Official Board Packet

Texas State Affordable Housing Corporation

Board Meeting

To be held at the offices of Texas State Affordable Housing Corporation

1005 Congress Avenue – Suite B-10 Conference Room Austin Texas 78701

Friday, August 11, 2006 10:30 a.m.

BOARD MEETING TEXAS STATE AFFORDABLE HOUSING CORPORATION

To be held at the offices of Texas State Affordable Housing Corporation

1005 Congress Avenue – Suite B-10 Conference Room Austin, Texas 78701

August 11, 2006 at 10:30 am

AGENDA CALL TO ORDER, ROLL CALL Jerry Romero CERTIFICATION OF QUORUM Chair The Board of Directors of Texas State Affordable Housing Corporation will meet to consider and possibly act on the following: PUBLIC COMMENT REPORTS

♦ President’s Report David Long ♦ Executive Vice President’s Report Katherine Closmann ♦ Single Family Lending Report Paige McGilloway ♦ Asset Oversight & Compliance Report Emily Lah

♦ Quarterly Compliance Update ♦ Quarterly Residence Services Update

♦ Financial Report Melinda Smith ♦ Presentation of Financial Statements and Budget Report

ACTION ITEMS IN OPEN MEETING Tab 1 Presentation, Discussion and Possible Approval of Minutes of the Board Meeting held on July 14, 2006. Tab 2 Presentation, Discussion and Possible Approval of an Application to Request a Reservation for Single

Family Bond Authority from the Bond Review Board in the Amount of $25,000,000. Tab 3 Presentation and Discussion of a Single Family Draw Down/Recycling Facility Program. Tab 4 Presentation, Discussion and Possible Approval of Fiscal Year 2007 Operating Budget. CLOSED MEETING Consultation with legal counsel on legal matters – Texas Government Code § 551.071 Deliberation regarding purchase, exchange, lease, or value of real property – Texas Government Code § 551.072 Deliberation regarding prospective gift or donation to the state or Texas State Affordable Housing Corporation – Texas Government Code § 551.073 Personnel Matters – Texas Government Code § 551.074 Implementation of security personnel or devices – Texas Government Code § 551.076 Other matters authorized under the Texas Government Code OPEN MEETING Action in Open Meeting on Items Discussed in Closed Meeting ADJOURN Individuals who require auxiliary aids or services for this meeting should contact Laura Ross, ADA Responsible Employee, at 512-477-3555, x 400 or Relay Texas at 1-800-735-2989 at least two days before the meeting so that the appropriate arrangements can be made. Texas State Affordable Housing Corporation reserves the right to recess this meeting (without adjourning) and convene at a later stated time, if and to the extent allowed by law. If Texas State Affordable Housing Corporation adjourns this meeting and reconvenes at a later time, the later meeting will be held in the same location as this meeting. Texas State Affordable Housing Corporation also reserves the right to proceed into a closed meeting during the meeting in accordance with the Open Meetings Act, Chapter 551 of the Texas Government Code. If permitted by the Open Meetings Act, Chapter 551 of the Texas Government Code, any item on this Agenda to be discussed in open meeting may also be discussed by the Board (and any other authorized persons) in closed meeting.

President’s Report

Discussion

Vice President’s Report

Discussion

Texas State Affordable Housing Corporation'sProfessional Educators Home Loan Program Series 2006A

As of February 28, 2006 through July 26, 2006

Month# of

Loans

% ofTotal

LoansTotal

Originated At a Glance Jan-06 1 0% 107,371$ Total Amount Originated $23,898,449Feb-06 1 0% 161,456$ Average Monthly Income $4,063Mar-06 33 16% 3,810,392$ Average Purchase Price $122,230Apr-06 62 31% 7,260,142$ Average Loan Amount $118,309May-06 83 41% 9,899,923$ Average Household Size 2Jun-06 17 8% 2,152,000$ New/ExistingJul-06 5 2% 507,165$ Existing 55%

Totals 202 100% 23,898,449$ New 45%Professional Breakdown

Lender Originated # of Loans Total % Teacher 96.53%Wells Fargo Bank NA $3,424,361 29 14% Teacher Aide 1.98%

Countrywide Funding Corp. $2,539,250 24 12% School Counselor 0.99%DHI Mortgage Company $2,112,575 15 7% School Nurse 0.50%

Market Street Mortgage Corp. $1,889,448 16 8% School Librarian 0.00%Colonial Savings, F.A. $1,589,554 13 6% Type of Loan

Cornerstone Mortgage Company $1,411,015 13 6% FHA 70%Universal American Mortgage Co $1,364,886 11 5% FNMA 29%

CTX Mortgage Corporation $1,260,942 10 5% VA 0.50%SFMC, LP fka Service First Mtg $1,106,217 9 4% USDA-RD 0.50%

Wachovia Mortgage Corporation $990,134 9 4% EthnicityWR Starkey Mortgage, LLC $837,840 7 3% Not specified 73%

Willow Bent Mortgage $618,100 5 2% White, not of Hispanic origin 21%Rocky Mountain Mortgage $613,985 5 2% Hispanic 3%

Prime Lending, Incorporated $552,456 4 2% African American 2%McAfee Mortgage & Investments $550,065 6 3% Asian, South Pacific 1%

Hammersmith Financial Corp. $509,000 4 2% Top Origination Locations # of LoansHome Loan Corporation $423,277 4 2% AUSTIN 20

Texas Capital $373,588 3 1% SAN ANTONIO 18Valley Mortgage Corporation $358,657 4 2% HOUSTON 17

Ryland $329,045 2 1% FORT WORTH 12Residential Home Lending $303,464 3 1% CYPRESS 6

Milestone Mortgage Corporation $261,008 2 1% ARLINGTON 6NTFN Inc./Premier Mortgage $129,958 1 0% ROUND ROCK 5

Bankers Financial $128,448 1 0% KATY 5Legacy Financial Group $117,000 1 0% HUMBLE 5

Home Trust Company $104,176 1 0% DALLAS 5Total Committed $23,898,449 202 100% SPRING 4

MESQUITE 4Total Allocation $23,809,000 KYLE 4

Remaining to Commit -$89,449

Texas State Affordable Housing Corporation'sProfessional Educators Home Loan Program Series 2006A

As of February 28, 2006 through July 26, 2006

Monthly Origination

1 1 33 62 83 17 5 202$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Totals

Bond ClosedFebruary 28, 2006

Occupational Origination Amounts

$22,937,907.00

$142,608.00$261,401.00

$461,693.00

$0.00

TeacherTeacher AideSchool CounselorSchool LibrarianSchool Nurse

Texas State Affordable Housing Corporation'sFire Fighter and Law Enforcement or Security Officer Home Loan Program Series 2006B

