Greystone Affordable Development Preserves 802 Affordable Housing Units in Texas During Pandemic

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$120 Million Recapitalization and Renovation Project Pushes Forward with Tax Credit Program Currently at Risk; Industry Groups Push for a Minimum 4 Percent Housing Credit Rate to Ensure the Continued Preservation and Development of Affordable Housing for Millions

In its continued efforts to help preserve critical affordable housing in the United States, Greystone Affordable Development recently closed a $120.5 million transaction – its first in the state of Texas – in collaboration with Burnet, Texas based Hamilton Valley Management, Inc., an owner and manager of affordable multi-family housing in rural areas of Texas. Utilizing the housing industry’s critical 4 Percent Low Income Housing Tax Credit (Housing Credit), which is currently in crisis due to historically low rates, Greystone Affordable Development will redevelop, modernize and secure affordable rental homes for thousands of Texans.  

“The rehabilitation of these properties, and the jobs that will be created during the extensive rehabilitation, would not be possible without the Housing Credit, our nation’s primary tool for financing affordable rental housing,” said Tanya Eastwood, President, Greystone Affordable Development. “Unfortunately, the program is facing significant challenges, threatening the development of affordable housing across the country at a time when it is needed more than ever. We support the immediate enactment of federal policies, such as the Moving Forward Act, H.R.2 and the Emergency Affordable Housing Act of 2020,which creates a minimum 4 Percent Housing Credit rate that would strengthen the purpose and efficacy of the Housing Credit and provide more affordable homes across the nation.”  

Hamilton Valley’s portfolio of affordable housing properties for this transaction includes 23 aged USDA Rural Development Section 515 properties, comprising 802 apartment homes serving low-income households in 14 counties across Texas. Greystone’s affordable housing preservation group worked closely with USDA’s Rural Housing Service (RHS) Texas State Offices, as well as the Texas State Affordable Housing Corporation and Texas Department of Housing & Community Affairs to coordinate and secure the financing needed to acquire and rehabilitate this at-risk and much-needed housing. 

“We now know first-hand the importance of the Housing Credit and what it can do to keep thousands of residents in their affordable rental homes,” said Dennis Hoover, President, Hamilton Valley Management, Inc. “The complexity of this transaction is truly incredible, and we are grateful to the many groups that contributed to its success. We thank the development team, investment partners, the Texas office of USDA’s Rural Housing Service and the Texas housing agencies – Texas State Affordable Housing Corporation and Texas Department of Housing & Community Affairs, as well as Texas Housing Foundation for their continued partnership. They have all come together to preserve over 800 rental units.”

The financing plan combined both 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 Corporation. The short-term bonds received an A-1+ rating from S&P Global.
  • Low-Income Housing Tax Credits – Purchase of 4 Percent Housing Credits by Boston Financial Investment Management, L.P., generating $19.1 million in capital contributions.
  • RHS 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 RHS. 
  • Senior Debt – $29.5 million in long-term debt comprised of USDA guaranteed 538 loans, provided by Greystone Servicing Company LLC.
  • 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. 

“We are thrilled to be a part of this transformative process for Hamilton Valley as the issuer of almost $40 million in tax-exempt bonds,”said David Danenfelzer, Senior Director, Development Finance, Texas State Affordable Housing Corporation. “States must be able to leverage every tool possible to increase the availability of affordable housing, and we are grateful to play a role in keeping this critical housing stock accessible to Texas residents.”

“With the new landscape we are facing today, the preservation and creation of affordable housing is only going to get more difficult unless programs such as the 4 Percent Housing Credit are available for owners such as Hamilton Valley,” said Teresa Morales, Director of Multifamily Bonds, Texas Department of Housing and Community Affairs. “We are happy to have played a role in this important transaction, and to have helped preserve homes for thousands of Texans.”

“This collaboration was a long time in the making, and I am humbled by the trust put into Greystone by Hamilton Valley,”said Will Eckstein, Senior Vice President, Greystone Affordable Development. “There are barriers to getting deals such as this done in regular circumstances; however, even with today’s new hurdles, our team, as well as our partners, truly rose to the challenge to make this a success for the many residents relying on this affordable housing. As our first transaction in Texas, we have forged a new path here and look forward to bringing the impact of Housing Credits to more affordable communities statewide.”

The deal team included:

ArchitectWallace Architects, LLC (Columbia, MO)
Bond CounselNorton Rose Fulbright US LLP (Dallas, TX)
DeveloperHamilton Valley Management, Inc. (Burnet, TX)
Developer ConsultantGreystone Affordable Development (Raleigh, NC)
Co-Developer's CounselColeman Talley LLP (Jacksonville, FL)
Co-Developer's CounselThe Law Offices of Claire G. Palmer, PLLC (Irving, TX)
EquityBoston Financial Investment Management, LP (Boston, MA)
Equity CounselKutak Rock LLP (Omaha, NE)
Financial AdvisorHilltop Securities Inc. (Austin, TX)
General ContractorGreat Southern, LLC (Valdosta, GA)
Investment Bidding AgentHilltop Securities Inc. (Dallas, TX)
Issuer (Bonds)Texas State Affordable Housing Corporation (Austin, TX)
Issuer (LIHTC)Texas Department of Housing & Community Affairs (Austin, TX)
Issuer's CounselNorton Rose Fulbright US LLP (Dallas, TX)
Rating AgencyStandard & Poor’s Rating Services (New York, NY)
Rebate AnalystHilltop Securities Asset Management (Dallas, TX)
Senior LenderGreystone Servicing Company LLC (Warrenton, VA)
Senior Lender's CounselBallard Spahr LLP (Washington, D.C.)
Subordinate LenderUSDA Rural Housing Service (Washington, D.C)
TrusteeWilmington Trust National Association (Dallas, TX)
Trustee's CounselNaman, Howell, Smith & Lee, PLLC (Austin, TX)
UnderwriterStifel, Nicolaus & Company, Inc. (Montgomery, AL)
Underwriter's CounselTiber Hudson, LLC (Washington, DC)
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