2.
Cornell Colony
TABLE OF CONTENTS
Section A
Report Summary Page
Recommendation A1‐A6
Overview A7‐A8
Uses of Funds A9‐A12
Operating Pro Forma A13‐A15
Section B
HOME Loan Special and General Loan Closing Conditions B1‐5
Section C
Supporting Information and Schedules
Additional Development & Third Party Information C1‐C6
Borrower Information C7‐C14
Guarantor Information C15
General Contractor Information C16‐C17
Property Management Information C18‐C19
Exhibits
15 Year Pro Forma 1
Description of Features and Amenities 2 1‐4
Completeness and Issues Checklist 3 1‐2
4. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐1
April 24, 2015
Recommendation
AmeriNational Community Services, Inc. (“AmeriNational”) recommends a Home Investment Partnerships
Program (“HOME”) loan of $5,103,486 to Cornell Colony LLC (“Applicant”) for the construction and
permanent phase financing of Cornell Colony (“Development”) in response to the Applicant’s request for
HOME Financing to be used for Rental Developments in Rural Areas under Request for Applications 2014‐
109 (“RFA 2014‐109”).
Address: City: Zip Code:
County: County Size:
Development Category: Development Type:
Construction Type:
Demographic Commitment: Elderly: Homeless: ELI: Units @ AMI
Farmworker or Commercial Fish Worker: Family: Link: Units
Buildings: Residential ‐ Non‐Residential ‐
Parking: Parking Spaces ‐ Accessible Spaces ‐
$273,348
44 1
103 6
44 50,688
$0 $230,580$228 $0 $0 $533 $549 $5493.0 2.0 35 1,152 60%
3.0 2.0 9 1,152 50% $0 $624
Low
HOME
Rents
High
HOME
Rents
Bed
Rooms
Bath
Rooms Units
Square
Feet
AMI
%
DEVELOPMENT & SET‐ASIDES
Development Name: Cornell Colony
Program Numbers: 2014‐109 2014‐404H
Gross HC
Rent
No No 0
No Yes 0
Appraiser
Rents CU Rents
Annual Rental
Income
Utility
Allow
RD/HUD
Cont Rents
Net HC
Rent
Applicant
Rents
Concrete Block
517 W. Cornell Street Avon Park 33825
Highlands Small
New Construction Single Family Homes
$396 $42,768$228 $0 $0 $380 $396
$0 $777
$0
HOME Subsidy Limits:
44 Three Bedroom units at $141,907 = $6,243,908 Maximum Subsidy
Set Asides:
Absorption Rate: units per month for months.
Occupancy Rate at Stabilization: Physical Occupancy Economic Occupancy
Occupancy Comments
DDA?: QCT?:
Site Acreage: Density: Flood Zone Designation:
Zoning: Flood Insurance Required?:R‐1 (Low Density Residential) No
95.0% 95.0%
CMA weighted average physical occupancy is 93.7%.
Yes Yes
8.3 5.55 N
22 2
HOME 80% 35 60% 50
Program % of Units # of Units % AMI Term (Years)
HOME 20% 9 50% 50
5. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐2
April 24, 2015
Applicant/Borrower:
General Partner 1:
Guarantor(s):
Developer:
Principal 1
Principal 2
Principal 3
General Contractor 1:
Management Company:
Architect:
Market Study Provider:
Appraiser:
Period of Operating
Expenses/Deficit Reserve in
Months
6
Operating/Deficit Service
Reserve
$117,477
Debt Service Coverage 1.47 1.47 1.47
Loan to Cost 17.3% 76.9% 3.3%
Restricted Market Financing
LTV
76.7% 416.9% 431.6%
Market Rate/Market
Financing LTV
44.2% 240.5% 249.0%
Amortization 35 0 0
Loan Term 10 30 15
Underwritten Interest Rate 5.75% 0.00% 0.00%
Amount $1,150,000 $5,103,486 $220,000
Lender/Grantor FCLF FHFC Highlands County
SCMH Architects, Inc.
Novogradac & Company LLP
Novogradac & Company LLP
PERMANENT FINANCING INFORMATION
1st Source 2nd Source 3rd Source 4th Source 5th Source Other
Avon Park Housing Authority
Marmer Construction, Inc.
Cornell Colony Developer LLC
APHDC‐Cornell Colony LLC
Heartland Development Group LLC
HTG Cornell Developer LLC
Cornell Colony LLC
Avon Park Housing Development Corporation
Martin M. Wohl (Construction Completion & Operating Deficit only)
DEVELOPMENT TEAM
Cornell Colony LLC % Ownership
Avon Park Housing Development Corporation 100.000%
As‐Is Value
TOTAL $6,637,793 $6,637,793 $150,859
Third Mortgage Highlands County $220,000 $220,000 $5,000
Deferred Developer Fee Developer $426,798 $164,307 $3,734
First Mortgage FCLF $1,300,000 $1,150,000 $26,136
Second Mortgage FHFC $4,690,995 $5,103,486 $115,988
CONSTRUCTION/PERMANENT SOURCES:
Source Lender Construction Permanent Perm Loan/Unit
Projected Net Operating Income (NOI) ‐ 15 Year $125,764
Year 15 Pro Forma Income Escalation Rate 2.0%
Year 15 Pro Forma Expense Escalation Rate 3.0%
Rent Restricted Market Financing Stablized Value $1,500,000
Projected Net Operating Income (NOI) ‐ Year 1 $112,605
Deferred Developer Fee $164,307
$310,000
Market Rent/Market Financing Stabilized Value $2,600,000
Note: During the construction phase, all subordinate funding will be available and a portion of the HOME
loan will be drawn to pay down the Construction Loan until such time as it converts to the Permanent
Loan.
6. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐3
April 24, 2015
Changes from the Application:
COMPARISON CRITERIA YES NO
Does the level of experience of the current team equal or exceed that of the team
described in the Application?
x
Are all funding sources the same as shown in the Application? 1.
Are all local government recommendations/contributions still in place at the level
described in the Application?
2.
Is the Development feasible with all amenities/features listed in the Application? x
Do the site plans/architectural drawings account for all amenities/features listed in the
Application?
x
Does the Applicant have site control at or above the level indicated in the Application? x
Does the Applicant have adequate zoning as indicated in the Application? x
Has the Development been evaluated for feasibility using the total length of set‐aside
committed to in the Application?
x
Have the Development costs remained equal to or less than those listed in the
Application?
x
Is the Development feasible using the set‐asides committed to in the Application? x
If the Development has committed to serve a special target group (e.g. elderly, large
family, etc.), do the development and operating plans contain specific provisions for
implementation?
x
HOME ONLY: If points were given for match funds, is the match percentage the same as
or greater than that indicated in the Application?
N/A
HC ONLY: Is the rate of syndication the same as or greater than that shown in the
Application?
N/A
Is the Development in all other material respects the same as presented in the
Application?
3.
The following are explanations of each item checked "No" in the table above:
1. The construction/permanent lender identified in the Application, Chase Bank, agreed to provide
a $1,700,000 construction loan and a $1,150,000 permanent loan to the Applicant. The
construction/permanent financing and lender have both been changed. Florida Community Loan
Fund (“FCLF”) will provide a construction loan up to $1,700,000 and a permanent loan of
$1,310,000.
2. The RFA requires an amount of match funds for funding preference only. As such, the Local
Government Contribution illustrated a $350,000 loan from Highlands County, however, based on
a conditional commitment dated March 12, 2015 from Highlands County Board of County
Commissioners, county funding has been reduced to $220,000.
7. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐4
April 24, 2015
3. The Applicant requested to add HTG Cornell Developer LLC (“HTG Cornell”), as a member of the
Developer, according to a letter dated January 16, 2015. The letter was accompanied by the
development experience of Mr. Randy Rieger, as co‐manager and principal of HTG Cornell, who
illustrates three affordable housing projects totaling 523 units developed in Florida between 2005
and 2012. Randy Rieger is a principal of Housing Trust Group, LLC (“HTG”), which has significant
experience in the development of affordable housing.
The Application did not elect a concrete block construction type; however, plans provided indicate
the use of concrete block construction.
Does the Development Team have any FHFC Financed Developments on the Past Due/Non‐Compliance
Report?
According to the FHFC Asset Management Noncompliance Report dated February 13, 2015, no
compliance issues exist for the Development Team.
According to the FHFC Past Due Report dated April 7, 2015, no past due issues exist for the Development
Team.
This recommendation is subject to satisfactory resolution, as determined by Florida Housing, of any
outstanding past due items or non‐compliance issues applicable to the Development Team prior to the
closing of the HOME loan recommended herein.
Strengths:
1. According to the appraisal, the Development will achieve the maximum allowable net restricted
rents on the HOME set‐aside units.