As of June 15, 2006 through July 26, 2006

Month# of

Loans

% ofTotal

LoansTotal

Originated At a Glance Jun-06 37 54% 4,055,824$ Total Amount Originated $7,490,914Jul-06 31 46% 3,435,090$ Average Monthly Income $3,849

Totals 68 100% 7,490,914$ Average Purchase Price $112,175Average Loan Amount $110,160

Lender Originated # of Loans Total % Average Household Size 2Countrywide Funding Corp. $1,398,513 14 21% New/Existing

Wells Fargo Bank NA $854,413 9 13% Existing 66%Market Street Mortgage $621,513 4 6% New 34%

CTX Mortgage Corporation $586,591 4 6% Professional BreakdownCornerstone Mortgage Company $468,756 4 6% Correctional Officer 24%

First Magnus Financial $443,390 4 6% Peace Officer 49%SFMC, LP fka Service First Mtg. $404,345 4 6% Fire Fighter 22%

Wachovia Mortgage Corp. $352,060 3 4% County Jailer 4%McAfee Mortgage & Investments $351,470 3 4% Public Security Officer 1%

NTFN Inc./Premier Mortgage $265,081 2 3% Type of LoanWillow Bend Mtg $254,995 2 3% FHA 63%

Happy State Bank $189,350 2 3% FNMA 25%American Home Mortgage Corp. $163,905 1 1% VA 12%

Prime West Mortgage $158,986 2 3% USDA-RD 0%Universal American Mortgage Co. $150,524 1 1% Ethnicity

Home Loan Corp. $140,000 1 1% Not specified 68%WR Starkey Mortgage, LLC $125,100 1 1% White, not of Hispanic origin 21%

Milestone Mortgage Corporation $114,460 1 1% Hispanic 7%First United Bank & Trust $107,500 1 1% African American 4%

1st National Bank dba 1st Community $101,581 2 3% Asian, South Pacific 0%First Horizon Home Loan Corp. $91,832 1 1% Top Origination Locations # of Loans

New South Federal Savings Bank $89,500 1 1% SAN ANTONIO 5National City Mortgage Co. $57,049 1 1% AMARILLO 3

Total Committed $7,490,914 68 100% SAN ANGELO 2LA PORTE 2

Total Allocation $23,640,000 FORT WORTH 2Remaining to Commit $16,149,086 FORNEY 2

EL PASO 2CYPRESS 2BEEVILLE 2

Texas State Affordable Housing Corporation'sFire Fighter and Law Enforcement or Security Officer Home Loan Program Series 2006B

As of June 15, 2006 through July 26, 2006

Monthly Origination

37 31 68$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

Jun-06 Jul-06 Totals

Bond ClosedJune 15, 2006

Occupational Origination Amounts

$255,815.00

$4,089,902.65

$1,634,956.00

$128,981.00

$1,381,259.00

Correctional OfficerPeace OfficerFire FighterCounty JailerPublic Security Officer

Agape Ashton/Woodstock, Inc.

Ashton Place WoodstockLI Occupancy 74% 82%VLI Occupancy 37% 59%

NHT/GTEX Project Portfolio

Ashley Park Champions Green Chelsea Court Kressington Place Victoria Place Riverwalk TimberlodgeLI Occupancy 75% 75% 74% 75% 75% 75% 75%VLI Occupancy 20% 21% 20% 20% 20% 20% 20%

Commonwealth Multifamily (White Rock), LLC

White RockLI Occupancy 75%VLI Occupancy 20%

American Housing Foundation

Settler's Cove Cimarron Park Pine Creek Stony Creek Bent Creek Creekwood Village Shadowridge LI Occupancy 78% 79% 84% 75% 80% 94% 84%VLI Occupancy 42% 40% 63% 41% 56% 29% 62%

Aston Brook Northwoods One Willow Chase One Willow Park Woodedge FountaingateLI Occupancy 82% 82% 82% 81% 77% 75%VLI Occupancy 55% 27% 51% 51% 42% 23%

South Texas Affordable Properties Corporation

Charleston Remington Summer Oaks The Rafters The Wharf WillowickLI Occupancy 79% 80% 76% 76% 75% 82%VLI Occupancy 23% 27% 22% 23% 20% 23%

American Opportunity for Housing, Inc.

Clover Hill Hillcrest Briarcrest Mill Creek One WestfieldLI Occupancy 89% 86% 83% 87% 88%VLI Occupancy 55% 54% 33% 51% 51%

San Antonio Low Income Housing, LLC

Aguila OaksLI Occupancy 75%VLI Occupancy 20% * LI Occupancy statistic is inclusive of the VLI Occupancy statistic.

Quarterly Compliance Status for TSAHCAs of Second Quarter Ending 6-30-06

Texas State Affordable Housing Corporation Resident Service Summary Second Quarter June 2006

American Housing Foundation One Willow Chase Apartments: Houston April: College Education Program (5 Attended) Tobacco 101 (20 Attended) May: Crime Watch provided by HPD (4 Attended) Free Cell Phones for Hurricane Victims & prepaid phone cards by T-Mobile (4 Attended) Swim and Sun Safety (7 Attended) Senior Meals (4 Attended) Bus Tokens (3 Attended) June: After School (3 Attended) Children’s Book Distribution (10 Attended) Cultural Activity/Zoo Tickets (10 Attended) Bus Tokens (1 Attended) One Willow Park Apartment: Houston April: Tobacco 101 (0 Attended) May: Crime Watch provided by HPD (0 Attended) Bus Tokens (0 Attended) Free cell phones for Hurricane Victims (4 Attended) Swim and Sun Safety (0 Attended) Seniors Meals (3 Attended) June: After school (1 Attended) Children’s book distribution (5 Attended) Cultural activity/ Zoo tickets (9 Attended) Bus Tokens (2 Attended) Woodedge Apartment: Houston April: Tobacco (4 Attended) College for Texans (3 Attended) May: Pool & Swim safety (10 Attended) Bus Tokens (2 Attended) June: Book Distribution (10 Attended) Zoo Tickets (10 Attended) Bus Tickets (8 Attended) Fountaingate Apartment: Wichita Falls April: After School (10 Attended) Boys & Girls club member ships (3 Attended) Crime Watch provided by PD (11 Attended)

