Boerne PFC considers transfer of Live Boerne Hills partnership interest; $400,000 payment to fund discussed

The Boerne Public Facility Corporation on April 8 considered Resolution No. 2025-R01, a request to consent to the transfer of 3 Shooting Club SLP LLC's partnership interest in Live Boerne Hills LP to AHP Housing Fund 205 LLC and to authorize related amendments to the development subagreement.

The change would, if approved, deliver $400,000 of a deferred developer fee to the PFC fund, increasing the board's receivable under the agreement. Nick (presenter for the board) described Live Boerne Hills as a 62-unit, 55-and-over apartment complex with a certificate of occupancy issued in 2021 and occupancy running about 85 to 90 percent.

Why it matters: the PFC's consent is required to effect the sale between partners. The board's share of deferred developer fees and the timing of future revenue splits depend on when the project's deferred developer fee is paid off and on continued compliance with tax-credit requirements, a point several members pressed at the meeting.

Board discussion centered on three financial points. First, the transaction would deliver $400,000 toward a remaining deferred developer fee the presenters said is approximately $1,030,000. Second, counsel Summer Greathouse, PFC attorney, explained that the PFC is entitled to 40 percent of the deferred developer fee cash flows while the deferred fee is being paid and that the deferred fee is typically paid out from project cash flow over the 15-year compliance period tied to tax credits. Greathouse said that after the deferred fee is paid, revenue splits would move to the previously agreed split for cash flow (described in the meeting as a 50/50 split after the deferred fee is satisfied, following an earlier 60/40 arrangement on certain payments).

Third, council members asked how the PFC would enforce payment if the partnership failed to distribute the agreed amounts. Victor Miramantez, representing Mission Development Group, and Greathouse said the deferred fee is paid after debt service and operating expenses and is tied to tax-credit compliance; Greathouse said that if the project does not generate distributable cash flow, those payments would not be made, but tax-credit compliance requirements drive the anticipated payout over the 15-year period. The presenters did not describe a specific enforcement remedy in the event payouts do not materialize.

Members also sought clarity about legal and fiscal liability. Greathouse explained that the bonds used to finance the project sit on the debt side and that the partnership, not the city or the PFC, is the primary obligor under the bond documents; she said the documents are drafted so that the city and the PFC do not have direct liability for partnership obligations absent other actions.

Board members asked which partner had been acting as the managing/operator partner; presenters said 3 Shooting Club SLP LLC had been the developer/operator and that AHP Housing Fund 205 LLC would assume the selling partner's rights and obligations if the transfer proceeds. One board member described Mission Development Group's decision to sell as driven by the need for a partner with greater operational capacity.

Action on the item: Alderman Wilson moved to approve Resolution No. 2025-R01; Councilman Scott seconded the motion. The transcript records the motion and second, but it does not record a vote result for Resolution No. 2025-R01.

Votes at a glance: - Agenda item 4 (Consider minutes of 11/12/2024 PFC meeting), motion to approve: motion and second recorded; vote recorded as "Passes 6-0." (No individual vote names recorded in transcript.) - Agenda item 5 / Resolution No. 2025-R01 (transfer of partnership interest in Live Boerne Hills LP to AHP Housing Fund 205 LLC): motion by Alderman Wilson, second by Councilman Scott; transcript does not record the board's vote on this resolution.

The board asked multiple operational and financial follow-ups during the discussion, including timing of the 15-year compliance period (noted as beginning around the project's 2021 in-service date; board members estimated an end near 2036), remaining deferred-developer-fee amounts, and confirmation that the PFC's share of unpaid deferred fees is about 40 percent (roughly $412,000 of the remaining balance, based on figures discussed). Presenters also noted the PFC would receive the $400,000 payment as part of the sale if the transfer occurs.

The public record at the meeting shows the board was presented the legal documents, counsels' clarifications on cash-flow sequencing, and assurances that the successor partner would assume rights and obligations; the transcript does not include a roll-call or final tally for Resolution No. 2025-R01.

The board moved on to the next agenda item after the motion, and the meeting adjourned at 5:44 p.m.