Other Considerations:
None
Issues and Concerns:
1. The Guarantors have limited experience in the development of affordable housing and limited
liquidity. Avon Park Housing Development Corporation (“APHDC”), a 501(c)(3) non‐profit
corporation that is an instrumentality of the Avon Park Housing Authority (“APHA”), recently
developed a newly constructed, 72‐unit, two‐phase multifamily affordable housing development
known as North Central Heights Phases I & II in 2010 ‐ 2011. Martin M. Wohl, principal of
Heartland Development Group LLC (“Heartland”), a Developer Member, and principal of Marmer
Construction, Inc. (“Marmer”), the General Contractor, has developed one 64‐unit townhome and
garden‐style multifamily affordable housing development known as Highlands Cove. Mr. Wohl
represents he has developed an additional 269 units among five market‐rate residential projects.
Collectively, the Guarantors represent liquidity in the low‐six figures.
10. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐7
April 24, 2015
Overview
Construction Financing Sources:
Source Lender Applicant's Total
Applicant's
Revised Total
Underwriter's Total
Interest
Rate
Debt Service
During
Construction
First Mortgage FCLF $1,700,000 $1,300,000 $1,300,000 5.75% $86,220
Second Mortgage FHFC $5,103,486 $5,103,486 $4,690,995 0% $0
Third Mortgage Highlands County $350,000 $220,000 $220,000 0% $0
Deferred Developer Fee Developer $0 $0 $426,798
$7,153,486 $6,623,486 $6,637,793 $86,220Total :
Proposed First Mortgage Loan:
A letter of intent (“LOI”) dated January 14, 2015 was provided by FCLF which illustrates a construction
loan up to $1,700,000; however, AmeriNational estimates a $1,300,000 Construction Loan. Terms and
conditions of the loan include: a term up to 24 months and interest only payments based upon a fixed
interest rate of 5.25%. AmeriNational added 0.50% for an underwriting cushion to derive the “all‐in”
interest rate of 5.75% during the construction phase.
Proposed Second Mortgage Loan:
The Applicant requested $5,103,486 in response to RFA 2014‐109. AmeriNational estimates a $4,690,995
HOME loan is necessary to meet the disbursement needs during the construction phase. Terms and
conditions of the HOME loan include a 0% interest rate. HOME loan proceeds shall be disbursed during
the construction phase in an amount per draw on a pro‐rata basis with other financing as approved by the
credit underwriter. Additional terms and conditions are outlined in the Permanent Sources of Funds.
Proposed Third Mortgage Loan:
A conditional loan commitment dated March 12, 2015 from Highlands County indicates State Housing
Initiatives Partnership (“SHIP”) funds in the amount of $220,000 for the construction and permanent
phase of the Development. Terms and conditions include a non‐amortizing loan with no payments
required during the construction phase. Additional terms and conditions are outlined in the Permanent
Sources of Funds.
Deferred Developer Fee:
The Applicant will be required to defer $426,798 of its total Developer Fee.
11. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐8
April 24, 2015
Permanent Financing Sources:
Source Lender Applicant's Total
Applicant's
Revised Total
Underwriter's Total
Interest
Rate
Amortization
Years
Term
Years
Annual
Debt Service
First Mortgage FCLF $1,150,000 $1,150,000 $1,150,000 5.75% 35 10 $76,383
Second Mortgage FHFC $5,103,486 $5,103,486 $5,103,486 0% 0 30 $0
Third Mortgage Highlands County $350,000 $220,000 $220,000 0% 0 15 $0
Deferred Developer Fee Developer $912,239 $40,870 $164,307
$7,515,725 $6,514,356 $6,637,793 $76,383Total :
Proposed First Mortgage Loan:
According to the LOI, the Construction Loan will convert to a permanent loan of $1,310,000; however, the
Applicant’s budget illustrates a loan amount of $1,150,000 (the “Permanent Loan”), which was relied upon
by AmeriNational for underwriting purposes. The Construction Loan will be paid down with a combination
of HOME and/or SHIP funds at permanent loan conversion. According to written correspondence provided
by FCLF, the achievement of a Debt Service Coverage Ratio of 1.15 to 1.00 based on three months of
operations on all hard pay debt obligations must be met in order to convert to permanent financing.
Terms and conditions of the Permanent Loan include a 10‐year term and a 35‐year amortization period.
The FCLF LOI indicates the interest rate will be fixed at the Construction Loan closing with an indicative
interest rate of 5.75%. At the end of the 10‐year term of the Permanent Loan, the Applicant indicates it
intends to either refinance by way of a takeout from a HUD 221(d)(4) permanent loan or extend the
Permanent Loan with FCLF.
Proposed Second Mortgage Loan:
The Applicant requested a $5,103,486 HOME loan in response to RFA 2014‐109. The loan shall be non‐
amortizing with a 0.00% interest rate over a 30‐year term. Principal will be deferred until maturity.
Annual payments of all applicable fees will be required. Fees include HOME Compliance Monitoring
(“CM”) and Permanent Loan Servicing (“PLS”) fees. The HOME Compliance Monitoring fees are estimated
to be $2,964 per year (representing a minimum fee per month of $247) plus $426 per year ($9.68 per
unit). The HOME Permanent Loan Servicing fees of $9,696 per year is based on an annual fee of 25 bp
subject to a minimum fee per month of $203 and a maximum fee per month of $808.
Proposed Third Mortgage Loan:
A conditional loan commitment dated March 12, 2015 from Highlands County indicates SHIP funds are
available in the amount of $220,000 for the construction and permanent phase of the Development.
Terms and conditions include a non‐amortizing loan, with no interest accrual and no payments required
during the life of the 15‐year loan. The loan is forgivable at maturity so long as the Development complies
with all affordable housing program requirements.
Deferred Developer Fee:
The Applicant will be required to permanently defer $164,307 of the total developer fee after stabilization.
12. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐9
April 24, 2015
Uses of Funds
Applicant Costs
Revised Applicant
Costs
Underwriters Total
Costs ‐ CUR
Cost Per Unit
HOME Ineligible
Costs ‐ CUR
New Rental Units ‐ Residential $4,000,626 $3,947,368 $2,914,741 $66,244 $0
Site Work $0 $0 $996,988 $22,659 $0
General Conditions $0 $236,842 $156,842 $3,565 $0
Overhead $0 $78,947 $78,947 $1,794 $0
Profit $643,125 $236,842 $236,842 $5,383 $0
Builder's Risk Insurance $22,000 $0 $30,000 $682 $0
Payment and Performance Bonds $0 $0 $50,000 $1,136 $0
Furniture, Fixture, & Equipment $0 $0 $35,000 $795 $0
Total Construction Contract/Costs $4,665,751 $4,499,999 $4,499,360 $102,258 $0
Hard Cost Contingency $264,787 $225,000 $224,968 $5,113 $0
$4,930,538 $4,724,999 $4,724,328 $107,371 $0
CONSTRUCTION COSTS:
Total Construction Costs:
Notes to Actual Construction Costs:
1. A Standard Form of Agreement between the Owner and General Contractor dated March 13, 2015
where the basis of payment is a stipulated sum of $4,499,360 (the “Construction Contract”) was
provided. The General Contractor shall achieve substantial completion 300 days (10 months) from
the date of commencement. Under the Construction Contract, retainage shall be ten percent until
fifty percent completion of construction and five percent shall be withheld thereafter, which exceeds
the minimum requirements within the Rule.
2. The Construction Contract’s schedule of values represent a General Contractor’s Fee (consisting of
general conditions, overhead, and profit) that is within the maximum 14.00% allowable per the RFA
and Rule. Fee is calculated exclusive of the costs of insurance and payment and performance bonds.
3. The costs of Builder’s Risk Insurance and Payment and Performance Bond costs included in the
General Conditions in the Construction Contract’s schedule of values.
4. A 5.00% hard cost contingency was utilized by AmeriNational as allowed per the RFA and the Rule.
5. A Plan and Cost Review (“PCR”) was performed by GLE & Associates, Inc. (“GLE”). The total hard cost
budget of $4,499,360 or $99,986 per unit of the schedule of values is within an acceptable range as
compared to similar projects. The costs associated with site work of $1,046,988 or $2.88 per square
foot are appropriate for the scope of work. According to GLE, the vertical construction costs of
$2,899,741 or $53.70 per square foot are at the low end of the acceptable range for the
Development’s scope of work. The construction timeline appears to be a reasonable duration for the
Development, according to GLE, provided no unforeseen circumstances occur.
13. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐10
April 24, 2015
GENERAL DEVELOPMENT COSTS: Applicant Costs
Revised Applicant
Costs
Underwriters Total
Costs ‐ CUR
Cost Per Unit
HOME Ineligible
Costs ‐ CUR
Accounting Fees $20,000 $15,000 $15,000 $341 $0
Appraisal $7,500 $6,750 $6,750 $153 $0
Architect's Fee ‐ Site/Building Design $40,000 $37,000 $37,000 $841 $0
Architect's Fee ‐ Supervision $10,000 $0 $0 $0 $0
Building Permits $77,000 $16,000 $16,000 $364 $0
Engineering Fees $50,000 $62,625 $65,125 $1,480 $0
Environmental Report $0 $2,500 $2,500 $57 $0
FHFC Application Fee $3,000 $3,000 $3,000 $68 $3,000
FHFC Credit Underwriting Fee $0 $300 $300 $7 $300
Lender Inspection Fees / Const Admin $18,000 $5,500 $37,319 $848 $0
Home Energy Rating System (HERS) $22,000 $0 $0 $0 $0
Insurance $28,000 $14,757 $14,757 $335 $0
Market Study $7,500 $4,500 $4,500 $102 $0
Marketing and Advertising $30,000 $22,500 $22,500 $511 $22,500
Plan and Cost Review Analysis $0 $3,350 $3,350 $76 $0
Property Taxes $2,000 $0 $0 $0 $0
Soil Test $10,000 $3,130 $3,130 $71 $0
Start‐Up/Lease‐up Expenses $0 $0 $0 $0 $0
Survey $15,000 $10,000 $10,000 $227 $0
Title Insurance and Recording Fees $90,000 $63,003 $63,003 $1,432 $0
Traffic Study $0 $3,061 $3,061 $70 $0
Utility Connection Fees $100,000 $110,870 $110,870 $2,520 $0
Soft Cost Contingency $0 $22,592 $20,908 $475 $0
$530,000 $406,438 $439,073 $9,979 $25,800Total General Development Costs:
Notes to the General Development Costs:
1. AmeriNational reflects actual costs for the appraisal, market study, plan and cost review, FHFC
Application and Credit Underwriting fees.
2. Architectural Fees and Engineering Fees are based on contracts executed by the Applicant. The
Architect’s Fee appears low to AmeriNational and GLE. However, the Applicant explained the costs
are indicative of existing architectural plans and a single‐family, repetitive, home product.
3. Lender Inspection Fees/Construction Admin consist of fees associated with the inspections by the
construction consultants retained by AmeriNational and FCLF. AmeriNational estimated $13,475 for
monthly construction inspections by GLE, $21,386 for construction loan servicing of the HOME loan,
and $5,500 for monthly inspections by the City of Avon Park and FCLF.
4. A contingency reserve of 5.00% of general development costs was utilized by AmeriNational.
5. The remaining General Development Costs appear reasonable.
14. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐11
April 24, 2015
Applicant Costs
Revised Applicant
Costs
Underwriters Total
Costs ‐ CUR
Cost Per Unit
HOME Ineligible
Costs ‐ CUR
Construction Loan Application Fee $0 $0 $300 $7 $0
Construction Loan Origination Fee $17,000 $0 $0 $0 $0
Construction Loan Closing Costs $4,250 $0 $0 $0 $0
Construction Loan Interest $38,675 $42,483 $86,220 $1,960 $31,150
Permanent Loan Origination Fee $30,000 $11,500 $11,500 $261 $0
Permanent Loan Closing Costs $0 $2,300 $2,300 $52 $0
HOME Closing Costs $0 $0 $15,000 $341 $0
Reserves ‐ Operating Deficit $0 $114,259 $117,477 $2,670 $117,477
Legal Fees ‐ Borrower's Counsel $100,000 $65,000 $65,000 $1,477 $0
Legal Fees ‐ Lender's Counsel $0 $0 $10,000 $227 $0
$240,960 $235,543 $307,797 $6,995 $148,627
FINANCIAL COSTS:
Total Financial Costs:
Notes to the Financial Costs:
1. Certain financial costs were derived from the representations illustrated in the letters of intent from
FHFC, FCLF and the Applicant’s budget for construction and permanent financing.
2. The interest reserve for the Construction Loan is supported by the Construction Loan terms illustrated
in the LOI provided by FCLF, the construction schedule timeline attached as an exhibit to the
Construction Contract, and the resultant calculation completed by AmeriNational through the use of
a construction draw schedule provided by the Applicant. The computation includes a 50 bp
underwriting cushion estimated by AmeriNational.
3. A $117,477 Operating Deficit Reserve (“ODR”) that represents approximately six months of expenses
and debt service is required by AmeriNational. The calculation of developer fee will be exclusive of
the budgeted ODR and any ODR “proposed or required by a limited partner or other lender” in excess
of the amount of the ODR deemed satisfactory by the credit underwriter will be a subset of developer
fee. Upon expiration of the ODR, the balance in the reserve will be used to pay down any FHFC
administered loan debt, if any, and if there is no FHFC administered loan debt, then the balance of
the reserve shall be deposited into a replacement reserve account. In no event shall the remaining
balance in said ODR be paid to the Developer or Applicant.
4. AmeriNational estimates $15,000 in closing costs for the HOME loan and $10,000 in lender legal fees
for the FCLF loan.
5. The remaining Financial Costs appear reasonable.
15. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐12
April 24, 2015
Applicant Costs
Revised Applicant
Costs
Underwriters Total
Costs ‐ CUR
Cost Per Unit
HOME Ineligible
Costs ‐ CUR
$5,701,498 $4,960,543 $5,471,198 $124,345 $174,427
Developer Fee $912,239 $700,915 $713,595 $16,218 $0
Other: Consultant Fees $0 $3,000 $3,000 $68 $0
Other: Excess Land Cost $0 $140,000 $140,000 $3,182 $0
$912,239 $843,915 $856,595 $19,468 $0
OTHER DEVELOPMENT COSTS
Development Cost Before Developer Fee and Land
Total Other Development Costs:
Notes to the Other Development Costs:
1. Total available Developer Fee of $856,595 is within 16% of Development Costs before Land exclusive
of reserves permitted by the Rule. As illustrated above, the Developer’s consultant fee of $3,000 and
excess land cost of $140,000 is a subset of the available Developer Fee. Therefore, $713,595
represents Developer Fee, net of consultant fee and excess land cost. The difference between the
purchase price of the land of $450,000 and the appraised value of the land of $310,000 represents
excess land cost.
Applicant Costs
Revised Applicant
Costs
Underwriters Total
Costs ‐ CUR
Cost Per Unit
HOME Ineligible
Costs ‐ CUR
Land $475,000 $310,000 $310,000 $7,045 $0
$475,000 $310,000 $310,000 $7,045 $0
$7,088,737 $6,520,897 $6,637,793 $150,859 $174,427
LAND ACQUISITION COSTS
Total Acquisition Costs:
TOTAL DEVELOPMENT COSTS:
Notes to Land Acquisition Costs and Total Development Costs:
1. The Applicant provided a commercial contract dated June 26, 2014 with addendums between Martin
M. Wohl, Inc. (“Seller”) and Applicant to purchase the land for a cost of $475,000 on which the
Applicant intends to construct the Development. The principal of the Seller, Mr. Martin M. Wohl, is
also the principal of the Co‐Developer, Heartland Development Group LLC. The executed second
addendum dated January 20, 2015 extended the closing date to May 1, 2015. The third addendum
dated March 30, 2015 reduced the purchase price to $450,000 and extended the closing date to July
31, 2015.
2. An Appraisal performed by Novogradac identifies an “as is” market value of the fee simple interest in
the land of $310,000. The lesser of the land cost or appraised value of the land was used for
underwriting purposes. The excess land cost of $140,000 was reallocated as a subset of Developer
Fee.
3. Total Development Costs decreased $450,944 since the Application due to decreases in construction
costs and land acquisition costs.
16. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐13
April 24, 2015
OPERATING PRO FORMA
FINANCIAL COSTS: Year 1
Year 1
Per Unit
OPERATING PRO FORMA
Gross Potential Rental Income $273,348 $6,212
Ancillary Income $12,100 $275
Gross Potential Income $285,448 $6,487
Less:
Physical Vac. Loss Percentage: 5.00% $14,272 $324
Total Effective Gross Income $271,176 $6,163
Fixed:
Real Estate Taxes $0 $0
Insurance $17,600 $400
Variable:
Management Fee Percentage: 6.00% $16,271 $370
General and Administrative $12,100 $275
Payroll Expenses $53,200 $1,209
Utilities $13,200 $300
Marketing and Advertising $3,300 $75
Maintenance and Repairs/Pest Control $24,200 $550
Grounds Maintenance and Landscaping $5,500 $125
Other $0 $0
Reserve for Replacements $13,200 $300
Total Expenses $158,571 $3,604
Net Operating Income $112,605 $2,559
Debt Service Payments
First Mortgage ‐ FCLF $76,383 $1,736
Second Mortgage ‐ FHFC $0 $0
Third Mortgage ‐ Highlands County $0 $0
HOME CM Fee $3,390 $77
HOME PLS Fee $9,696 $220
Total Debt Service Payments $89,469 $2,033
Cash Flow after Debt Service $23,136 $526
FINANCIAL COSTS: Annual Per Unit
Debt Service Coverage Ratios
DSC ‐ First Mortgage 1.47 1.47
DSC ‐ Second Mortgage 1.47 1.47
DSC ‐ Third Mortgage 1.47 1.47
DSC ‐ All Mortgages and Fees 1.26 1.26
Financial Ratios
Operating Expense Ratio 58.48%
Break‐even Economic Occupancy Ratio (all debt) 86.89%
INCOME:EXPENSES:
Notes to the Operating Pro Forma and Ratios follow:
1. Gross Potential Rental Income is based upon an estimate of 44 HOME Program units with rents
effective as of May 1, 2014 for 2014 per the FHFC website, less utility allowances published by the
City of Avon Park.
