C8 financing affordable rental projects p pt - russ huxtable

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This workshop will explore how organizations can utilize various federal, state, and private financing sources combined with innovative ideas to create affordable rural rental housing for veterans, seniors, and families. Participants will learn to analyze project cash flow, maximize private investment, leverage tax credits, and bridge financing gaps.

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C8 financing affordable rental projects p pt - russ huxtable

  1. 1. 11/20/2012  Milford Housing Development Corporation Russell Huxtable Vice President 302-422-8255 rhuxtable@milfordhousing.com   A sample Senior Rental Housing Project  A project is conceptualized  Market study conducted  Plans and specs are drawn  Developer gets financing to pay for construction and permanent debt  Developer builds apartments  Developer hires a property management company or self- manages  Project is operational 1
  2. 2. 11/20/2012 Principle Interest Rate 1% 100% 2% Principle 3% Operating Costs 4% 5% Operating Costs Gross Rents-Operating Expenses =Net Operating Income Net Operating Income determines how much is available for Debt Service (also appraisal) Debt Service / NOI = DCR DCR must be greater than 1.0  60% and below median income for the area, with an emphasis on those making less than 50%, 40% and 30%  Our apartments: Quality construction, emphasis on energy efficiency (QAP)  Costs are the costs 2
  3. 3. 11/20/2012 PRINCIPLEPrinciple Reduction: Principle• LIHTC • Equity!• Federal Home Loan Bank• HOME Principle• DSHA Housing Subsidy Development Fund• Fee Waivers• Other Sources INTEREST• HOME • Interest Deferred Interest Rates Loan• Federal Home Loan Bank • 0% forgivable loan Project USDA• DSHA Housing USDA Development Fund USDA • 0-3%, can be USDA deferred• Local CDFI• Regional CDFI• USDA 515 OPERATINGOperating Costs Operating ExpensesReductions:• PILOT• Tax deferment OperatingRevenue Increase: Expense Tax• Higher rent DefermentUSDA Rental AssistanceHUD Housing AssistancePayment 3
  4. 4. 11/20/2012 62 years and older (also disabled) o 36 units o 30 1 bedroom o 2 2-bedroom o Energy Star Construction o 1,400 square foot community room with kitchenette, computer, TV and etc. o Life Trails – age appropriate exercise stations o Walking trails, gazebos, picnic tables and benches Principle & Interest $5,300,000 Total Development Costs(2007) LIHTCequity: $2,800,000 DSHA; $1,500,000 o HDF: 3% deferred o HOME USDA 515: $1,000,000 (1%, 50 yr. amm) 4
  5. 5. 11/20/2012 Operating Revenue o How much rent do we charge o $461 1 bedroom USDA Rental o $547 2 bedroom Assistance o Not a tiered rent situation Expenses o 8% management fee, standard o No other considerations because of LIHTC • Nonprofit tax exemption not in place Hurd’s Crossing is a success story for Rural Seniors. Low Income Housing Tax Credit o Equity for deals Follows the Qualified Allocation Plan for the State o State makes its rules o Emphasizes the State’s needs through category point allocations o Standards of construction o Sets the table • Example: NO developments within ¼ mile of Railroad tracks (point deduction) 5
  6. 6. 11/20/2012 2012 LIHTC Project for Seniors o 36 units of new construction, 28 units of rehab o $9.4 million in TDC o Awarded $660,000 in LIHTC o The only missing piece, USDA 515 • Strong application with 90% of other funds committed o QAP issues • In DE for senior complexes at least 50% of the units must have rental assistance, if not, the project does not meet threshold What happens now Sunk costs o Market study o Appraisal o Application fees o Architect fees o $30-$40,000 investmentA 2013 LIHTC prospective applicant Thank you! 6

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