May: After School (10 Attended) Crime Watch provided by PD (13 Attended) Spring Cleaning (3 Attended) Cook Out (30 Attended) June: After School (12 Attended) Crime Watch (1 Attended) Pool & Sun Safety (4 Attended) Settler’s Cove Apartment: Beaumont April: Dental Benefit Fact Sheet (182 Attended) After School (6 Attended) Crime Watch (1 Attended) Youth Program (3 Attended) Earth Day Awareness (3 Attended) Fitness Center (24 Attended) May: Family Disaster Plan handout (182 Attended) After School (2 Attended) Crime Watch (1 Attended) Fitness Center (21 Attended) June: Swim and Sun Safety (3 Attended) Crime Watch (0 Attended) Fitness Center (25 Attended) HIV/AIDS Info and testing (6 Attended) Cimarron Park Apartment: Conroe April: Crime Watch (6 Attended) Senior Meals (5 Attended) Computer Facilities (18 Attended) Spring Cleaning (6 Attended) May: Swim and Sun Safety (8 Attended) Crime Watch (4 Attended) Senior Meals (3 Attended) Computer Facilities (39 Attended) June: Child ID Kits (8 Attended) Hurricane Preparedness handout (162 Attended) Senior Meals (3 Attended) Stony Creek Apartment: Conroe April: Spring Cleaning (3 Attended) Crime Watch (3 Attended) May: Swim and Sun Safety (10 Attended) Crime Watch (3 Attended) June: Hurricane Preparedness handout (210 Attended) Safety Swimming (2 Attended) Pine Creek Village Apartment: Conroe

April: Crime Watch (3 Attended) Spring Cleaning (3 Attended) May: Crime Watch (3 Attended) Swim and Sun Safety (10 Attended) June: Hurricane Preparedness handout (116 Attended) Summer Safety (2 Attended) Shadowridge Village Apartment: Dallas April: Tobacco 101 (12 Attended) Fitness Center (8 Attended) May: Pool and Sun Safety (7 Attended) Renters Insurance (0 Attended) June: Credit Repair (0 Attended) Summer Reading (6 Attended) Creekwood Village Apartment: Dallas April: Crime Watch (16 Attended) Childrens Health Insurance Program (2 Attended) Computer Facilities (90 Attended) Bus Passes (10 Attended) May: Crime Watch (7 Attended) Renters Insurance (7 Attended) Computer Facilities (40 Attended) June: Summer Reading (10 Attended) Crime Watch (12 Attended) Sun and Pool Safety (9 Attended) Computer Facilities (45 Attended) Bent Creek Apartment: Dallas April: Financial Planning Courses (2 Attended) Crime Watch (25 Attended) Computer Facilities (50 Attended) May: Job Search (1 Attended) Town Hall/ Community Meeting (19 Attended) Renters Insurance (2 Attended) Computer Facilities (30 Attended) June: Summer Reading (9 Attended) Sun and Pool Safety (21 Attended) Crime Watch (21 Attended) Computer Facilities (35 Attended) Northwoods Apartment: Houston April: Tobacco 101 (7 Attended) Promostion for College Education (7 Attended) May: Swim and Sun Safety (13 Attended) Hurricane Preparation Handout (150 Attended)

CHIPS flyer (150 Attended) Bus Tokens (4 Attended) June: Book Distribution (10 Attended) Bus Passes (4 Attended) Zoo Tickets (24 Attended) Aston Brook Apartment: Houston April: Job Skills (8 Attended) College or University (4 Attended) Child ID Kits (18 Attended) Tobacco 101 (5 Attended) May: Children’s Health Insurance (2 Attended) Buss Passes (1 Attended) June: Book Distribution (10 Attended) Zoo Tickets (10 Attended) Buss Passes (5 Attended) South Texas Affordable Properties The Charleston Apartment: Cranbrook April: Job Skills (8 Attended) College or University (4 Attended) Child ID Kits (18 Attended) Tobacco 101 (5 Attended) May: Children’s Health Insurance (2 Attended) Bus Tokens (1 Attended) June: Book Distribution (10 Attended) Zoo Tickets (10 Attended) Bus Tokens (5 Attended) The Wharf Apartment: Corpus Christi April: Credit Repair (7 Attended) Child Support Seminar (8 Attended) Story time (13 Attended) May: Identity Theft (15 Attended) Cooking Class provided by Wizards Whisk (8 Attended) Crafts on a Budget (10 Attended) June: Electronic Voting Procedures provided by Nueces County (0 Attended) Tennis Lessons provided by Tennis Success (4 Attended weekly) Know your neighbor (41 Attended) Sun Safety and UV Protection (41 Attended) Senior Bingo (5 Attended) Willowick Apartment: Corpus Christi April: Child Support Seminar (0 Attended) Neighborhood Watch provided by PD (6 Attended)

May: Internet Safety (0 Attended) Healthy Heart Night (0 Attended) June: Electronic Voting Procedures provided by Nueces County (0 Attended) Tennis Lessons provided by Tennis Success (6 Attended weekly) Fireworks Safety (0 Attended) The Rafters Apartment: Corpus Christi April: Electronic Voting Procedures provided by Nueces County (0 Attended) Story Time (8 Attended) Child Support provided by AG office (0 Attended) May: Credit Repair (0 Attended) Vocational Development provided by high school (16 Attended) June: Electronic Voting Procedures provided by Nueces County (1 Attended) Tennis Lessons provided by Tennis Success (15 Attended) Summer Reading Program (1 Attended) Personal Protection provided by Women’s Shelter (2 Attended) Fireworks Safety (3 Attended) AutoCheck (90 Attended) ESL provided by CC Literacy Council (0 Attended) Remington Apartment: San Antonio April: Identity Theft Fliers (Flier to all Residents) Electrical Safety (10 Attended) May: Crime Watch (12 Attended) Town Hall Meeting (12 Attended) June: Children & Pets Interaction (9 Attended) Crime Watch (14 Attended) Breakfast Nutrition (50 Attended) Heat Stress (5 Attended) Summer Oaks Apartment: San Antonio April: Stress Relief (7 Attended) May: Crime Watch (0 Attended) Stress Relief (0 Attended) June: Computer Literacy Classes (1 Attended) Fireworks Safety (Flier to all Residents) Crime Watch (12 Attended) Breakfast Nutrition (100 Attended) American Opportunity for Housing Briarcest Apartment: Spring April/May/June: None Provided Clover Hill Apartment: Arlington April/May/June: None Provided

Hillcrest Apartment: Grand Prairie April/May/June: None provided. Mill Creek Apartment: Spring April/May/June: None provided. One Westfield Lake Apartment: Spring April/May/June: None provided. GTEX Chelsea Court Apartment: Houston April: Computer Class (5 Attended) Report Card Party (30 Attended) Computer Facilities (100 Attended) Bus Passes (20 Attended) Child/Adolescent Mental Health (1 Attended) Information on ITT Tech and HCC classes (5 Attended) May: Computer Class (5 Attended) Report Card Party (20 Attended) Health Screening Services (3 Attended) Computer Facilities (100 Attended) Bus Passes (17 Attended) June: Employment Services (50 Attended) Financial Assistance for Child Care (11 Attended) School Supplies (5 Attended) Angel Food Ministries (2 Attended) Job Fair (15 Attended) Computer Facilities (100 Attended) Kressington Place Apartment: Spring April: Home Ownership Counseling (0 Attended) May: Budgeting (7 Attended) June: Safety in Summer Heat and Fireworks (5 Attended) Victoria Place Apartment: Houston April: Child Care (4 Attended) May: Weight Watchers (6 Attended) June: Job Fair (3 Attended) Champions Green Apartment: Houston April: Home Ownership Counseling (2 Attended) May: Health class provided by 24 Hour Fitness (0 Attended) June: Personal Protection (1 Attended) Riverwalk Apartment: Dallas April: Children’s Talent Show (18 Attended)

