA) Section 515 properties serve low-income households in 14 counties.

A critical source of affordable housing in their communities, the developments and their 802 units will be rehabbed and brought up to date, says Amie Cofini, senior vice president at Greystone Affordable Development, the development partner and transaction manager.

Greystone worked on the $120.5 million deal with property owner Hamilton Valley Management and other partners for more than two years, closing on the transaction in June while navigating obstacles brought on by the COVID-19 pandemic and changes in the financial and construction markets.

“You can’t really discount also the fact that this is a first-of-its-kind transaction in the state of Texas—a large scattered-site portfolio in rural communities,” adds Will Eckstein, Greystone senior vice president.

There may have been some smaller portfolio transactions in the state but nothing on the scale of the Hamilton Valley deal, he says. It’s also Greystone Affordable Development’s first Texas deal.

The financing plan combined public and private funding and included:

· Tax-exempt bonds—Single issuance of $35.9 million in multifamily private-activity tax-exempt bonds by Texas State Affordable Housing Corp. The short-term bonds received an A-1+ rating from S&P Global.

· Low-income housing tax credits—Purchase of 4% low-income housing tax credits (LIHTCs) by Boston Financial Investment Management, generating $19.1 million in capital contributions.

· Section 515 debt—Assumption and subordination of $19.3 million of original USDA Section 515 debt. The Section 515 program is a direct loan program designed to provide subsidized loans to developers of affordable housing in rural markets. In addition, 94% of the 802 apartment units will continue to receive Section 521 rental assistance provided by USDA’s Rural Housing Service.

· Senior debt—$29.5 million in long-term debt comprised of USDA guaranteed Section 538 loans, provided by Greystone Servicing Co.

· Other—Other funding sources included additional financial support of $16.7 million.

With the financing in place, the rehabilitation plan includes a fast-paced construction process, estimated to be complete within 16 months, during which no residents will be permanently displaced. Substantial renovations, averaging $37,200 per unit, will include both interior and exterior improvements. Particular emphasis will be placed on bringing the properties, built between 1987 and 2003, up to modern standards, addressing accessibility, functional obsolescence, and deterioration.

The current landscape is only exacerbating the affordable housing crisis, says Eckstein.

The deal is an example of the importance of the 4% LIHTC, but the credit’s low and fluctuating rates make it challenging for developers.

Having a minimum 4% fixed rate would help provide predictability to the marketplace and increase production by making more developments financially feasible, according to supporters. Setting a 4% fixed rate is among the provisions included in the Moving Forward Act (H.R. 2).

“If you set a floor for the 4%, it would create more funding and ultimately more opportunities for the preservation and development of affordable housing to address the needs we are going to continue to see,” Eckstein says.

The deal team included:


Wallace Architects

Bond Counsel

Norton Rose Fulbright


Hamilton Valley Management

Developer Consultant

Greystone Affordable Development

Co-Developer's Counsel

Coleman Talley

Co-Developer's Counsel

The Law Offices of Claire G. Palmer


Boston Financial Investment Management

Equity Counsel

Kutak Rock

Financial Advisor

Hilltop Securities

General Contractor

Great Southern

Investment Bidding Agent

Hilltop Securities

Issuer (Bonds)

Texas State Affordable Housing Corp.

Issuer (LIHTC)

Texas Department of Housing and Community Affairs

Issuer's Counsel

Norton Rose Fulbright

Rating Agency

Standard & Poor’s Rating Services

Rebate Analyst

Hilltop Securities Asset Management

Senior Lender

Greystone Servicing Co.

Senior Lender's Counsel

Ballard Spahr

Subordinate Lender

USDA Rural Housing Service


Wilmington Trust National Association

Trustee's Counsel

Naman, Howell, Smith & Lee


Stifel, Nicolaus & Co.

Underwriter's Counsel

Tiber Hudson