Greystone | Investment Sales Group COVID-19 Announcement

A Letter from Todd Franks, CCIM, Founder and Executive Managing Director, Greystone | Investment Sales Group

On behalf of the entire Greystone ISG team, we hope you, your family and loved ones are healthy and safe in light of the coronavirus (COVID-19) outbreak. As we carefully monitor the developments, we are writing to share information on the impact on current business operations and the market as a whole.

Property Tours Going Virtual
One of the most effective mitigation techniques recommended by the Centers for Disease Control and Prevention (CDC) is social distancing. With that in mind, the Greystone ISG team will be offering virtual, in-lieu of in-person, tours of properties currently on the market. Virtual tours will include an interview with the property manager, walk-thru of vacant units, mechanical rooms, amenities, etc. Tour attendees will have the ability to ask questions, which will be answered at the end of the tour.

Our team will send out group virtual tour dates per property when available, however, please feel free to reach out to the listing broker for a property of interest to inquire about other virtual tour availability.

Market Update
With all that being said, workforce and affordable housing remain in high demand and short supply; and institutional capital continues to flow into this sector. At the end of the day, people will always need a place to live. There’s probably not a safer place to shelter cash than workforce housing at this time, and with the Federal Reserve expanding their balance sheet to buy $700B+ in U.S. treasuries and mortgage-backed securities, investor’s sentiment is positive.

The injection of liquidity facilitates the lending of money, so we can continue transacting on the safest asset class in commercial real estate. In the last 14 days, Fannie Mae and Freddie Mac have committed to $10B in loans and quoted $21B in loans – very much still active. When business was interrupted during the “Great Recession” Fannie and Freddie were still lending, and they are expected to continue to lend.

Currently, they are figuring out how to conduct 3rd party, and their own, inspections virtually, so be advised loans will take longer to close. In addition, interest rate spreads are extremely volatile and fluctuate day-to-day, so what you’re quoted will change frequently.

We will continue to provide updates as the situation develops. For more information on COVID-19, we encourage you to seek information from reliable sources, such as the CDC and your local public health departments. Please feel free to contact us if you have any questions.


Todd Franks
Founding Broker & Executive Managing Director
Greystone | Investment Sales Group

COVID-19 Updates

MAY 7 | Evictions in the city of Dallas during COVID-19
This article was originally published and remains available on “PLG News & Insights“, a blog and newsletter produced by Patel Law Group, PLLC.

As of: May 6, 2020

On April 22, 2020, the City of Dallas, acting through the Mayor and City Counsel executed Ordinance No. 31521 with the following purposes: (i) providing for a COVID notice of possible eviction by residential landlords before a notice to vacate, (ii) creating a COVID hardship notice for tenants, and (iii) creating an offence and penalty for landlords that violate the ordinance. The guidance set forth in this article is only for properties within the City of Dallas; other cities may have their own ordinances for evictions.

Patel Law Group PLLC has prepared the attached flowchart for our clients to navigate the Ordinance. Landlords must remember that the Ordinance is in addition to the Texas Property Code procedures on evictions that we had outlined in a previous article.

Some of the key terms in the flow chart are as follows:

  • Notice of Possible Eviction: This is a written notice substantially in the form of Exhibit “A” attached to this article. The content of the notice is set forth in Sections 2(g) and (m) of the Ordinance, and it must be served in the manner set forth in Section 2(h) or (i). The notice must be delivered in person or by mail to the premises in question.
    • If the notice is delivered in person, it must be given to the tenant or a person residing at the premises that is 16 years old or greater.
    • If the notice is sent by mail, it must be by regular mail, by registered mail, or by certified mail, return receipt requested.
    • If the notice is affixed to the door of the premises, it must (1) be affixed to the inside of the main entry door, or (2) affixed to the outside entrance of the main entry door in a sealed envelope stating the tenant’s name, address, and in all capital letters, the words “IMPORTANT DOCUMENT” and no later than 5pm of the same day, depositing in the mail in the same county as the premises is located, a copy of the COVID notice if (x) the premises has no mailbox and has a keyless bolting device, alarm, or animal preventing entry to affix the COVID notice to the inside of the main entry door, or (y) landlord reasonably believes harm would result from personal delivery or affixing the COVID notice to the inside of the main door.
  • COVID Financial Impact: A COVID Financial Impact is a substantial decrease in household income for a residential tenant related to COVID-19, due to business closure, loss of compensable hours of work or wages, layoffs, or substantial out-of-pocket medical expenses. A financial impact is “related to COVID-19” if it is caused by the pandemic or government response in any way, including complying with public health orders or recommended guidance from state, local, or federal authorities.
  • COVID Hardship Notice: A COVID Hardship Notice means a written objectively verifiable notice a tenant may provide to the tenant’s landlord of the tenant’s COVID financial impact, in the form of an email, text, letter, or any other form of written communication, evidencing any loss of income or increase in expenses, and a statement from the tenant that the loss of income or increase in expenses is due to financial impacts related to COVID-19.


APRIL 17 | 4 Things Affordable Housing Owners Can Do Now
MultiHousing News Article, April 17, 2020 

Experts offer tips for keeping residents of affordable and low-income communities healthy and safe during the pandemic.

The coronavirus outbreak has impacted renters and homeowners alike from all corners of the U.S. But for those living in affordable housing and low-income rental properties, financial difficulties caused by the pandemic can exacerbate pre-existing problems.