May: Health & Nutritional class provided by Dallas Health & Human Services (8 Attended)

June: Crime Watch provided by PD (7 Attended) Timberlodge Apartment: Dallas April: Crime Watch provided by PD (25 Attended) May: Child Fingerprinting provided by PD (3 Attended) June: None provided Ashley Park Apartment: Plano April: Resident’s Flower Potting (32 Attended) May: Health and Nutritional Class (10 Attended) June: Crime Meeting (5 Attended) AGAPE ASHTON / WOODSTOCK Ashton Place Apartment: Galveston April: After School (5 Attended) May: After School (4 Attended) June: After School (6 Attended) Woodstock Apartment: Arlington April/May/June: None provided. Common Wealth White Rock Apartment: San Antonio April: Tutoring Twice a Week (6 Attended) Internet Safety (6 Attended) Medical Services (3 Attended) Telemarketing No-Call List (3 Attended) May: Tutoring Twice a Week (7 Attended) After School Crafts (6 Attended) Summer Safety ( 0 Attended) Crime Watch provided by Fear Free Environment (10 Attended) CPR and Pool Safety (12 Attended) June: Breakfast Nutrition (75 Attended) Tutoring Twice a Week (4 Attended) SOA Aguila Oaks Apartment: San Antonio April: Aerobics Class (12 Attended) May: Yoga (8 Attended) June: Yoga (8 Attended)

TEXAS STATE AFFORDABLE HOUSING CORPORATIONCOMPARISON OF BUDGETED TO ACTUAL OPERATING ACTIVITY

(For the Ten Month Period Ending June 30, 2006)

% of AnnualRevenues Budget Actual Budget

Servicing Revenue, Net of Subservicer Fees 425,000 406,655 95.68%Multifamily Revenue 650,000 191,824 29.51%TDHCA Asset Oversight Revenue 509,000 546,192 107.31%Investment Revenue 120,000 126,034 105.03%Single Family - 114,304 -Grant/Fundraising Income - - -TOTAL REVENUES 1,704,000 1,385,009 81.28%

ExpendituresSalaries & Payroll Related Expenditures 860,000 678,886 78.94%Professional Services - Legal, Audit & IT 177,000 139,105 78.59%Office & Equipment Lease 124,000 102,245 82.46%Travel & Meals 72,000 64,131 89.07%Interest on FHLB Notes 67,000 55,184 82.36%Marketing & Sponsorships 23,000 6,508 28.30%Insurance 23,600 15,575 66.00%Professional Dues & Training 12,000 14,680 122.33%Communication 12,000 10,885 90.71%Bank Fees & Charges 8,000 8,363 104.54%Office Supplies 8,000 6,319 78.99%Publications, Subscriptions, Office Maintenance 5,300 3,284 61.96%Freight, Delivery & Postage 6,000 5,442 90.70%Furniture, Equipment, & Software 20,000 23,609 118.05%Printing 1,500 997 66.47%Program and Loan Administration 4,000 3,162 79.05%TOTAL EXPENDITURES 1,423,400 1,138,375 79.98%

NET INCOME 280,600 246,634 87.90%

Target Percentage = 83%

FY 2006

TEXAS STATE AFFORDABLE HOUSING CORPORATIONCOMPARISON OF BUDGETED TO ACTUAL OPERATING ACTIVITY

(For the Ten Month Period Ending June 30, 2006)

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BOARD MEETING TEXAS STATE AFFORDABLE HOUSING CORPORATION

Held at the Offices of Texas State Affordable Housing Corporation

1005 Congress Avenue – Suite B-10 Conference Room Austin Texas 78701

July 14, 2006 at 10:30 am

Summary of Minutes Call to Order, Roll Call Certification of Quorum The Board Meeting of the Texas State Affordable Housing Corporation (the “Corporation”) was called to order by Jerry Romero, Chair, at 10:30 a.m., on July 14, 2006, at the offices of Texas State Affordable Housing Corporation, 1005 Congress Avenue – Suite B-10 Conference Room, Austin, TX 78701. Roll Call certified that a quorum was present. Members Present Jerry Romero, Chair Jesse A. Coffey, Member Charles G. Rencher, Member Jo Van Hovel, Member Members Absent Thomas Leeper, Vice Chair Staff Present Katherine Closmann, Executive Vice President Melinda Smith, Chief Financial Officer Paige McGilloway, Single Family Programs Manager Emily Lah, Asset Oversight & Compliance Manager Cynthia Gonzales, Assistant Corporate Secretary Public Comment No public comment was given. Special Guests Robert Dubbelde, Greenberg Traurig LLP Robin Miller, First Southwest Company Tim Nelson, RBC Dain Rauscher Steve Schottman, Texas Department of Housing and Community Affairs (TDHCA) Greg Stites, Wells Fargo Appointment of Assistant Corporate Secretary

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Mr. Romero noted that since the Corporate Secretary would not be present at the meeting, an Assistant Corporate Secretary needed to be appointed. Mr. Coffee made a motion to appoint Ms. Cynthia Gonzales as the Assistant Corporate Secretary. Mr. Rencher seconded the motion. Motion passed unanimously. Reports President’s Report Ms. Closmann made the Board aware that Ms. Garcia, the Corporation’s Manager of Multifamily Finance, had resigned effective June 16th. Ms. Closmann informed the Board that currently there were job postings out for the positions of Manager of Marketing and Development and Asset Oversight and Compliance Specialist. Ms. Closmann stated that the Asset Oversight contract with TDHCA added an additional 47 properties to the Corporation’s portfolio and an additional staff person would be needed to complete the work. Ms. Closmann reported that staff had had a retreat on June 2nd, where they talked about programs and brainstormed for the future of the programs. Ms. Closmann stated that the Corporation planned a formal media release for June 26th in Austin with regard to the EQ2 award from Wells Fargo, and noted this would include a check presentation. Ms. Closmann stated that the Austin Business Journal had published an article with regard to the EQ2 award which included quotes from the Corporation’s Board Chairman. Ms. Closmann reported that $82,600 of the award had already been used toward down payment assistance for the Affordable Homeownership Program for Texas. Ms. Closmann stated that Mr. Long, with the assistance of certain Board Members, was looking into evaluating other opportunities for the single family interim construction program. Mr. Romero reported that there were several programs, one in the Houston area, a couple in Fort Worth, and one in El Paso that Mr. Long was looking into with regard to the program. Mr. Romero noted that Corporation staff should be cautious when partnering with other organizations to make sure that the Corporation was not put in a bad position. Mr. Rencher reported that he had met with Tri-County CDC, a non-profit in Bay City, Texas, with regard to the need for affordable housing in that area. Mr. Rencher explained that the organization was interested in constructing affordable single-family dwellings and he thought the Corporation’s involvement in this should be considered. Ms. Closmann stated that she would tell Mr. Long about this opportunity so that he could research it further. Ms. Closmann asked that if the Members knew of any other opportunities that would work under the Interim Construction Fund to please let staff know. Mr. Rencher inquired what the initial procedure would be with regard to this organization submitting a proposal. Ms. Closmann stated that the next step would be for Mr. Long to go to Bay City to meet with Tri-County CDC to talk about this opportunity. Mr. Romero agreed that staff should visit with the organizations first, before a presentation is made to the Board to ensure that background information and research was done. Ms. Closmann then proceeded to inform the Board that Mr. Long, Mr. Romero and Ms. McGilloway would be attending the Freddie Mac and Countrywide Partners in Home Ownership Conference July 19-21 in Los Angeles. Ms. Closmann stated that she, Mr. Long and Mr. Romero would be attending the Texas Association of Affordable Housing Providers (TAAHP) conference July 26-27 in Austin.

