AHFC & AHPFC Partnerships

Last updated as of October 1, 2026

The City of Austin has both a Housing Finance Corporation entity (the Austin Housing Finance Corporation, or AHFC) and a Public Facility Corporation entity (the Austin Housing Public Facility Corporation, or AHPC) that are used as tools for partnering with developers to create and maintain affordable housing by providing a 100% property tax exemption for residential properties owned by the entities.

All terms and requirements are subject to change. AHFC and AHPFC reserves the right to reject any request for partnership. All partnerships are subject to approval by the AHFC and AHPFC Board of Directors (Austin City Council).

Per Sec. 303.0421(b)(4) of the Texas Local Government Code, any PFC housing development within the City of Austin proposing a partner other than AHPFC must be approved by Austin City Council, unless the majority of the members of the proposed partner’s board are elected officials. Per the City’s policy, the PFC housing development must also be located in an eligible census tract.

General Partnership Goals and Requirements

The following goals and requirements apply to all partnerships with AHFC and AHPFC, unless otherwise noted. Requirements unique to each entity are listed in the dropdown menus below.

General Policy Goals

Provide long-term and deep affordability (30-50% MFI).
Provide affordable housing in high opportunity areas, displacement risk areas, geographically dispersed areas, and/or in proximity to high-frequency transit and/or stops within Phase 1 of the CapMetro Light Rail.
Partner with reputable, mission-aligned entities with demonstrated experience in developing, owning, and operating affordable housing.
Align Development characteristics, location, amenities, and services with the target population.
Integrate the Development and future residents into the surrounding neighborhood.
Create a financially feasible Development while minimizing any potential gap financing requested of AHFC, or if an AHPFC deal, requiring no gap financing.
Support AHFC and AHPFC’s ability to further affordable housing initiatives through revenue generation.
Minimize AHFC, AHPFC, and the City’s risk.

Other Considerations

The Development must be located completely within the corporate limits of the City of Austin. A Development seeking an AHPFC partnership must also be located in an eligible census tract.
AHFC and AHPFC will not consider requests that include any new housing or related structures in the floodplain. Properties with existing housing in the floodplain will be reviewed on a case-by-case basis.
AHFC and AHPFC will not consider requests that include permanent supportive housing units and/or units serving Coordinated Entry, unless the Development has already secured service funding for at least five years of operations and project-based vouchers at the time of submission of a partnership application, among other considerations.
Mixed use Developments will be considered on a case-by-case basis, with preference for commercial spaces that support local organizations, neighborhood-serving commercial, and/or community amenities.
Acquisition/rehab will be considered on a case-by-case basis. Site visits and full property condition assessments will be required.

Affordability

Minimum Affordability

Minimum of 10% of units at 50% median family income (MFI) or below, with a strong preference for deeper affordability (30-50% MFI) with adequate resident services provided by the property. The overall affordability mix must adhere to statutory requirements and will be driven by a Public Benefit analysis.
MFI levels must be distributed proportionally throughout the various unit sizes and floor plans. Units with at least two bedrooms may have higher proportions of lower MFIs, if allowed by statutes and the applicable funding sources.

Rent & Income Limits

Total housing costs (rent + utilities + mandatory fees) may not exceed 30% of income for each MFI level. For the sake of clarity:
- Utility allowances must be included within the rent limits for income-restricted units.
- All units must include mandatory fees within the rent.
MFI rent limits must be adjusted based on household size following low-income housing tax credit (LIHTC) standards.
Mid-lease increases to fees and rent are prohibited.
Rent charged for income-restricted units may not exceed rent charged for unrestricted, market rate units at the Development, if the Development includes market rate units.

Tenant Protections & Transparency

The Development must:

Utilize the current City of Austin Rental Housing Development Assistance (RHDA) Lease Addendum and Tenant Screening Criteria for all units. For sake of clarity, per the Lease Addendum, the Development must, among other items:
- Cap late fees.
- Ban evictions for nonpayment of fees unrelated to rent.
- Provide 30-day notice of lease terminations.
- Provide good cause for lease nonrenewal and termination.
- Provide 30-day right to cure lease violations concurrent with the 30-day notice of termination.
Disclose all fees in marketing, lease quotes, and applications per Ordinance No. 20260528-045.
Prohibit excessive and nonrefundable up front “risk” fees. Any upfront fees for covering potential future damages are to be refundable as part of a security deposit.
Cap application fees and other up-front fees following LIHTC standards for LIHTC and non-LIHTC properties.
Comply with state law on security deposit alternatives, including clear disclosure that the alternative monthly fees are optional and non-refundable.
Enforce non-discrimination protections for voucher holders.
Prohibit exclusionary minimum income requirements for voucher holders.
Affirmatively market all units, including income-restricted units, with clear disclosures on the Development’s website of its income-restricted units and acceptance of vouchers, outreach to local housing authorities and platforms like affordablehousing.com and atxaffordablehousing.net, and any other appropriate strategies.
Track and report voucher acceptance and utilization rates to AHFC and AHPFC.
Adopt and implement an Eviction Prevention Plan for the Development per the Rental Housing Development Assistance Guidelines, available on the Housing Development Assistance Funding webpage.

Gap Financing

AHPFC deals are ineligible for gap financing.
Any proposed AHFC partnership anticipating gap financing from AHFC must separately apply for Housing Development Assistance Funding and must adhere to the current program requirements, including caps on subsidy per unit and leverage ratio. Note that gap financing is competitive; an award is not guaranteed. Any proposed partnership must seek to minimize gap financing requested of AHFC.
Any unused contingency or reserve first must be used to pay for repairs or capital improvements to the Development, then to pay the Developer Fee or Deferred Developer Fee, then to repay any gap financing provided by AHFC.

