LIHTC Feasibility Study Case Study: A 72-Unit 9 Percent Housing Credit Family Community on Idalou Road in Lubbock, Texas, Not Feasible as Proposed with Every Unit at 60 Percent of Area Median Income and Feasible as Restructured Under Income Averaging

A 72-unit garden walk-up family apartment community proposed on a 4.0-acre tract at 3516 Idalou Road in Lubbock, Lubbock County, Texas, listed at $185,000, in a Region 1 Urban city of about 273,000 residents where the state agency awarded a comparable 80-unit 9 percent family community in 2025 that is under construction for August 2027 delivery, and where the 60 percent two-bedroom rent limit of about $1,101 sits within 6 percent of a fair market rent that fell to $1,175 in fiscal 2026. The sponsor proposed all 72 units at 60 percent of area median income, a $4,300,000 permanent loan sized on 5 percent vacancy and $4,800 per unit of expenses, and credit equity at $0.85. At the state agency's 7.5 percent vacancy and the study's $5,976 per unit of expenses the loan covers at 1.10x against the 1.15x floor, the stack is short by $612,000 at the sponsor's equity price and $1,361,000 at the study's $0.80, and the all-60 percent product competes for the same household as the 80 units arriving in 2027 with no rent advantage over the city's older market-rate inventory. Restructured under income averaging with 10 units at 30 percent, 20 at 50 percent, 26 at 60 percent and 16 at 80 percent of area median income, a 57.5 percent average, a $3,533,000 Freddie Mac forward permanent loan sized to the agency's 1.15x floor, $11,993,000 of 9 percent credit equity at $0.80 on a $1,499,000 annual allocation, a $950,000 deferred developer fee and a $1,178,000 soft loan, the community covers at 1.15x in Year 2, 1.16x in Year 3, 1.17x in Year 4 and 1.18x in Year 5 and builds to 1.24x by Year 15. Determination: not feasible as proposed; feasible as restructured, conditioned on a 2027 competitive award from the Texas Department of Housing and Community Affairs, the city's rezoning or specific use permit for 72 units on the tract, the appraisal district's restricted-rent valuation under Tax Code Section 23.21, a committed soft loan of not less than $1,178,000 and the Qualified Market Analyst's study required under 10 TAC 11.303.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 3, 2026

MMCG concludes that the proposed 72-unit family housing credit community on Idalou Road in Lubbock, Texas is not feasible as proposed and is feasible as restructured. The city and the program fit are sound. Lubbock is a Region 1 Urban city of 273,071 residents at the Census Bureau's July 2025 estimate, up 6.2 percent since 2020, with a published unified development code that admits apartments in its medium- and high-density residential districts, and the state agency's own 2025 award list shows it funding exactly this product in this city: Avenue U Villas, 80 new-construction family units on the south side, awarded $1,366,814 of annual credit and under construction for August 2027. The land is cheap at $2,569 per unit. The proposal fails on the rent structure and the stack. Lubbock's fiscal 2026 fair market rents fell year over year, to $990 for a one-bedroom, $1,175 for a two-bedroom and $1,634 for a three-bedroom, and the 60 percent rent limits, about $917, $1,101 and $1,272 gross on MMCG's estimate from the fiscal 2025 limits pending HUD's fiscal 2026 multifamily tax subsidy table, sit at 93, 94 and 78 percent of them, which places a 60 percent unit at or above the rent of the city's older Class B and C market-rate inventory. A community with all 72 units at 60 percent therefore offers no rent advantage to the household it is built for, competes for that same household with the 80 units arriving in 2027, and depends on the top of the income band to lease. On the financing, the sponsor's $4,300,000 permanent loan covers at 1.37x on its own pro forma at 5 percent vacancy and $4,800 per unit of expenses, and at 1.10x on the agency's required 7.5 percent vacancy and collection loss and the study's line-item budget of $5,976 per unit, below the 1.15x first-year floor in 10 TAC 11.302; and the sources, $12,742,000 of equity at $0.85 and the $4,300,000 loan, fall $612,000 short of the $17,654,000 cost at the sponsor's equity price and $1,361,000 short at the $0.80 that West Texas 9 percent credits command.

