Summary: Hampton. of Dallas. t is located in. rural. also been. oversight. of Palladium. financing. Page 1 of 3

Transcription

1 Texas State Affordable Housing Corporation Agenda Item: Presentation, discussion and possible approval of a resolution authorizing the issuance of Texas State Affordable Housing Corporation Multifamily Housing Revenue Bonds (Palladium Glenn Heights Apartments) Series 2017, a Trust Indenture, a Loan Agreement, a Bond Purchase Agreement, an Asset Oversight, Compliance and Security Agreement, a Regulatory Agreement, a Preliminary Official Statement and a Final Official Statement; authorizing the execution of documents and instruments necessary or convenient to carry out the issuance of the bonds; and other provisions in connection therewith. Summary: The Corporation approved the inducement of $18.5 million in private activity bonds for the Palladium Glenn Heights Apartments (Palladium Glenn Heights) project in July Located at the Southeast corner of the intersectionn of Hampton Rd. and Ovilla Rd., in Glenn Heights, Texas, the project involves the construction of a 270-unit multifamily housing complex targeted to families. Map of Project Area The Corporation s Board is being asked at this time to approve the bonds and provide staff with the authority to sign closing documents for the project. Public Benefit: The proposed project fulfills the Corporation s targeted housing needs of rural and small urban areas, as well as disaster relief. Glenn Heights, Texas is a community of approximately 11,000 persons located on the border of Dallas and Ellis Counties. The proposed development t is located in an area with primarily rural characteristics and outside of the primary metro area off Dallas/Fort Worth. Additionally, Glenn Heights and surrounding areas were included in state and federal disaster declarations due to a series of tornadoes in December Glenn Heights reported more than 100 homes destroyed or damaged according to Federal Emergency Management Agency reports. Community leaders have also been supportive of new affordable housing projects and the City of Glenn Heights Housing Finance Corporation will be the General Partner for the development, ensuring long-term City oversight and involvement. Financial Summary: The proposed acquisition of land and new construction of Palladium Glenn Heights has a total budget of approximately $41.9 million, for a total per unit cost of about $155,000. $28.5 million is planned for direct construction costs, or approximately $ 105,000 per unit. Acquisition of the land, financing costs, soft costs and developer fees account for the remaining $13.4 million in total costs. The proposed financing leverages tax-exempt bonds and 4% housing tax credits under a fairly typical financing structure. The bonds will be issued as short-term instruments with the proceeds used for acquisition and construction activities. RBC Capital Markets is the Underwriter for the bonds that will be offered publicly with bond rating provided by Standard & Poor s rating agency. Page 1 of 3

2 Texas State Affordable Housing Corporation The total bond amount is anticipated to be $18.5 million. PNC Bank N.A. will be the permanent lender providing a $29.5 million 35-year FHA insured mortgage with an anticipated interest rate of 4.15%. Tax credit proceeds in the amount of $9.9 million will be syndicated by PNC Bank. In addition to bonds and tax credit equity the project will receive $800,000 in federal HOME Investment Partnership Funds from the Texas Department of Housing and Community Affairs, and the Developer has committed to deferring at least $1.7 million of their total Developer Fee. A summary of sources and uses for the project is included in staff s underwriting. Market Conditions: Glenn Heights, Texas, straddles the borders of Dallas and Ellis Counties just west of the interstate 35E corridor. Incorporated in 1969, the community has grown from 257 residents in the 1970 census to 11,456 in Manufacturing, retail and transportation are the three most common industries representing 46% of all economic activity in the community. Current unemployment estimates for the City are at 4.3% as compared to 4.1% for the entire state. The population and economic growth for the area have been strong since 2000 with average home prices increasing from $105,300 in 2000 to their peak in 2007 at $213,000. Due to high foreclosure activity between 2007 and today, home prices fell considerably from their peak to $165,000 for While the community is regaining momentum on single family housing activity and pricing, the construction of rental units has lagged in recent years. Building permit data show few new units under construction in the past 5 years, and median rental rates have reached $1,175 as compared to the County median of $895. In addition to the high median rents there are few subsidized affordable housing projects in the market area. There are no other affordable rental properties within Glenn Heights and only three properties within a 10-mile radius of the proposed site. These three projects have a total of 321 units, including 105 units that are restricted for elderly residents. Borrower Summary: The development team for Palladium Glenn Heights is a partnership between Palladium USA and the City of Glenn Heights Housing Finance Corporation. Palladium USA is the holding company for Palladium Group, a privately owned real estate company with developments in Western Europe, Saudi Arabia and the U.S. Its core U.S. business focuses on the development of portfolio multifamily properties that are owned and operated by the company long-term. Palladium Group is a vertically integrated company that provides site planning, financial structuring, construction and property management services. The Corporation previously worked with Palladium USA on the THF Palladium Midland housing project. Like the current proposed development, THF Palladium Midland included a public entity general partner, the Texas Housing Foundation. As the general partner of Palladium Glenn Heights, the City of Glenn Heights Housing Finance Corporation will play a long-term role in the project overseeing management decisions and operations for the term of the project s affordability period. The participation of the City s Housing Finance Corporation also grants a property tax exemption to the development pursuant to Section 394 of the Texas Local Government Code. Though the City of Glenn Heights has no other housing experience, staff feels that they will be well supported by Palladium and its property management division. Page 2 of 3