Megan Sandel, co-director of the GROW Clinic at Boston Medical Center, said during a recent ULI webinar on protecting low-income and affordable residents during the pandemic that researchers are learning more and more about how social factors can impact health outcomes. The quality of an individual’s housing can have a big impact on their overall health: multiple moves, overcrowding, unsafe conditions and difficulty paying rent can all be contributing factors.

“There’s a 50 percent higher risk of kids being in poor health that are in homes behind on rent,” said Sandel.

How can owners help? Below, industry experts spell out four actions owners and operators can take to ensure residents stay healthy and feel safe.


NMHC President Doug Bibby said the first thing owners and operators should do is talk to each of their residents and get a clear idea of what their situation is.

“We’ve been saying for weeks, contact every single resident and assess their needs,” said Bibby. “This is a time when it’s got to be one-on-one. I think letting every single person know you want to work with them and care about them is the best approach.”

Bibby recommended owners offer payment plans for residents and avoid instituting rent increases for the duration of the pandemic.


Many low-income renters struggle with having enough food as a result of lost income due to the outbreak, in addition to overwhelmed food banks. For those with children, virtual schooling cannot exist without a Wi-Fi connection and computers.

That’s where partnerships between housing providers and the community can come in.

“Reach out to food banks, to local libraries that are closed but might have equipment to donate for some purposes,” said Diane Yentel, president & CEO of the National Low-Income Housing Coalition. “Be resourceful and connected as much as possible to triage and meet tremendous needs, while waiting for federal money to keep flowing.”


In cities across the country, as grocery store shelves continue to empty out every day, cleaning supplies have become difficult to obtain. And the ones that are available often contain toxic chemicals. However, many local public health departments offer resources on mixing your own green cleaning supplies, said Sandel.

“Many have really amazing resources about how to mix supplies naturally with lemon juice and baking soda, things you can actually buy in stores,” she said, noting that Los Angeles offers its residents green recipes in 12 different languages.


In places where social isolation has become vital to protecting the health of its residents, like senior housing communities, staff members have come up with creative ways for residents to still be able to socialize while maintaining proper social distancing.

“I’ve seen certain senior housing developments where they have been instituting social hours where people open doors and wave at each other to have conversations as a way to connect with one another,” said Sandel.


APRIL 7 | Important Update on Texas Property Tax System
Email communication from Bobby McCulloch of Cantrell McCulloch, Inc. 

Dear clients, friends and colleagues:

Many of you have questions about the impact of the COVID-19 virus on the Texas property tax system. As you can imagine, the situation is fluid and changing almost daily. For the latest update as of Friday, I have attached an email from our state professional organization (TAPTP) and its government relations chair, Ray Head. Please read it carefully, as a number of important topics are covered.

You may have seen an article that circulated last week regarding Code Section 11.35 and its applicability to economic disasters. Some believe the Governor’s declaring the entire state a disaster area invokes the provision in Section 11.35 allowing for an exemption for certain types of property due to an “economic” disaster. The consensus among numerous property tax attorneys (including the author of the bill providing for disaster relief), other members of the legislature, CADs, senior staff in the Executive Branch, taxing jurisdictions, and others about this matter is that the exemption does not apply to an economic disaster declaration, but rather only to a physical disaster such as fire, wind, flood, hurricane, earthquake, etc. For this reason, we believe the interpretation of an economic disaster exemption being applicable to Section 11.35 may be referred to the Texas Attorney General for an opinion. If so, we hope the AG’s office will give taxpayers and CADs direction in this matter very soon. Without a favorable AG opinion on the matter, taxpayers may not see any measurable relief this year in light of the January 1, 2020 valuation date (i.e., since the economic impact of COVID-19 was still unknown). Of course, we will still vigorously protest values this year regardless of the AG’s opinion (if any).

What follows below is a brief synopsis of the current situation. As for the prospect of values being “frozen” at 2019 levels, I don’t think that will occur for reasons covered in the attached email from TAPTP. Lastly, the 2020 review board process for most CADs is likely to be conducted electronically via phone, email and videoconference (no face-to-face informal settlement meetings and/or formal appraisal review board hearings). I suspect the process will also take a very long time to complete, with certification of the appraisal roll extending well into late Summer or early Fall.

Here is what we know at this time:

  • Except as noted below, all deadlines remain in place. This includes:
    • The personal property rendition deadline of April 15th,
    • The exemption application deadline of April 30th, and
    • The protest deadline of May 15th.
  • Dallas, Tarrant, Collin, Harris, Travis and Bexar CADs have granted an automatic extension of the business personal property rendition deadline from April 15th to May 15th.
  • Dallas CAD has extended the Freeport Exemption application filing deadline to June 15th.
  • Dallas CAD has announced that appraisal notices could be delayed until the end of May, whereas Tarrant and Denton CADs will delay appraisal notices until May 1st. Collin CAD is anticipated to follow suit. Concurrently, protest deadlines will automatically be extended 30 days from the date of notification.
  • A few counties have considered proposals to freeze property values at the 2019 values. No decisions have been made at this time (other than Travis, which pre-COVID-19, announced a freeze of residential values).
  • The Governor’s disaster declaration allows cities and counties to increase property tax revenue above the 3.5% limitation (imposed by Senate Bill 2) by as much as 8%.
  • An increasing number of appraisal districts have closed their offices to the public and will remain closed until the court-ordered “stay-at-home” restrictions have been lifted.
  • The Dallas County Tax Office is presently closed, but is still accepting online payments.
  • Informal settlement discussions with CAD staff will likely take place only by telephone.
  • ARB hearings may be difficult to conduct in-person because they involve gatherings of more than 10 people. Under current law, only a property owner can request a telephonic hearing. This may change.
  • It may be difficult for CADs to find persons willing to serve as ARB members, due to health concerns. If that occurs, certification of the appraisal rolls for 2020 could be delayed.
APRIL 1 | CRE Investment Trends Heading into the COVID-19 Crisis
Real Capital Analytics Presentation by Jim Costello, Real Capital Analytics, Senior Vice President & Economist


<< View the Full Presentation >>

MARCH 30 | Lawmakers Sign COVID-19 Stimulus Package into Law
This article was originally published on NMHC on March 27, 2020


NMHC and NAA appreciate Congressional action on the COVID-19 stimulus package that was signed into law today. This legislation, the Coronavirus Aid, and Economic Security Act, (CARES Act), includes important provisions intended to stave off total economic collapse in the wake of the coronavirus crisis.