2. The Development’s units will operate under the HOME program set‐aside requirement with 20% of
the units set aside for households earning at or below 50% and with 80% of the units set aside for
households earning at or below 60% of AMI. The appraisal supports maximum HOME rental rates for
the 44 units are achievable as illustrated in the following table:
17. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐14
April 24, 2015
MSA (County): Sebring, Florida MSA (Highlands County)
$273,34844 50,688
$0 $230,580$228 $0 $0 $533 $549 $5493.0 2.0 35 1,152 60%
3.0 2.0 9 1,152 50% $0 $624
Low
HOME
Rents
High
HOME
Rents
Bed
Rooms
Bath
Rooms Units
Square
Feet
AMI
%
Gross HC
Rent
Appraiser
Rents CU Rents
Annual Rental
Income
Utility
Allow
RD/HUD
Cont Rents
Net HC
Rent
Applicant
Rents
$396 $42,768$228 $0 $0 $380 $396
$0 $777
$0
3. AmeriNational utilized a 5.0% vacancy and collection loss rate that was supported by the appraiser.
4. Other Income is comprised of fees associated with late rent, damages, unit cleaning, laundry, and
other miscellaneous income related to rental operations. The Applicant intends to lease washer/dryer
units at the Development. AmeriNational concluded with the appraiser’s estimate of $275 per unit,
inclusive of a utilization rate of 50% for tenant’s use of the washer/dryer rental service.
5. The Applicant intends to elect tax‐exempt status as allowed under Florida Statues; therefore, real
estate taxes were excluded from the Operating Pro Forma.
6. AmeriNational utilized an estimate of $400 per unit for insurance based on the representations of the
appraiser. Comparable data presented in the appraisal indicated a range of $210 to $456 per unit for
restricted comparable properties.
7. An executed Management Agreement dated March 23, 2015 was provided illustrating a management
fee payable in arrears equal to six percent (6.0%) of the gross income actually collected during the
month. A reasonable 6.0% fee was utilized by AmeriNational, which is higher than the 5% estimate
presented by the appraiser.
8. AmeriNational utilized an estimate of $1,209 per unit for payroll expense based on the
representations of the appraiser, which is within the range of $700 to $1,489 for the expense
comparable properties for restricted properties.
9. The Development will offer trash service at no expense to the tenant with the remaining utility
expenses incurred by the tenants.
10. Replacement Reserves of $300 per unit per year were underwritten by AmeriNational. This expense
is supported by the appraisal and meets the $300 per unit per year requirements of Rule.
11. AmeriNational relied upon the appraisal’s estimates for General and Administrative expenses of
$12,100, which were slightly lower than the Developer’s estimates. According to operating expense
data, Novogradac estimates approximately $80 per unit more to operate a LIHTC/HOME property
than a market rate property.
Overall, AmeriNational’s estimate of total operating expenses of $3,604 per unit per year exceeds the
Developer’s estimate of $3,543 and within the range of $3,489 to $5,745 of expense comparable
properties.
18. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE A‐15
April 24, 2015
12. Based upon an estimated Net Operating Income (“NOI”) of $112,605 for the Development’s initial
year of stabilized operations; the first mortgage loan can be supported by operations at a 1.47 Debt
Service Coverage (“DSC”). The combined amount of the first mortgage and HOME loan yields a 1.47
DSC in the initial year of operations in accordance with the Rule. The combined amount of all
mortgages and fees yields a 1.26 DSC in the initial year of operations.
13. The HOME Compliance Monitoring Fees are estimated to be $2,964 per year (representing a minimum
fee per month of $247) plus $426 per year ($9.68 per unit). The HOME Permanent Loan Servicing Fee
of $9,696 per year is based on an annual fee of 25 basis points subject to a minimum fee per month
of $203 and a maximum fee per month of $808.
14. A 15‐year Operating Pro Forma attached hereto as Exhibit 1 reflects rental income increasing at an
annual rate of 2% and expenses increasing at an annual rate of 3%.
20. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE B‐1
April 24, 2015
Special Conditions
This recommendation is contingent upon the review and approval of the following items by Florida
Housing and the Servicer, at least two weeks prior to loan closing. Failure to submit and to receive
approval of these items within this time frame may result in postponement of the loan closing date.
1. An Operating Deficit Reserve (“ODR”) in the collective amount of approximately six months of
expenses and debt service or $117,477 that exists for the entire 30‐year term of the HOME loan is
required by AmeriNational. The calculation of developer fee will be exclusive of the budgeted ODR
and any ODR “proposed or required by a limited partner or other lender” in excess of the amount of
the ODR deemed satisfactory by the credit underwriter will be a subset of developer fee. Upon
expiration of the ODR, the balance in the reserve will be used to pay down any FHFC administered
loan debt, if any, and if there is no FHFC administered loan debt, then the balance of the reserve shall
be deposited into a replacement reserve account. In no event shall the remaining balance in said ODR
be paid to the Developer or Applicant.
2. During construction/rehabilitation, the developer is only allowed to draw a maximum of 50% of the
total developer fee (developer fee minus acquisition developer fee) during
construction/rehabilitation, but in no case more than the payable developer fee, which is determined
to be “developer’s overhead”. No more than 35% of “developer’s overhead” during
construction/rehabilitation will be allowed to be disbursed at closing. The remainder of the
“developer’s overhead” will be disbursed during the construction/rehabilitation on a pro rata basis,
based on the percentage of completion of the Development, as approved by FHFC and Servicer. The
remaining unpaid developer fee shall be considered attributable to “developer’s profit” and may not
be funded until the development achieves stabilization, defined as a minimum debt service coverage
ratio of 1.15x with 90% physical occupancy for 90 consecutive days, certified by an independent
certified public accountant and verified by Florida Housing and its servicer.
3. A site inspection will be performed by AmeriNational.
General Conditions
This recommendation is contingent upon the review and approval of the following items by Florida
Housing and the Servicer at least two weeks prior to loan closing. Failure to submit and to receive approval
of these items within this time frame may result in postponement of the closing date.
1. Borrower is to comply with any and all recommendations noted in the Plan and Cost Review prepared
by GLE.
2. Signed and sealed survey, dated within 90 days of closing, unless otherwise approved by Florida
Housing, and its Legal Counsel, based upon the particular circumstances of the transaction. The
Survey shall be certified to Florida Housing, and its Legal Counsel, as well as the title insurance
company, and shall indicate the legal description, exact boundaries of the Development, easements,
utilities, roads, and means of access to public streets, total acreage and flood hazard area and any
other requirements of Florida Housing.
3. Building permits and any other necessary approvals and permits (e.g., final site plan approval, water
management district, Department of Environmental Protection, Army Corps of Engineers,
21. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE B‐2
April 24, 2015
Department of Transportation, etc.). An acceptable alternative to this requirement is receipt and
satisfactory review of a letter from the local permitting and approval authority stating that the above
referenced permits and approvals will be issued upon receipt of applicable fees (with no other
conditions), or evidence of 100% lien‐free completion, if applicable. If a letter is provided, copies of
all permits will be required as a condition of the first post‐closing draw.
4. Final sources and uses of funds itemized by source and line item, in a format and in amounts approved
by the Servicer. A detailed calculation of the construction interest based on the final draw schedule
(see below), documentation of the closing costs, and draft loan closing statement must also be
provided. The sources and uses of funds schedule will be attached to the Loan Agreement as the
approved development budget.
5. A final construction draw schedule showing itemized sources and uses of funds for each monthly
draw. HOME loan proceeds shall be disbursed during the construction phase in an amount per draw
on a pro‐rata basis with other financing, unless approved by the Credit Underwriter. The closing draw
shall include appropriate backup and ACH wiring instructions.
6. Evidence of general liability, flood (if applicable), builder’s risk and replacement cost hazard insurance
(as certificates of occupancy are received) reflecting Florida Housing as Loss Payee/Mortgagee, with
coverages, deductibles and amounts satisfactory to Florida Housing.
7. If the development is not 100% lien‐free completed, a 100% Payment and Performance Bond or a
Letter of Credit (LOC) in an amount not less than 25% of the construction contract is required in order
to secure the construction contract between the GC and the Borrower. In either case, Florida Housing
must be listed as co‐obligee. The P&P bonds must be from a company rated at least “A‐“by A.M. Best
& Co with a financial size category of at least FSC VI. FHFC, and/or Legal Counsel must approve the
source, amount(s), and all terms of the P&P bonds, or LOC. If the LOC option is utilized, the LOC must
include “evergreen” language and be in a form satisfactory to the Servicer, Florida Housing, and its
Legal Counsel.
