Building Partnerships by Investing your Community

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Investing in Communities
February/March 2013
www.fhlbi.com
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“Community Dividend” We Deliver

FHLBI annually reinvests at least 10 percent of
our net earnings into affordable housing in
partnership with our members

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Like every “dividend,” this contribution is
predicated on earnings
FHLB’s Affordable Housing Program (AHP)
constitutes the largest single source of private
“capital” for affordable housing in the country

No other provider of liquidity pays this dividend
2
FHLBI Community Investment Programs

Affordable Housing Program (AHP) – grant funding
to create rental and homeownership opportunities for
low- and moderate-income households

Homeownership Initiatives (HOP and NIP) – grant
funding for down payment, closing cost assistance and
homeowner rehabilitation to income-eligible
households

Community Investment Program (CIP) Advances
and Letters of Credit – discounted advances and
letters of credit available to members to support
targeted housing and economic development
3
2013 AHP Allocation to be determined
2012 AHP Contribution (based on 2011 results)
Competitive AHP
$9 million
Homeownership
Initiatives
$4.8 million
HOP
NIP
4
2012 Highlights

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Single AHP round funded 27 projects with $10.5M
in subsidy (649 affordable units)
Homeownership Initiatives Programs funding of
$5.3 million assisted 743 households
Community Investment Program transactions
totaled $109.4 million to 25 projects
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Implementation Plan

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Reviewed by AHAC annually before approval by
Board, or as amended
Establishes AHP scoring and set-aside program
criteria in response to district needs and within
regulations
Establishes competitive application round
deadlines and set-aside holdback dates
Allocates required annual contributions
6
2013 Implementation Plan

The roadmap by which community leaders are brought
together to fulfill a common objective

Member institution

Has desire to invest in the community
 Foundations or philanthropy goals
 Community Reinvestment Act (CRA)

Sponsor/Owner/Developer

Has a desire to invest in the community
 Creates long-term, sustainable community housing assets
 Fulfills a need or mission
 Non–profit with housing as a core mission

FHLBI

Has a desire to invest in the community
 Leverages AHP with other stakeholders with common objectives
 Creates opportunity for new and existing relationships with members
 Creates jobs long term and short-term jobs
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Affordable Housing Program (AHP)

Provides a direct subsidy (grant) for acquisition,
rehabilitation or construction of affordable housing
of various types

Only FHLBI members may apply for this grant funding
Project sponsors are non-profit or for-profit housing
developers who partner with FHLBI member

8
River Center Apartments, Mishawaka, IN
1st Source Bank partnered with Mishawaka Housing Authority &
Community Development to obtain an AHP grant of $305,482 to
redevelop the former Mishawaka High School into one- and twobedroom senior apartments.
Community Investment Programs
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Eligible AHP Uses

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Land or building acquisition
Down payment and closing costs
for homebuyers
Construction or rehabilitation costs
Owner-occupied rehabilitation
Some soft costs (developer fee, architectural,
legal, survey, engineering)
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Ineligible AHP Uses

Operating or administrative costs of sponsor

Infrastructure costs

Processing fees charged to administer AHP

Replacement or operating reserves including
investor service fees or investor reserves
11
AHP 2012 Award Summary

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2012 was a competitive round with a 2:1 ratio of
applications to awarded projects
53 applications received and scored

Average score was 60.2
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Lowest score = 52.7
Highest score = 68
Average total subsidy for rental projects =
$417,400
Average subsidy per unit for rental projects =
$38,900
12
2013 AHP

A single funding round in 2013
 Competitive application process
 Maximum grant $500,000 per project

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No limit on how many AHP projects a member
can apply for or be awarded per round
Deliver funds to project through member’s
deposit account at FHLBI
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Important 2013 AHP Dates


March - Round 2013A Opens
April 30 – Notifications of Intent Due (soft deadline)

May 30 – Member Application Deadline (required for
technical review)
June 14 – Last day for questions
June 19 – Application Deadline (5:00 PM EDT “in hand”)

September 27 – Award announcement

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Typical AHP Projects

Senior or family rental projects (not assisted
living, hospice or nursing homes)
 Scattered site single family homes for
homeownership, lease purchase or rental
 Emergency shelters
 Transitional housing
 Permanent supportive housing

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Habitat for Humanity projects
Neighborhood revitalization projects
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AHP Key Thresholds:
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Development team
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Lender
General contractor
Consultant
Architect
Green specialist

Site control and zoning
 Funding commitment
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Funding gap
Demonstrated market need for housing
type
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Financially feasible
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Key 2013 Scoring Categories
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Comprehensive community development
Aging in place for seniors and permanent
supportive housing

Green building and rehabilitation standards
continue to be a focus
 Readiness to proceed
 Economic diversity

Subsidy per unit increased to 15 points
17
A $500,000 AHP grant from Mercantile Bank of Michigan helped to create or rehabilitate 92 beds and units of
transitional housing for very low-income women and their children. The Mel Trotter Ministries project
addresses a critical need in Grand Rapids by providing housing with supportive services, as well as solutions
for homelessness.
Retention Requirement