Prior to the passage of this legislation, NMHC and NAA called on lawmakers to enact a number of provisions that would provide assistance to renters and property owners affected by financial hardships as a result of the COVID-19 outbreak. 

These past two weeks the NMHC and NAA government affairs teams has been working directly with Congressional leadership around the clock to help shape the multiple federal bills being drafted in response to the COVID-19 outbreak. NMHC and NAA have also been constantly communicating with Administration officials as they work to provide additional relief. Three different recovery packages have been passed over the last two weeks. The most extensive package, the CARES Act, consisted of over 800 pages and final language was not available to policymakers until shortly before the Senate vote. Given the magnitude of the task and the speed in which this package was moving, mistakes were made. Consequently, there are provisions that will be helpful to the industry and its renter, and there are others that will create substantial challenges challenges for rental property owners and the housing stability Americans need and deserve during this crisis.

For example, while we understand the intent of the national eviction moratorium included in the legislation, lawmakers inadvertently neglected to specifically tie the moratorium to those affected by the COVID-19 crisis. Instead, what should be a limited protective step is expanded to those who have not been financially impacted by the pandemic. This is already creating an expectation that unaffected renters do not have to meet their lease obligations. The language as drafted raises questions about whether housing providers may evict a resident for reasons other than nonpayment of rent. This could pose significant health and safety concerns for residents, housing providers and their staffs. The unintended consequences of the eviction moratorium will wreak havoc on the stability of the rental housing market and places it out of step with similar state and local actions. Congress must swiftly address this discrepancy.

Second, the current package provides substantial financial support to residents though HUD and unemployment insurance, however, more direct emergency rental assistance is necessary—particularly for those who do not presently receive federal housing assistance but now find themselves needing it.

Finally, at the urging of NMHC and NAA, Congress provided mortgage forbearance for multifamily property owners negatively impacted by the COVID-19 outbreak. The legislation, however, only provides this relief to owners with federally backed mortgages, such as those through the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac. This protection needs to be expanded to all types of mortgages. Owners and operators are tasked with ensuring the viability of apartment communities. They, too, are experiencing financial hardships sometimes tenfold as renters in the communities across the country struggle.

Further, the provision limits forbearance to a 90-day time period, which is out of alignment with the 120-day eviction moratorium. Unless it is fixed, this disconnect could result in a mass wave of financial delinquencies and defaults from rental housing providers of all types and sizes, jeopardizing the stability of entire communities.

NMHC and NAA will continue to advocate on behalf of the rental industry to ensure millions of Americans nationwide will continue to have a safe, secure place to call home. 

<< View the Detailed CARES Act Summary >>

MARCH 30 | Directing Capital to Small Businesses Affected by COVID-19: Legal Strategies for Texas Local Governments
This article was originally published and remains available on “PLG News & Insights“, a blog and newsletter produced by Patel Law Group, PLLC.


As the COVID-19 pandemic drives economic life to a halt across Texas, the small business communities of cities and towns across the State are in crisis.

On average, companies with fewer than 500 employees have less than a month of cash reserves to cover their operating expenses. Smaller “Main Street” businesses – the restaurants, coffee shops, bars, groceries, hotels, auto repair shops, dry cleaners, and hair salons for which so many people work, and which contribute so much to local communities – often have just a couple of weeks’ worth of cash to keep running. This means that, absent prompt financial assistance to help these businesses cover operating expenses during the ongoing shutdown, towns and cities across Texas could soon find themselves losing the core businesses on which their local economies and communities depend.

Unfortunately, the current assistance available to small businesses – primarily SBA “economic injury” loans – takes weeks to obtain and requires business owners to go through a complicated application process whose outcome is uncertain. Although the coronavirus relief bill taking shape in Congress will provide additional assistance in the form of business-interruption loans, those loans won’t be operationalized and small businesses won’t start seeing liquidity from them until at least 1-2 months from now — and possibly longer. Meanwhile, small businesses are facing the prospect of closure, and workers are experiencing layoffs and hour reductions.

Texas local governments can step in to bridge the present gap in assistance to small businesses affected by COVID-19, while building financially stronger, better networked, and more resilient communities poised for growth after the pandemic is controlled. Counties and municipalities can shift their use of well-known economic‑development authorities from the present focus on recruiting out-of-town industry to supporting homegrown businesses. They can use local procurement powers to make purchases of deferred‑performance goods and services from local businesses in exchange for long-term “time warrants”, which a business can factor or sell to obtain immediate funds. And they can use innovative legal strategies to organize local stakeholders around a community investment vision and raise capital for local businesses by blending governmental, private, and civic resources in public‑purpose funds.

Using these tools, Texas local governments can begin assembling economic stabilization networks that, on a day-to-day basis, can ascertain the damage being experienced by local businesses, organize local capital pools, and deploy them toward infusions of capital fit to the purpose of helping small businesses weather this public health and economic crisis.