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Executive Vice President’s Report Ms. Closmann began by informing the Board that on June 1, she testified before the Urban Affairs Committee with regard to Interim Charge 4. Ms. Closmann explained that this interim charge considered the implications of eliminating the lottery system for allocating 4 percent housing tax credit awards through the State’s private activity bond program and replacing it with an alternative allocation system. Ms. Closmann acknowledged that the Corporation did not go through the lottery system for its Private Activity Bond Program, which allowed for the ability to pool properties. Ms. Closmann stated that she testified at the meeting about the hurdles that came with trying to pool properties. Ms. Closmann reported that also discussed was the creation of a task force regarding this charge, which she asked that the Corporation be represented on so that we could join in the discussion of how the lottery system would work, and how the Corporation would fit into that system. Ms. Closmann then turned the Board’s attention to the handouts that were provided, specifically the Notice to the Bond Holders from Wells Fargo about the Standard & Poor’s ratings for the Series A and B bonds of the AHF portfolio. Ms. Closmann noted that the rating for the series A bonds was Triple C minus with a negative outlook, and the B bonds went from a C rating to a D rating. Ms. Closmann then turned the Board to the board packet, which contained a request from Greystone regarding the American Opportunity for Housing (AOH) restructuring. Ms. Closmann explained that Greystone, who bought the bonds and served as remarketing agent on those bonds, had contacted the Corporation the week after the closing and requested changes to the Distribution Agreement. Ms. Closmann stated that the Distribution Agreement was set up like a loan to AOH so that at the end of the waterfall, a percentage would go to Greystone and a percentage would go to revenue fund, which in the indenture would flow down the waterfall to the subordinate bondholders. Ms. Closmann explained that Greystone felt they were taking a big risk related to the A bonds and that the monies that would come from this deal dealt with the A bonds, so no money should go to the subordinate bond holders. Ms. Closmann stated that Greystone felt that this was an inconsistency with the Distribution Agreement. Ms. Closmann reported that after speaking with Mr. Robin Miller, the Corporation’s Financial Advisor, Ms. Kathy Garner, the Corporation’s Bond Counsel on this transaction, and General Counsel, it was determined that there was no inconsistency in the Distribution Agreement, that it did say that monies should go to the subordinate bondholders. Ms. Closmann stated that she would not recommend that any change be made at this time. Ms. Closmann then informed the Board that the Corporation had received an open records request with regard to AHF, and because of the volume of files and documents being requested, it would take considerable staff time to fulfill and so therefore she wanted the Board to be informed. Ms. Closmann spoke further about the open records request. Discussion followed. Single Family Lending Report Ms. McGilloway began by informing the Board that she had attended the Train the Trainer Workshop put on by Neighborworks and the Texas Department of Housing and Community Affairs (TDHCA), in Galveston, where she became a certified Homebuyer Education Counselor. Ms. McGilloway noted that the Corporation served as a sponsor and account administrator of the event. Ms. McGilloway informed the Board that the Corporation had sponsored a lunch during

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the conference where she had had the opportunity to give a presentation on the Corporation’s programs and receive feedback. Ms. McGilloway informed the Board that she and Mr. Long had attended the July Board Meeting for the Texas Department of Criminal Justice, where they were able to speak before the Board with regard to the Homes for Heroes Program. Ms. McGilloway reported that they were very receptive and appreciative of the Corporation’s efforts in assisting their employees. Ms. McGilloway stated that she had attended the July meeting for the Houston chapter of the Professional Association of Mortgage Women, where she was the guest speaker at their dinner function and was able to discuss the first time homebuyer programs. Ms. McGilloway informed the Board that she had received emails and calls from attendees that were interested in participating in the programs as lenders. Ms. McGilloway then announced that the Nursing Faculty Home Loan Program was up and running with an initial 3 million as approved by the Board, issued at 6.25% interest rate on a 30-year fixed rate mortgage. Ms. McGilloway stated that no funds had been committed to date, but all the nursing programs in the state had been notified and sent marketing materials and information to post and include in their HR packets for new employees. Ms. McGilloway stated that the lenders participating in the other two programs had been notified and that 13 had signed up to participate in this one. Ms. McGilloway informed the Board that she and Mr. Long would be attending the Freddie Mac and Countrywide Partners in Home Ownership Conference July 19-21. Ms. McGilloway also stated that on August 7, she and Mr. Long would be attending a meeting with Neighborworks in Waco and speaking to their executive director and staff about the Corporation’s first time homebuyer programs. Ms. McGilloway made the Board aware of a TEFRA hearing that would be taking place August 10th, contingent upon the approval by the Board of Tabs 2 and 3. Ms. McGilloway stated that she would be attending the Huntsville Board of Realtors monthly meeting on August 15th, where she would be making a presentation on the programs. Ms. McGilloway informed the Board that in addition to attending the Train the Trainer course, she would be attending 2 other classes, Combating Predatory Lending and Credit Counseling for Maximum Results, at the end of the month. Ms. McGilloway stated that these courses would provide information that the Corporation could use to offer more services to borrowers. Ms. McGilloway then turned the Board’s attention to the reports included in the board packet. Ms. McGilloway reported that the 2005 programs had been fully committed. Ms. McGilloway then stated that the 2006A Professional Educators Home Loan Program had been fully originated. Ms. McGilloway then reported on the 2005B Firefighters Law Enforcement or Security Officers Home Loan Program, stating that it was going along well. Ms. McGilloway reported that in the past correction officers were the biggest demographic accessing the program and now the number of peace officers and firefighters was climbing so the numbers were leveling out. Ms. McGilloway turned the Board’s attention to the bond closing that occurred on June 15 for the 2006B Firefighters Law Enforcement or Security Officers Home Loan Program. Ms.