3 Texas State Affordable Housing Corporation Public Comment: Staff held hearings in Glenn Heights and Austin to collect public comment. Six persons attended the hearing in Glenn Heights, with only one person speaking on the record. The speaker, a resident of Glenn Heights, noted that they (he and his wife) were not in favor of the proposed project. He said that they did not want apartment complexes in Glenn Heights, especially if they provide housing to low-income persons. In his opinion, low-income apartments bring crime based on his experience as a police officer. No public comment was provided at the Austin hearing and no public comments were submitted in writing. Staff has become aware that the Red Oak Independent School District has written a letter in opposition to the project to the Texas Department of Housing and Community Affairs as the tax credit issuer. The school district notes that the area is growing rapidly and that a local school bond election was defeated in May The Cities of Red Oak, Ovilla, Glenn Heights and some unincorporated areas feed students into the Red Oak ISD, and many of these areas have seen increased population growth. Staff did consider these trends before making our recommendation to approve this transaction. Staff Recommendation: Staff recommends that the Board approve the resolution authorizing the issuance of Texas State Affordable Housing Corporation Multifamily Housing Revenue Bonds (Palladium Glenn Heights Apartments) Series 2017, a Trust Indenture, a Financing Agreement, a Bond Purchase Agreement, an Asset Oversight, Compliance and Security Agreement and a Regulatory Agreement; authorizing the execution of documents and instruments necessary or convenient to carry out the issuance of the bonds; and other provisions in connection therewith. Page 3 of 3

4 Glenn Heights - Underwriting.xlsx Project Summary Project Summary Applicant Palladium USA International Project Name Palladium Glenn Heights Location Address East side of Hampton Rd at Ovilla Rd. City Glenn Heights County: Ellis State TX Zip Census Tract: Funding Sources Amount % of Total TSAHC Bonds Short Term* $ 18,500,000 n/a PNC FHA 221d4 $ 29,534, % PNC Tax Credit Equity $ 9,951, % Palladium Deferred Dev Fees $ 1,709, % TDHCA HOME funds $ 800, % Totals $ 41,995, % * not included in total Market Summary City County State Census Tract Population 11, ,447 26,092,033 1,261 Average Age Minority Pop. % 63.5% 17.8% 25.3% 42.3% % Hispanic 15.2% 24.3% 38.2% 31.7% % Persons with Disability 22.0% 12.5% 11.6% 7.0% % Households that Rent 29.1% 27.3% 37.3% 34.9% Persons w/o Insurance 21.0% 19.1% 21.9% 24.0% Median Household Income $71,700 Median Home Price $126,500 $140,200 $131,400 $86,500 Median Rents $1,175 $895 $870 $1,100 % Renters Who are Cost Burdened 59.2% 46.6% 45.2% 61.0% % Attending Public Schools 95.7% 97.8% 93.2% 100.0% Graduation Rate (De Soto ISD) 60.1% Unemployment 4.3% 4.0% 4.1% CRA Eleigible Census Tract Not eligible Medically Underserved Area Yes Projects Units # of LI Apartment Projects of 4