Grants and Loans Under Chapters 380/381
Chapters 380 and 381 of the Texas Local Government Code are the most flexible instruments for economic development available to Texas municipalities and counties, respectively. They authorize local governments to establish programs to promote economic development, including, without limitation, programs making loans and grants of public funds, personnel, facilities, property and equipment to private parties, with or without charge. Moreover, a local government may “accept contributions, gifts, or other resources” from private or philanthropic groups to be used in a Chapter 380/381 program. Although cities and counties have typically used Chapter 380/381 authority to incentivize major corporations and industries to stay in, or move to, their jurisdiction, supporting small businesses in maintaining their operations and employees is just as squarely within the scope of that authority.

To exercise Chapter 380/381 authority, a city or county must take the following steps:

  • Develop Chapter 380/381 Program(s). Each grant or loan under Chapters 380/381 must be made pursuant to a “program” that specifies at least the following matters:
    • the “public purpose” that will be accomplished by providing the grant or loan (for example, development and diversification of the economy and the elimination of unemployment or underemployment in the local jurisdiction, with specific references to job creation and retention and the maintenance of business operations);
    • the “demonstrable benefit” toward accomplishing the “public purpose” which the recipient will provide to the local government in exchange for the grant or loan (for example, the creation of a certain number of jobs, the retention of certain jobs that otherwise would be terminated, or continued operations in the jurisdiction for a stated period);
    • effective methods for measuring and determining whether the recipient of the grant or loan has met its obligations (for example, inspection, audit, or other contract and management controls); and
    • provisions for recapturing the grant or loan provided if the business does not meet its obligations.
  • Adopt Chapter 380/381 Program(s). To satisfy the “program” requirement, the governing body of the municipality or county may adopt either (i) a general program governing the selection of all (or a group of) Chapter 380/381 recipients, as embodied in a comprehensive policy; or (ii) a separate program for each grant or loan arrangement with a recipient, as embodied in the economic development agreement with that recipient approved by the governing body. In either case, governing bodies should ensure that the resolution adopting the Chapter 380/381 program expressly makes fact- and locality-specific findings that (a) the public purpose of economic development will be accomplished through the program; (b) there will be a demonstrable benefit to the local government from the use of Chapter 380/381 incentives; and (c) sufficient safeguards are in place to determine whether a recipient has met its obligations, and, if the obligations have not been met, to recapture the incentives.
  • Develop and Approve a Chapter 380/381 Agreement. A chapter 380/381 grant or loan must be governed by a written agreement approved via resolution adopted by the governing body of the applicable local government. Although no specific contract terms or conditions are statutorily required, a city may (and typically does) include: (i) provisions conditioning the incentive upon the recipient’s achievement of performance standards such as job creation, job retention, continued operations for a stated period, sales tax generation, or added tax base; (ii) provisions for the recapture of the incentive, typically through significant liquidated damages, if the recipient breaches the agreement; (iii) inspection, audit, certification, and other management controls; (iv) authority for the local government to terminate the agreement if recipient fails to comply with the agreement; (v) references to Chapter 380/381 and the Texas Constitution Article VIII, Section 52-a; and (v) the method and structure of the grant or loan.

“The flexibility of Chapters 380 and 381 makes them ideal instruments for stabilizing small businesses in crisis. Local governments can use them to assemble community resources and deliver fit-to-purpose assistance to small businesses.”

The flexibility of Chapters 380 and 381 makes them ideal instruments for stabilizing small businesses in crisis. Local governments can freely tailor grants and loans of public funds under these provisions to the specific financial circumstance with which the government and the business are contending. Simultaneously, local governments can extend their internal resources of personnel and property to satisfy some of the “wraparound” needs of small businesses, for things like professional services, maintenance equipment, or raw material. Finally, local governments can recruit private and philanthropic capital into their efforts by providing for the solicitation and administration of donations as part of their Chapter 380/381 programs. Through this combination, local governments can assemble community resources and deliver fit-to-purpose assistance to small businesses.

Strategic Public Procurement Using Time Warrants
A local government seeking to conserve cash reserves and avoid grants or loans of available funds may still help local businesses access liquidity through targeted public procurement using “time warrants”, which the business can sell or factor in exchange for cash. Time warrants are debt instruments like Certificates of Obligations, Tax Notes, and General Obligation Bonds, but they are easier to issue, more flexible to use, and can be paid over an extended maturity term. Specifically, time warrants (i) can be issued directly to any vendor in exchange for any personal property or labor; (ii) do not mature prior to the calendar year subsequent to their issuance and may have maturity terms as long as 40 years in the issuer’s discretion; and (iii) provided certain conditions are met, require neither a public notice period, nor an election, nor the approval of the Texas Attorney General.

A time warrant is defined by state statute as “any warrant issued by a [municipality or county] that is not payable from current funds.”[1] For counties, “current funds” means “funds in the county treasury that are available in the current tax year, revenue that may be anticipated with reasonable certainty to come into the county treasury during the current tax year, and emergency funds.”[2] For municipalities, “current funds” means “money in the treasury, taxes in the process of being collected in the current tax year, and all other revenue that may be anticipated with reasonable certainty in the current tax year.”[3] The issuance of time warrants is wholly exempted from the requirement of Texas Attorney General approval for public securities.

“A local government seeking to conserve cash reserves . . . may still help local businesses through targeted public procurement using “time warrants”, which the business can sell or factor in exchange for cash. The relative ease of issuing time warrants and their flexibility makes them a suitable vehicle for local governments seeking to spread the cost of supporting small businesses in crisis over time.”

