HomeMy WebLinkAbout28163-12-2025 - City Council - OrdinanceOrdinance No.28163-12-2025
AN ORDINANCE INCREASING ESTIMATED RECEIPTS AND APPROPRIATIONS IN THE
GRANTS OPERATING OTHER FUND, IN THE AMOUNT OF $643,224.31, FROM URBAN
DEVELOPMENT ACTION GRANT MISCELLANEOUS REVENUE PROGRAM INCOME,
FOR THE PURPOSE OF FUNDING FUTURE PROJECTS; PROVIDING FOR A
SEVERABILITY CLAUSE; MAKING THIS ORDINANCE CUMULATIVE OF PRIOR
ORDINANCES; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH; AND PROVIDING
AN EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS:
SECTION 1.
That in addition to those amounts allocated to the various City departments for Fiscal Year 2025-2026 in the
Budget of the City Manager, there shall also be increased estimated receipts and appropriations in the Grants
Operating Other Fund, in the amount of $643,224.31, from Urban Development Action Grant Miscellaneous
Revenue Program Income, for the purpose of funding future projects.
SECTION 2.
That should any portion, section or part of a section of this ordinance be declared invalid, inoperative or void
for any reason by a court of competent jurisdiction, such decision, opinion orjudgment shall in no way impair
the remaining portions, sections, or parts of sections of this ordinance, which said remaining provisions shall
be and remain in full force and effect.
SECTION 3.
That this ordinance shall be cumulative of Ordinance 27979-09-2025 and all other ordinances and
appropriations amending the same except in those instances where the provisions of this ordinance are in
direct conflict with such other ordinances and appropriations, in which instance said conflicting provisions of
said prior ordinances and appropriations are hereby expressly repealed.
SECTION 4.
This ordinance shall take effect upon adoption.
APPROVED AS TO FORM AND LEGALITY:
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Assistant City Attorney
ADOPTED AND EFFECTIVE: December 09, 2025
CITY SECRETARY
Jannette S. Goodall
City Secretary
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City of Fort Worth, Texas
Mayor and Council Communication
DATE: 12/09/25 M&C FILE NUMBER: M&C 25-1107
LOG NAME: 19HUGHES HOUSE II — HOME UDAG FUNDS
SUBJECT
(CD 5) Approve Financial Actions in Support of Hughes House II Apartments Located at 1401 Etta Street as Part of the Choice Neighborhoods
Implementation Grant for the Cavile Place/Historic Stop Six Area Consisting of (A) Authorizing (i and ii) Expenditure of $2,000,000.00 of HOME
Investment Partnerships Program Grant Funds as a Non -Forgivable Loan to FW Hughes House II, LP, or an Affiliate, Which Loan May Convert to
Forgivable on Specified Conditions being Met, and Execution of Related Contracts; (iii and iv) Expenditure of $450,000.00 of Urban Development
Action Grant Miscellaneous Revenue as a Loan to Fort Worth Affordability Inc., and Execution of Related Contracts; (v) Acceptance of Assignment
from Fort Worth Affordability Inc., of Contracts and Loan Documents for its Loan to FW Hughes House II, LP; (vi) Authorization of Assignment from
Fort Worth Affordability Inc. to FW Hughes House II, LP. of Federal Grant Obligations; (vii and viii) Authorize Execution of Necessary Amendments
and Extensions to All Contracts and Documents to Facilitate Project Completion; (ix) Authorize Execution of Agreement with Fort Worth Housing
Solutions for the Conversion of the HOME Investment Partnerships Program Loan to Forgivable Under Specified Conditions; and (x) Authorize the
Substitution of Funding Years; (B) Find that the Loans Serve a Public Purpose and that Adequate Controls are in Place; and (C)
Adopt Appropriation Ordinance
RECOMMENDATION:
It is recommended that the City Council:
1. Authorize expenditure in the amount of $2,000,000.00 of HOME Investment Partnerships Program grant funds in the form of a non -forgivable
loan to Hughes House II, L.P.;
2. Authorize execution of an agreement with the Housing Authority for the City of Fort Worth, Texas, doing business as Fort Worth Housing
Solutions, to allow for the conversion of the non -forgivable HOME Loan to a forgivable loan so long as conditions are met, including without
limitation the condition that the Project is directly or indirectly owned 100% by Fort Worth Affordability Inc., Fort Worth Housing Solutions
and/or an affiliate thereof, following expiration of the Project's compliance period;
3. Authorize expenditure in the amount of $450,000.00 of Urban Development Action Grant Miscellaneous Revenue as a forgivable loan to Fort
Worth Affordability Inc.;
4. Authorize the City Manager, or his designee, to execute all related contracts, loan documents, and other documents necessary for lending
activities with terms as specified below;
5. Authorize the acceptance of an assignment to City by Fort Worth Affordability, Inc. of the loan documents for the $450,000.00 loan to be
made by Fort Worth Affordability Inc.;
6. Authorize the assignment of the UDAG obligations from Fort Worth Affordability Inc., to FW Hughes House II, LP to ensure compliance with