5 Glenn Heights - Underwriting.xlsx Summary Sources and Uses Summary of Sources and Uses Applicant Palladium USA International Project Name Palladium Glenn Heights Number of Units 270 Sources Amount Amount Per Unit Percentage of Total TSAHC Bonds Short Term* $ 18,500,000 $ 68,519 44% PNC FHA 221d4 $ 29,534,307 $ 109,386 70% PNC Tax Credit Equity $ 9,951,016 $ 36,856 24% Palladium Deferred Dev Fees $ 1,709,842 $ 6,333 4% TDHCA HOME funds $ 800,000 $ 2,963 2% Total Sources $ 41,995,165 $ 155, % Uses Acquisition $ 678,400 $ 2, % OffSite Construction $ 0% OnSite Work $ 4,004,060 $ 14, % Site Amenities $ 1,191,003 $ 4, % Building Costs $ 19,293,821 $ 71, % Other Const/Contingency $ 4,062,202 $ 15, % Soft Costs $ 2,054,309 $ 7, % Financing Costs $ 3,349,131 $ 12, % Developer Fees $ 4,823,384 $ 17, % Reserve Accounts $ 2,538,855 $ 9, % Total Uses $ 41,995,165 $ 155, % (Gap) / Reserve $ Percent of Developer Fee Deferred 35.45% 4 of 4

6 Glenn Heights - Underwriting.xlsx Operating Proforma Operating Proforma Applicant Palladium USA International Project Name Palladium Glenn Heights Number of Units 270 Affordable Units 206 Min. Set Aside 83 SetAside Requirement 108 Affordable % 76% Accessible Unit Min. 11 Residential Income Unit Type Unit Sq. Ft. Net Sq. Ft. # units Rent Mo. Income Inflator Rent Limiter Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 15 1br/1ba 800 1,600 2 $ 382 $ % AMI $ 9,168 $ 9,351 $ 9,538 $ 9,729 $ 9,924 $ 10,957 $ 12,097 1br/1ba , $ 795 $ 48, % AMI $ 581,940 $ 593,579 $ 605,450 $ 617,559 $ 629,911 $ 695,472 $ 767,857 1br/1ba 800 2,400 3 $ 895 $ 2, MR $ 32,220 $ 32,864 $ 33,522 $ 34,192 $ 34,876 $ 38,506 $ 42,514 $ $ $ $ $ $ $ 2br/2ba 950 2,850 3 $ 457 $ 1, % AMI $ 16,452 $ 16,781 $ 17,117 $ 17,459 $ 17,808 $ 19,662 $ 21,708 2br/2ba , $ 953 $ 128, % AMI $ 1,543,860 $ 1,574,737 $ 1,606,232 $ 1,638,357 $ 1,671,124 $ 1,845,056 $ 2,037,090 2br/2ba 950 5,700 6 $ 1,050 $ 6, MR $ 75,600 $ 77,112 $ 78,654 $ 80,227 $ 81,832 $ 90,349 $ 99,753 $ $ $ $ $ $ $ 3br/2ba ,300 2 $ 521 $ 1, % AMI $ 12,504 $ 12,754 $ 13,009 $ 13,269 $ 13,535 $ 14,943 $ 16,499 3br/2ba , $ 1,094 $ 53, % AMI $ 643,272 $ 656,137 $ 669,260 $ 682,645 $ 696,298 $ 768,770 $ 848,784 3br/2ba ,350 9 $ 1,250 $ 11, MR $ 135,000 $ 137,700 $ 140,454 $ 143,263 $ 146,128 $ 161,337 $ 178,130 $ $ $ $ $ $ $ $ $ $ $ $ $ $ , $ 1 $ $ $ $ $ $ $ Other income: $ $ 7, $ 87, $ 88,866 $ 90,643 $ 92,456 $ 94,305 $ 104,121 $ 114,958 Potential gross income $ 3,137,140 $ 3,199,882 $ 3,263,880 $ 3,329,158 $ 3,395,741 $ 3,749,172 $ 4,139,389 Residential vacancy loss 7.00% $ (219,600) $ (223,992) $ (228,472) $ (233,041) $ (237,702) $ (262,442) $ (289,757) Effective Gross Residential Income $ 2,917,540 $ 2,975,891 $ 3,035,408 $ 3,096,117 $ 3,158,039 $ 3,486,730 $ 3,849,632 Operating Expenses TSAHC est. Borrower Yr 1 % EGI Variance Per Unit Inflator General & Administrative $ 110,970 $ 80, % $ $ 80,522 $ 82,938 $ 85,426 $ 87,989 $ 90,628 $ 105,063 $ 121,797 Management Fee $ 103,410 $ 116, % $ $ 116,701 $ 120,202 $ 123,808 $ 127,522 $ 131,348 $ 152,268 $ 176,521 Payroll and Related $ 321,570 $ 339, % $ 1, $ 339,498 $ 349,683 $ 360,173 $ 370,979 $ 382,108 $ 442,968 $ 513,521 Maintenance & Repair $ 176,040 $ 166, % $ $ 166,547 $ 171,543 $ 176,690 $ 181,990 $ 187,450 $ 217,306 $ 251,917 Utilities $ 217,890 $ 176, % $ $ 176,395 $ 181,687 $ 187,137 $ 192,752 $ 198,534 $ 230,155 $ 266,813 Insurance $ 75,060 $ 67, n/a $ $ 67,500 $ 69,525 $ 71,611 $ 73,759 $ 75,972 $ 88,072 $ 102,100 Taxes $ $ 6, #DIV/0! $ $ 6,248 $ 6,435 $ 6,629 $ 6,827 $ 7,032 $ 8,152 $ 9,451 Operating Debt Service Reserves 0.00 n/a $ 1.03 $ $ $ $ $ $ $ Replacement reserves $ 67,500 $ 81, % $ $ 81,000 $ 83,430 $ 85,933 $ $ $ HTC/HOME Compliance Fees $ 10,800 $ 10, n/a $ $ 10,800 $ 11,124 $ 11,458 $ 11,801 $ 12,155 $ 14,092 $ 16,336 Bond Compliance Fees $ 12,150 $ 12, % $ $ 12,150 $ 12,515 $ 12,890 $ 13,277 $ 13,675 $ 15,853 $ 18,378 Issuer Fee $ $ Other (specify): 0.00 $ 1.03 $ $ $ $ $ $ $ Total Operating Expenses $ 1,095,390 $ 1,057,361 3% $ 3, $ 1,057,361 $ 1,089,082 $ 1,121,754 $ 1,066,896 $ 1,098,903 $ 1,273,930 $ 1,476,834 state avg $ 4, per unit $ 3,916 $ 4,034 $ 4,155 $ 3,951 $ 4,070 $ 4,718 $ 5,470 Operating Expenses as a percentage of Effective Gross Income 36.2% 36.6% 37.0% 34.5% 34.8% 36.5% 38.4% 2 of 4