For municipalities, the issuance of time warrants requires only the authorization of the municipality’s governing body, without a public notice period or an election, if the following conditions are satisfied: (a) the value of the contract being paid via time warrant(s) is less than $50,000 in municipal funds; and (b) the total value of time warrants issued by the municipality in the calendar year falls below certain thresholds — $7,500, if the city’s population is 5,000 or less; $10,000, if the city’s population is 5,001 to 24,999; $25,000, if the city’s population is 25,001 to 49,999; and $100,000, if the city’s population is more than 50,000. If the foregoing condition “(a)” is not met, the municipality must procure the contract to be paid with time warrants via a competitive bidding process under Chapter 252 of the Local Government Code, to be held following a two-week public notice period. By contrast, if the foregoing condition “(b)” is not met, the municipality will be required to hold an election to approve the time warrant issuance upon receipt of a petition signed by at least 10 percent of qualified voters in the municipality.

For counties, the issuance of time warrants requires only the authorization of the county’s governing body, without a public notice period, if the value of the contract being paid via time warrant(s) is less than $50,000 in county funds. However, a county is always required to hold an election to approve a time warrant issuance upon receipt of a petition signed by at least 5 percent of qualified voters in the county.

Once issued, a time warrant must be delivered directly to a vendor as payment for personal property or labor. Although the issuer cannot sell a time warrant for cash, the recipient vendor may sell the time warrant to any bank, factor, or other purchaser to obtain immediate funds. To facilitate the vendor’s ability to obtain liquidity for the time warrant, the issuing municipality or county should arrange for local banks to purchase the time warrant from the vendor.

Although time warrants are seldom used today, historically local governments used to fund many purchases through time warrants issued to vendors. It’s time to bring them back. The relative ease of their issuance and their flexibility makes them a suitable vehicle for local governments seeking to spread the cost of supporting small businesses in this crisis over time.

Raising Capital Using a Public-Purpose Fund
In recent years, cities across the Midwest — Cleveland with its Evergreen Cooperative Initiative, Cincinnati with its Center City Development Corporation, Philadelphia with its Kensington Corridor Trust, and Erie, PA, with its Erie Downtown Development Corporation, among others — have pursued innovative legal strategies to blend public, private, and civic capital into investment vehicles directed toward achieving public purposes while generating a return. Operating to align the previously siloed capital of diverse stakeholders, these “public-purpose funds” have multiplied the financial resources available to support neighborhood investment in their cities. In the present crisis, such public-purpose funds provide a useful vehicle through which Texas cities and counties can organize their local institutions — banks, universities, businesses, investors, philanthropies, and neighborhood organizations — for a whole‑of‑community effort to deliver equity capital to small businesses. Once the COVID-19 crisis subsides, such public-purpose funds can become platforms for continued coordination and action by local stakeholders to achieve community goals.


Chapters 380 and 381 provide municipalities and counties with the requisite authority to facilitate the creation of a public-purpose fund in Texas. Although the constitutional prohibition on Texas local governments owning equity in private entities prevents them from directly sponsoring or participating in a typical private equity fund, municipalities and counties may, pursuant to a Chapter 380/381 program and related agreements, seed a private equity fund with loans or grants, take “first loss” positions to incentivize private investment in the fund, accept distributions from the fund or its manager, and impose related accountability and performance requirements. The flexibility of Chapter 380/381 authority means local governments have wide discretion to customize their financial, control, and oversight relationships with public-purpose funds.

To demonstrate its authority to lend or grant resources to a public-purpose fund, a local government should adopt a resolution establishing a Chapter 380/381 program specifically for its relationship with the fund. The resolution should include at least the following:

  • Public Purpose Statement. A statement that the public purpose of the program is to “promote local economic development and stimulate business and commercial activity in the [municipality or county]” in accordance with Chapter 380/381 through, for example and without limitation, seeding private equity funds dedicated to developing and diversifying the local economy, eliminating unemployment or underemployment, supporting growth and innovation in agriculture, and expanding local transportation and commerce; supporting organizations dedicated to coordinating economic development efforts among commercial, civic, and philanthropic institutions in the local community; and incentivizing private equity investment in (and the development of private equity capital pools for) local economic development and business and commercial activity, with emphasis on private equity investment by local commercial, civic, and philanthropic institutions.
  • Fact Findings. Findings to support the public purpose statement can include: (1) the depressed availability of debt and equity financing for local business and commercial activity during the present COVID-19 crisis; (2) the present rate of equity and debt flow into the census tracts within the jurisdiction; (3) the availability of siloed capital in local commercial, civic, and philanthropic institutions that could be incentivized into investment in local economic development; (4) the designation of census tracts within the jurisdiction as Opportunity Zones, State Enterprise Zones, or qualified low-income communities for the purposes of the New Markets Tax Credits; and/or (5) examples from other jurisdictions demonstrating the efficacy of public seed funding in catalyzing the development of multi-source private equity capital pools dedicated to public purposes.
  • Demonstrable Benefit Statement. A statement of the demonstrable benefits the local government will demand or expects to receive in exchange for the incentives it provides under the Chapter 380/381 program can include: (1) direct job creation by the fund; (2) specific activities or milestones related to coordinating the economic development efforts of local stakeholders and the development of a community investment vision shared among the stakeholders; (3) specific activities or milestones related to the raising of stakeholder and other capital for the fund; (4) specific activities or milestones related to investing the fund’s capital in local economic development, including investment in local commercial or retail businesses, real estate projects, or industrial projects; and (5) distributions of surplus revenue from the manager of the fund to the local government (as described below), among others.
  • Description of Recapture Mechanism. A description of the mechanism by which the local government will monitor incentive recipient performance and recapture the incentives provided if the fund fails to deliver the demonstrable benefits anticipated.