applicable federal regulations;
7. Authorize the City Manager or his designee to extend the contracts if such extensions are necessary for completion of the Project, and to
extend all other required documents for lending activities as necessary for the development of the Project;
8. Authorize the City Manager, or his designee, to amend the contracts and other required documents if necessary to achieve project goals,
provided that the amendments are within the scope of the Project and in compliance with City policies and applicable laws and regulations
governing the use of federal funds;
9. Find that providing a forgivable UDAG loan and a non -forgivable HOME Loan that may be converted to forgivable so long as certain
conditions are met, serves the public purpose of providing decent, safe, and sanitary housing for low-income residents and that adequate
controls are in place through the various loan documents and agreements to ensure the public purpose is carried out;
10. Authorize the substitution of current and prior funding years in order to meet commitment, disbursement, and expenditure deadlines for grant
funds from the United States Department of Housing and Urban Development;
11. Accept interest revenue and miscellaneous revenue receipts in the Grants Operating Other Funds account; and
12. Adopt the attached appropriation ordinance increasing estimated receipts and appropriations in the Grants Operating Other Fund, in the
amount of $643,224.31, from Urban Development Action Grant Miscellaneous Revenue Program Income, for the purpose of funding future
projects.
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The purpose of this Mayor and Council Communication (M&C) is to approve financial actions in support of an affordable housing development in
the Cavile Place/Historic Stop Six area as part of the multi -year Choice Neighborhoods Implementation grant.
On October 22, 2019, Mayor and Council M&C 19-0268 authorized the City to partner with Fort Worth Housing Solutions (FWHS) as a co -
applicant for a Choice Neighborhoods Implementation (CNI) grant from the U.S. Department of Housing and Urban Development (HUD). The City
Council also adopted a revised Cavile Place/Historic Stop Six Neighborhood Transformation Plan and committed $39,375,654.00 over six years
for improvements in the area, contingent on receiving the grant. In spring 2020, the City was notified that the City and FWHS had been awarded
the CNI grant. As co -applicant, the City agreed to support FWHS in implementing the Transformation Plan by providing resources for eligible
activities, including a commitment of $3,000,000.00 in HOME Investment Partnerships Program (HOME) funds, $3,250,000.00 in Community
Development Block Grant (CDBG) funds, and $1,110,000.00 in Urban Development Action Grant (UDAG) funds, for a total of $7,360,000.00 to be
awarded over six years.
During the implementation of the Transformation Plan, when the Hughes House project was presented to City Council (M&C 22-0400), the Council
was informed that instead of allocating $500,000.00 in CDBG funds per development phase of the CNI, the funding would be revised to
$1,000,000.00 in HOME funds. This change was made because CDBG funds are more difficult to use for new housing construction, while HOME
funds are more flexible and easier to utilize under federal regulations.ln addition to the funding commitment, in March 2021 President Biden signed
the American Rescue Plan Act providing aid relief to various sectors of the national economy. Through the ARPA allocations that the City of Fort
Worth received, city staff recommended that a total of $400,000.00 be provided to the first four phases of the CNI developments totaling
$1,600,000.00 in ARPA funds (M&C 21-0814). All CNI development phases have been approved by City Council. Due to the nature of the
implementation of the Transformation plan, funding allocations might have differed due to regulatory adherence.
In addition to HOME and UDAG funding, The Fort Worth Housing Finance Corporation (FWHFC) authorized the expenditure of $1,250,000.00 to
be used for the development of Permanent Supportive Housing (PSH) and $1, 250,000.00 for construction in permanent loans for financing the
developments (Resolution No. 2019-06). Of that $1,250,000.00 in PSH funds, $525,000.00 has been authorized in the form of a forgivable loan for
21 PSH units for the Project (Resolution No. FWHFC- 2025- 01).
Approval of this M&C allows the Project to move forward with the fourth phase of the six -year Transformation Plan and award $2,000,000.00 in
HOME funds and $450,000.00 in UDAG funds for a total of $2,450,000.00 to be used for eligible activities for the Project.
The table below outlines the City's funding commitment for each phase of the Stop Six Choice Neighborhood Implementation Grant, demonstrating
its contributions to the Transformation Plan. The figures below do not include the $27 million in 2022 Bond funds allocated for construction of the
community Hub.