8. Architect, Construction Consultant, and Borrower certifications on forms provided by Florida Housing
will be required for both design and as‐built with respect to Section 504 of the Rehabilitation Act,
Americans with Disabilities Act, and the Federal Fair Housing Act requirements, as applicable.
9. Satisfactory resolution of any outstanding past due or non‐compliance issues by closing of the loan.
10. Final “as permitted” (signed & sealed) site plans, building plans & specifications. The geotechnical
report must be bound within the final plans & specifications.
11. Payment of any outstanding arrearages to the Corporation, its legal counsel, Servicer or any agent or
assignee of the Corporation for past due issues applicable to the development team (Applicant or
Developer or Principal, Affiliate or Financial Beneficiary, as described in 67‐48.0075(5) F.A.C., of an
Applicant or a Developer).
This recommendation is contingent upon the review and approval by Florida Housing, and its Legal
Counsel at least two weeks prior to loan closing. Failure to receive approval of these items within this
timeframe may result in postponement of the closing date.
1. Documentation of the legal formation and current authority to transact business in Florida for the
Borrower, the general partner/principal(s)/manager(s) of the Applicant, the guarantors, and any
limited partners of the Applicant.
2. Signed and sealed survey, dated within 90 days of closing, unless otherwise approved by Florida
22. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE B‐3
April 24, 2015
Housing, and its legal counsel, based upon the particular circumstances of the transaction. The Survey
shall be certified to Florida Housing and its legal counsel, as well as the title insurance company, and
shall indicate the legal description, exact boundaries of the Development, easements, utilities, roads,
and means of access to public streets, total acreage and flood hazard area and any other requirements
of Florida Housing.
3. An acceptable updated Environmental Audit Report, together with a reliance letter to Florida Housing,
prepared within 90 days of the HOME loan closing, unless otherwise approved by Florida Housing,
and Legal Counsel, based upon the particular circumstances of the transaction. Borrower to comply
with any and all recommendations noted in the Environmental Assessment(s) and Update and the
Environmental Review, if applicable.
4. Title insurance pro‐forma or commitment for title insurance with copies of all Schedule B exceptions,
in the amount of the HOME loan naming Florida Housing as the insured. All endorsements required
by Florida Housing shall be provided.
5. Florida Housing and its legal counsel shall review and approve all other lenders closing documents
and the limited partnership or other applicable agreement. Florida Housing shall be satisfied in its sole
discretion that all legal and program requirements for the Loan have been satisfied.
6. Evidence of general liability, flood (if applicable), builder’s risk, and replacement cost hazard insurance
(as certificates of occupancy are received) reflecting Florida Housing as Loss Payee/Mortgagee, in
coverage, deductibles and amounts satisfactory to Florida Housing.
7. Receipt of a legal opinion from the Borrower's Legal Counsel acceptable to Florida Housing addressing
the following matters:
a. The legal existence and good standing of the Borrower and of any partnership or limited liability
company that is the general partner of the Borrower (the "GP") and of any corporation or
partnership that is the managing general partner of the GP, and of any corporate guarantor and
any manager;
b. Authorization, execution, and delivery by the Borrower and the guarantors, of all Loan
documents;
c. The loan documents being in full force and effect and enforceable in accordance with their terms,
subject to bankruptcy and equitable principles only;
d. The Borrower's and the guarantor's execution, delivery and performance of the loan documents
shall not result in a violation of, or conflict with, any judgments, orders, contracts, mortgages,
security agreements or leases to which the Borrower is a party or to which the Development is
subject to the Borrower’s Partnership Agreement and;
e. Such other matters as Florida Housing or its legal counsel may require.
8. Evidence of compliance with local concurrency laws, if applicable.
9. UCC Searches for the Borrower, its partnerships, as requested by counsel.
10. Such other assignments, affidavits, certificates, financial statements, closing statements and other
documents as may be reasonably requested by Florida Housing or its legal counsel in form and
substance acceptable to Florida Housing or its legal counsel, in connection with the Loan.
11. Any other reasonable conditions established by Florida Housing and its Legal Counsel.
23. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE B‐4
April 24, 2015
This recommendation is also contingent upon the following additional conditions:
1. Compliance with all provisions of Rule Chapters 67‐48, 67‐53, 67‐60 F.A.C., RFA 2014‐109, 24 CFR Part
92, and any other State and Federal requirements.
2. Acceptance by the Borrower and execution of all documents evidencing and securing the HOME Loan
in form and substance satisfactory to Florida Housing, including, but not limited to, the Promissory
Note, the Loan Agreement, the Mortgage and Security Agreement, and the Land Use Restriction
Agreement.
3. If applicable, receipt and satisfactory review of financial statements from all guarantors dated within
90 days of loan closing.
4. Cornell Colony LLC, Avon Park Housing Development Corporation, and Martin M. Wohl to provide the
standard Florida Housing Construction Completion Guaranty; to be released upon lien‐free
completion as approved by the Servicer.
5. Cornell Colony LLC, Avon Park Housing Development Corporation, and Martin M. Wohl are to provide
the standard FHFC Operating Deficit Guaranty to be released upon achievement of an 1.15 Debt
Service Coverage on the permanent first mortgage loan and HOME Loan as determined by FHFC or its
agent, 90% occupancy, and 90% of the gross potential rental income, net of utility allowances, if
applicable, for a period equal to twelve (12) consecutive months, all as certified by an independent
Certified Public Accountant (“CPA”). Notwithstanding the above, the Operating Deficit Guarantee
shall not terminate earlier than three years following the final certificate of occupancy.
6. Cornell Colony LLC and Avon Park Housing Development Corporation are to provide the standard
Florida Housing Environmental Indemnity Guaranty.
7. Cornell Colony LLC and Avon Park Housing Development Corporation are to provide the standard
Florida Housing Guaranty of Recourse Obligations.
8. A mortgagee title insurance policy naming Florida Housing as the insured in the amount of the HOME
loan is to be issued immediately after closing. Any exceptions to the title insurance policy must be
acceptable to Florida Housing or its Legal Counsel. All endorsements that are required by Florida
Housing are to be issued and the form of the title policy must be approved prior to closing.
9. Property tax and hazard insurance escrow are to be established and maintained by the First
Mortgagee or the Servicer. In the event the reserve account is held by the Servicer, the release of
funds shall be at Florida Housing’s sole discretion.
10. Replacement Reserves in the amount of $300 per unit per year will be required to be deposited on a
monthly basis into a designated escrow account, to be maintained by the First Mortgagee or Florida
Housing’s loan servicing agent. However, Applicant has the option to prepay Replacement Reserves.
New construction developments shall not be allowed to draw during the first five (5) years or until the
establishment of a minimum balance equal to the accumulation of five (5) years of replacement
reserves per unit. The reserve shall be adjusted based on a capital needs assessment beginning no
later than the 10th year after the first residential building receives a certificate of occupancy, a
temporary certificate of occupancy, or is placed in service, whichever is earlier (“Initial Replacement
Reserve Date”). A subsequent CNA is required no later than the 15th
year after the Initial Replacement
Reserve Date and subsequent assessments are required every five years thereafter.
11. GLE, or other construction inspector acceptable for Florida Housing, will act as Florida Housing’s
inspector during the construction period.
24. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE B‐5
April 24, 2015
12. A minimum of 10% retainage holdback on all construction draws until the Development is 50%
complete, and 0% retainage thereafter is required per the Rule. Retainage will not be released until
successful completion of construction and issuance of all certificates of occupancy. According to the
Construction Contract, retainage will be 10% until 50% complete, and 5% thereafter.
13. Completion of a Davis‐Bacon Federal Labor Standards pre‐construction conference.
14. Satisfactory evidence of compliance with the Davis‐Bacon Act, Section 3, and other applicable Federal
Labor standards during the construction of this development. Evidence of compliance must be
through satisfactory completion of a compliance audit by Florida Housing and its authorized
subcontractor.
15. Satisfactory completion of a pre‐loan closing compliance audit conducted by Florida Housing or
Servicer, if applicable.
16. Closing of all the funding sources prior to or simultaneously with the HOME loan.
17. Any other reasonable requirements of the Servicer, Florida Housing, or its Legal Counsel.
26. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐2
April 24, 2015
Additional Development & Third Party Supplemental Information
Appraised Value: AmeriNational received and satisfactorily reviewed an appraisal prepared by
Novogradac & Company, LLP (“Novogradac”) dated February 19, 2015. The
appraisal was executed by Brad Weinberg, a State Certified General Appraiser
whose Florida license number is RZ3249.