7 Glenn Heights - Underwriting.xlsx Operating Proforma NET OPERATING INCOME $ 1,860,179 $ 1,886,809 $ 1,913,654 $ 2,029,221 $ 2,059,136 $ 2,212,801 $ 2,372,798 PRIMARY DEBT SERVICE Principal Rate Amort Term Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 15 TSAHC Bonds Short Term* PNC FHA 221d4 $ 18,500, % 0 2 $ $ $ $ $ 29,534, % $ 1,525,647 $ 1,525,647 $ 1,514,457 $ 1,514,457 $ 1,514,457 $ 1,514,457 $ 1,514,457 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Total Primary Debt $ 29,534,307 $ 1,525,647 $ 1,525,647 $ 1,514,457 $ 1,514,457 $ 1,514,457 $ 1,514,457 $ 1,514,457 TSAHC Issuer Fee $ 5, % $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 Net Cashflow After Primary Debt $ 329,531 $ 356,161 $ 394,197 $ 509,764 $ 539,679 $ 693,344 $ 853,341 DSCR Primary Debt SOFT SUBORDINATE DEBT & EQUITY PNC Equity Palladium Deferred Dev Fees HOME Funds $ 9,944,882 $ $ $ $ $ $ $ $ 1,462,990 $ 329,531 $ 356,161 $ 394,197 $ 509, $ (126,663.69) $ 800,000 $ $ $ $ $ $ $ Total Secondary Debt $ 12,207,872 $ 329,531 $ 356,161 $ 394,197 $ 509,764 $ (126,664) $ $ Estimated value of completed real estate $ 31,002,980 Estimated Cap Rate 6.00% 3 of 4

