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HomeMy WebLinkAboutResolution Fort Worth Housing Finance Corporation (FWHFC) FWHFC-2023-30RESOLUTION NO. FWHFC-2023-30 FORT WORTH HOUSING FINANCE CORPORATION A RESOLUTION APPROVING A LOAN IN AN AMOUNT NOT TO EXCEED $650,000 TO TERRELL HOMES GP, LLC OR AN AFFILIATE TO ENSURE THE CONTINUED OPERATIONS AND FINANCIAL SUSTAINABILITY OF THE TERRELL HOMES DEVELOPMENT LOCATED IN THE HISTORIC SOUTHSIDE NEIGHBORHOOD WHEREAS, the City Council of the City of Fort Worth ("City") has adopted development and revitalization of the City's neighborhoods and affordable housing stock as a strategic goal, and City residents and the City Council have determined that quality accessible affordable housing is needed for moderate, low and very low-income residents; WHEREAS, the City Council created the Fort Worth Housing Finance Corporation (the "Corporation") in 1979 pursuant to the Texas Housing Finance Corporations Act, Chapter 394 of the Texas Local Government Code, to facilitate neighborhood revitalization and housing initiatives in the City, including but not limited to issuing tax exempt bonds, developing, rehabilitating and promoting housing, and assisting low to moderate income City residents in acquiring quality, accessible, affordable housing through lending and construction activities; WHEREAS, NRP Development, RBC Investments, and the Corporation formed Terrell Homes, Ltd. to construct and manage the Terrell Homes Development, a 54-unit, single family affordable housing project located within the Historic Southside Neighborhood and within the City of Fort Worth; WHEREAS, the Corporation is the sole member of Terrell Homes GP, LLC, the general partner of Terrell Homes, Ltd.; WHEREAS, NRP Management LLC has served as the official "unit/apartment" manager for the development since it opened in 2012 and has ongoing contractual obligations with Terrell Homes, Ltd. as set forth in a property management agreement dated December 9, 2011; WHEREAS, during the COVID pandemic, there was a moratorium on evictions that severely limited the ability of the management to evict tenants that were not paying rent which substantially reduced the rental revenues to the partnership; WHEREAS, there has also been many unit vacancies in the development during the pandemic, which lead to units becoming occupied by homeless individuals and several units being severely vandalized; WHEREAS, the development's management office was also unoccupied during the pandemic and became occupied by homeless individuals who started two fires in the office that required extensive renovations that were not covered by insurance; WHEREAS, this series of unfortunate events has led to a number of years with declining revenues and increasing expenses; RESOLUTION NO. FWHFC-2023-30 PAGE 2 WHEREAS, during the 2022 audit for Terrell Homes, finalized on or about June 2023, the auditors issued an opinion concerning "on -going operations" of the partnership due to significant expenses incurred during the pandemic and large accounts payable balances; WHEREAS, Corporation staff contracted with an accounting firm to review and report on the last five years of operations of the partnership and also discussed our findings with both NRP Management and RBC Investments; and WHEREAS, the Corporation has received $1,008,236 in partnership revenues from this Terrell Homes project over the course of the last 11 years with $210,364 still "receivable"; WHEREAS, after significant discussion with NRP and RBC Investments, the Board of the Corporation (the "Board") is being asked to approve a loan in an amount not to exceed $650,000 to Terrell Homes, GP, LLC or an affiliate in order to ensure the continuing operations of Terrell Homes; NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE FORT WORTH HOUSING FINANCE CORPORATION: THAT the Board authorizes the execution and delivery of a loan agreement (the "Loan Agreement") and all other necessary loan documents to provide funding to ensure the continuing operations of Terrell Homes (collectively the "Loan Documents") on the terms listed in Attachment A by and between the Corporation and Terrell Homes GP, LLC, or an affiliate, in an amount not to exceed $650,000, subject to the availability of funds, to support Terrell Homes, an existing 54-unit single-family rental housing development located in the Historic Southside Neighborhood (the "Loan"). 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 the Loan Documents for and on behalf of the Corporation along with any related documents or agreements necessary to support the ongoing operations of Terrell Homes. This authorization includes the ability to make modifications and amendments so long as they are within the scope of the project, and in conformance with the goals and purposes of the Corporation, as may be amended from time to time. THAT this Resolution takes effect from the date of its adoption. AND IT IS SO RESOLVED. Adopted June 27, 2023 RESOLUTION NO. FWHFC-2023-30 PAGE 3 FORT WORTH HOUSING FINANCE CORPORATION i Carlos Flores President Attest: Jannette S. Goodall Corporate Secretary RESOLUTION NO. FWHFC-2023-30 PAGE 4 ATTACHMENT A Loan Terms Lender: Fort Worth Housing Finance Corporation Borrower: Terrell Homes GP, LLC or an Affiliate Project: Terrell Homes Location: 54 Single-family rental housing units located in the Historic Southside Loan Amount: Not to exceed $650,000 Origination Fee: None Amortization: None, repaid through operating income as distributed by the terms in the limited partnership agreement for Terrell Homes, Ltd. Loan Term: Begins on date loan documents are executed. Lien Priority: This loan will be subordinate to permanent financing (mortgage), but Payments: Repayment shall be made through operating income as distributed by the terms in the limited partnership agreement for Terrell Homes, Ltd. Recourse: Non -recourse as to Borrower Other Conditions: (If Applicable) • Approval of RBC Tax Credit Manager II, Inc., Special Limited Partner of Terrell Homes, Ltd.