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McGilloway informed the Board that the Corporation was able to release $23,640,000 into the market, of which $18.9 million went to non-targeted areas with an interest rate of 6.25% and $4.74 million went to targeted areas and the GO zone with an interest rate of 5.99%. Ms. McGilloway then turned the floor to Mr. Timothy Nelson with RBC Capital Markets, the Corporation’s underwriter, so that he could explain the pricing book for the transaction. Mr. Rencher inquired if the Nursing Faculty Home Loan program included administrative individuals or if it just included educators, and Ms. McGilloway stated that she understood it to mean a full-time employee on the faculty in the nursing program at a undergraduate or graduate school in Texas, that are first time homebuyers and meet the income, purchase price, and underwriting requirements to qualify for the program. Discussion followed. Mr. Romero asked Ms. McGilloway to seek clarification on whether administrative individuals would be included in the program. Mr. Coffey informed the Board that land had recently been purchased in Denton to be used for development and wondered if this might be an opportunity for the Corporation to get involved. Mr. Romero suggested that Mr. Coffey find out who purchased the land and what the intended use for it was. Ms. Closmann followed by stating that if it fell into the Corporation’s mission for affordable housing then she and Mr. Long would talk with them to see if one of the Corporation’s programs could be used. Discussion followed. Asset Oversight & Compliance Report Ms. Lah began by stating that she and Ms. Jackson had attended the National Apartment Association Conference in Denver in June and had garnered a lot of useful information. Ms. Lah reported that a full day of compliance training had been held for South Texas Affordable Properties and White Rock portfolios in June, where they were able to sit down with staff and fully explain bond compliance. Ms. Lah then turned the Board’s attention to the contract with TDHCA and stated that interviews were currently being held for an additional Asset Oversight & Compliance Specialist so that they could assist with the additional work load of all the new properties. Ms. Lah stated that audits for all the additional properties would be completed by the end of the year. Ms. Lah also stated that with the help of the accounting department, it had been set up with the trustee that funds with regard to those properties would flow directly to the Corporation instead of going through TDHCA. Ms. Lah turned the Board’s attention to AHF properties, Bent Creek and Creekwood, and stated that they were set up on monitoring status to submit to the Corporation once a month their reports for their crime prevention program. Ms. Lah reported that staff had approved their crime prevention plan, and had started to receive their monthly binders with information, including police reports for the previous month. Discussion amongst the Board Members followed with regard to the properties. Ms. Lah stated that the properties were instituting zero tolerance and because of this there had been mass evictions and occupancy was down. Mr. Coffey inquired whether there were guards, and Ms. Lah confirmed that there were armed guards and they did ID checks before they allowed people onto the properties. Mr. Romero suggested that staff create a baseline of activity prior to the security plans being put in place so that current conditions could be compared to that and a conclusion as to the effectiveness of the plan could be determined. Mr. Rencher inquired as to whether the mass evictions were due to non-payment or to

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misbehavior. Ms. Lah stated that it was starting to become more non-payment then misbehavior. Discussion continued between the Board Members. Ms. Closmann stated that staff would be monitoring those properties as they turned in their police reports and their crime prevention plans and were complying with those plans. Ms. Lah followed by informing the Board that for the month of June, the police report showed only 9 calls, 2 of which were routine checks on the property by police. Mr. Coffey inquired whether they had started to convert one bedroom apartments into three bedrooms, and Ms. Closmann stated that they had not but that AHF was in the process of talking with MBIA, the insurer of the A bonds, about how to proceed. Ms. Lah stated that one building had already been cleaned out for construction. Mr. Rencher inquired what the Corporation could do if the worse case scenario occurred. Ms. Lah stated that the Corporation would require that the property provide Corporation staff with an action plan that brings results and would require that they report on a monthly basis for a year that they were complying with the plan. Mr. Rencher inquired as to what would happen if they didn’t comply with the plan, and Mr. Dubbelde, the Corporation’s General Counsel, stated that as a conduit issuer the remedies were limited. Mr. Dubbelde stated that this would be more of an issue for MBIA, who would have more avenues for action. Ms. Lah stated that MBIA was informed of the current status of the properties, and had been sent reports on the properties. Mr. Rencher inquired whether it was a possibility that local authorities could confiscate the property and Mr. Dubbelde stated that it was, but it wouldn’t have anything to do with the Corporation. Mr. Dubbelde stated that the only affect it would have on the Corporation would be the loss of fees, similar to a foreclosure. Discussion followed with regard to the calls to police. Financial Report Ms. Smith began by turning the Board’s attention to the budgeted to actual expenditures comparison for the nine months ending May 31, 2006. Ms. Smith noted a profit of $36,700 and stated that on an overall basis the Corporation was right on budget. Ms. Smith proceeded to go through and discuss the report for the Board. Ms. Smith informed the Board that work had begun on the budget for the 2007 fiscal year, and noted that a draft copy would be presented to the Board at the next meeting. Tab 1 Presentation, Discussion and Possible Approval of Minutes of the Board

Meeting held on May 12, 2006. Mr. Rencher made a motion to approve the minutes of the Board Meeting held on May 12, 2006. Mr. Romero seconded the motion. Mr. Romero, Mr. Rencher and Mr. Romero voted to approve the motion. Ms. Van Hovel abstained from voting. Motion passed. Tab 2 Presentation, Discussion and Possible Approval of a Resolution Regarding

the Submission of an Application for Allocation of Private Activity Bonds, Notice of Intention to Issue Bonds and State Bond Application to the Texas Bond Review Board relating to the Corporation’s Single Family Mortgage Revenue Bond Professional Educators Home Loan Program.