8 RESOLUTION NO. 17- TEXAS STATE AFFORDABLE HOUSING CORPORATION RESOLUTION authorizing the issuance of Texas State Affordable Housing Corporation Multifamily Housing Revenue Bonds (Palladium Glenn Heights Apartments) Series 2017, a Trust Indenture, a Loan Agreement, a Bond Purchase Agreement, an Asset Oversight, Compliance and Security Agreement, a Regulatory Agreement, a Preliminary Official Statement and a Final Official Statement; authorizing the execution of documents and instruments necessary or convenient to carry out the issuance of the bonds; and other provisions in connection therewith WHEREAS, Texas State Affordable Housing Corporation (the Issuer ) has been duly created and organized pursuant to and in accordance with the provisions of the Texas Non- Profit Corporation Act, Article et seq. Vernon s Annotated Texas Civil Statutes, as amended and under the authority of Subchapter Y of Chapter 2306, Texas Government Code, as amended (the Act ), for the purpose, among other things, of promoting the public health, safety and welfare through the provision of adequate, safe and sanitary housing primarily for individuals and families of low, very low and extremely low income; and WHEREAS, the Act authorizes the Issuer to (a) make mortgage loans to provide financing for multifamily residential rental housing in the State of Texas (the State ) intended to be occupied by persons and families of low, very low and extremely low income; (b) issue its multifamily housing revenue bonds, for the purpose, among others, of obtaining funds to make such mortgage loans, to establish any necessary reserve funds and to pay administrative and other costs incurred in connection with the issuance of such bonds; (c) pledge all or any part of the revenues, receipts or resources of the Issuer, including the revenues and receipts to be received by the Issuer from such mortgage loans, and to mortgage, pledge or grant security interests in such mortgage loans or other property of the Issuer in order to secure the payment of the principal or redemption price of and interest on such bonds; and (d) make, enter into, and enforce contracts, agreements, leases, indentures, mortgages, deeds, deeds of trust, security agreements, pledge agreements, credit agreements and other instruments with any person on terms the Issuer determines to be acceptable; and WHEREAS, the Issuer has determined to provide a loan to Palladium Glenn Heights, Ltd., a Texas limited partnership (the Borrower ), for the purpose of constructing and equipping a multifamily residential development to be located in the City of Glenn Heights, Dallas County, Texas and to be known as the Palladium Glenn Heights Apartments (the Project ) to be rented to persons of low and moderate income, as evidenced by that certain Loan Agreement dated as of October 1, 2017 (the Agreement ) by and among the Issuer, the Borrower and Wilmington Trust, National Association, as trustee (the Trustee ), and in connection therewith the Borrower has agreed to assume certain of the obligations set forth in the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of October 1, 2017 (the Regulatory Agreement ) by and among the Issuer, the Trustee and the Borrower; and WHEREAS, the Issuer now proposes to issue its bonds styled Texas State Affordable Housing Corporation Multifamily Housing Revenue Bonds (Palladium Glenn Heights Apartments) Series 2017 (the Bonds ) pursuant to this Resolution and a Trust Indenture dated as of October 1, 2017 (the Indenture ) between the Issuer and the Trustee; and /

9 WHEREAS, the Issuer further proposes to sell the Bonds, upon the issuance thereof, to RBC Capital Markets, LLC (the Underwriter ); and WHEREAS, all capitalized terms not otherwise defined herein shall have the same meaning ascribed to them in the Indenture unless the context in which they appear requires otherwise; and WHEREAS, there have been presented to the Issuer proposed forms of each of the following: 1. the Indenture; 2. the Agreement; 3. the Bond Purchase Agreement (the Purchase Agreement ), by and among the Underwriter, the Issuer and the Borrower; 4. the Remarketing Agreement (the Remarketing Agreement ), by and among RBC Capital Markets, LLC, the Borrower and the Issuer; 5. the Asset Oversight, Compliance and Security Agreement (the Asset Oversight and Compliance Agreement ), by and between the Borrower and the Issuer; 6. the Regulatory Agreement; and 7. the Preliminary Official Statement (the Preliminary Official Statement ), relating to the Bonds. WHEREAS, the Issuer finds the form and substance of the above-listed documents (hereinafter, collectively the Bond Documents ) to be satisfactory and proper and finds the recitals with regard to the Issuer contained therein to be true, correct and complete and hereby determines to proceed with the issuance and sale of the Bonds, the execution of such documents and the taking of such other actions as may be necessary and appropriate in connection therewith; and now THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE TEXAS STATE AFFORDABLE HOUSING CORPORATION THAT: Section 1: Based solely upon the representations made to the Board of Directors (the Board ) by the Borrower, it appears and the Board hereby finds that the issuance of the Bonds and the making of the various contractual commitments, as provided herein, will provide a means of financing the Project within the State that accomplishes the public purpose of providing adequate, safe and sanitary housing primarily for individuals and families of low, very low and extremely low income. Section 2: The issuance of the Bonds in one or more series and in the aggregate maximum principal amount of not to exceed $18,500,000, is hereby authorized and approved. The Bonds shall mature, bear interest at the rate or rates and shall be subject to the redemption features as specified in the Indenture. The Board hereby approves the Indenture in substantially the form and substance presented to the Board with such changes or additions /

