Lessons Learned Midwestern Lenders Conference October 14 2015 Four HUD Hot Buttons Functional Obsolescence Scattered Sites Fair Housing Environmental Issues Functional Obsolescence Small Units ID: 555854
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Slide1
Rental Assistance DemonstrationLessons Learned
Midwestern Lenders Conference
October 14, 2015Slide2
Four HUD Hot Buttons
Functional Obsolescence
Scattered Sites
Fair Housing
Environmental IssuesSlide3
Functional Obsolescence
Small Units
Too few Bathrooms
Small doorways
Site design
Terra Cotta sewer linesSlide4
Scattered Sites
5 contiguous units per parcel
One marketable, manageable property
Similar quality when renovated
Rotating staff serves all propertiesSlide5
Fair Housing
Fair Housing Accessibility if built after March 13, 1991
First floor units or all elevator units must be adaptable
(blocking, accessible path, adaptable cabinets)
Section 504: Federal Funds
(Section
8) = 5% fully accessible and 2% hearing and sight
HUD Minimum Property Standards
Elderly Units:
call systems; grab bars in bathtubs; non-slip tub surface; elevators sizes (waivable); stair height (waivable); hallway handrails on one side
Disabled
Units: blocking for grab barsSlide6
Environmental Issues
Floodway
Floodplain
Asbestos
Lead-based Paint
Radon
8-step process
Form 4128Slide7
Who is in Charge?
Four RAD Underwriting Offices:
Atlanta
Chicago
Ft. Worth
Seattle
See Handout for who to call for concept meeting, RAD jurisdictions, and work-load sharingSlide8
Who is in Charge: Two Examples
If originating office is Atlanta, Chicago, Ft. Worth, or Seattle
RAD office conducts concept Call
Discuss HUD Hot Buttons, Waivers, and Issues
Attending: Housing underwriter,
RAD transaction
manager
,
housing
authority,
developer, and
lender
.
Project probably underwritten in geographic RAD officeSlide9
Who is in Charge: Two Examples
If originating office is
NOT
Atlanta, Chicago, Ft. Worth, or Seattle
Originating office conducts concept Call
Discuss HUD Hot Buttons, Waivers, and Issues
Attending:
Housing underwriter,
RAD transaction
manager
,
housing
authority,
developer, and
lender
.
Project
will
NOT
be
underwritten in
the originating officeSlide10
Who is in Charge?
Work-Load Sharing: in all cases
Call Mark Wiesendanger to ask which RAD office will receive your RAD project
If not the concept call office, conduct a new “warm-up” call, discuss Hot Buttons, Waivers, and Issues
Attending warm-up call: Housing underwriter,
RAD transaction
manager
,
housing
authority,
developer
, and
lender
. Slide11
Where are Decisions Made?
Underwriting branch chief: RAD
office
HUB-level waivers: RAD processing office, housing and legal
Environmental reviews: Geographic office
Closing: Geographic office
At
the concept meeting or warm-up meeting,
ASKSlide12
Random Lessons Learned
Waiver of Paragraph B of the Ground Lease is approved in RAD housing and legal with HUD Central concurrence
Leasehold value on ground lease from public entity is always $0, which may be changing and may not matter; what to cost certify?
Payments in cash on GL during construction are
part of replacement cost and cost
certifiable; single up front payments satisfied by a landlord note are
notSlide13
Random Lessons Learned
Good repair history is hard to get
Justify 10% contingency in heavy rehab
Check terms of RE tax PILOTs: role of HASlide14
Random Lessons Learned
Housing Authority can contribute cash and take cash out if last
transaction
223f
: value is set by restricted value
RECAP will take care of releases of Declarations of
TrustSlide15
Random Lessons Learned
Developer fee LIHTC:
L
esser of 15% of total development cost or Agency allowed fee
Distributed on Syndicator Schedule
Paid from tax credit equitySlide16
Random Lessons Learned
Developer fee
Not
LIHTC:
10% of total development cost less reserves, developer fee, and acquisition cost in IOI transactions
Distributed
33% at IE
33% at 50% complete
Remainder at 100% completeSlide17
Random Lessons Learned: 221d4
Value may be more or less than purchase price
Purchase price negotiated between buyer and seller; included in basis
Underwrite and certify lesser of “as is” value or purchase price
Seller note may exceed market value with a waiver of MAP Guide 8.9B2Slide18
Random Lessons Learned: 221d4
“
as is” value set at market rents,
market expenses
,
market cap rate
No cash out from any source at IE; waiver of ML 2012-20.IV.P for 5%-10% required by syndicators
Cash out from “as is” value at 6 months of sustaining occupancy following FE MAP Guide 8.13J