Legal mechanism recorded to ensure property
is used for affordable housing during retention
period

15 years for rental, 5 years for homeownership
 Generally a deed restriction, second mortgage
‘soft’ second
 Specific language is required by Regulation to be
included in the retention mechanism
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AHP Monitoring

Sponsor prepares reports and submits to member
semi-annually during development phase;
member submits reports to FHLBI

Initial monitoring at completion
Long-term monitoring for rental projects

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Project is habitable
Rents and incomes are in compliance with
targeting commitments
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AHP Technical Assistance

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Training on Demand (TOD) is available for
applications being prepared for the 2013 AHP
competitive round. A member may request a faceto-face meeting, conference call or personalized
webinar to discuss a potential AHP project.
Five Help Lines between May 7-June 3 (1-2 hour
time slots when applicants can call during
scheduled times with questions and leave the call at
any time)
HelpMail – AHP application questions can be
submitted electronically any time and answers will
be received within one business day
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AHP Webinars (Wednesdays 2:00-4:00 EDT)

April 3 - Scoring Overview and Getting Started
(tips and scoring requirements)
 April 10 - Supportive Housing Rental
(development budget/funding sources, pro-forma)
 April 17 - Homeownership (development budget,
Habitat gap calculation)
 April 24 - Rental and Lease Purchase
(development budget/funding sources, pro-forma)
 May 15 - Member Institutions ONLY (member role
and requirements – overview)
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AHP Application Technical Reviews
Technical Reviews for complete AHP applications
submitted to members by May 30th will be provided in
person subject to scheduling:
 June 5 & June 6 9:00 am – 4:00 pm
Okemos Conference Center
2187 University Park Drive, Okemos, MI
 June 10 & June 11 9:00 am – 4:00 pm
FHLBI
8250 Woodfield Crossing Blvd., Indianapolis, IN
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The FHLBI’s homeownership initiative
programs can help first-time homebuyers
with down payments and closing costs or
assist homeowners with repairs to
individual homes or entire neighborhoods.
2013 Homeownership Initiatives Programs
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HOP – Homeownership Opportunities Program
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NIP – Neighborhood Impact Program
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Owner-occupied rehabilitation for eligible homeowners
DRP – Disaster Relief Program
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Down payment and closing cost assistance for eligible
first-time homebuyers
Rehabilitation or down payment assistance for state or
federally declared disaster areas in FHLBI’s district—
requires board approval
Members may access up to $300,000 per program,
per year
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2012 Disbursement Summary
$1.6M
$3.7M
HOP/NSA
NIP
Program
Households
Funds Disbursed
HOP/NSA
244
$1.6M
NIP
499
$3.7M
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Who uses Homeownership Initiatives?
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Member institutions - often used for their own
mortgage business
Members often partner with non-profit or
government sponsors
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Non-profit partners providing required homeownership
counseling or manage owner-occupied rehabilitation
programs
Municipalities or Land Banks with NSP/HOME/CDBG
or other local funds
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Member electives and program best-practices
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Limit to existing customers or require customer
to establish banking relationship
Limit to employees (great for staff recruitment/
retention!)
Limit scope of NIP to basics: windows/doors,
siding/ insulation, roofing, etc.
Customize program to meet your institution’s
objectives
Require partner organizations attend FHLBI
training
Execute MOUs, agency contract or similar
agreement with partnering organizations
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Homeownership Initiatives Participation Requirements
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Member (primary or secondary contact) must
complete workshop training or webinar training
Training is available and recommended for
anyone planning to use Homeownership
Initiative funding
Member institution must complete and submit
Master Agreement and Registration Form
(covers HOP and NIP)
Registered Members may have contact
information posted on FHLBI website
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Homeownership Initiatives Requirements

Income limit of 80% or less of AMI
 FHLBI provides $3 per $1 of matching funds
 If counseling is required, it must be face-to-face
with state or HUD-certified counselor
 Member cap of $300,000 per program
 5 year retention recorded to property title,
prorated recapture over the 5 years
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Funding on a first come – first served basis
Available balance posted on FHLBI Website
and updated regularly
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HOP Recipient Requirements
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First-time homebuyer
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Up to $10,000 for member originated mortgages
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Up to $5,000 for non-member mortgages with 3:1
eligible matching funds
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$1,000 cash contribution from homebuyer
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Approved homebuyer counseling (up to $150 of HOP
funds allowed toward cost)
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No more than $250 cash back to buyer at closing
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Lidbeck Family, Iron Mountain, MI – First National Bank &
Trust of Iron Mountain has helped 149 area homeowners
make improvements to their homes, such as new windows
and siding.
NIP Recipient Requirements
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Up to $10,000 with required 3:1 eligible matching
funds or member first lien-holder
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Up to $7,500 with no match
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Funding must be used toward eligible repairs, i.e.:
 roofing
 gutters
 siding
 windows
 doors
 HVAC

Own and occupy property for minimum of 6 months
33
In partnership with 1st Source Bank in South Bend, IN, Habitat for Humanity renovated an old Frank’s
Nursery & Crafts building into a new ReStore that provides items generally needed for housing
improvements at reduced prices. The project was financed with a $1.6 million loan funded with a
Community Investment Program advance from the FHLBI, along with support from Mishawaka Tax
Increment Financing funds.
Community Investment Program (CIP)
Help improve a member’s bottom line…

Community Investment Program advances are
FHLBI’s lowest cost funding!