10 thereto as may be approved by the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer (upon advice of bond counsel to the Issuer), as evidenced by their execution and delivery thereof and the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer is authorized and directed, for and on behalf of the Issuer, to execute the Indenture and such officers are hereby authorized to deliver the Indenture. Upon execution by the parties thereto and delivery thereof, the Indenture shall be binding upon the Issuer in accordance with the terms and provisions thereof. Section 3: The Board hereby approves the Agreement in substantially the form and substance presented to the Board with such changes or additions thereto as may be approved by the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer (upon advice of bond counsel to the Issuer), as evidenced by their execution and delivery thereof and the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer is hereby authorized and directed, for and on behalf of the Issuer, to execute the Agreement, and the Chief Financial Officer and Treasurer, Secretary or any Assistant Secretary of the Issuer is authorized and directed, for and on behalf of the Issuer, to attest the Agreement, and such officers are hereby authorized to deliver the Agreement. Upon execution by the parties thereto and delivery thereof, the Agreement shall be binding upon the Issuer in accordance with the terms and provisions thereof. Section 4: The Board hereby approves the Purchase Agreement in substantially the form and substance presented to the Board with such changes or additions thereto as may be approved by the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer (upon advice of bond counsel to the Issuer), as evidenced by their execution and delivery thereof and the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer are each hereby authorized and directed, for and on behalf of the Issuer, to execute the Purchase Agreement, and such officers are hereby authorized to deliver the Purchase Agreement. Upon execution by the parties thereto and delivery thereof, the Purchase Agreement shall be binding upon the Issuer in accordance with the terms and provisions thereof. Section 5: The Board hereby approves the Remarketing Agreement in substantially the form and substance presented to the Board with such changes or additions thereto as may be approved by the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer (upon advice of bond counsel to the Issuer), as evidenced by their execution and delivery thereof and the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer are each hereby authorized and directed, for and on behalf of the Issuer, to execute the Remarketing Agreement, and such officers are hereby authorized to deliver the Remarketing Agreement. Upon execution by the parties thereto and delivery thereof, the Remarketing Agreement shall be binding upon the Issuer in accordance with the terms and provisions thereof. Section 6: The Board hereby approves the Asset Oversight and Compliance Agreement in substantially the form and substance presented to the Board with such changes or additions thereto as may be approved by the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer (upon advice of bond counsel to the Issuer), as evidenced by their execution and delivery thereof and the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer are each hereby authorized and directed, for and on behalf of the Issuer, to execute the Asset Oversight and Compliance Agreement, and such officers are hereby authorized to deliver the Asset Oversight and Compliance Agreement. Upon execution by the parties thereto and delivery thereof, the Asset Oversight and Compliance /

