Public hearing: Van Zandt County approves conditional assignment of $35 million in private‑activity bond authority to TDHCA

Van Zandt County Commissioners Court held a public hearing on Nov. 5 about assigning $35 million in private‑activity bond volume cap to the Texas Department of Housing and Community Affairs (TDHCA). After presentations by TDHCA and outside counsel, the court approved a resolution to go forward with the assignment, but only after extracting commitments for local oversight and financial transparency from the East Texas Housing Finance Corporation (East Texas HFC).

Scott Fletcher, deputy executive director for housing finance at TDHCA, and Andy Perrotta of Bracewell took questions by phone about how TDHCA uses the volume cap. Fletcher described TDHCA’s role in issuing tax‑exempt mortgage revenue bonds and mortgage credit certificates and explained the difference between TDHCA’s authority to issue bonds and the actual flow of funds: “the bonds we issue are payable solely from the revenue generated from the underlying mortgage loans,” and the volume cap is a limited IRS allocation the state administers, he said. Fletcher emphasized that assigning the local volume cap to TDHCA does not transfer cash to the local HFC; instead it earmarks the state’s authority so TDHCA will prioritize loans and mortgage credit certificates for East Texas.

Commissioner Cliff Williams and other members voiced concern over the East Texas HFC’s internal governance and transparency. Williams pressed for assurances that Van Zandt County appointees would have meaningful input and that the county would receive financial reporting on how any origination fees or investment income were being used. Judge Richard Anderson and members of the East Texas HFC’s leadership explained the corporation’s structure, noting a 34‑member board and a smaller executive committee that has handled decisions where the board could not convene quorum. East Texas HFC counsel said the corporation’s operating expenses are modest and are covered by investment income; he said the corporation holds roughly $2.9 million in invested assets resulting from prior bond redemptions.

After extended discussion about representation and past reporting practices, the court approved a resolution assigning the $35 million of volume cap authority to TDHCA, with two conditions the court required be met: (1) the East Texas Housing Finance Corporation must place a Van Zandt County representative on its executive committee or otherwise ensure a formal seat for county representation; and (2) the corporation must provide Van Zandt County with recent financial information (the court specifically requested financial material covering past years). The court recorded the resolution as approved with conditions.

Why it matters Assigning private‑activity volume cap is an administrative but consequential step: it determines where TDHCA will prioritize tax‑exempt mortgage bond issuance and mortgage credit certificates, tools used to lower borrowing costs for first‑time buyers and veterans. TDHCA officials told the court that without a local assignment, the set‑aside could be reallocated elsewhere in the state. Commissioners said they were willing to assign the cap only if Van Zandt County receives more visibility and official capacity within the East Texas HFC.

What was said (selected quotes) - Scott Fletcher (TDHCA): “What we’re really talking about here is … an assignment of $35,000,000 from East Texas HFC to TDHCA.” - Andy Perrotta (Bracewell): “Volume cap is a permission to issue tax‑exempt bonds. It is not a money contribution.” - Commissioner Cliff Williams: Commissioners “want to know whether or not the people that we have appointed to those boards have any input or say whatsoever.”

Next steps The county judge and county attorney were directed to communicate the court’s conditions to the East Texas Housing Finance Corporation and return confirmation to the court. TDHCA representatives said that if accepted, they would earmark loans and provide quarterly reports showing where the assigned volume cap is used within East Texas.

Ending The court’s conditional approval aims to secure local oversight and reporting even as it seeks to preserve access for Van Zandt County residents to TDHCA’s mortgage‑support programs.