Ms. McGilloway began by stating that the Professional Educators Home Loan Program was so successful that in the span of 3 months $25 million in funds had been fully originated. Ms. McGilloway then stated that the Corporation was allocated $55 million in single family bonds

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that could be issued within a year’s time. Ms. McGilloway explained that other entities were also given this authority and were not able to use the funds, and when that happened the funds were returned to the Bond Review Board (BRB) and that September the funds would become available for application. Ms. McGilloway stated that the resolution before the Board was asking for their approval of the submission of an application in September to the BRB for $100 million in additional funds for the Professional Educators Home Loan Program. Ms. McGilloway further explained that what staff would then file a notice of intent to issue those bonds, and then get the money back into the market. Ms. McGilloway stated that there was no guarantee that the Corporation would be issued these funds, as they would be issued on a first come first served basis. Ms. McGilloway noted that while $100 million was a big figure, given the track record of the program and through discussions between staff and the Corporation’s Bond Counsel, General Counsel, Underwriters and Financial Advisor, as well as the Bond Review Board, staff felt very comfortable that $100 million could be committed in the time allotted to do so. Mr. Romero inquired as to whether it would be in the Corporation’s best interest to lock in the interest rate now due to the risk of it going up over the next year. Mr. Miller with First Southwest, the Corporation’s Financial Advisor, introduced himself to the Board and addressed the question. Mr. Miller explained that the BRB had rules regarding the amount of time that was allowed to issue bonds. Mr. Miller stated that with rates as they were it wouldn’t be advisable to issue all $100 million at once due to the fact that it would be fixed and there would be rate risk. Mr. Miller stated that it was being recommended to issue $50 million immediately and do a variable rate on the other $50 million so that it wouldn’t be used immediately. Mr. Miller also noted the possibility of asking for $75 million instead, with the issue of $50 million immediately and pricing the other $25 million at a variable rate so that once the $50 million was gone the $25 million could be used along with the $25 million allocation for 2007. Mr. Dubbelde, the Corporation’s General Counsel, stated that the resolution asked for an amount not to exceed $100 million. Ms. Closmann noted that the resolution was asking for the approval to submit an application to the BRB for an amount not to exceed $100 million, and that staff and professionals would come back before the Board to discuss the structure of the transaction for approval. Mr. Miller stated that if the Corporation got the $100 million allocation it could be given back to the BRB within 180 days, fully or partially, and the Corporation would have 42 months from the day the bonds were issued to use it. Discussion followed. Mr. McGilloway stated that this was being done to avoid having a lapse of funds in 2007, and Mr. Romero urged that staff monitor the program so that it doesn’t have a lapse in funds again. Mr. Miller made one final note that it was the intent to have the bond issue out by the end of September so that money would be available to the lenders and homebuyers as quickly as possible. Mr. Rencher made a motion to approve of a resolution regarding the submission of an application for allocation of private activity bonds, notice of intention to issue bonds and state bond application to the Texas Bond Review Board relating to the Corporation’s Single Family Mortgage Revenue Bond Professional Educators Home Loan Program. Ms. Van Hovel seconded the motion. Motion passed unanimously.

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Tab 3 Presentation, Discussion and Possible Approval of a Resolution Regarding the Submission of an Application for Allocation of Private Activity Bonds, Notice of Intention to Issue Bonds and State Bond Application to the Texas Bond Review Board relating to the Corporation’s Single Family Mortgage Revenue Bond Fire Fighter and Law Enforcement or Security Officer Home Loan Program.

Ms. McGilloway began by explaining that the resolution before the Board was similar to that of Tab 2 except that it was asking to submit an application for the Fire Fighter and Law Enforcement or Security Officer Home Loan Program and asked for an amount not to exceed $25 million. Ms. McGilloway stated that $17 million in funds was still in the market for this program so it was thought that it would last through the end of the year and this $25 million combined with the 2007 allocation of $25 million would last us through 2007. Ms. McGilloway noted that if this money wasn’t applied for, it was feared that in 2007 this program could see the same lapse in funds as the Professional Educator Program was seeing this year. Mr. Romero made a motion to approve the resolution regarding the submission of an application for allocation of private activity bonds, notice of intention to issue bonds and state bond application to Teas Bond Review Board relating to the Corporation’s Single Family Mortgage Revenue Bond Fire Fighter and Law Enforcement or Security Officer Home Loan Program. Ms. Van Hovel seconded the motion. Motion passed unanimously. Tab 4 Presentation, Discussion and Possible Approval of a Resolution Regarding

the Approval of a PILOT Payment Compliance Program and Concerning Other Matters Incident and Related thereto.

Ms. Closmann began by informing the Board as to the history of the PILOT program. Ms. Closmann explained that in 2001 and 2002, the Corporation issued $450 million in bonds for about 39 properties through its 501(c)(3) program. Ms. Closmann explained that the borrowers who received the tax-exempt bond financing through the program were Community Housing Development Organizations (CHDO), which made them eligible under Property Tax Code 11.182 for 100% property tax exemption. Ms. Closmann explained that at the beginning of the program there was no PILOT (Payment in Lieu of Taxes) program, but as the 501(c)(3) program went on the Corporation heard from school districts and other taxing entities saying that although there was a benefit to affordable housing, there were still services that needed to be provided. Ms. Closmann stated that through the guidelines for the program, a requirement was added in that the borrowers make PILOT payments every year on the properties that were financed through the Corporation’s 501(c)(3) program. Ms. Closmann explained that in general the payment was 25% of what would have been owed for property taxes. Ms. Closmann referred the Board to the information in the board packet, which listed the five portfolios affected. Ms. Closmann then referred the Board to the PILOT payments calculation worksheet and letter that she hoped to send out to the portfolios in August that would inform them of this new compliance requirement, should the Board approve the resolution. Ms. Closmann stated that there had been articles in the Dallas Morning News regarding the payments, and through that it was discovered that when PILOT payments were sent to the taxing entities, there was confusion as to why they were paying and the payments were sent back to the trustee. Ms. Closmann stated that because of this it was decided that a process should be established where the borrower would inform the Corporation as to whether payments had been made by using the calculation worksheet. Ms. Closmann stated that the trustee at Wells Fargo, Mr. David Runck, had been informed of the

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situation and was happy to work with the Corporation in letting us know when PILOT payments were made. Ms. Closmann made the Board aware that currently there was a 12 percent penalty on payments that weren’t made. Ms. Closmann stated that this had not been collected up until this point, and it seemed unfair to collect it now when there had been so much confusion in the past. Ms. Closmann asked that the 12 percent penalty for unpaid PILOT payments be waived so long as they are complying with the process. Ms. Closmann noted that some of the properties were in financial distress and would not be able to make their payments, and so instead of imposing the 12 percent penalty on them staff was recommending that the monies be kept track of so that if and when the properties were able to pay, a full accounting of all monies owed would be had. Mr. Rencher asked for clarification on what the 25% was taken of, and Ms. Closmann stated that the properties had agreed to pay 25% of what their property taxes would have been during that year to taxing entities, so that communities felt that the Corporation was giving back to them and not just taking away all their taxing revenues. Discussion followed. Ms. Closmann stated that this was a contractual agreement between the Corporation and the properties. Ms. Closmann said that the first deal to incorporate the PILOT payment program paid the funds to the school district alone, whereas the ones that followed paid to all the taxing entities. Ms. Closmann stated that in spite of whatever financial position these properties are in, they still owe 25 % to the taxing entities. Ms. Closmann noted that monies to pay this payment came out of the tax and insurance accounts in the waterfall, and because some of the properties were having financial difficulties, the money was not falling far enough down the waterfall for the PILOT payments to be paid. Ms. Van Hovel inquired whether this was the first time the payments had not been made, and Ms. Closmann explained that some properties had paid in the past and some hadn’t which made it important for the Corporation to put this process in place. Discussion followed. Ms. Closmann stated that if approved, the properties would send the first calculation worksheets in November 2006 with all the PILOTs for the last few years, and then starting in March 2007 they would send calculation worksheets with documentation for the previous tax year. Mr. Rencher inquired as to how the Corporation staff would determine whether the properties funds were insufficient to make the payments, and Mr. Romero explained that it would be determined by the proceeds from the transaction. Ms. Closmann stated that if the trustee informed the Corporation that funds were in the account and the payments could be made then they would be, but if there’s no money in the bucket then nothing can be done about it. Mr. Rencher inquired about the lien that could be put on the property if payments were not made, and Ms. Closmann explained that the lien would not withstand a foreclosure but if the property was sold the lien would still be in place. Mr. Dubbelde added that as long as MBIA was in place the Corporation would not be able to foreclose on the lien. Ms. Van Hovel made a motion to approve the resolution regarding the approval of a PILOT Payment Compliance Program and concerning other matters incident and related thereto. Mr. Rencher seconded the motion. Motion passed unanimously. Open Meeting