11 Agreement shall be binding upon the Issuer in accordance with the terms and provisions thereof. Section 7: The Board hereby approves the Regulatory Agreement in substantially the form and substance presented to the Board with such changes or additions thereto as may be approved by the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer (upon advice of bond counsel to the Issuer), as evidenced by their execution and delivery thereof and the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer are each hereby authorized and directed, for and on behalf of the Issuer, to execute the Regulatory Agreement, and such officers are hereby authorized to deliver the Regulatory Agreement. Upon execution by the parties thereto and delivery thereof, the Regulatory Agreement shall be binding upon the Issuer in accordance with the terms and provisions thereof. Section 8: The Board hereby approves the Preliminary Official Statement and the changes to the Preliminary Official Statement which will result in the final Official Statement (the Official Statement ) proposed to be delivered in connection with the sale of the Bonds, in substantially the form and substance presented to the Board with such changes or additions thereto as may be approved by the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer (upon advice of bond counsel to the Issuer) and the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer is hereby authorized and directed, for and on behalf of the Issuer, to execute the Preliminary Official Statement and the Official Statement. Delivery to the Underwriter of the Preliminary Official Statement and the Official Statement, based upon representations received from the Borrower is hereby authorized. Section 9: The Board hereby approves the Bonds in substantially the form and substance set forth in the Indenture as presented to the Board with such changes or additions as may be approved by the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer, as evidenced by their execution and delivery thereof and the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer are hereby authorized and directed, for and on behalf of the Issuer, to execute the Bonds or have their facsimile signatures placed upon the Bonds, and the Chief Financial Officer and Treasurer, Secretary or any Assistant Secretary, by manual or facsimile signature, are hereby authorized and directed to attest the signature of the Chairperson, Vice Chairperson, President or Executive Vice President, and any of such officers is hereby authorized and directed to deliver the Bonds. Section 10: The Board hereby approves the sale of the Bonds to the Underwriter in accordance with the terms and conditions specified in the Purchase Agreement approved herein. Section 11: Wilmington Trust, National Association is hereby appointed as Trustee and paying agent under the terms of the Indenture for the Bonds. If said bank shall be unable or unwilling to so serve, the Chairperson, Vice Chairperson, President or Executive Vice President of the Issuer is hereby authorized and directed to designate a commercial bank or other entity with trust powers acceptable to it to serve as Trustee and paying agent. Section 12: The Chairperson, Vice Chairperson, President and Executive Vice President of the Issuer, either individually or jointly, are hereby authorized to approve the principal amount or amounts and maturity date or dates of the Bonds to be issued pursuant to /

12 this Resolution, to establish the interest rate or rates to be borne by the Bonds, provided, however, that the interest rate or rates shall never exceed 15% per annum. The President and Executive Vice President of the Issuer, either individually or jointly, are further authorized to engage the services of consultants that may be needed, in the opinion of such officer, to fully complete the issuance and delivery of the Bonds. Section 13: The officers of the Issuer are each hereby authorized to execute and deliver to the Trustee the written order of the Issuer for the authentication and delivery of the Bonds by the Trustee in accordance with the Indenture. Section 14: All action (not inconsistent with provisions of this Resolution) heretofore taken by the Board and officers of the Issuer directed toward the financing of the Project and the issuance of the Bonds shall be and the same hereby is ratified, approved, and confirmed. Section 15: The officers of the Issuer shall take all action in conformity with the Act necessary or reasonably required to effectuate the issuance of the Bonds and take all action necessary or desirable in conformity with the Act to finance the Project and for carrying out, giving effect to, and consummating the transactions described in the Bonds, this Resolution, the Bond Documents, and any other instruments authorized by this Resolution or required to effect the transactions contemplated hereby, including without limitation, the execution and delivery of any certificates, agreements or documents in addition to those specifically referenced herein which are associated with the issuance of the Bonds. Section 16: The President or the Executive Vice President of the Issuer is authorized to approve such changes to the documents specifically referenced in this Resolution and to make any changes or enter into any supplements or amendments that may be required following the closing of the Bonds for a period of up to one year as well as the certificates, agreements and documents authorized in Section 15 hereof, as they deem necessary or appropriate. The execution and delivery of such documents by either of such officers shall constitute conclusive evidence of such approval. Section 17: If any section, paragraph, clause, or provision of the Resolution shall be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Resolution. In case any obligation of the Issuer authorized or established by this Resolution or the Bonds is held to be in violation of law as applied to any person or in any circumstance, such obligation shall be deemed to be the obligation of the Issuer to the fullest extent permitted by law. [remainder of page intentionally left blank] /

13 PASSED, APPROVED AND EFFECTIVE this September 14, TEXAS STATE AFFORDABLE HOUSING CORPORATION ATTEST: Chairperson Secretary / S-1