The report estimates the hypothetical value, “As Complete and Stabilized” of
the leasehold interest assuming achievable market rents as of January 16, 2015
is $2,600,000 which results in a 44.2% loan to value of the first mortgage and
240.5% loan to value of the first and second mortgages. The report also
estimates the hypothetical value, “As Complete and Stabilized” of the leasehold
interest assuming achievable rents with HOME rent encumbrances as of
January 16, 2015 is $1,500,000 which results in a 76.7% loan to value of the first
mortgage and 416.9% loan to value of the first and second mortgages.
The report concludes that the Development’s “As Is” market value of the fee
simple interest in the land as of January 16, 2015 is $310,000, which does not
support the $450,000 purchase price. The excess land cost is $140,000, which
was reallocated as a subset of Developer Fee.
Market Study: AmeriNational received and reviewed a satisfactory market study of the
Development prepared by Novogradac dated of February 19, 2015. The study
concludes, based on market research and demographic analysis, that there is
strong demand for the Development as proposed. Demand in the market is
evidenced by the occupancy rates of comparable properties in the market and
the capture rates for the Development. Strengths of the Development will
include its competitive unit sizes, excellent quality, good location, and strength
of the local LIHTC and market rate rental markets.
The Development is located in Avon Park, Highlands County, Florida. The city of
Avon Park is located in central Florida, approximately 40 miles south of
Lakeland and 65 miles south of Orlando. Avon Park’s population, according to
the 2010 Census, was 8,878, and Highlands County was 98,709. The
Development is located within the Sebring, Florida Metropolitan Statistical Area
(“MSA”) which includes Highlands County. The Development is located in a
predominately residential neighborhood that has excellent access to US Route
27, which is heavily trafficked and serves as the primary commercial corridor
for the neighborhood, along with Highlands County and Polk County to the
north. The Development will be accessed from West Cornell Street, which is a
lightly trafficked neighborhood street that provides access to US Route 27.
Overall, accessibility of the Subject is considered average.
Immediately north of the Development site is Whispering Pines, an existing
senior Section 8 development, which was excluded by Novogradac as a
comparable due to its subsidized rent structure and tenancy. Further north are
single family homes in fair to good condition, and northwest is an orange tree
27. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐3
April 24, 2015
grove. East and south of the Development site are single‐family homes in fair
to good condition. Of note, there are two single‐family homes on parcels
adjacent to the Development in good condition. Southwest of the Development
is Peppertree Village, a subsidized family development that was excluded as a
comparable due to its subsidized rent structure. Immediately west of the
Development are single‐family homes in fair to good condition. Commercial
uses in the neighborhood are in fair to average condition and are estimated to
be 85% occupied.
The unemployment rate for the MSA was 8.3% for 2013, higher than the
national average. Estimates of unemployment were 7.5% through November
2014, a 0.8% decrease from the 2013 average and a rate that was 1.3% higher
than the national average of 6.2%. Population and household growth are
expected to remain relatively stable through 2019. Estimates for population
and number of households for the MSA as of 2014 were approximately 99,509
and 42,913, respectively. An increase in median income is expected through
2019 at an annual rate of 2.6%. The 2014 estimate for the median income of
the MSA was $34,422, which is significantly less than the $51,314 estimated
median income for the nation in 2014.
Eight of the thirteen largest employers in Highlands County are in the
healthcare industry, which has been predominantly and historically stable
industry according to Novogradac. Florida Hospital is the largest healthcare
employer with over 1,000 employees. Other major employers consist of food
manufacturing, agriculture/agribusiness and distribution. Tourism is also a
driver to the local community by providing affordable destination for travelers
and part‐time residents during the winter months. Additionally, area
attractions such as the Sebring International Raceway contribute to Highland
County’s tourism. The prevalence of the healthcare industry and tourism in
Highlands County bode well for the area’s economy.
The Development’s competitive market area (“CMA”) is synonymous with the
Primary Market Area (“PMA”), which is defined by Novogradac as a 152.7
square mile area, with Highland County/Polk County line to the north,
Hardee/Highlands County line to the west, State Route 66 to the south, and
State/County Route 17 and Arbuckle Creek to the east. The PMA includes the
northwestern portion of Highlands County. Local property managers and
leasing agents at comparable properties indicated that they face moderate
competition from surrounding areas, though the majority of their competition
comes from within the PMA. Novogradac estimated that approximately 10% of
the Development’s tenants will come from outside these boundaries.
Population and household growth in the PMA is predicted to be the same as
that of the MSA. The population of the PMA in 2014 was estimated at 65,503
and the number of households in 2014 was estimated at 28,088, of which both
are anticipated to remain relatively stable through 2019. The median income
for the PMA is similar to the MSA. The 2014 estimate for the PMA was $33,140
and is anticipated to increase at an annual rate of 2.8% through 2019. The
28. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐4
April 24, 2015
percentage of renter‐occupied housing units in the PMA in 2014 was 29.3%,
and is anticipated to remain relatively stable through 2019 at 29.5%.
Following over a decade of slight growth similar to the overall nation from 2000
to 2014, the population and households in the PMA and the MSA are projected
to remain generally stable over the next five year. The projected stability is
attributed to the Development’s rural market characteristics. As mentioned
previously, median household income in the PMA is similar to the MSA but
lower than the nation. Approximately 61% of households earn between $0 and
$39,999 annually, and many of these households may be renters who could
income‐qualify for the Development. These demographic trends suggest that
demand in the area for affordable rental options should remain strong.
There are a total of 2,016 income‐eligible renter households in the PMA for the
Development’s HOME units as proposed. The Development would need to
capture 42, or 2.1%, of these households to achieve stabilized occupancy as
proposed. The Development will also benefit from the rental rate advantage it
will have when compared to market rents. The achievable market rent as
concluded by Novogradac is $765 for three‐bedroom units. The three‐bedroom
units set‐side at the Development for families qualifying for Low HOME rents
(at or below 50% of AMI) and High HOME rents (at or below 60% of AMI) will
have an advantage over achievable market rent of 48% and 28% respectively.
This advantage should help to create additional demand for the Development.
The market study identifies a total of nine comparable affordable HOME/LIHTC
properties located within the CMA containing 635 total units. The comparable
affordable properties report an average physical occupancy rate of 93.7% as of
Florida Housing Finance Corporation’s October 2014 Occupancy Report. Of
note, Novogradac indicated the comparable, Park Crest Terrace Apartments,
appears to be underperforming the market significantly with 72% occupancy,
and while their management declined a full interview, they mentioned the
property recently underwent a management change due to poor performance
and is currently undergoing some renovations. Novogradac considers Park
Crest an outlier and excluded it.
The demand analysis illustrates ample demand for the Development based on
capture rates of income‐eligible renter households. Overall capture rates were
2.88% at the Low HOME rent level and 13.4% at the High HOME rent level, as
proposed. To provide another level of analysis, the consultant removed the
households from the income‐eligible renter demand pool that are currently
suitably housed elsewhere in the PMA. They conducted an annual demand
analysis, which is based on new income‐eligible renter households moving into
the area (in the Development’s first year of operation only) and those income‐
eligible renter households that are rent‐overburdened (paying over 35% of
income to living costs) less the number of vacant or planned or under
construction affordable units in the PMA. This annual capture rate is 5.8% in
the PMA, which is considered good and achievable.
29. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐5
April 24, 2015
Based on Novogradac’s analysis, they have estimated an absorption pace of 22
units per month for the Development, for an absorption period of
approximately two months assuming the Development is marketed three
months prior to completion.
There are no FHFC Guarantee Fund developments located within a five‐mile
radius or within the PMA of the Development. Therefore, the Development is
not expected to have a negative impact on any Guarantee Fund properties.
Novogradac opines that the construction of the Development is not expected
to have any short‐ or long‐term impact on the occupancy rates of existing
competitive projects.
Environmental Report: A Phase I Environmental Site Assessment (“ESA”) was performed by Polston
Engineering, Inc. (“Polston”) on August 22, 2014 in accordance with 40 CFR Part
312 and ASTM 1527‐05 to identify recognized environmental conditions (“REC”)
at the site. Overall, the report concluded there was no evidence of REC
identified in connection with the Development site and no further
environmental investigation was warranted.
Soils Test Report: Universal Engineering Sciences, Inc. (“UES”) completed a geotechnical
exploration of the Development’s site and compiled their findings in a report
dated January 2, 2015. The report summarizes DEC’s field exploration and
presents their findings, conclusions, and geotechnical engineering
recommendations.
The field exploration consisted of performing eight standard penetration tests
(“SPT”) borings that were drilled to a depth of approximating 15 feet below
ground surface throughout the site. Results of the field investigation confirm
the site is generally suitable from an engineering perspective. For a planned
shallow foundation system, the detailed recommendation of the geotechnical
report should be incorporated into the construction contract.