Restructured under income averaging with 10 units at 30 percent, 20 at 50 percent, 26 at 60 percent and 16 at 80 percent of area median income, a 57.5 percent average inside the 60 percent ceiling, with the 80 percent units capped at the achievable market rent, a $3,533,000 Freddie Mac forward permanent loan at 7.50 percent over 35 years sized to the 1.15x floor, $11,993,000 of credit equity at $0.80 on a $1,499,000 annual allocation, a $950,000 deferred developer fee and a $1,178,000 soft loan, the same 72 units cover at 1.15x in Year 2, 1.16x in Year 3, 1.17x in Year 4 and 1.18x in Year 5 and build to 1.24x by Year 15. The restructured credit is one a TDHCA underwriter, a syndicator and a forward lender can approve: the mix gives 30 units a rent $150 to $640 below the 60 percent limit and so a real advantage against the market, reserves the 80 percent units for the hospital, university and school households that the fair market rent evidence says will pay the market rent, sizes the loan to the agency's own test on its own vacancy, and prices the equity where the regional evidence puts it rather than where the sponsor hoped. The price of the mix is $61,000 of gross rent a year and a loan $767,000 smaller than proposed, which the deferred fee and the soft loan replace. The determination is conditioned on a 2027 competitive award from TDHCA; on the city's rezoning or specific use permit for 72 units at 18 units per acre on the tract; on the Lubbock Central Appraisal District's valuation of the property on its restricted rents under Tax Code Section 23.21, which the sensitivity shows is the largest single variance in the budget; on a committed soft loan of not less than $1,178,000; and on the Qualified Market Analyst's study that 10 TAC 11.303 requires, which this study does not replace.

This is an MMCG model study: a developer and lender financial feasibility analysis performed on a real, publicly marketed parcel using public data, prepared to show housing credit syndicators, forward lenders, construction lenders and developers how MMCG tests a 9 percent family community against the rent limits, the market rent, the state agency's underwriting rules and the capital stack before the pre-application is filed. It is not a client engagement. MMCG has no relationship with the landowner, the listing brokers, the City of Lubbock, TDHCA or any prospective developer, and the analysis does not represent an offer, an appraisal or a recommendation to buy the parcel. Figures drawn from the listing, the City of Lubbock's Unified Development Code, HUD's fiscal 2026 fair market rents, the published 2025 and 2026 city, county, hospital district, school district and water district levies, TDHCA's 2025 award list and 2026 Qualified Allocation Plan as adopted, the Texas Department of Licensing and Regulation's project registrations and the Novogradac equity pricing series are identified as such. Figures labeled MMCG assumption are underwriting inputs set by MMCG from industry benchmarks, including the October 1, 2026 rate deck, the Rider Levett Bucknall first-quarter 2026 Dallas cost range escalated to the third quarter, the national apartment operating expense survey and current forward commitment pricing. Items that could not be verified from a primary source at the study date are listed in the Conditions and Limitations section rather than estimated silently: in particular, the tract's zoning district, utilities and appraisal district account, HUD's fiscal 2026 multifamily tax subsidy project limits for the Lubbock area, the utility allowances, the remaining 2026 levies, the 2026 QAP's per-unit cost limit, fee caps and capture rate thresholds, the ACS tables, the full housing credit inventory and the real estate analysis reports for the two 2025 comparables. This study is the financial feasibility study for the developer and the lenders; it is not the market analysis that TDHCA requires from a Qualified Market Analyst under 10 TAC 11.303, which is a condition.

The Project will operate as a 72-unit garden walk-up family apartment community on the 4.0-acre tract at 3516 Idalou Road on the northeast side of Lubbock, Lubbock County, Texas, under a single-asset limited partnership that borrows the construction loan and the Freddie Mac forward permanent loan, admits the credit investor as the limited partner and holds the land, the buildings and the operating business. The physical program comprises four three-story walk-up buildings of 75,700 gross square feet with 72 units, 16 one-bedroom units of 700 square feet, 40 two-bedroom units of 950 square feet and 16 three-bedroom units of 1,150 square feet, for 67,600 net rentable square feet, with a 3,000 square foot clubhouse containing the leasing office, a community room, a fitness room, a computer lab and the maintenance shop, 130 surface parking spaces at 1.81 per unit, a playground, a covered pavilion and a dog park, on a site plan that places the buildings around a central green with parking on the perimeter and the detention pond at the low corner, with landscaping and bufferyards built to the 60 points the code requires for a community over 50 units. Under the restructured program the 72 units are set aside under income averaging: 10 units at 30 percent of area median income, 2 one-bedroom, 6 two-bedroom and 2 three-bedroom; 20 at 50 percent, 5, 11 and 4; 26 at 60 percent, 6, 14 and 6; and 16 at 80 percent, 3, 9 and 4, for an average designation of 57.5 percent. The community will be managed by a third-party agent with a TDHCA compliance record, with a full-time community manager, a leasing and compliance specialist and a maintenance technician on site, for about 3 full-time equivalents. The sponsor contributes the development and defers 50 percent of the developer fee, paid from cash flow within 15 years.

