County housing project moves forward

RAYMONDVILLE — A program to finance 80 low-income Willacy County Housing Authority apartments through sale of tax credits to investors has been given the go-ahead by county commissioners, but the project faces hurdles, County Judge John F. Gonzales Jr. said.
City commissioners in Raymondville and Lyford also will vote on the project, he said.
The apartments will be located on a 33-acre site and be financed through sale of 9 percent tax credits, he said.
John Valls, of the Austin-based development company Amstar, said Willacy County’s project must also gain approval from the Texas Department of Housing and Community Affairs.
The Willacy County Housing Authority will have to repay only a $2 million loan out of the total $9 million cost of building the apartments, Valls said. The other $7 million will come from the sale of tax credits.
The 9 percent housing tax credit will generate most of the money, he said. But the tax credit program is competitive, so there is no guarantee the state will select the Willacy County application.
But if Willacy County Housing Authority gets accepted, investors will then be financing most of the project, he said.
“They purchase equity in the project in the form of tax credits, which minimizes their tax liability, basically, on cash,” Valls said. “You’ve got pension funds, large group investors, even private individuals with investment money.”
Investors will buy the tax credits to reduce their tax liability, Valls said.
The housing authority has to repay only $2 million that will be a loan from the U.S. Department of Housing and Urban Development, Valls said. When the tax credits expire after about 15 years, the apartment complex will be owned by the housing authority, he said.
“That means all of (the money) in tax credits has been exhausted, so there are no more investors in the project,” Valls said.
Investors don’t get income from their $7 million investment, they just get reduced income taxes over the 15 years, he said.
“This is a perfect example of a public-private partnership,” Valls said. “This is a win-win for everybody.”
The $2 million that will be repaid by the Willacy County Housing Authority through apartment rental income will pay off an earlier loan on the 33 acres of land from a McAllen bank, but at a lower interest rate, Gonzales said.
The interest rate on the new loan is lower than the original loan, he said.

allene@valleystar.com