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After discussion, it was decided that the next Board Meeting would take place on August 11, 2006. Adjournment Mr. Rencher made a motion to adjourn the meeting. Mr. Romero seconded the motion. Motion passed unanimously. The Texas State Affordable Housing Corporation Board Meeting was officially adjourned at 12:02 pm. Respectfully submitted by________________________________________________ Laura Ross, Corporate Secretary

45808714.1/10608257

RESOLUTION NO. 06-____

TEXAS STATE AFFORDABLE HOUSING CORPORATION

RESOLUTION Regarding the Submission of a 2006 Application for Allocation of Private Activity Bonds, Notice of Intention to Issue Bonds and State Bond Application to the Texas Bond Review Board for Single Family Mortgage Revenue Bonds

WHEREAS, the Board of Directors of the Texas State Affordable Housing Corporation (the �Corporation�) desires to submit an Application for Allocation of Private Activity Bonds to the Texas Bond Review Board during the calendar year 2006 and prior to September 1, 2006, in connection with a proposed issue of its Single Family Mortgage Revenue Bonds in a principal amount not to exceed $25,000,000 (the "Bonds");

WHEREAS, the Board desires to make all other appropriate filings and requests to the Texas Bond Review Board to enable the Corporation to issue the Bonds;

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Texas State Affordable Housing Corporation:

1. That the President of the Corporation or any officer of the Corporation is hereby authorized and directed to execute and deliver prior to September 1, 2006 a 2006 Application for Allocation of Private Activity Bonds to the Texas Bond Review Board in connection with requesting an allocation for the Bonds, together with any documents, certificates or instruments related thereto.

2. That the President of the Corporation or any other officer of the Corporation is hereby authorized and directed to file with the Texas Bond Review Board a Notice of Intent to Issue Bonds and a State Bond Application in connection with the Bonds and such officers are further authorized and directed to request that the application be approved by the Executive Director of the Texas Bond Review Board in accordance with Section 181.9(e) of the Rules of the Texas Bond Review Board.

3. That the President of the Corporation is hereby authorized and directed to take any and all other actions necessary or incidental to securing the private activity bond allocation and the approval of the Bonds from the Texas Bond Review Board.

PASSED, APPROVED AND EFFECTIVE this 11th day of August, 2006.

TEXAS STATE AFFORDABLE HOUSING CORPORATION

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Tab 3

Presentation and Discussion of a Single Family Draw Down/Recycling Facility Program.

Handouts to be provided at the meeting.

Texas State Affordable Housing CorporationDraft Operating Budget

(Fiscal Year Ending August 31, 2007)

2006 2007Projected Budget

REVENUEServicing Revenue $ 480,000 $ 427,000 Multifamily Revenue 120,000 329,000 Federal Home Loan Bank Interest Income 119,000 110,000 TDHCA Asset Oversight Revenue 600,000 650,000 Investment Revenue 150,000 160,000 Single Family 137,000 150,000 Grant/Fundraising Income - -

Total Budgeted Revenue $ 1,606,000 $ 1,826,000

EXPENDITURESSalaries & Payroll Related Expense $ 815,000 $ 1,014,000 Professional Services 170,000 210,000 Office & Equipment Lease 124,000 134,000 Travel & Meals 78,000 98,000 Interest on FHLB Notes 80,000 75,000 Sponsorships & Grants 6,600 12,500 Marketing 7,600 30,500 Insurance Expense 20,000 23,500 Professional Dues & Training 18,000 21,000 Communication Expense 13,000 16,000 Bank Fees & Charges 10,000 10,000 Office Supplies 7,600 9,000 Publications, Subscriptions, Office Maintenance 4,000 4,000 Freight, Delivery & Postage 7,300 7,500 Furniture, Equipment & Software 29,000 10,000 Printing 1,200 3,000 Program & Loan Administration 4,000 7,000

Total Budgeted Expenditures $ 1,395,300 $ 1,685,000

Excess of Budgeted Revenues over Budgeted Expenditures $ 210,700 $ 141,000

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Texas State Affordable Housing CorporationDraft Operating Budget

(Fiscal Year Ending August 31, 2007)

2006 2007Projected Budget

REVENUEServicing Revenue $ 480,000 $ 427,000 Multifamily Revenue 220,000 329,000 Federal Home Loan Bank Interest Income 119,000 110,000 TDHCA Asset Oversight Revenue 600,000 650,000 Investment Revenue 150,000 160,000 Single Family 137,000 150,000 Grant/Fundraising Income - -

Total Budgeted Revenue $ 1,706,000 $ 1,826,000

EXPENDITURESSalaries & Payroll Related Expense $ 815,000 $ 1,014,000 Professional Services 170,000 210,000 Office & Equipment Lease 124,000 134,000 Travel & Meals 78,000 98,000 Interest on FHLB Notes 80,000 75,000 Sponsorships & Grants 6,500 12,500 Marketing 7,600 30,500 Insurance Expense 20,000 23,500 Professional Dues & Training 18,000 21,000 Communication Expense 13,000 16,000 Bank Fees & Charges 10,000 10,000 Office Supplies 7,600 9,000 Publications, Subscriptions, Office Maintenance 4,000 4,000 Freight, Delivery & Postage 7,300 7,500 Furniture, Equipment & Software 29,000 10,000 Printing 1,200 3,000 Program & Loan Administration 4,000 7,000

Total Budgeted Expenditures $ 1,395,200 $ 1,685,000

Excess of Budgeted Revenues over Budgeted Expenditures $ 310,800 $ 141,000

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