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.

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
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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
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3. 11/20/2012
PRINCIPLE
Principle 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
OPERATING
Operating Costs Operating Expenses
Reductions:
• PILOT
• Tax deferment
Operating
Revenue Increase: Expense
Tax
• Higher rent Deferment
USDA Rental Assistance
HUD Housing Assistance
Payment
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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)
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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)
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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!
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