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AHFC December 12, 2024

District: 3 | Southeast Austin

City Council 12/12/24

The Sasha represents a 60-unit permanent supportive housing development in Austin's District 3, structured through a public-private partnership between established housing developers and service providers. Austin Housing Finance Corporation (AHFC)’s role is purely a lender utilizing GO Bond and Project Connect funds, with the loan characterized as forgivable and structured to align with TDHCA's supportive housing requirements that eliminate permanent debt service. There is no going AHFC involvement beyond loan administration.

Development Team

Ownership Structure Grove Supportive Housing Partnership LP owns the development with:

Public Agency Roles

Service Provider Integration
SAFE Alliance provides comprehensive supportive services including:

The December 12, 2024 Austin City Council approval authorized the partial release of 0.886 acres from existing lease agreements to facilitate The Sasha's development. This technical approval clears a crucial site control hurdle within a complex financing structure:

Capital Stack Structure
The $26.8M development utilizes a $12M construction loan from Amegy Bank at 7.5% interest for 24 months. The permanent capital structure eliminates traditional permanent debt, instead utilizing $16.78M in tax credit equity (NEF at $0.8625 per credit) and an $8.5M forgivable loan from the City of Austin. The lack of permanent debt aligns with TDHCA's definition of Supportive Housing.

Public Funding Components
The City of Austin's involvement includes multiple layers: an $8.5M forgivable loan ($4.68M from 2022 GO Bonds, $3.82M from Project Connect funds), approximately $150,000 in fee waivers through S.M.A.R.T. Housing certification, and a 99-year ground lease restructuring of the 0.886-acre development site.

Operating Subsidy
The Housing Authority of the City of Austin committed 25 project-based vouchers (41% of units) through a 20-year HAP contract valued at $10.32M. The contract establishes initial contract rents at $1,471 for one-bedrooms, $1,721 for two-bedrooms, and $2,213 for three-bedrooms, with utility allowances of $54, $68, and $84 respectively.

Affordability Structure
The development maintains deep affordability with 6 units at 30% MFI, 25 units at 40% MFI, and 29 units at 50% MFI. All 60 units operate as Continuum of Care (CoC) units with a 45-year affordability period. This 100% supportive housing model influenced several unique financing aspects:

Tax Credit Structure
The development received a $1.946M annual allocation of 9% credits, generating $16.78M in equity through five installments: 15% at admission, 30% during construction, 38.95% at completion, 15% at stabilization, and 1.05% upon 8609 receipt. The equity pricing reflects current market conditions for supportive housing developments.

Development Team Structure
The ownership entity, Grove Supportive Housing Partnership LP, combines DMA Development Company with SAFE Alliance Affordable Housing Corporation. JSA Development and SAFE provide guarantees jointly through stabilization, after which SAFE becomes sole guarantor with required liquidity of $1M and net worth of $5M.

Operating Pro Forma
First-year operating expenses total $685,572 ($11,426 per unit) with $256,108 in net operating income. The development eliminates traditional DCR requirements through its supportive housing structure with no permanent debt service.

The Sasha demonstrates several unique features in affordable housing finance: elimination of permanent debt, full integration of supportive services, deep affordability requirements, and significant public funding leverage. The structure creates long-term sustainability through operating subsidies while maintaining deep affordability targeting.

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