Funding Cowan Hughes House: Babers Hughes Hughes Total funding
Source Place: Phase phase II Manor: House II: House III: per source
Phase III Phase IV Phase V
HOME
UDAG
CDBG
FWHFC
PSH
$500,000.00 $1,000,000.00 $1,000,000.00 $2,000,000.00 $- $4,500,000.00
$360,000.00 $150,000.00 $150,000.00 $450,000.00 $- $1,110,000.00
$1,250,000.00 $-
$225,000.00 $325,000.00
FWHFC $1,250,000.00 $-
Construction
ARPA $400,000.00 $400,000.00
TOTAL
funding to $3,985,000.00$1,875,000.00
each phase
$-
$
$-
$1,250,000.00
$100,000.00
$525,000.00
$75,000.00
$1,250,000.00
$-
$
$-
$1,250,000.00
$- $400,000.00 $400,000.00 $1,600,000.00
$1,250,000.00 $3,375,000.00 $475,000.00 $10,960,000.00
The Hughes House II Apartments will be a newly developed, affordable multifamily community designed to support mixed income levels. The
project will feature 302 residential units in a mix of 1-, 2-, 3-, and 4-bedroom floor plans. Of these, 89 units will be project -based voucher (PBV)
apartments reserved for returning families from Cavile Place; 112 units will be income -restricted for households earning 60% or less of the area
median income (AMI); 80 units will be offered at market rate; and 21 units will provide Permanent Supportive Housing (PSH) for individuals
experiencing chronic homelessness. The development will consist of eleven buildings, including two with elevator access, ensuring accessibility
and convenience for all residents. It is anticipated that the construction of Hughes House II will begin in the first quarter of 2026 and take 26 months
to reach substantial completion. FW Hughes House II, L.P. (Developer) will develop and own the Project. It is a Texas limited partnership
consisting of FW Hughes House II, LLC as the general partner (owned by FWHS or an affiliate), and Cavile Place MBS SLP, Inc. as a special
limited partner (owned by McCormack Baron Salazar, Inc.)
Fort Worth Affordability, Inc. (FWAI) a Texas nonprofit corporation, which is the managing member of FW Hughes House II GP, LLC, is an
instrumentality of FWHS, and has requested to be the initial borrower of the UDAG funds ("UDAG Loan Funds") instead of the Developer for tax
purposes. FWAI will execute a loan agreement and promissory note in favor of the City for the UDAG Loan Funds and simultaneously loan the
UDAG Loan Funds to the Developer for the development of the Project. To collateralize the loan from the City to FWAI and ensure compliance with
federal requirements, FWAI will (1) assign its loan documents (from the loan from FWAI to the Developer) to the City and (2) assign its obligations
under the City's UDAG contract to the Developer.
To further the implementation of the Transformation Plan and aid the infrastructure improvements in support of the Project, staff recommends the
following loan terms and conditions:
HOME Loan Terms:
1. Loan term to commence on execution of the loan documents and terminate 40 years after project stabilization. Payment of principal and
accrued, unpaid interest will be due 40 years after project conversion coterminous with final payment date of permanent loan;
2. Interest rate of zero percent so long as borrower complies with all of the terms of the contract and loan documents;
3. Performance of the HOME requirements and payment of the HOME loan, if required, will be secured by a deed of trust and HOME Deed
Restrictions on the real property through the affordability period or the loan term, whichever is longer;
4. Affordability period to begin on the date the project status is changed to "Complete" in the Integrated Disbursement and Information System
(IDIS) and continue for 20 years thereafter;
5. HOME loan to be subordinate to any construction/permanent financing and any financing provided by Fort Worth Housing Finance
Corporation;
6. HOME -assisted units will be designated according to the HOME regulations with a 20-year affordability period;
7. HOME funds will be provided on a reimbursement basis for eligible costs only; and
8. Development and operation will comply with all HOME Regulations in 24 CFR Part 92 et seq.
The expenditure of HOME funds is conditioned upon the followina:
1. Satisfactory underwriting in accordance with federal guidance for use of HOME funds and City policies for funding of HOME units;
2. Compliance with all HOME requirements contained in 24 CFR Part 92 et seq;
3. Construction and permanent financing acceptable to City;
4. Satisfactory completion of an environmental review pursuant to 24 CFR Part 58;
5. Receipt of authorization to use grant funds from HUD;
6. Receipt of acceptable, fully executed loan documents; and
7. Closing on all other financing for the Project.
Approval of this M&C also authorizes the City to convert the HOME Loan from a repayment loan to a forgivable loan only if FWHS, FWAI, or an
affiliate acquires either (i) the Project in fee simple or (ii) 100% of the interest in Development following the expiration of the compliance
period. For the avoidance of doubt, the HOME Loan shall not be forgivable unless the Project is directly or indirectly owned 100% by FWHS, FWAI
and/or an affiliate thereof. This M&C further authorizes the City to execute an agreement with FWHS to memorialize the terms on which the loan will
be converted to forgivable. In the event the HOME Loan is converted to a forgivable loan, it shall only be forgiven if all loan terms and conditions are
met and FWHS/Developer has complied with all City and HOME regulations and requirements.