Marketing and Sales Strategy

Pre-leasing begins six months before completion from a leasing office in the first completed building and from the management agent's regional waiting lists, aimed at the three income bands the mix serves. The 30 and 50 percent units are marketed through the Lubbock Housing Authority, whose voucher holders can use the units at the payment standard, the city's social service agencies, the hospital systems' community health workers and the school district's family liaisons. The 60 percent units are marketed to the service, retail, clerical and skilled trade households that the 60 percent band in Lubbock contains, through the employers' human resources offices and the housing authority's lists. The 80 percent units, priced at the market rent, are marketed to the nursing, technical, administrative and graduate households at Covenant Health, University Medical Center and Texas Tech University, through those employers directly, as the newest family product on the northeast side. The lease-up overlaps the delivery of Avenue U Villas' 80 units on the south side in August 2027 only if the subject's own completion slips; on the study's schedule the subject opens eighteen months after it. Retention runs through the new product, the clubhouse program, the in-unit washer and dryer connections and rents that rise with the income limits rather than the market.

Amenities

The parcel is a 4.0-acre tract at 3516 Idalou Road, Lubbock, Texas 79403, listed at $185,000, or $46,250 per acre, on Homes.com's Lubbock land search, with the zoning, the utilities and the appraisal district account not stated; a nearby listing on the same page advises buyers to consult city planning on the use. The tract was listed in October 2026 and its live status is not confirmed. The alternate is the Boyd Farms multifamily land on Crexi, 16 acres, divisible, at $2 per square foot, about $87,120 per acre, marketed as multifamily development land six minutes from a large local employer, whose exact address and district are not confirmed. Four other tracts were screened and rejected: 510 Valencia Avenue, 4.625 acres at $550,000, zoned R-1 and improved with an 11,400 square foot warehouse; 9704 Upland Avenue, 3.53 acres at $3,700,000, about $1,050,000 per acre; 6705 100th Street, 5 acres at $1,500,000, already platted for 27 single-family lots; and 2212 Upland Avenue, 4.04 acres, price not stated. Idalou Road is a state farm-to-market route on the city's northeast side, with Lubbock's older residential fabric to the west and the airport and industrial districts to the north, which places the subject in the part of the city whose renter households sit inside the 30 to 60 percent bands and away from the south and southwest where the city's new market-rate and Avenue U Villas are concentrated.

Lubbock is the economic center of the South Plains, with 273,071 residents at the Census Bureau's July 2025 estimate, up 6.2 percent from the 2020 count, inside the 50,000 to 300,000 band that TDHCA treats as Region 1 Urban. Its economy is education, health care, agriculture and distribution: Texas Tech University, Covenant Health and University Medical Center are the employers the public listings name, and their headcounts, the 2024 to 2026 expansions, the ACS tenure and income tables and the building permit series are conditions. HUD's 2022 comprehensive housing market analysis for Lubbock reported new market-rate asking rents of $1,040 to $1,140 for a one-bedroom and $1,424 to $1,574 for a two-bedroom at one new community as of September 2022, which the study uses as the ceiling evidence for the 80 percent units; aggregator listings for older communities show Stonelake from $785, Albany Ridge from $625 and Courtyards West from $606, which are unverified and are used only to show where the 60 percent limit sits against the Class B and C floor.

The site's three liabilities are its entitlement, because the district is unknown and 18 units per acre will require a medium- or high-density residential designation with the city's support resolution; its rent headroom, because the 60 percent limits sit within 6 to 7 percent of the one- and two-bedroom fair market rents; and the 2027 delivery of Avenue U Villas, which absorbs the first 80 units of the city's shallow-subsidy demand before the subject opens.