Plan & Cost Review: A Plan and Cost Review (“PCR”) dated March 23, 2015 was performed by GLE &
Associates, Inc. (“GLE”). The plans pertaining to civil, landscaping, architectural,
structural, mechanical, plumbing, and fire protection were deemed satisfactory
to GLE. The total hard cost budget of $4,499,360 or $99,986 per unit of the
schedule of values is within an acceptable range as compared to similar
projects. The costs associated with site work are $1,046,988 or $2.88 per
square foot which GLE opines is appropriate for the scope of work. The costs
associated with vertical construction is $2,899,741 or $53.70 per square foot
which GLE opines is low, but within an acceptable range for the scope of work.
The construction timeline appears to be a reasonable duration for the
Development provided no unforeseen circumstances occur. Four units are
designed to meet the requirements of the Fair Housing Act Design Guide. The
PCR indicates that all of the required construction features and amenities are
present in the plans and specifications.
30. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐6
April 24, 2015
Features, Amenities
& Resident Programs: The Applicant committed to provide certain Features and Amenities and
Resident Programs in accordance with the RFA (see Exhibit 2). The PCR
confirms the features and amenities will be constructed and are incorporated
in the plans and specifications. The Management Plan illustrates the Resident
Programs committed and will be implemented at the Development.
Site Inspection: AmeriNational will perform a site inspection prior to loan closing.
31. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐7
April 24, 2015
Borrower Information
Borrower Name: Cornell Colony LLC (“Applicant”)
Borrower Type: A Florida limited liability company
Ownership Structure: The Applicant is a Florida limited liability company formed as of June 12, 2014.
Avon Park Housing Development Corporation (“APHDC”) is a Florida not‐for‐
profit tax‐exempt corporation incorporated on August 14, 2001. APHDC is the
100% sole member of the Applicant and an instrumentality of the Avon Park
Housing Authority (“APHA”), as well as a member of the Developer. The
Applicant and its member appear to have sufficient experience to own,
operate, and manage the Development.
The Applicant’s ownership structure is as follows:
The Developer, Cornell Colony Developer, LLC, is a member managed Florida
limited liability company incorporated on June 12, 2014 for the sole purpose of
constructing the Development. The members of the Developer are: APHDC‐
Cornell Colony LLC (“APHDC‐Cornell”) with 25% ownership, Heartland
Development Group LLC (“Heartland”) with 45% ownership, and HTG Cornell
Developer, LLC (“HTG Cornell”) with 30% ownership, collectively, (the
“Developer Members”). Each Developer Member is a recently formed 2014
Florida limited liability company.
APHDC‐Cornell’s sole member is APHDC, which is an instrumentality of APHA.
Heartland’s sole member and manager is Martin M. Wohl. HTG Cornell
members include HTG Affordable, LLC (“HTGA”) with an 80% ownership
interest and Rieger Holdings, LLC with a 20% ownership interest. HTGA is
equally owned by RER Family Partnership, LLC (“RERFP”) and Balogh Family
Cornell Colony LLC
Avon Park Housing
Development Corporation
100% Sole Member
Avon Park Housing Authority
Sole owner of APHDC
32. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐8
April 24, 2015
Investments Limited Partnership (“BFILP”); of which, Randy Rieger is a principal.
Rieger Holdings’ sole member/manger is Matthew Rieger.
Copies of the Articles of Incorporation and/or Organization and Certificates of
Status have been provided on each of the pertinent ownership structure
entities mentioned above.
Contact Person(s): Larry P. Shoeman
Executive Director
director@avonparkha.org
Telephone (863) 452‐4432
Applicant Address: 21 Tulane Drive
Avon Park, FL 33825
Federal Employer ID: 37‐1768801
Experience: The Applicant, Developer, APHDC‐Cornell, Heartland and HTG Cornell are single
purpose entities (“SPE”) recently created to own, operate and construct the
Development. According to letters on file, they report no material requisite
financial capacity to construct the Development.
APHDC: APHDC is an instrumentality of APHA whose executive director is Mr.
Larry P. Shoeman. The Authority’s purpose is to create affordable housing,
resident self‐sufficiency and economic opportunity in Avon Park, Florida.
AHPA’s development experience, inclusive of APHDC’s development of a 72‐
unit two‐phased single family affordable rental housing development known as
North Central Heights (“NCH”), consists of four affordable housing projects with
over 238 units for family, elderly and disabled demographic types since their
existence in 1968.
Heartland: Heartland’s sole member, Martin M. Wohl, has over twelve years
of experience in the real estate, development and construction industry. While
Mr. Wohl’s affordable housing development experience is somewhat limited to
a 64‐unit townhome/garden style multifamily project, he has been both a
developer and general contractor for 269 units among five market rate
townhome/garden/villa style residential projects. Mr. Wohl’s general
contractor experience is further illustrated within Section C of this report.
HTG Cornell: As a recently formed entity, HTG Cornell does not possess the
necessary experience; however, through its affiliation with Housing Trust
Group, LLC (“HTG”), whose principal is Randy Rieger, collectively, they possess
the requisite experience to construct the Development.
Mr. Rieger is an experienced affordable housing real estate developer through
his involvement in HTG, which he established in 1998, and serves as its
Chairman. HTG develops, owns, and manages properties throughout the
southeastern United States. HTG and its related entities specialize in the
33. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐9
April 24, 2015
development of multifamily rental communities, including affordable, student
housing, commercial developments, and sales. The company is headquartered
in Coconut Grove, Florida and has developed 3,735 multifamily units
nationwide inclusive of 2,978 affordable and workforce multifamily housing
units among 13 projects by working with local governments in Cherokee
County, Georgia, as well as Broward, Palm Beach and Miami‐Dade County,
Florida.
Credit Evaluation: The Applicant, Developer, APHDC‐Cornell, Heartland and HTG Cornell either are
single purpose entities or newly formed with no credit history. As such, no
information was available for these entities.
APHDC: A Dunn & Bradstreet Business and Information Report (“D&B) was
attempted but no information was available.
APHA: A D&B was obtained for APHA dated February 13, 2015. The composite
credit appraisal shows the probability of delinquent payments at the lower‐
level risk range compared to the average of businesses in the D&B database.
The D&B report reflects 100% of trade experiences with APHA are within terms;
with recent payment information showing payments currently and within the
three prior months, are within terms. The industry median is 5 days beyond
terms. No material derogatory credit history was reported at this time.
Martin M. Wohl: AmeriNational obtained an Experian Credit Profile Report
dated February 10, 2015 that reported no derogatory credit history with all
seventeen trades reporting a current payment status.
HTGA: A D&B search was attempted but no information was available.
RERFP: A D&B search was attempted but no information was available.
BFILP: A D&B search was attempted but no information was available.
Banking References: The Applicant, Developer, APHDC‐Cornell, Heartland and HTG Cornell are single
purpose entities; therefore, no banking references were available.
APHDC: AmeriNational reviewed bank statements dated January 2015
confirming unrestricted cash and cash equivalents in the low six figures, which
is consistent with the financial statement provided.
APHA: AmeriNational reviewed bank statements dated December 2014
confirming liquidity in the low seven figures, which is consistent with the
financial statement provided.
Martin M. Wohl: AmeriNational reviewed bank statements dated February &
March 2015 confirming cash and cash equivalents in the low six figures, which
is consistent with the amount reported in the financial statement. Mr. Wohl’s
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CORNELL COLONY PAGE C‐10
April 24, 2015
liquidity is primarily held among accounts titled to his construction company,
Marmer Construction, Inc.; however, Mr. Wohl opines the cash is unrestricted.
HTGA: AmeriNational received investment statements for accounts held with
Gibraltar Private Bank as of December 31, 2014 confirming deposits in the
middle six figures.
RERFP: AmeriNational received bank statements for accounts held with
Gibraltar Private Bank & Trust and City National Bank as of December 31, 2014
confirming deposits in the low six figures.
BFILP: AmeriNational received bank statements for accounts held with First
Citizens Bank as of December 31, 2014 confirming cash deposits as reported on
the financial statement.
Financial Statements: The Applicant, Developer, APHDC‐Cornell, Heartland and HTG Cornell are
recently formed SPE’s and according to letters on file they have no material
assets or liabilities. Financial statements of the remaining entities are as
follows:
APHA:
December 31, 2014 (Audited)
Cash and Cash Equivalents (Unrestricted): $ 1,627,165
Total Assets: $ 5,610,243
Total Liabilities: $ 2,863,865
Net Position: $ 2,746,378
An audit prepared by Malcolm Johnson & Company, P.A. for the year ending
December 31, 2014 was provided. APHA’s primary asset and liability is their
invested capital in, and long‐term debt created from, real estate by APHDC.
Below is a summary of APHDC’s financial position according to the audit.
An April 16, 2015 Schedule of Real Estate Owned for APHA illustrates two 100%
owned affordable housing developments known as Lakeside Park I and
Ridgedale, that have a combined weighted DSC ratio of 4.64x as of December
31, 2014.