“In the present crisis, public-purpose funds provide a useful vehicle by which Texas municipalities and counties to organize their local institutions for a whole‑of‑community effort to deliver equity capital to small businesses.”

Like any private equity fund, a public-purpose fund should be structured as a limited partnership (the “Fund”). The general partner should be a nonprofit corporation (the “General Partner”) and should possess broad authority to invest in, administer, and manage investments for the fund. The limited partners should function as passive investors. The role of the facilitating local government should be limited to providing seed financing in the form of a Chapter 380/381 grant or loan, ensuring compliance with the Chapter 380/381 agreement, and, as described below, appointing directors to the General Partner’s board.

In this structure, at least three vehicles exist for holding the General Partner accountable to local stakeholders and the public purposes of the Fund: (i) the organizational documents of the General Partner; (ii) the organizational documents of the Fund; and (iv) the Chapter 380/381 agreement between the Fund and the facilitating local government. The certificate of formation and bylaws of the General Partner should, at a minimum, clearly state the nonprofit corporation’s purpose to advance economic development and require that all or a substantial portion of its directors be appointed by the facilitating local government and local stakeholders. The certificate of formation and partnership agreement of the Fund should require, and make explicit the right of, the General Partner to manage the Fund in a manner that balances the investors’ pecuniary interests, the best interests of the persons materially affected by the Fund’s activities, and the public purposes specified in the Chapter 380/381 agreement. Finally, in exchange for a loan or grant of public funds, the Chapter 380/381 agreement should include enforceable performance standards and entitle the local government to recapture public funds in the event that the General Partner is removed or material changes are adopted in the organizational documents of the General Partner or the Fund.

Aside from the normal economic considerations involved in fund formation, a local government establishing public-purpose funds should consider (1) whether to grant or loan its Chapter 380/381 funds; and (2) whether to require distributions of surplus revenue from the General Partner (which would only be meaningful if the General Partner actually took a management fee and carried interest from the Fund).

With respect to Chapter 380/381 funds, a loan would allow the local government to receive a return on its contribution to the Fund and, given the priority of debt over equity, preclude the local government’s funds from serving as “first loss” capital to incentivize private investment in the Fund. A grant would flip the tables: the local government would not receive a return on its grant contribution, but the granted funds would function as “first loss” capital for the Fund.

With respect to surplus revenue distributions, provisions may be included in the General Partner’s organizational documents requiring distributions of its surplus revenue (that is, revenue from management fees and carried interest exceeding operating expenses) to the facilitating local government. Alternatively, the General Partner’s board may authorize such distributions on an ad hoc basis from time to time. The extent to which the General Partner can command market-level fees for its management of the Fund will determine whether surplus revenue can be expected to materialize in sufficient quantities to warrant prospective arrangements in the General Partner’s organizational documents.

An aggressive local government response to the ongoing crisis is imperative. To survive and recover from the COVID-19 shock, small businesses – the heart and soul of our communities – need to replace lost income as fast and as efficiently as possible. Federal programs may work for some small businesses but, even considering the forthcoming stimulus bill, are likely to be slower and less flexible than many small businesses need. In this context, local governments must move urgently to organize local stakeholders around a whole-of-community effort to get fit-to-purpose capital to small businesses that need it. I hope the legal strategies described in this article can facilitate their efforts.

[1] See TEX. LOC. GOV’T. CODE§ 252.001(8) (defining “time warrants” for municipalities); TEX LOC. GOV’T. CODE § 262.022(9) (defining “time warrants” for counties).

[2] See TEX LOC. GOV’T. CODE § 262.022(3) (defining “current funds” for counties).

[3] See TEX. LOC. GOV’T. CODE§ 252.001(3) (Defining “current funds” for municipalities).

MARCH 26 | New Freddie Mac SBL Underwriting Guidelines

Email from Freddie Mac Multifamily, Small Business Loan Update, March 26, 2020

Temporary Authorization – Immediate Updates to SBL Underwriting

Amid market volatility, Freddie Mac remains steady and open for business. But due to current market conditions, we’re making two temporary underwriting changes to our SBL program as follows:

  • Effective as of the date of this communication, any loan taken under application that involves a borrower taking cash equity out of the transaction will require a 0.10x increase to DCR and a 5% reduction in LTV. Cash equity out of the transaction will be defined as any cash proceeds greater than 3% of the existing mortgage loan plus junior capital and prepayment penalties.
  • Effective as of the date of this communication, for any loan taken under application or not yet committed to by Freddie Mac: Commercial space will be underwritten as if completely vacant, even if occupied. In extremely limited circumstances, and subject to approval by Catherine Evans, vice president of SBL Underwriting, underwriting income from a supply chain critical and/or credit tenant will be considered on a case-by-case basis.

Freddie Mac Multifamily is making credit parameter adjustments across all business lines. These temporary measures will remain in effect until further notice. We continue to look at other ways to address cash-out transactions.


Freddie Mac has developed an approach to deal with impacted borrowers, their properties, their tenants and associated loans. You’ve likely already received an email in regard to our forbearance approach. If not, please reach out to your Freddie Mac representative for the details.

Inspection Guidance

We’ve posted a document titled COVID-19 SBL Inspection Guidance on Freddie Mac’s Originate and Underwrite webpage under References & Tools regarding guidance and ideas on how to conduct an inspection in the current environment. Please note, we are not requiring anyone to enter occupied units at this time, however, inspections are a risk mitigant. We urge everyone to keep CDC safety guidelines in mind.

