HomeMy WebLinkAboutResolution Fort Worth Housing Finance Corporation (FWHFC) FWHFC-2021-21RESOLUTION NO. FWHFC-2021-21
FORT WORTH HOUSING FINANCE CORPORATION
RESOLUTION AUTHORIZING FORGIVENESS OF A 2013 LOAN TO THE
HOUSING AUTHORITY FOR THE CITY OF FORT WORTH IN THE
AMOUNT OF $615,000.00 FOR THE BENEFIT OF THE VILLAS OF
EASTWOOD TERRACE SENIOR APARTMENT COMPLEX
WHEREAS, in April of 2003, the Fort Worth Housing Finance Corporation
(FWHFC) was working with its single asset entity, Villas of Eastwood Terrace LLC
(VET), for which the FWHFC was the sole member, on the development and
construction of a senior apartment complex in the southeast sector of the City of
Fort Worth (City) located at 4700 East Berry Street; and
WHEREAS, as the project neared completion, a financing gap of
$615,000.00 was identified, and on April 9, 2003, the Fort Worth City Council
authorized a non -interest -bearing financial assistance agreement for $615,000.00
with the FWHFC to fill in the gap (M&C C-19047), which in turn loaned the funds
to the VET (the gap loans); and
WHEREAS, the funding used to provide the gap loans were initially a
combination of Community Development Block Grant (CDBG) Program Income and
Rental Rehabilitation Program Income (RRPI); and
WHEREAS, in October 10, 2006, in response to new CDBG program
guidance issued by the U.S. Department of Housing and Urban Development (HUD),
the City Council authorized $315,000.00 from RRPI to replace the previously
authorized allocation of $315,000.00 from CDBG Program Income; and
WHEREAS, in 2013, after operating the project for a few years, the FWHFC
negotiated the sale of the project to the Housing Authority of the City of Fort Worth
doing business as Fort Worth Housing Solutions (FWHS), whereby FWHS assumed
the outstanding debts and liabilities against the property;
WHEREAS, per the terms of a Preliminary Approval of Transfer of Physical
Assets, dated May 31, 2013, and submitted by HUD, Villas of Eastwood Terrace,
LLC was prohibited from taking on the gap loan or any other subordinate loan,
which meant that the gap loans could not be secured against the project; and
WHEREAS, the understanding among the parties at the time was that (1)
FWHS would refinance the loan when the market allowed for such a refinance to
occur and (2) if sufficient funds were realized from that refinance, the gap loans
would be fully repaid; and
WHEREAS, in selling the project to FWHS, the FWHFC retained the
subsurface minerals, and the sale also achieved a number of other important ends,
including providing assurance that the project would continue to provide senior
housing and be maintained and operated in a first-class manner and alleviating on-
going operating costs that were being paid by FWHFC; and
RESOLUTION NO. FWHFC-2021-21
PAGE 2
WHEREAS, in 2015, the accounts of all component units, including the
FWHFC's, were separated from the City's accounts, and Deloitte & Touche LLP
conducted its first audit of FWHFC. After reviewing all the related documents of
the loan and the related M&Cs, the auditors, along with the City and FWHFC
management, recommended to book the loan as a receivable in the City's books and
a payable in the FWHFC's books along with a receivable from Villas of Eastwood
Terrace, LLC; and
WHEREAS, FWHS refinanced the loan in 2017, but the refinance did not
produce sufficient funds to repay the gap loans; and
WHEREAS, on October 19, 2021, the Fort Worth City Council forgave the
gap loan with the FWHFC so that the FWHFC could then in turn also forgive its
outstanding gap loan and The Fort Worth City Council also found that forgiving the
gap loan served a public purpose by making the funds available for the FWHFC to
dedicate towards achieving its mission and the vital public purpose of providing
decent, safe and affordable housing to residents of the City; and
WHEREAS, because the sale of the project to FWHS represented a net
positive to FWHFC, represented a public benefit in the form of continued access to
quality senior housing in the community, and because there is no enforceability
mechanism for the debt and the related debt owed by the FWHFC has been forgiven
by the City, FWHFC staff, in accordance with section 392.032(c) of the Texas Local
Government Code, now recommends that the FWHFC forgive the gap loan; and
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE FORT WORTH HOUSING FINANCE CORPORATION:
1. THAT the Board authorizes forgiveness of a 2013 unsecured loan to the
Housing Authority for the City of Fort Worth doing business as Fort Worth
Housing Solutions in the amount of $615,000.00 for the benefit of the
Villas of Eastwood Terrace Senior Apartment Complex.
2. THAT Fernando Costa, General Manager of the Corporation, or Victor
Turner, Assistant General Manager of the Corporation, or their duly
appointed successors, are each authorized to execute and deliver any
necessary document to effectuate the intent of this resolution.
3. THAT this resolution takes effect from the date of its adoption.
AND IT IS SO RESOLVED.
Adopted November 30, 2 02 1.
FORT WORTH HOUSING FINANCE CORPORATION
Carlos Flores, President