The governing ordinance is Chapter 39 of the City of Lubbock Code, the Unified Development Code effective October 1, 2023, published at ecode360. Section 39.02.004 establishes the base residential districts from RE and SF-1 through MDR and HDR; Table 39.02.004.d-2 sets the apartment and multiplex height in MDR at 45 feet, which admits the subject's three stories; Section 39.07.033 in Division 2.4 allows additional density for apartments, multiplexes, townhouses and live-work in HDR by specific use permit; Table 39.02.016-1 controls the permitted uses by district where tables conflict; Division 3.2 sets the multiplex and apartment building types and design; Division 3.3 and Table 39.03.009-2 set the off-street parking schedule; and Division 3.4 requires 60 landscaping points for multifamily over 50 units and district bufferyards under Section 39.03.016. The MDR and HDR units per acre, the setbacks and the residential parking ratio are not confirmed from the tables and are conditions; the program's 18 units per acre, three stories and 1.81 spaces per unit are set at levels a medium-density apartment district would ordinarily admit and must be confirmed against Table 39.02.004.d-2 and Table 39.03.009-2.

The tract's current district is not confirmed, and the study assumes a rezoning to MDR, or to HDR with a specific use permit under Section 39.07.033, which the City Council must approve and which doubles as the Local Government Support resolution that TDHCA scores under 10 TAC 11.9(d)(1). The entitlement path is a pre-application conference with the planning department, the rezoning or specific use permit application with public notice and Planning and Zoning Commission and City Council hearings, and site plan review under Divisions 3.2 through 3.4. The 2026 QAP requires the zoning evidence at application, so the rezoning must be in hand or in process before the March 2027 deadline, and the land contract should be contingent on it.

Water and wastewater are provided by the City of Lubbock and electric service by Lubbock Power and Light; the city's impact fees, tap and meter charges and the service extensions to the tract are conditions. The study carries $250,000 for water, wastewater and impact fees, meters and service extensions (MMCG assumption) and the building permit inside the architecture, engineering and permits line.

Property tax is computed from the published levies on the Lubbock Central Appraisal District's roll. The 2025 levies are $0.472191 per $100 for the City of Lubbock, comprising $0.364605 for maintenance and operations and $0.107586 for debt; $0.327425 for Lubbock County, the no-new-revenue rate adopted 3 to 2 in August 2025, with $0.322782 reported for 2026; $0.099660 for the Lubbock County Hospital District, which operates University Medical Center; $0.86 for Lubbock Independent School District for 2025-26, down from $0.90; and $0.00295 for the High Plains Underground Water Conservation District, for a combined $1.762226 per $100 of value if the tract lies in Lubbock ISD, which its northeast location indicates and which the appraisal district's account must confirm; Frenship and Lubbock-Cooper rates are not carried. No junior college levy was identified. Texas Tax Code Section 23.21 directs the appraisal district to value a property with restricted rents under Section 42 on its restricted income, and the study carries a restricted-rent value of $4,200,000 (MMCG assumption), about $58,000 per unit, for a Year 1 tax of $74,000 and a Year 2 tax of $76,220. Two exemptions are available to a nonprofit structure and are not carried in the base case: the community housing development organization exemption under Section 11.182 and the nonprofit low-income housing exemption under Section 11.1825, which carries a 50 percent exemption and its own income-method valuation; the 50 percent case is run as a sensitivity. HB 21 of 2025 amended the Housing Finance Corporation chapter of the Local Government Code and does not affect a standard 9 percent partnership without an HFC owner, and HB 2071 of 2023 excluded housing credit developments from its new public facility corporation requirements; neither bears on the base case. The full market valuation of $8,500,000, $149,800 of tax, is run as the downside sensitivity because the appraisal district's practice, not the statute, decides the bill.