Flexible terms/structure

Variable and fixed to 20 year
 Up to 30 year amortization
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Same collateral, prepayment terms, and activitybased stock requirements as traditional advances
Available at FHLBI’s cost of funds, plus a nominal
administrative fee (non-competitive)
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Other CIP member benefits

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Provide low cost funding for many investment
and loan opportunities, including AHP projects
Offer potentially lower rates than competitors

Enhance community relations by meeting the
credit needs of your community
 Match funding to mitigate interest rate risk
 Fulfill Community Reinvestment Act (CRA)
lending and/or investment tests*
* This does not constitute CRA advice.
Please consult appropriate advisors.
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Eligible CIP Uses

Use CIP to provide financing for
predevelopment, purchase, construction,
rehabilitation, or refinance:

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Housing (residential)… AHP projects qualify
automatically!
Economic development (nonresidential)
Mixed use (combination of residential &
nonresidential)
Or to fund:
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Future originations
Originations up to 3 months prior
Loan refinancing
Communities or entities financing eligible housing
or economic development initiatives (even fire trucks,
hospitals or libraries!)
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The application process is easy!
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Complete the short application (available
year-round)
Multiple ways to qualify a project…
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FHLBI staff can help find the easiest way to
qualify your project
 FHLBI review time less than 10 business days
 Minimum typical CIP advance is $100,000
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The rest is easier!
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Documentation required at project qualification
only
No penalty for not taking down a commitment
No ongoing monitoring or reporting
Project must be closed and funds fully disbursed
or construction draws funded within 3 months
prior to the CIP funding date and/or ending 6
months after the funding date
Past Project
Funding
Future Project
Funding
CIP Funding
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CIP Housing Project Qualification

Ownership Residential
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Individual owner-occupied units owned or purchased
All household incomes <=115% of Area Median Income (AMI)
Documentation Required: List of originated mortgages
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Rental Residential
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Financing of rental units and cooperatives
At least 51% of resident incomes <=115% of AMI or
Rents affordable to at least 51% residents whose incomes
are <=115% AMI
Documentation Required: Rent roll, FHLBI Rent Schedule or
Income Roll
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CIP Commercial and Economic Development
Project Qualification:

Small Business Concern

Small Business Administration revenue/size standards
(North American Industry Classification System Codes
(NAICS))
Documentation Required: Proof of revenue
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Job creation/retention at qualified wage levels
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At least 51% of job salaries <=115% AMI for rural
At least 51% of job salaries <=100% AMI for urban
Documentation Required: FHLBI Job Information Form
41
Consumers Credit Union used CIP funds to build its new branch located in Portage, MI. Since opening, the branch
has averaged 70 new members per month and increased staff to accommodate the growth.
CIP Commercial and Economic Development
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Services and benefits to a qualified area
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Project provides services/benefits to urban or rural area
 <=100% AMI for urban areas
 <=115% AMI for rural areas
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Project location in targeted area (income exemption)
 Rural/urban Champion Community/Empowerment Zone
or Enterprise Community
 Native American area
 Federal Brownfield Tax Credit
 Area affected by a federal military base closing or realignment
 State of Michigan Renaissance Zone
 Federally declared disaster area
Documentation Requirement: Verification of AMI or Targeted Area
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CIP Mixed Use Project Qualification
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Combination of housing project and economic
development
Project only required to qualify as economic
development
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Small Business Concern
Job creation/retention at qualified wage levels
Services and benefits to income targeted location
or targeted area
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Common CIP Uses
Industrial and
manufacturing initiatives
Commercial initiatives
• Factories
• Bakeries
• Warehouses
• Assembly Plant
• Shopping Centers
• Office Buildings
• Hotels
• Retail Stores
• Member Branches
Public-facility initiatives
Social-service initiatives
• Buildings /vehicles for police
and fire departments
• Office space for nonprofits
• Day-care Centers
• Hospitals
• Nursing Homes
Infrastructure projects
• Roads
• Sidewalks
• Utilities
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Q & A / Contact Information
MaryBeth Wott, Community Investment Officer
[email protected]
317-465-0368
Marjorie Green, Development Manager
[email protected]
517-230-2361
www.fhlbi.com
800-688-6697
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Contact Information – Homeownership Initiatives
Shannon Fountain, Community Lending Manager
[email protected]
317-465-0428
Ronna Edwards, Compliance Analyst
[email protected]
317-465-0369
www.fhlbi.com
800-688-6697
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Contact Information – Competitive AHP
Trish Lewis, AHP Portfolio Manager
[email protected]
317-465-0379
Becky Hyink, Compliance Analyst
[email protected]
317-465-0362
Rose Marie Roberts, Compliance Analyst
[email protected]
317-465-0377
www.fhlbi.com
800-688-6697
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www.fhlbi.com
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