HOUSING OHIO COHHIO’s Annual Statewide Conference Overview of Bond Financed Projects
What is the 50% Test? Must Finance “At least 50% Of Projects Aggregate Basis + Land” With Bonds Or …roughly ½ of total project costs.
How Bonds Can Be Used Three Ways Bonds Can Be Used: Construction Financing Permanent Financing Both Construction & Permanent
What Commitments Come With Bonds & 4% Credits Deed Restriction: 20/50 or 40/60 Set Aside Pretty Much The Same As LIHTC, One Caveat, Must Extend To Bond Term If Longer
Credit Enhancement Two Types: FHA Insurance: Letter of Credit Un-Enhanced Bonds:
Bond Rating Rated By One of Two Main Agencies: Standard & Poors OR Moodys OR Unrated: Bought By Direct Investor
Costs Of Bonds A Lot… Participant List: Issuer, Bond Counsel, Underwriter, Underwriter’s Counsel, Owner, Owner’s Counsel, Lender, Lender Counsel, Credit Enhancer or Letter of Credit Bank, Rating Agency, Trustee, Tax Credit Syndicator, Syndicator’s Counsel Figure 7% Of The Bond Amount With Permanent Financing, Less For Construction Only
Bond Pools Several Small Projects Can Be Pooled Into One Bond Issuance Can Be In Multiple Locations, Cities, Counties, Etc…
Expected Timeline Forever…. Expect A Year To 18 Months
Issues With Tax Exempt Bond Deal 1. Deals Are Very Complicated 2. Many Players Involved 3. Financing Can Be Very Expensive Get A Good & Knowledgeable Development Team!
HOUSING OHIO COHHIO’s Annual Statewide Conference Sources of Gap Financing
HOUSING OHIO COHHIO’s Annual Statewide Conference Other Considerations to Financing
Reporting Reports more than 30-days late Watchlist Criteria Compliance & Other CRITERIA DEFINITION INFORMATION SOURCE Compliance Issues Any qualified unit out of compliance for more than 60 days Non-compliance with 10% or more of qualified units (rent levels, tenant income , certification) No receipt of Annual Owner’s Certification IRS Form 8823 issued Notice of IRS claim or audit Quarterly Status Report Annual Owner’s Certification Annual Site Visit Monthly & Quarterly Report Transfers of Ownership/Reorganization of Project Sponsor Any change Annual Owner’s Certification Strength of Sponsor/Management Company Decline in sponsor’s financial condition Deterioration of its asset management capability Annual Site Visit Default under Partnership agreement, mortgage or loan agreement Litigation Any litigation Quarterly report
To establish a flexible source of funds that can be utilized by development partners of Ohio Capital Corporation for Housing for use as predevelopment funding, acquisition financing, bridge financing and homeownership development.
From 2000-2004 OCCH lent out over $3.6M in predevelopment loans
Loans limited to $50,000
Used for Short Term and Predevelopment Costs
In 2002 the Ohio Capital Finance Corporation received CDFI Fund Certification
In 2004 the Ohio Affordable Housing Loan Fund was created - $10,000,000
In 2006 over $10,000,000 in loans have closed and the Fund has begun to revolve
The Loan Fund has experienced no write-offs or loans at risk
Continued demand for existing loan products
Borrowers appreciate new source of capital that understands the tax credit marketplace