Florida Housing Coalition Annual Conference - PowerPoint Presentation

1. Florida Housing Coalition Annual Conference Preservation of Affordable HousingSeptember 27, 2011

2. Fannie Mae and Freddie MacPreservation Programs - Expiring Section 8 HAP Contracts - Less than 10 Years of RestrictionsBond Credit Enhancement – 4% LIHTC9% LIHTC MortgagesGreen Refinance Plus – Fannie Mae

3. Preservation Programs – Immediate FundingDebt Service Coverage Ratio – 1.20x – 1.25x - HUD Risk Share – 5 basis point reductionLoan to Value – 80% - HUD Risk Share – increase LTV by 5%Amortization – 30 to 35 yearsTerm – typically a minimum of 10 yearsMinimum Occupancy – 85% Physical & 80% EconomicRecourse – Non-recourse except for standard carve-out provisionsSupplemental Loans - Available

4. Bond Credit Enhancement – 4% LIHTCImmediate and Forward Commitment - Forward requires LOC from “A” – “AA” Rated Bank until construction/rehab and stabilizationGeneral Underwriting - Debt Service Coverage Ratio – minimum of 1.15x (1.20x for VRB) - Loan to Value – maximum of 85% adjusted value or 90% of market value - Minimum Term – 15 years - Amortization – 30 to 35 years - Fixed or Variable Rate Bonds (Fannie Mae – only Fixed)Processing Time – 90 days or lessSupplemental Loans – AvailableHUD Risk Share – Normally available and may improve terms

5. 9% LIHTC MortgagesImmediate and Forward Commitment - Same LOC Requirement if Forward CommitmentGeneral Underwriting - Debt Service Coverage Ratio –1.15x - Loan to Value – 90% - Minimum Term – 15 years - Amortization – 30 to 35 years - Fixed or Variable Interest RateProcessing Time – 75 days or lessSupplemental Loans – AvailableHUD Risk Share – Normally available and may improve terms

6. Fannie Mae Green Refinance PlusBenefits - 4%-5% more proceeds for energy retro-fitting - One Stop Customer Service – Fannie Mae Lender interacts with HUD/FHAGeneral Underwriting - Loan to Value – 85% - Minimum Debt Service Coverage Ratio – 1.15x - Term – 10 years or more - Amortization – 30 years - Fixed Interest Rate with no I/O periodOther Terms - Affordability Restrictions must remain for Term of Loan - Subsidy Layering Review may be required - Green PNA is required - Standard Appraisal and Phase I ESA required

7. Case Study #1 – Bonds with 4% LIHTC$6,400,000Florida Housing Finance CorporationNew Issue Bond ProgramCWCapital wasSeller/ServicerForward CommitmentAcquisition/RehabCWCapital LLC served as the Freddie Mac TAH Seller/Servicer on $6,400,000 of NIBP bonds purchased by Treasury.Bond proceeds were used to rehabilitate a 14-story, 200 unit elderly housing development. Principal and interest on the mortgage loan was secured by a direct pay Credit Enhancement Agreement issued by Freddie Mac.Initial Bond Issuance was split between Gap Bond amount of $2,850,000 and Permanent Bond amount of $6,400,000 and both were credit enhanced by Freddie Mac.The all-in cost of capital for the financing was 4.638%.Freddie Mac HUD Risk Share program utilized to improve terms.

8. Case Study #1 – Bonds with 4% LIHTC (continued)Originally constructed in 1971 and consists of an existing 200-unit elderly housing development.The Project includes 81 efficiency units and 119 1B/1B units and was affiliated with the Methodist Church.The cost of the rehab was $6,418,000 or $32,090 per unit. The Project will receive a new 20-year, Section 8 HAP contract for 84% of the units upon expiration of the existing contract in 2012.Rehabilitation will be floor-by-floor, and is expected to be completed within 15 months.SOURCES OF FUNDS - PermanentNIBP Bond Proceeds$ 6,400,000Tax Credit Equity$ 5,488,000Home Loan$ 3,923,000Seller Subordinate Loan$ 2,500,000Borrower Contribution$ 350,000Total Sources$18,661,000USES OF FUNDS - PermanentPurchase Price – Land and Building$ 4,600,000Hard Construction Costs - Rehab$ 6,418,000Soft Construction Costs / Financing$ 7,267,000Transition Reserve/Contingency$ 376,000Total Uses$18,661,000

9. Case Study #1 – Bonds with 4% LIHTC (continued)Interest Rate StackAll-In Cost4.638%

10. Case Study #1 – Bonds with 4% LIHTC (continued)Flow of FundsIssuerBorrowerProjectTrusteeCWCapital LLCBond ProceedsBond MortgageLoanProceeds used to rehabilitateRevenueBondsBond ProceedsTreasuryPrincipal and InterestLoan PaymentCredit EnhancementAgreement

11. Case Study – Rehab with Tenants in Place – 9% LIHTC$7,800,000Fannie Mae Immediate DeliveryFixed Rate in Place Rehab with 9% LIHTCCWCapital wasFannie Mae DUS LenderImmediate DeliveryAcquisition/RehabCWCapital LLC served as the Fannie Mae DUS Lender on an immediate delivery loan of $7,800,000.Loan proceeds plus tax credit equity were used to rehabilitate a 180-unit garden apartment property with residents in place. Tax Credit Equity Installments plus loan proceeds to fund the renovations.Completion and Operating Deficits Guaranty required.Fannie Mae HUD Risk Share program utilized to improve terms.

12. Case Study – Rehab with Tenants in Place – 9% LIHTC (continued)Originally constructed in 1981 and consists of an existing 180-unit family and seniors development.The Project includes 148 family units and 32 age-restricted units.The cost of the rehab was $7,920,000 or $44,000per unit. The Project received a new 20-year, Section 8 HAP contract for 100% of the units in 2011.Rehabilitation is expected to be completed within 15 months and the borrower provided an interim bridge loan to fund the timing gap from tax credit equity installments.SOURCES OF FUNDS - PermanentLoan Proceeds$ 7,800,000Tax Credit Equity$10,786,000Existing Reserves$ 303,000Total Sources$18,889,000USES OF FUNDS - PermanentPurchase Price – Land and Building$ 7,000,000Hard Construction Costs - Rehab$ 7,920,000Soft Costs / Financing$ 2,981,000Reserve/Contingency$ 988,000Total Uses$18,889,000