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County corporations approve amended lien note for Saison North Apartments; officials flag economic-occupancy risk
Summary
Travis County's Housing Finance Corporation and TCC Hill Country Development Corporation approved amended loan terms for the Saison North Apartments to allow conversion of a construction loan; developers warned of low economic occupancy and commissioners requested a briefing on eviction risks.
Travis County's housing corporations approved amended and restated real estate lien notes on April 8 for Saison North Apartments, a mixed-income development west of MoPac, and commissioners flagged concerns about economic occupancy and potential eviction pressures in Austin's rental market.
Christie Moffitt, assistant secretary for the county corporations, told the Travis County Housing Finance Corporation (HFC) that the corporation had made a subordinate mortgage loan just over $2.3 million to the borrower to partially finance construction and operation of the project. The borrower requested an amendment to update repayment terms, including changing principal and interest payment timing from monthly to annual to help the project meet minimum debt-service coverage requirements and avoid construction-loan extension fees. Moffitt said the loan amount and interest rate would remain unchanged.
Megan Lash, representing the developer, said the project has met a required 90% physical occupancy threshold to convert the construction loan but is facing lower "economic occupancy" — the share of occupied units that are paying rent. "We got everybody in by December 31. The clock started January 1," Lash said, noting that some tenants are behind on rent in the current market. She described interventions the developer is using, including eviction-prevention partnerships and legal services, to keep residents housed.
Moffitt and counsel said the corporations' financial advisor (Hilltop) and outside counsel had reviewed the amendment and raised no concerns about moving forward. The HFC board approved the amendment in a unanimous vote after an executive-session review; the companion item for the TCC Hill Country Development Corporation was approved shortly afterward.
The project is a 9% low-income housing tax credit deal with an affordability mix described in the hearing: 9 units at 30% of median family income (MFI) or below, 34 units at 50% of MFI, 39 units at 60% of MFI, and 34 market-rate units. Moffitt said the amendment reclassifies the payment mechanism for administrative preference and does not change ranking of the lien.
Commissioners asked for a follow-up briefing on economic-occupancy trends and eviction risks. Commissioner Howard specifically asked staff to agendize a briefing that might include Health and Human Services and other partners to analyze the broader local eviction situation.
Motion to approve the HFC resolution was made by Commissioner Shea and seconded by Commissioner Howard; the vote was unanimous. The companion TCC Hill Country resolution was approved by the board on the same terms.
