Troubled Patriot's Crossing Development "Back at Ground Zero" After HUD Denies Funding

On paper, Patriot's Crossing is still going to be a pleasant, 162-unit development on Lancaster Road offering military veterans affordable housing with easy access to the VA Medical Center. The problem -- one of them, anyway -- is that the generously subsidized project is can't seem to make the jump into physical being.

The latest in the ongoing saga, which has already raised plenty of concerns about city housing policy (a $4.5 million "forgivable" loan?), is that developer Yigal Lelah can't get HUD to provide the loan he needs to finance the project.

That's what he told the Texas Department of Housing and Community Affairs, anyway. Agency spokesman Gordon Anderson says that Lelah (or maybe his attorney, Claire Palmer) told them that "HUD denied their application for funding due to a lack of demand in the market."

That contrasts with the TDHCA's determination that there is sufficient demand and Dallas' endorsement of Patriot's Crossing, once to receive 9 percent tax credits then, when that application was denied, for 4 percent.

We emailed Lelah and left a voicemail with Palmer on Friday afternoon to discuss. Nothing yet.

Lelah passed along this response on Monday afternoon:

We immediately appealed HUD's determination that there is a lack of demand in the market and have provided HUD with several independent market studies that show high demand for new affordable housing in the area. In the meantime, we have talked to several private lenders and have a lot of interest from private lenders to either make a construction loan or buy the bonds through private placement if HUD denies our appeal. It is our preference to use a HUD secured loan if possible as interest rates would be more appealing for a low income housing project. In regard to TDHCA, we willfile a new application expeditiously, based on the timing required for both bonds and 4% tax credit applications. Since we have most of the required documentation completed from our previous application we should be able to cut the delay time in half. This is still a wonderful and needed project for Southern Dallas and our veterans.

In any case, the "why" doesn't really matter. The important point is that it means Lelah won't be able to meet the state's April 13 deadline for accessing $13 million in tax-exempt bonds. (The project's structure is explained here on Page 183 but essentially involves paying off the bonds with money from the HUD loan). Which in turns means that, unless he digs very deeply into some as-yet-undisclosed pocket, he doesn't have the cash to actually build Patriot's Crossing.

According to Anderson, Lelah plans to appeal HUD's decision. But even if the agency changes its mind, he will have to restart the TDHCA process over again, which will mean a lengthy delay.

"They are essentially back at ground zero," Anderson says.

Send your story tips to the author, Eric Nicholson.

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