The primary market area is the northeast quadrant of Lubbock, bounded by the Marsha Sharp Freeway and Loop 289, which contains the city's older single-family and small-multifamily fabric, the airport district employment and the households whose incomes sit inside the 30 to 60 percent bands, with the city as the secondary area. The city held 273,071 residents in July 2025. HUD's fiscal 2025 income limits for Lubbock County, as republished by Lubbock Habitat for Humanity, set the median family income at $80,000 and the 50 percent limits at $28,550 for one person, $32,600 for two, $36,700 for three, $40,750 for four and $44,050 for five; the 30 percent limits on the same basis are $17,130 to $26,430, the 60 percent limits $34,260 to $52,860 and the 80 percent limits $45,680 to $70,480. HUD's fiscal 2026 multifamily tax subsidy project limits, effective May 1, 2026, are a condition and replace these figures. The ACS tables for the primary market area, tenure by household income, gross rent by bedrooms, rent burden and households with children, and the Census building permit series are conditions; the demand analysis below carries MMCG's estimates of the primary market area's households, renter share and income distribution pending those tables, and is identified as such.

The study's demand for 72 units under income averaging is built from the income-qualified renter household pool by tier. The primary market area is carried at about 25,000 households (MMCG estimate pending the ACS tables), with 50 percent renters, about 12,500 renter households, in a city whose university population raises the renter share above the Texas urban average. The qualifying band for the whole mix runs from about $15,700, the income at which the 30 percent one-bedroom gross rent of $458 is 35 percent of income, to $70,480, the 80 percent limit for five persons, and the study carries 40 percent of renter households, about 5,000, inside it. The 72 units are 1.4 percent of that pool. By tier, the 10 units at 30 percent draw on the extremely low income renter households that the housing authority's waiting list and the voucher program serve; the 20 units at 50 percent and 26 at 60 percent draw on the service, retail, clerical and trade households between about $25,000 and $52,860; and the 16 units at 80 percent draw on the households between $45,680 and $70,480 that the hospital, university and school employers supply and that pay the market rent today. TDHCA's capture rate thresholds in 10 TAC 11.302(i) are applied in the Qualified Market Analyst's study; the study's own penetration test for an urban family product is 5 percent by tier and the mix sits well inside it on the estimated pool.

Two supply-side facts shape the demand. Avenue U Villas, 80 family units at 8401 Avenue U on the south side, awarded in 2025 with a construction start of May 1, 2026 and a delivery target of August 1, 2027, absorbs the first 80 units of the city's shallow-subsidy renter demand before the subject opens in 2029, and the study carries the subject's lease-up at a pace that assumes it. Inn Town Lofts, 56 units downtown, awarded in 2021, is the other recent family delivery. The 2026 round's Region 1 awards, made on July 23, 2026, are a condition, because a second 2026 Lubbock family award would add a third community to the overlap.

The full housing credit and assisted inventory for the primary market area must be pulled from the HUD LIHTC database and TDHCA's property inventory and is a condition. The three properties that set the subject's competitive position are described below; rents, occupancies and assessor records are not confirmed on the communities' own sites or the appraisal district's records and are disclosed.

Competitor Number 1

Avenue U Villas, 8401 Avenue U, Lubbock 79423, is the direct comparable: 80 new-construction family units, all low-income, awarded $1,366,814 of annual 9 percent credit in TDHCA's 2025 round with a score of 173 in census tract 48303010506, registered with the Texas Department of Licensing and Regulation on March 4, 2026 with a construction start of May 1, 2026 and a target completion of August 1, 2027. It will be in lease-up or newly stabilized when the subject's application is scored and stabilized when the subject opens; its unit mix, rents and lease-up pace, once its real estate analysis report and compliance records are obtained, are the best local evidence for the subject. Real estate taxes are not confirmed.

Competitor Number 2

Inn Town Lofts, 1202 Main Street, Lubbock, is the city's prior 9 percent family award: 56 new-construction units awarded $1,270,819 in 2021, downtown. Its rents, occupancy and unit mix are not confirmed. It is the evidence of absorption of new family product in the city's core and the second entry in the overlap analysis. Real estate taxes are not confirmed.

Competitor Number 3

Coronado Crossing, 3333 Toledo Avenue, Lubbock, is a 61-unit market-rate community listed for sale at an 8.06 percent capitalization rate on LoopNet, which is the only published Lubbock cap rate the study found and which it uses to check the restricted-rent valuation; its rents are unverified. It represents the Class B inventory whose rents sit at or below the 60 percent limit and against which the subject's 30 and 50 percent units carry their advantage. Real estate taxes are not confirmed.

