Kerrville EIC directs staff to draft amendment to accelerate Habitat for Humanity payments and subordinate EIC lien to long-term deed restrictions

The Economic Improvement Corporation on March 17 voted unanimously to ask staff to draft an amendment to the economic development grant agreement with Habitat for Humanity that would (1) accelerate the second tranche of infrastructure reimbursement into the current fiscal year and (2) subordinate the EIC grant lien to two sets of deed restrictions that lock in long-term affordability for the Mariposa subdivision.

The motion came after Habitat representatives told the EIC that construction of public infrastructure for the Mariposa development is ahead of schedule and likely to be substantially complete by June. Mary Campana, executive director of Habitat for Humanity, said the organization has designed a faster-build product, “Habitat 2,” intended to be affordable to households at up to 80% of area median family income while remaining long-term income-restricted.

“Habitat 2 will be built with subcontractors. It’ll be faster and it will have volunteer support,” Campana said. She said the organization’s target sales price for the Habitat 2 product is “2.25” (transcript wording) and that this is below the “2.75” figure in the current contract.

Attorney Greg (present as counsel for the project) described the deed-restriction structure staff proposed: a standard set of neighborhood restrictions plus an affordability covenant that ties resale price growth to a 2%-per-year cap and restarts a 40-year restriction period on each resale, up to a maximum 99-year term. Greg said the lender working with Habitat has agreed to subordinate its lien to the affordability restrictions and that EIC is being asked to do the same so future sales remain subject to the covenants.

“The lender is working with us, effectively to, subordinate their lien to these, income restrictions,” Greg said. He explained the practical effect: if EIC were not subordinated and took title by foreclosure, EIC could resell lots without the affordability restrictions, defeating the project’s long-term objective.

Finance staff Trina told the board accelerating the second tranche — roughly $1.13 million scheduled for the next fiscal year — would not create a cash-flow problem for EIC because the funds are already committed and available. Board member Craig noted the lost interest on accelerating payment would be modest relative to the community benefit of delivering homes sooner.

After discussion, a board member moved to direct staff and legal counsel to draft an amendment covering both items; Greg seconded the motion. The board voted by voice; the chair announced the result as unanimous.

The board directed staff to provide the draft amendment and the two sets of restrictive covenants to members for review before the next EIC meeting. Staff said the amendment would return to the board for formal approval at a future meeting; Habitat indicated it expects the work to be substantially complete enough to support earlier invoicing.

Votes at a glance: - Motion to direct staff to draft an amendment to (a) accelerate the second tranche of the EIC grant to Habitat for Humanity and (b) subordinate the EIC lien to the proposed deed restrictions. Moved by an unnamed board member; seconded by Greg. Outcome: approved (unanimous).

Why it matters: The amendment would let Habitat draw previously committed infrastructure reimbursement sooner, enabling the nonprofit to complete and sell homes faster. Subordination of EIC’s lien to affordability covenants is intended to preserve long-term income-restricted ownership across successive resales.

What the amendment will cover: draft subordination language, two sets of restrictive covenants (neighborhood rules and affordability covenants with resale caps and 40-year resets), procedures for partial lien releases on individual house sales, and an acceleration of the existing two-tranche reimbursement schedule into the current fiscal year if Habitat provides inspected, approved pay applications.

Next steps: Staff and counsel will circulate the draft amendment and the deed-restriction documents to board members ahead of the next meeting for review. The board may consider formal approval of the amendment at that meeting.