February 18 was HUD’s deadline for 75% commitment of funds in the Tax Credit Assistance Program (TCAP). TDHCA hit that benchmark, with HUD reporting a 78.53% commitment rate for Texas. The next major deadline is a year from now, when 75% of the funds must be spent by developers.
The HUD report indicates that as of last Friday, five states hadn’t met the 75% benchmark: Illinois, North Carolina, South Carolina, West Virginia, New Mexico. HUD’s program rules state if a grantee does not meet its statutory commitment or expenditure requirements, HUD will reallocate the funds to grantees meeting these requirements.
Even if HUD doesn’t reallocate any funds to Texas from laggard states, it looks like TDHCA is going to have about 8.4 Million in uncommitted funds once they finish closing on all of the currently pending applicants. On a call last week, TDHCA staff indicated they would ask the TDHCA board to open a third round of TCAP funding.
Since everyone who applied and was qualified was funded in the first two rounds, the TDHCA board should broaden the call for proposals to make certain that the third round is competitive. These funds should be committed to proposals that improve the housing of the state. The department needs to insure the funds are not used (just because they are there) on whatever is left in the barrel or on already previously approved projects which suddenly ‘discover’ higher costs.
Round Three shouldn’t be an insurance policy on underestimated proposals–if a project gets increased funding, it should offer increased benefits to the state.