New Webpage Regarding COVID-19 Updates

There’s a lot happening, and we don’t want you to miss the updates. We’ve created a COVID-19 webpage as a resource for all of our related Multifamily communications and will continue to post updates to this page.

MARCH 24 | Change to Multifamily Underwriting Standards

March 24, 2020


MARCH 23 | Coronavirus (COVID-19): Impacts to Forbearance

Email Update from Robert Koontz, Senior Vice President of Multifamily Capital Markets, Freddie Mac, March 23, 2020

Ensuring there is stability in the multifamily space is a critical role for Freddie Mac. Regardless of future market turbulence and complications due to COVID-19, please know we will be open for business and working alongside lenders, borrowers and investors to help ensure market stability.

We’ve been fielding questions from many of you about how current public health concerns will affect our forbearance policies. To help address potential hardships, we’ve developed guidelines that address impacted borrowers, their properties and associated loans. The following summarizes Freddie Mac Multifamily’s approach, or Servicing Standard, for all such loans.

Freddie Mac will offer forbearance up to 90 days (three consecutive monthly payments) for any loan for which the Borrower provides acceptable information demonstrating the hardship it and its tenants face as a consequence of the COVID-19 emergency. If the Borrower accepts this arrangement, Freddie Mac will also waive any associated late charges and default interest.

  • To be eligible, loans can’t have been 30 days or more delinquent in monthly payment of interest, principal and deposits since January 1, 2020.
  • The Borrower must repay the total forborne amount, without additional interest or prepayment premiums, over the ensuing 12-month period.
  • The Borrower must agree that during the forbearance period it will not evict a tenant based solely on non-payment of rent occurring as a consequence of the COVID-19 emergency, whether it is caused by illness, caring for a family member, job loss, reduced hours, or temporary unpaid leave, etc.
  • If at the end of the forbearance period the Borrower cannot or does not resume making scheduled monthly payments (including the deferred amounts), then Freddie Mac will refer the loan to its Asset Resolution group or the Special Servicer, if applicable, for discussion of other workout arrangements or enforcement actions.

We’ve created a COVID-19 webpage as a resource for all of our related Multifamily communications and will continue to post updates to this page.

MARCH 23 | FHFA Offers Mortgage Relief for Multifamily Property Owners

Email Update from Robert Pinnegar, CAE, President and CEO of NAA (National Apartment Association), March 23, 2020

Dear NAA Members,

The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac, the Enterprises will offer mortgage forbearance for multifamily property owners, under the condition that they suspend all evictions for renters who are unable to pay rent because of COVID-19, also known as “coronavirus.”

To be eligible, property owners must suspend evictions for as long as the owner remains in forbearance. Forbearance is available only for multifamily housing properties with an “Enterprise-backed performing multifamily mortgage” that is financially impacted by coronavirus.

We will continue to update you as FHFA, Fannie Mae and Freddie Mac release information about implementation of this decision. For owners who believe they qualify, contact your loan servicer to learn more about the process to seek relief.

Continue to bear in mind that states and localities are pushing eviction moratoriums, applicable to all privately-owned housing. Nationally, almost 70 jurisdictions announced eviction moratoriums, with some attempting to provide relief to owners and operators. For example, Governor Phil Murphy of New Jersey is encouraging any financial institution holding residential or commercial mortgages, equity loans, lines of credit or business loans to implement a process to work with the mortgagors or loan holders to avoid foreclosure or default arising out of financial hardship caused by the COVID-19 pandemic, or by any local, state, or federal government response to COVID-19.

We have developed a research report to help you navigate this patchwork of mandates, including information on eviction, rent increase restrictions, late fees and shelter-in-place orders. Please visit NAA’s Resources and Guidance for COVID-19 where you can find a link to our policy concerns page to learn more. 

MARCH 19 | Moody's Analytics COVID-19 and U.S. CRE Property & Transaction Markets

Moody’s Analytics COVID-19 and U.S. CRE Property & Transaction Markets



MARCH 17 | How are third party inspections being handled in the wake of COVID-19?

Update from Ben Schweitzer, Head of Multifamily Innovation Lab at Freddie Mac, March 17, 2020

Hey guys! Freddie Mac has some cool proof of concepts in the iLab to solve these problems. 1) encourage your FMAC lender to sign-up for Optigo Happy, our mobile digital inspection platform. We will look to leverage that platform to send to the property manager/contact the inspection form to complete (including pics). It will solve lender (FMAC/Optigo) and appraiser inspection needs and allow them to waive onsite visits. 2) leverage Zoom and potentially custom-built tool for conference call style video inspections 3) exploring the use of robots to take 3D renderings (still needs operator and property management tour guide). More to come!

MARCH 16 | Freddie Notice: Pause on Index and Early Rate Locks

Email Update from Freddie Mac Multifamily, March 16, 2020

To Conventional and TAH lenders:

Freddie Mac is taking a pause on Index Lock Agreements. Effective immediately, Freddie Mac hereby with this communication rescinds and revokes each and every Index Lock Agreement (ILA) that has been issued by Freddie Mac to an Optigo® lender that has not yet been signed and uploaded to the Document Management System (DMS) by the Optigo lender, in accordance with Section 1 of the ILA.

For those transactions other than student housing, seniors housing, lease-up, and supplemental loans, we currently intend to reissue a new ILA as soon as reasonably practicable, if the Optigo lender requests it.

