| (-b-) households meeting the occupancy qualifications
of the Development (data to quantify this demand may be based on statistics
beyond the defined PMA but not outside the historical service area
of the Applicant).
(VI) For Developments with rent assisted units (Project
Based Vouchers, Project-Based Rental Assistance, Public Housing Units):
(-a-) minimum eligible income for the assisted units
is $1; and
(-b-) maximum eligible income for the assisted units
is the minimum eligible income of the corresponding affordable unit.
(iv) For External Demand, assume an additional 10%
of Potential Demand from the PMA to represent demand coming from outside
the PMA.
(v) For Demand from Other Sources:
(I) the source of additional demand and the methodology
used to calculate the additional demand must be clearly stated;
(II) consideration of Demand from Other Sources is
at the discretion of the Underwriter;
(III) Demand from Other Sources must be limited to
households that are not included in Potential Demand; and
(IV) if households with Section 8 vouchers are identified
as a source of demand, the Market Study must include:
(-a-) documentation of the number of vouchers administered
by the local Housing Authority; and
(-b-) a complete demographic report for the area in
which the vouchers are distributed.
(F) Employment. Provide a comprehensive analysis of
employment trends and forecasts in the Primary Market Area. Analysis
must discuss existing or planned employment opportunities with qualifying
income ranges.
(10) Conclusions. Include a comprehensive evaluation
of the subject Property, separately addressing each housing type and
specific population to be served by the Development in terms of items
in subparagraphs (A) - (J) of this paragraph. All conclusions must
be consistent with the data and analysis presented throughout the
Market Analysis.
(A) Unit Mix. Provide a best possible unit mix conclusion
based on the occupancy rates by Bedroom type within the PMA and target,
income-eligible, size-appropriate and tenure-appropriate household
demand by Unit Type and income type within the PMA.
(B) Rents. Provide a separate Market Rent conclusion
for each proposed Unit Type by number of Bedrooms and rent restriction
category. Conclusions of Market Rent below the maximum Net Program
Rent limit must be well documented as the conclusions may impact the
feasibility of the Development under §11.302(i) of this chapter
(relating to Feasibility Conclusion). In support of the Market Rent
conclusions, provide a separate attribute adjustment matrix for each
proposed Unit Type by number of Bedrooms and rental restriction category.
For HOME-ARP, Units for Qualified Populations will be underwritten
at $0 income, unless the Unit has project-based rental assistance
or subsidy, or is supported by a capitalized operating reserve agreement.
(i) The Department recommends use of HUD Form 92273.
(ii) A minimum of three developments must be represented
on each attribute adjustment matrix.
(iii) Adjustments for concessions must be included,
if applicable.
(iv) Adjustments for proximity and drive times to employment
centers and services narrated in the Comparable Unit description,
and the rationale for the amount of the adjustments must be included.
(v) Total adjustments in excess of 15% must be supported
with additional narrative.
(vi) Total adjustments in excess of 25% indicate the
Units are not comparable for the purposes of determining Market Rent
conclusions.
(C) Effective Gross Income. Provide rental income,
secondary income, and vacancy and collection loss projections for
the subject derived independent of the Applicant's estimates.
(D) For Demand:
(i) state the Gross Demand for each Unit Type by number
of Bedrooms proposed and rent restriction category (e.g. one-Bedroom
Units restricted at 50% of AMGI; two-Bedroom Units restricted at 60%
of AMGI);
(ii) state the Gross Demand for the proposed Development
as a whole. If some households are eligible for more than one Unit
Type due to overlapping eligible ranges for income or household size,
Gross Demand should be adjusted to avoid including households more
than once; and
(iii) state the Gross Demand generated from each AMGI
band. If some household incomes are included in more than one AMGI
band, Gross Demand should be adjusted to avoid including households
more than once.
(E) Relevant Supply. The Relevant Supply of proposed
and Unstabilized Comparable Units includes:
(i) the proposed subject Units to be absorbed;
(ii) Comparable Units in previously approved Developments
in the PMA that have not achieved 90% occupancy for a minimum of 90
days. Approved Developments should be determined by:
(I) the HTC Property Inventory that is published on
the Department's website as of December 31, 2023, for competitive
housing tax credit Applications;
(II) the most recent HTC Property Inventory that is
published on the Department's website one month prior to the Application
date of non-competitive housing tax credit and Direct Loan Applications.
(iii) Unstabilized Comparable Units that are located
in close proximity to the subject PMA if they are likely to share
eligible demand or if the PMAs have overlapping census tracts. Underwriter
may require Market Analyst to run a combined PMA including eligible
demand and Relevant Supply from the combined census tracts; the Gross
Capture Rate generated from the combined PMA must meet the feasibility
criteria as defined in §11.302(i) (relating to Feasibility Conclusion).
(F) Gross Capture Rate. The Gross Capture Rate is defined
as the Relevant Supply divided by the Gross Demand. Refer to §11.302(i)
of this chapter (relating to Feasibility Conclusion).
(G) Individual Unit Capture Rate. For each Unit Type
by number of Bedrooms and rent restriction categories, the individual
unit capture rate is defined as the Relevant Supply of proposed and
Unstabilized Comparable Units divided by the eligible demand for that
Unit. Some households are eligible for multiple Unit Types. In order
to calculate individual unit capture rates, each household is included
in the capture rate for only one Unit Type.
(H) Capture Rate by AMGI Band. For each AMGI band (30%,
40%, 50%, 60%, and also 20%, 70%, and 80% if the Applicant will make
the Income Average election), the capture rate by AMGI band is defined
as Relevant Supply of proposed and Unstabilized Comparable Units divided
by the eligible demand from that AMGI band. Some households are qualified
for multiple income bands. In order to calculate AMGI band rates,
each household is included in the capture rate for only one AMGI band.
(I) Absorption. Project an absorption period for the
subject Development to achieve Breakeven Occupancy. State the absorption
rate.
(J) Market Impact. Provide an assessment of the impact
the subject Development, as completed, will have on existing Developments
supported by Housing Tax Credits in the Primary Market. (§2306.67055)
(11) Photographs. Provide labeled color photographs
of the subject Property, the neighborhood, street scenes, and comparables.
An aerial photograph is desirable but not mandatory.
(12) Appendices. Any Third Party reports including
demographics relied upon by the Market Analyst must be provided in
appendix form. A list of works cited including personal communications
also must be provided, and the Modern Language Association (MLA) format
is suggested.
(13) Qualifications. Current Franchise Tax Account
Status from the Texas Comptroller of Public Accounts (not applicable
for sole proprietorships) and any changes to items listed in subsection
(c)(1)(B) and (C) of this section (relating to Market Analyst Qualifications).
(e) The Department reserves the right to require the
Market Analyst to address such other issues as may be relevant to
the Department's evaluation of the need for the subject Development
and the provisions of the particular program guidelines.
(f) In the event that the PMA for a subject Development
overlaps the PMA's of other proposed or Unstabilized comparable Developments,
the Underwriter may perform an extended Sub-Market Analysis considering
the combined PMA's and all proposed and Unstabilized Units in the
extended Sub-Market Area; the Gross Capture Rate from such an extended
Sub-Market Area analysis may be used by the Underwriter as the basis
for a feasibility conclusion.
(g) All Applicants shall acknowledge, by virtue of
filing an Application, that the Department shall not be bound by any
such opinion or Market Analysis, and may substitute its own analysis
and underwriting conclusions for those submitted by the Market Analyst.
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