Charlie Harris, CASA of Oregon

LINNHAVEN STONEBROOK Preservation of Two Rural Development Projects Charlie Harris, CASA of Oregon

Linnhaven Apts 26 Unit Elderly/Disabled

Stonebrook Apts 25 Unit Family Project

PROJECT SUMMARY:
Consolidation, transfer and rehabilitation of 2 RD projects located in Sweet Home, Oregon
both built in mid-70s.
Had 37 units of RA, rec’d 12 add’l units.
Sponsor is Willamette NHS
Owner is LLC subsidiary of WNHS

SCOPE OF REHAB LINNHAVEN
Exterior rehab : new siding, new windows, new 2nd story landings, ext paint.
Interior rehab : new refrigerators, stoves, exhaust fans, sinks & faucets in all kitchens; new shower/tubs, sinks, faucets, flooring in bathrooms
New community building w/ mgt office, tenant meeting space

SCOPE OF REHAB STONEBROOK
Exterior rehab: new roofs, new siding, new windows, new 1st floor decks, ext. paint; New playground
Interior rehab : new refrigerators, stoves, exhaust fans, sinks & faucets in all kitchens; new shower/tubs, sinks, faucets, flooring in bathrooms
New community building w/ office, tenant meeting space
Accessibility: converted 2 units for full accessibility

FINANCING USES OF FUNDS
Total Development Cost: $5,000,000 ($98,000 per unit)
Acquisition: $1,654,000 ($32,500 per unit)
Rehab Cost: $2,180,000 (($43,000 per unit)
Soft Costs: $1,150,000 ($22,600 per unit)

SOURCES OF FUNDS
$3,100,000 Sec. 1602 Exchange Funds
$1,062,580 RD 515 loans
$ 300,000 Assume Existing Loans (MPR debt deferral)
$ 762,580 New 515 loan: (1%, 30 yr term, 50 yr amortzn)
$ 585,000 HOME grant w/ soft loan to LLC
$ 90,000 Green/Energy Incentives: (HAC, Enterprise, Oregon Wx)
$ 130,000 Other Grants: (OHCS, NeighborWorks)
$ 50,000 Seller Contribution: (for deferred maintenance)

TIMELINE
May, 2007: Purchase Agreements
May, 2007: RD MPR Pre-Application
June 2007 Notification of Pre-App Approval
October, 2007: Appraisal
December, 2007: CNA
Jan 2008 to Aug. 2009: Full RD Transfer Application
February, August 2008: Application for LIHTC, state funding
November 2008: Notification of state award
August 2009 Notification of MPR Funding Tools
August 2009 Application for 1602 Exchange funds
September 2009 RD Conditional Commitment
December 2009 Loan Closing
January to June, 2010 Rehab

Timeline
Only person put out by 3 yr timeline was one of seller’s realtors
Since sellers have been dealing with RD for 30 years, they’re used to LLOONG process

ISSUES
What path to go down for RD?
MPR (see NOFA)
Transfer
7 CFR 3560.406; Hdbk 3-3560, Chp. 7 and/or
Prepayment
With Incentives
Without incentives
7 CFR 3560.651 to 700; Hdbk 3-3560, Chp. 15.

ISSUES (cont.)
Factors in Deciding what path to go down for RD?
Is property subject to use restriction and/or prepayment? (Need original loan date and date of last RD servicing action)
Additional RA needed?
Eligibility for $50k predev grant?
Increased Return to Owner?
Need for new 515/514 loan?
Need for other MPR tools

ISSUES (cont.)
When do you know what you’re getting from RD MPR program?
Using LIHTC for rural RD scattered-site project (Section 1602 to the Rescue!)
Transfer of Project Accounts
Forecast Balances of Assumed Loan(s)
Drawdown of Funds (RD last in, but consider RD-ineligible costs like dev fee)
Relocation

ISSUES (cont.)
Operating Budget
Replacement Reserves
Rents v. CRCU (and v. current rents, if not 100% RA)
“ Soft Second” HOME loan and Project Cash Flow
Project Consolidation gives owner leeway—one operating budget for both projects

Non-Issues
Timing with Multiple Funding Sources
Additional RA (State Office provided 12 units of recaptured RA)
Lien Priorities (no construction lender, RD is only perm lender)

Charlie Harris, CASA of Oregon

by National Housing Conference & the Center for Housing Policy on May 21, 2010

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