Public Benefit

Prior to Closing, the Developer Partner must:

If financed via low-income housing tax credits (LIHTC), demonstrate that the deal would not be feasible without the tax exemption and that, due to the tax exemption, the deal is able to provide deeper affordability.
If financed without LIHTC, demonstrate that at least 50% (60% if AHPFC) of the annual value of the exempted ad valorem taxes will go to rent reductions, and pay for any statutorily required underwriting assessments or other analyses of the proposed Development required prior to Board approval.
Provide an analysis of the total projected Public Benefit, including the value of the rent reduction and total fees to AHFC or AHPFC (and related consultants) relative to public investment or exempted taxes (both ad valorem and sales and use taxes).

Construction

If the Development includes new construction or significant rehabilitation, additional requirements include:

Minimum 10% retainage through construction completion.
Payment & Performance bonds, or acceptable Letter of Credit.
3rd Party Construction Monitor for the benefit of AHFC/AHPFC and paid for by the Development.

City Ordinances

The Development will comply with all federal, state, county, municipal and special district laws, ordinances, rules, regulations and orders relative to the leasing, use, operation, repair, and maintenance of the Development, including Ordinance No. 20260528-045 regarding mandatory fee disclosure and Ordinance No. 20230921-004 regarding composting at multifamily properties.

Minimum Hold Periods

Minimum partnership interest hold of five (5) years of operations (beginning at Certificate of Occupancy for new construction).

Underwriting Criteria

Replacement reserves: minimum $300/unit/year
Capitalization rate: minimum 5%
Revenue escalator: 2%
Expenses escalator: 3%

Bond Issuance

If the Development includes tax-exempt bonds, AHFC or AHPFC will serve as the bond issuer. Applications for bond issuance must be submitted separately.

Monitoring and Compliance

The Development and Developer Partner will be responsible for ensuring all applicable federal, state, and local monitoring and compliance requirements are met.

Partnership Application Process

Applications for both AHFC and AHPFC partnerships involve a two-step process:

Step 1

Complete a preliminary Interest Form, which provides information for staff’s initial review. Developers interested in partnering with AHFC or AHPFC must first review all requirements on this page before submitting an Interest Form.

Once submitted, staff will review and follow up with any questions. If staff find the proposed partnership aligns with the criteria outlined on this page, staff will initiate a meeting with the applicant. Otherwise, staff will notify the applicant if they find the proposed partnership does not meet the criteria established herein.

Submit an AHFC/AHPFC Interest Form

Step 2

Following the initial meeting with staff, qualified applicants will be invited to submit a Formal Application, at which point a non-refundable application fee will be due.

Austin Housing Finance Corporation (AHFC) Partnership Structures + Requirements

Chapter 394 Compliance

The deal structure must comply with Chapter 394 of the Texas Local Government Code, which regulates Housing Finance Corporations.
AHFC (or an affiliate) is deeded fee simple title to land on which the multifamily development is built and operated, and ground leases it to the partnership to facilitate the ad valorem tax exemption on the property and improvements. To further facilitate the ad valorem tax exemption, AHFC will have a purchase option and right of first refusal to purchase the Development.
AHFC’s ad valorem tax exemption does not apply to Emergency Service Districts or conservation/reclamation district taxes.
A local government hearing will be required for bond issuance, if a 4% low-income housing tax credit (LIHTC) deal.
The Development and Developer Partner will be responsible for ensuring all applicable federal, state, and local monitoring and compliance requirements are met.

Structure

An affiliate of AHFC serves as the General Partner of the Partnership (generally referred to as the “Borrower”) and will enter the Partnership at closing.
If requested, the General Partner may make an irrevocable election under Internal Revenue Code Section 168(h) to be treated as a taxable entity.
An affiliate of AHFC serves as Co-Developer.
An affiliate of AHFC may serve as the General Contractor to facilitate exemption from sales and use tax on construction materials.
All AHFC's reasonable expenses are to be paid by the Borrower.

Fees and Key Terms

The following terms are subject to revision per AHFC’s Financial Advisor, Public Benefit Test, and deal specifics.

Application Fee: Upon review of Interest Form response, staff may invite the Developer Partner to submit a Formal Application. A non-refundable fee is due at submission of Formal Application.
- $5,000 if LIHTC
- $15,000 if non-LIHTC
Developer Fee Sharing: AHFC receives 25% of the Developer Fee based on the same payout schedule as the Developer Partner.
General Contractor Fee: 1.5% of construction hard costs. 50% paid at Closing and 50% payable upon construction completion.
General Partner Management Fee: $150/unit/year
Ground Lease Term + Rent: Ground lease term of 55 years. Annual lease payment based on a minimum of 10% of the exempted ad valorem taxes with a 3% escalator, with the first two installments due at Closing.
Net Cash Flow
- Operations: 50% of net cash flow
- Capital Transaction / Liquidation: 50% of net cash flow
Refinance / Sale Fee: 1.5% of the gross sales price or loan proceeds
3rd Party Construction Monitoring Fee Estimate: Estimated not to exceed $3,500/month
Outside Counsel Estimate: Estimated not to exceed $150,000
Underwriting Assessment Estimate (If Applicable): $20,000

Austin Housing Public Facility Corporation (AHPFC) Partnership Structures + Requirements

Chapter 303 Compliance

The deal structure must comply with Chapter 303 of the Texas Local Government Code, which regulates Public Facility Corporations.
AHPFC (or an affiliate) is deeded fee simple title to land and the multifamily development and serves as the Property Lessor to facilitate the ad valorem tax exemption on the property and improvements.
AHPFC’s ad valorem tax exemption does not apply to conservation/reclamation district taxes.
The Development and Developer Partner will be responsible for ensuring all applicable federal, state, and local monitoring and compliance requirements are met.