The pipeline for the primary market area beyond Avenue U Villas and the 2026 Region 1 award list are conditions. No 2026 Lubbock award was identified from the Governor's July 24, 2026 release, which reported 70 properties and more than 4,400 units statewide on the largest allocation in the agency's history after the 12 percent federal ceiling increase.

The subject's rents are set by tier from the income limits and capped by the market. The 2026 per-capita credit ceiling is $3.416. The gross rent limits, on MMCG's estimate from the fiscal 2025 limits at 1.5 persons per bedroom pending HUD's fiscal 2026 table, are $458, $551 and $636 at 30 percent; $764, $918 and $1,060 at 50 percent; $917, $1,101 and $1,272 at 60 percent; and $1,223, $1,468 and $1,696 at 80 percent. The fiscal 2026 fair market rents are $990, $1,175 and $1,634, down from $1,007, $1,192 and $1,658 in fiscal 2025, so the 60 percent limits sit at 93, 94 and 78 percent of them. The study's achievable market rent for a new garden community on the northeast side is $1,150, $1,350 and $1,550 (MMCG assumption), set below HUD's 2022 new-community evidence of $1,040 to $1,140 and $1,424 to $1,574 for the south side and pending the market-rate census, and the 80 percent units are capped at it, so their gross rents are $1,150, $1,350 and $1,550 rather than the limits. Utility allowances for tenant-paid electric are carried at $78, $98 and $122 (MMCG assumption pending the Lubbock Housing Authority schedule or TDHCA's allowance options). The resulting net rents are $380, $453 and $514 at 30 percent; $686, $820 and $938 at 50 percent; $839, $1,003 and $1,150 at 60 percent; and $1,072, $1,252 and $1,428 at 80 percent; the unit-weighted averages are $778 for a one-bedroom, $926 for a two-bedroom and $1,087 for a three-bedroom. The 30 and 50 percent units sit $150 to $640 below the 60 percent limit and 32 to 60 percent below the study's market rents, which is the advantage the all-60 percent proposal lacked, as in MMCG's 9 percent LIHTC study in Macon-Bibb County, Georgia. Other income, comprising application and late fees, pet fees and laundry, is carried at $25 per unit per month. As proposed, all 72 units are carried at the 60 percent net rents, for a gross potential rent of $863,328 against the restructured $802,560.

TDHCA's 2027 competitive cycle follows the agency's usual calendar: pre-application in January 2027, full application in early March 2027, the Qualified Market Analyst's study about a month later and Board awards in July 2027, on the 2026 Qualified Allocation Plan as adopted December 2025 or the 2027 plan if the Board adopts it in November 2026. The study carries a July 2027 award, a carryover allocation, a closing in the first quarter of 2028, a 14-month construction period and completion in the first quarter of 2029, with 2029 carried as Year 1. Lease-up runs at eight units per month to 92.5 percent in nine months, a pace slower than a new market-rate community would carry, which reflects the income certification process and the 2027 overlap.

Rents trend at 2 percent and expenses at 3 percent, and economic occupancy is held at 92.5 percent, which is the agency's 7.5 percent vacancy and collection loss for a community without project-based subsidy, against the national 7.8 percent vacancy and the 7.9 percent for 3 Star product in the October 2026 national data. The Year 1 shortfall of $151,445 against the restructured debt service is funded from the operating deficit reserve, and the rent-up reserve carries the three months of expenses before the first rents.

Location: 3516 Idalou Road, Lubbock, TX 79403 Size in SF (Gross): 78,700 Units: 72