Every ILA that has been accepted and received by Freddie Mac via DMS as of the time of this email will remain in full force and effect and will be processed in accordance with our then-current business practices when we resume our Index Lock activity.

Additionally, effective immediately, Freddie Mac will no longer interest rate lock any Early Rate Lock Application (ERLA) that has not yet been signed and uploaded into DMS by the Optigo lender. We currently intend to reissue revised ERLAs as soon as reasonably practicable when we resume our early-rate locks.

Thank you for your understanding of these changes. We appreciate your continued partnership — and your business — as we navigate this extraordinary situation together.

MARCH 16 | How to Manage Social Distancing at Apartment Communities

Multihousing News, March 16, 2020

How to Manage Social Distancing at Apartment Communities

Many areas are requiring people to self-quarantine to slow the spread of coronavirus. Is your apartment community one of them? Here are some tips to help manage your residents.


I’ve never heard the term “social distancing” before, but now it’s everywhere. And its practice is critical to slow the spread of coronavirus. Where I am in New Jersey, schools are closed (I’ve already let Professor Elmo teach my 3-year-old today), and no one is supposed to have large gatherings. Nationally, sports are on hold, Broadway is closed, concerts are being postponed, among many other things. Hopefully, this will all be a short blip.

Is your apartment community practicing social distancing? If you’re not currently, unfortunately, it looks like you probably will eventually, as more and more areas are asking that people self-quarantine. Do you have a plan for your residents? Here are some suggestions.

Communicate with your residents. People need to know what’s going on. If your area is requiring people to self-quarantine, let your residents know. Also, let them know what’s being done in the community in terms of cleaning procedures, who on staff will be able to be reached, how to pay rent, etc. For example, are maintenance workers only available for emergencies? These are things that are crucial for your renters to know.

But, maybe cut down on social media posts. I check my social media constantly. I’m always mindlessly scrolling on Instagram and Facebook. I’m a member of several parent groups and area happenings groups. But, if there were ever a time for me to cut down, it would be now. Notification after notification: they think they heard someone in town tested positive for coronavirus; this store is out of toilet paper; here’s a homeschool schedule that you can try out that involves seven straight hours of math problems for your kindergartner; did you hear this person might have coronavirus—I know from my uncle’s wife’s hairstylist, and oh, by the way, make sure to still shop local because people like the hairstylists are really struggling now but also don’t, under any circumstances, go near other people. Information is necessary, but sometimes you just want to read about how Bachelor Pilot Pete already broke up with Madison, you know? The deluge of rumors and fear-mongering on social media is really upping people’s anxiety. Even the CDC says social media might be upsetting! If there’s important information for your residents, it might be better to email it. That way they’ll be sure to see it and it won’t get buried under the endless stream on social media.

Stock up on supplies and even food for residents who need it, and check in on them. Some of your residents might not be able to leave their apartments, especially your older residents or those who might have an illness. If you have an area to stock up on supplies, it would be great to keep items to help out.

Continue to be vigilant with cleaning. Wipe down all surfaces that people might touch, such as mailboxes, gym equipment (if your gym is still open) and the front desk. As more people work from home, people might be using the conference room more for printing or making calls, so make sure that’s frequently being cleaned.

Figure out what you’re going to do about late rent. A lot of people can work from home. Unfortunately, some can’t. If people aren’t working, they might not be able to have their rent on time. So you need to figure out (either building-wide or company-wide) a plan for this. Can people have more time? A payment plan? This is new territory for everyone, of course, so you might have to be more flexible than usual.

Provide [wrapped] snacks.
If there’s anything that can boost people’s spirits, it’s free food. People might be leery of unwrapped or homemade treats now. But wrapped granola bars or packs of chips can be wiped down. Mmmm, disinfected Doritos!

Stay safe, everyone!

MARCH 16 | FreddieMac Multifamily: Business Update

Information is from email sent by Richard C. Martinez, SVP Production & Sales at Freddie Mac

Managing Volume
With market turbulence intensified by public health news and the oil fight, Treasurys continue to reach new lows, and our intake continues to hit new highs. Our volume has been record-breaking — nearly $25 billion in inflows the past three weeks alone, far exceeding any previous record.

As you’ve likely read, recordation and closing agencies are starting to report closures. We are working with our Optigo® lenders, legal teams, title companies and closing offices to determine potential resolutions. To ensure we can provide the service you and your borrowers expect, we are implementing the following changes for Conventional and Targeted Affordable business:

  • We previously implemented a suspension of Index Locks on specialty products, but due to current industry issues, all Index Locks and early-rate locks have been temporarily paused for all products as we evaluate the market and our offering. 
  • Treasury floors are now the greater of 0.75% or 15 bps below current Treasury for all products, except supplementals.
  • We’re also adding a Treasury floor of 0.75% on all supplementals, regardless of loan term.
  • First quotes issued are valid for five business days instead of 10, and subsequent quotes will remain unchanged at five business days.
  • We are no longer waiving good faith deposits for Select Sponsors.
  • Beginning with commitments that are issued tomorrow, we are eliminating the cap in the Breakage Fee formula for fixed-rate loans; breakage will now be calculated without the 2% cap. As always, Freddie Mac will pursue the borrower for any breakage fee that is above the good faith deposit.

Staff and Response Times
In response to public health concerns, we’re seeing many organizations move to flexible work arrangements, and Freddie Mac is doing the same and leveraging technology to maintain business functions seamlessly.
Our One-Team strategy is paying off, and we’re sharing resources across business lines and regions as needed. That said, please ask your teams to be patient as we work to manage record volume in this extraordinary situation.