APHDC:
December 31, 2014 (Audited)
Cash and Cash Equivalents (Unrestricted): $ 149,032
Total Assets: $ 11,753,240
Total Liabilities: $ 12,366,774
Net Position: $ (613,534)
An audit prepared by Malcolm Johnson & Company, P.A. for the year ending
December 31, 2014 contains supplemental financial information for APHDC.
The primary asset held by APHDC is their investment in net real estate capital
assets ($11.3MM) for NCH. Primary liabilities consist of long‐term debt, net of
35. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐11
April 24, 2015
current capital notes and mortgages payable ($12.3MM) in NCH. The negative
net position is due to capital assets being depreciated combined with no
payments required on a portion of total long‐term debt until maturity.
A December 31, 2014 Schedule of Real Estate Owned for APHDC illustrates a
total asset value of $12,337,232 comprised of North Central Heights I (“NCH”),
a 100% owned 40‐unit single‐family home rental development, and a 49%
owned 32‐unit single‐family rental home development, known as North Central
Heights II.
Martin M. Wohl
March 10, 2015 (Unaudited)
Cash and Cash Equivalents: $ 192,655
Total Assets: $ 4,153,681
Total Liabilities: $ 557,780
Net Worth: $ 3,595,901
An unaudited financial statement dated March 10, 2015 was certified by Martin
M. Wohl. His largest assets include his personal residence ($1,115K),
partnership interests and closely held stock ($2,198K) and retirement accounts
($600K). Partnership interests and closely held stock consist of his construction
business ($773K) jointly owned with his spouse, closely held interests jointly
held with his spouse ($638K), and partnership and closely held interests solely
owned by Mr. Wohl ($787K). Liabilities include a mortgage on his residence
($551.8K) and automobile debt ($5.8K). Of note, Mr. Wohl’s assets are
reported net of his ownership position. Further, the cash reported consists of
Mr. Wohl’s controlling interest in cash held in the name of his construction
company, Marmer Construction, Inc. AmeriNational received 2011, 2012 and
2013 U.S. Income Tax Returns for Mr. Wohl and found them acceptable.
A Schedule of Real Estate Owned dated December 31, 2014 reflects Mr. Wohl
holds ownership in five commercial or residential vacant land parcels/lots
totaling more than 29 acres, two agricultural/agribusinesses with underlying
land exceeding 5,400 acres, an office building, and a 64‐unit affordable housing
development. Additionally, Mr. Wohl personally owns two vacant
commercial/residential land parcels along with his personal residence, resulting
in a combined approximate total market value in excess of $24MM.
HTGA:
December 31, 2014 (Unaudited)
Cash and Cash Equivalents: $ 482,868
Total Assets: $ 2,654,304
Total Liabilities: $ 161,944
Net Worth: $ 2,492,360
The financial information is based upon a draft unaudited financial statement
prepared April 6, 2015 for the period ending December 31, 2014. According to
a certification from Mario Sariol, CFO, the unaudited financial statements have
36. HOME CREDIT UNDERWRITING REPORT ACS
CORNELL COLONY PAGE C‐12
April 24, 2015
had no material adverse change as of April 9, 2015. Assets consist of cash
($483M), other assets ($943M), construction in progress ($52M) and other
investments in closely held interests ($1,176M). Current liabilities consist of
payables due to related/closely held entities ($162M) and no long‐term
liabilities were reported. Net income (loss) of ($932M) is based on revenues of
$1,249M after expenses of $2,181M. AmeriNational has received and reviewed
2012 and 2013 tax returns filed for HTGA and found them to be acceptable.
A December 31, 2014 Schedule of Real Estate Owned for HTGA illustrates a total
market value of $24,495,558 for 295 total multifamily units comprised of two
affordable housing multifamily projects and one market rate multifamily
project. One project was reported under construction and the remaining two
are under construction or in lease‐up. The overall DSC for the three properties
was 1.43x.
RERFP:
December 31, 2014 (Unaudited)
Cash and Cash Equivalents: $ 238,781
Total Assets: $ 2852,164
Total Liabilities: $ 238,646
Net Position: $ 2,613,518
The financial information is based upon a draft unaudited financial statement
prepared April 6, 2015 for the period ending December 31, 2014. According to
a certification from Randy Rieger, principal, the unaudited financial statements
have had no material adverse change as of April 9, 2015. Assets consist of cash
($239M), due from affiliates ($55M), other receivables from HTG ($62M),
investments in partnerships ($2,440M) and other assets ($56M). Liabilities
consist of other liabilities ($132M) and payables ($106M). Net income (loss) of
$42M is based on revenues of $1,518M after expenses of $1,476M.
AmeriNational has received and reviewed 2012 and 2013 tax returns filed for
RERFP and found them to be acceptable.
A December 31, 2014 Schedule of Real Estate Owned for RERFP illustrates a
total market value of $95,055,744 for 1,136 total multifamily units comprised
of six affordable housing multifamily projects and one market rate multifamily
project. Five projects were reported as stabilized and two are under
construction. The overall DSC for the three properties was 1.24x.
BFILP:
December 31, 2014 (Unaudited)
Cash and Cash Equivalents: $ 387,859
Total Assets: $ 32,982,438
Total Liabilities: $ 12,057,662
Net Position: $ 20,924,776
The financial information is based upon a draft unaudited financial statement
prepared April 2, 2015 for the period ending December 31, 2014. According to
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April 24, 2015
a certification from Cara Balogh, General Partner, the unaudited financial
statements have had no material adverse change as of April 9, 2015. Assets
consist of cash and receivables ($479M), various investments in closely held
interests ($32,402M), property/plant/equipment net of depreciation ($11M)
and other assets ($90M). Current liabilities ($665M) and long‐term liabilities
($11,392M) consist of liabilities due to related/closely held entities.
AmeriNational has received and reviewed 2012 and 2013 tax returns filed for
the Partnership and found them to be acceptable.
According to the entity’s financial statement preparer, BFILP does not own real
estate. The entity serves as an estate planning vehicle for the Balogh children.
Contingent Liabilities: There are no reported contingent liabilities for the Applicant, Developer and
the Developer Members according to letters on file. AmeriNational reviewed a
Statement of Financial and Credit Affairs for the aforementioned entities which
states there are no pending legal actions, bankruptcies, foreclosures, or
unsatisfied judgments.
APHDC: AmeriNational reviewed a Statement of Financial and Credit Affairs for
this entity that states there are no pending legal action, bankruptcies,
foreclosures, unsatisfied judgments, etc. that would detrimentally affect its
ability to provide an acceptable guaranty. Per a schedule of contingent liabilities
dated as of December 31, 2014, the entity lists approximately $12.3MM in
liabilities representative of affordable housing projects.
APHA: AmeriNational reviewed a Statement of Financial and Credit Affairs for
this entity that states there are no pending legal action, bankruptcies,
foreclosures, unsatisfied judgments, etc. Per a schedule of contingent liabilities
dated as of February 5, 2015, the entity lists approximately $2.7MM in liabilities
representative of two affordable housing projects.
Martin M. Wohl: AmeriNational reviewed a Statement of Financial and Credit
Affairs for Mr. Wohl dated October 21, 2014 that states he has no pending legal
action, bankruptcies, foreclosures, unsatisfied judgments, etc. that would
detrimentally affect its ability to provide an acceptable guaranty. Mr. Wohl
represents $1.6MM in contingent liabilities according to his schedule of real
estate owned. Contingent liabilities consist of a commercial office building, an
agribusiness and his personal residence. The underlying value of the collateral
was deemed sufficient to repay the loans in full.
HTGA: AmeriNational reviewed a Statement of Financial and Credit Affairs
dated March 25, 2015 that states HTGA has no pending legal actions,
bankruptcies, foreclosures, or unsatisfied judgments, etc. A schedule of
contingent liabilities dated December 31, 2014 identified $22MM in
contingencies for completion guarantee and recourse loans associated with
four real estate developments in which the entity has ownership.
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April 24, 2015
BFILP: AmeriNational reviewed a Statement of Financial and Credit Affairs
dated March 25, 2015 that states BFILP has no pending legal actions,
bankruptcies, foreclosures, or unsatisfied judgments. AmeriNational was
provided a Contingent Liability Schedule dated December 31, 2014 indicating
no contingent liabilities.
RERFP: AmeriNational reviewed a Statement of Financial and Credit Affairs
dated March 25, 2015 that states RERFP has no pending legal actions,
bankruptcies, foreclosures, or unsatisfied judgments. A schedule of contingent
liabilities dated December 31, 2014 identified $55MM in contingencies for
completion guarantees and recourse construction loans with recourse
associated with five real estate developments in which the entity has
ownership.
Summary: Though the Guarantors have limited experience in affordable housing
development, the addition of HTG Cornell, and affiliates of HTG, add to the
strength of the Development Team, which appears to have the requisite
experience to construct the Development.