Source: Marshall & Swift CoreLogic, MMCG

Total project cost of $245,192 per unit sits inside the range of recent Region 1 awards, with land at $2,917 per unit and a building cost of $130 per gross square foot for three-story wood-frame walk-up construction, escalated from the low end of the first-quarter 2026 Dallas range of $190 to $280 per square foot, which covers denser urban product, by the 2.4 percent rise in the national index to the third quarter and adjusted for a West Texas garden walk-up; the general contractor's general requirements, overhead and profit are carried inside the building line at the QAP's 6, 2 and 6 percent limits. The developer fee of $1,900,000 is 11.4 percent of eligible basis, inside the QAP's cap, and half of it is deferred. The operating deficit reserve is six months of Year 2 expenses, reserve and debt service and the rent-up reserve three months of expenses. The eligible basis for the 9 percent credit excludes land, the reserves, the permanent lender fees, syndication, the agency fees and marketing, and is $16,656,550; at the 9 percent applicable percentage without a basis boost, because the tract's qualified census tract and difficult development area status was not confirmed, the annual credit is $1,499,090, or $20,821 per unit, against the Region 1 Urban per-application maximum of $2,000,000 shown in TDHCA's draft 2026 ceiling summary and Avenue U Villas' $17,085 per unit, which the QAP's tiebreaker for the lowest request per low-income unit rewards. The 2026 QAP's new per-unit total development cost limit is not confirmed and is a condition.

Loan Assumptions (as proposed)

Loan Assumptions (restructured)

The restructuring reduces the permanent loan by $767,000, defers half the fee and adds a soft loan, and in exchange it gives the community a rent structure that leases. The $1,178,000 soft loan is the condition on which the restructured determination turns; at $0.75 equity it rises to $1,928,000 and at $0.85 it falls to $429,000, which is the range the sensitivity table shows and the reason the equity letter of intent must precede the application.

The Project is a Region 1 Urban new-construction general population application under TDHCA's 2026 Qualified Allocation Plan, 10 TAC Chapter 11, adopted December 8, 2025 and effective December 28, 2025, with the 2027 plan in its formal comment period at the study date and a Board vote expected in November 2026 before the statutory December 1 Governor's approval deadline. Under 10 TAC 11.302 the first-year debt coverage ratio is at least 1.15, defined as net operating income divided by scheduled debt service, and the restructured loan is sized to it; the acceptable range under 11.302(d)(4)(D) is not confirmed, and the Year 2 to Year 15 schedule from 1.15x to 1.24x is carried for the underwriter's review. Vacancy and collection loss is 7.5 percent for a community without project-based subsidy. The income averaging election under Section 42(g)(1)(C) holds the average designation at 57.5 percent, inside the 60 percent ceiling, with every designation at a 10-percent increment. The replacement reserve is carried at $250 per unit escalating 3 percent (MMCG assumption at the agency's new-construction minimum, to be confirmed against 11.302). The developer fee, contractor fee and per-unit cost limits in 11.302(d) and (e) and the capture rate thresholds in 11.302(i) are conditions; the study carries the fee at 11.4 percent of eligible basis and the contractor's fees at 6, 2 and 6 percent. The market analysis must come from a Qualified Market Analyst on TDHCA's approved list under 10 TAC 11.303, and this study does not replace it. The scoring items the site must address under 10 TAC 11.9 are the Opportunity Index and Underserved Area under 11.9(c), Proximity to Job Areas under 11.9(c)(7) as revised in the 2026 plan, qualified census tract status and any concerted revitalization plan under 11.9(d)(7), Local Government Support under 11.9(d)(1), the quantifiable community participation under 11.9(d)(4), State Representative input under 11.9(d)(5) and community organization input under 11.9(d)(6); the point values are not confirmed, and the 2026 plan's new minimum score and the lowest-request-per-unit tiebreaker apply. The study presents the sensitivities a TDHCA underwriter, a syndicator and a forward lender expect: rent, occupancy, expense, tax valuation and exemption, interest rate and equity price cases, the combined case and the as-proposed case.

The Year 2 operating budget, the first stabilized year, at 92.5 percent economic occupancy on the income averaging rents is built by line for a 72-unit garden community in Lubbock County at a 3 percent escalation from the Year 1 budget.

Total operating expenses of $5,976 per unit sit below the national all-product average of $8,657 and above the $4,800 the sponsor carried, as a new, tax-advantaged, compliance-managed garden community in a low-cost West Texas city should; TDHCA's 2026 regional operating expense database, built on 2024 data, is published for reference only and was used as a reasonableness check, not as the budget. Property tax reflects the 2025 city, county, hospital district, school district and water district levies on a restricted-rent value, with the full market valuation and the nonprofit exemption run as sensitivities; insurance is carried at $900 per unit in Year 1 for a new sprinklered wood-frame community on the High Plains, where hail and wind loading sit above the national $777 average that rose 10.8 percent in the latest survey, escalating 3 percent; payroll carries the community manager, the leasing and compliance specialist and the maintenance technician; utilities carry the owner-paid water, wastewater and trash and the common-area electric with tenants paying in-unit electric; and the management fee is carried at 5 percent for a compliance-managed community. As proposed, the sponsor's budget of $4,800 per unit omitted the compliance and audit cost and carried insurance and payroll below the study's lines.