UDAG Loan Terms:
1. Loan term to commence on the date of execution and terminate 40 years after project stabilization. Final payment of principal and accrued,
unpaid interest will be due 40 years after project conversion coterminous with final payment date of permanent loan;
2. Performance period to begin on the date the project status is changed to "Complete" in the Integrated Disbursement and Information System
(IDIS) and will continue for 5 years thereafter;
3. UDAG funds to be subordinate to any construction/permanent financing, the City's HOME loan, and any financing provided by the Fort Worth
Housing Finance Corporation;
4. Interest rate of zero percent so long as borrower complies with all of the terms of the contract and loan documents;
5. UDAG funds will be used for eligible construction costs associated with the new multifamily housing construction;
6. UDAG funds will be used in compliance with all CDBG requirements contained in 24 CFR Part 570, including but not limited to the Project
being located in a CDBG-eligible census tract and will accomplish the public benefit of furthering a CDBG National Objective of promoting
activities that benefit low -and -moderate income residents;
7. Developer must or must require property management company to employ the equivalent of at least 2 full-time positions for Central City
residents at all times during the performance period;
8. UDAG funds shall be repaid by FWAI to the extent FWAI receives repayment from Developer;
9. UDAG funds shall be forgiven if all terms and conditions are met, FWAI has not received any repayment from Developer, and Developer has
complied with all City and CDBG regulations and requirements; and
10. UDAG funds will be provided on a reimbursement basis for eligible construction costs only.
Staff recommends approving the expenditure and execution of contracts and related loan documents with FWAI and Developer in the amount of
$2,000,000.00 in HOME funds and $450,000.00 in UDAG funds, for the construction costs in support of the Project; approving acceptance of the
collateral assignment by FWAI to City of related UDAG loan documents, and approving the assignment of the related UDAG obligations from
FWAI to the Developer; and approval of an agreement between FWHS and the City memorializing the conditions under which the HOME Loan
may be converted to a forgivable loan.
Through this M&C, the City Council finds that the Project serves a public purpose by assisting the City in fulfilling its goals under the Choice
Neighborhoods Implementation Grant, Transformation Plan, by providing quality, accessible, affordable housing for low- to moderate- income
residents and supporting economic development and revitalization, and that the forgivable UDAG loan and the HOME Loan that may be converted
to forgivable so long as the conditions listed above are met, are vital to the financial feasibility of the Project. The Council further finds that
adequate controls are in place through the various loan documents and agreements to ensure that the public purpose is carried out.
Approval of this M&C also allows Action Plan funding years to vary and be substituted in order to expend the oldest grant funds first.
Appropriations supporting the HOME Loan will come from the annual program appropriation for the funding years against which the loan is
booked. A public comment period was held from June 1,2025 through July 1, 2025; no comments were received.
UDAG Miscellaneous Revenue funds are rental revenues received from the lease of the City -owned parking garage under General Worth Square
(City Contract No. 11085). UDAG Funds must be used for projects that meet certain CDBG program requirements, including use in a CDBG-
eligible area, qualification as a CDBG economic development project and inclusion of private investment. Annual revenue from the parking
garage is approximately $108,000.00. Currently the City has an appropriated balance of $463,639.38 in UDAG funds. In addition, the City is in
receipt of but has not appropriated a total of $643,224.31 of UDAG Funds from prior years. After funding this loan, and after all funds have been
appropriated, the garage rental revenues account will have a remaining balance of approximately $656,863.69. Adoption of the attached
appropriation ordinance will appropriate the current balance of program revenue with the balance of appropriated funds to be programmed for
other eligible projects in the future.
A Form 1295 is not required because: This contract will be with a governmental entity, state agency or public institution of higher education: The
Housing Authority of the City of Fort Worth dba Fort Worth Housing Solutions
FISCAL INFORMATION / CERTIFICATION:
The Director of Finance certifies that funds are currently available in the Hyatt Regency Parkg Garage Rev, Home Grant (PY24/FY25) and in the
Home (PY22/FY23) projects within the Grants Operating Federal Fund and the Grants Operating Other Fund, and upon approval of the above
recommendations, funds will be available in the Grants Operating Federal Fund and the Grants Operating Other Fund to support the loan contract.
The Neighborhood Services Department (and Financial Management Services) will be responsible for the collection and deposit of funds due to
the City. Prior to an expenditure being incurred, the Neighborhood Services Department has the responsibility to validate the availability of funds.
This is a reimbursement grant.
Submitted for Citv Manaaer's Office bv: Dana Burghdoff 8018
Oriainatina Business Unit Head: Kacey Thomas 8187
Additional Information Contact: Chad LaRoque 2661
Lilian Bastidos 8454