The Year 1 shortfall of $151,445 is the lease-up year and is funded from the $367,300 operating deficit reserve; the forward loan funds at stabilization and the construction loan's lease-up interest is inside the capitalized interest line. The community covers at 1.15x in Year 2, the agency floor to which the loan is sized, and builds by about one point a year as rents trend at 2 percent against expenses at 3 percent, reaching 1.20x in Year 8 and 1.24x in Year 15. The Year 2 yield on total project cost of 2.0 percent is the yield a 57.5 percent average community earns at $245,000 per unit, which is why the credits carry 68 percent of the cost and the loan 20 percent. As proposed with all 72 units at 60 percent and a $4,300,000 loan, the same building produces $401,800 of net operating income and $383,200 of cash flow after reserve in Year 2 on the agency's vacancy and the study's budget against $347,900 of debt service, a coverage of 1.10x below the 1.15x floor, and the sources fall short of the cost at either equity price; the as-proposed row is the determination.

At Year 2 rates, the restructured community's fixed operating cost is $409,900, comprising taxes, insurance, payroll, repairs, utilities, marketing and compliance and the replacement reserve, and its variable cost is the 5 percent management fee on effective gross income.

The loan is sized to 1.15x at the forecast occupancy. The 1.00x threshold at 87.1 percent is five points below the forecast, and the operating break-even at 51.3 percent is the statement of a low-leverage credit whose rents rise with the income limits: the community pays its expenses at half occupancy and its debt at 87 percent, and the 30 and 50 percent units, which lease first and turn over least, are the floor under both figures.

The restructured community holds coverage above 1.0x in every single-factor case except the property tax case, and that case is the finding of the sensitivity: a Texas housing credit community sized to 1.15x at a 20 percent loan cannot absorb a market valuation, so the appraisal district's application of Section 23.21 is a condition, not an assumption, and a nonprofit general partner with the 50 percent exemption is the mitigant if the district resists. The equity price cases move the soft loan, not the coverage, because the loan is sized to the cash flow: every five cents of price is $750,000 of gap on a $14,991,000 credit. The combined case fails, as a 1.15x credit does. The as-proposed structure fails the floor and the stack in the base case.

The determination of not feasible as proposed and feasible as restructured is subject to the following conditions precedent on the restructured program:

The following items could not be verified from a primary source at the study date and are disclosed: the tract's zoning district, utilities, appraisal district account and live listing status; the MDR and HDR density, setback and parking standards; the city's impact fees and tap charges; the 2025 Lubbock County hospital district rate, pending the district's adopted rate order, the 2026 county rate, and the Frenship and Lubbock-Cooper rates if the tract lies outside Lubbock ISD; the text of Tax Code Sections 23.21, 11.182 and 11.1825; HUD's fiscal 2026 multifamily tax subsidy project limits, which the study estimates from the fiscal 2025 limits as republished by Lubbock Habitat for Humanity; the utility allowances; the ACS tenure, income, rent and household tables and the building permit series, from which the study's household, renter share and qualifying-band estimates would be replaced; the employers' headcounts and expansions; the market-rate rent census, which the study carries from HUD's 2022 analysis and unverified aggregator listings; the full housing credit inventory and the 2026 Region 1 awards; the real estate analysis reports for the 2025 comparables; the 2026 plan's per-unit cost limit, fee and reserve requirements and capture thresholds in 10 TAC 11.302 and the point values in 11.9; and the tract's qualified census tract and difficult development area status.

This model study applies the methodology described on MMCG's LIHTC and affordable housing feasibility study and multifamily feasibility study pages. MMCG prepares developer and lender financial feasibility studies for 9 percent and 4 percent housing credit communities alongside the state-required market study, and multifamily feasibility studies for bank, agency, HUD and USDA lenders nationwide, including in Texas, with engagements from $4,900 and delivery in 9 to 16 business days.