Building Partnerships by Investing your Community

Investing in Communities
February/March 2013
“Community Dividend” We Deliver
FHLBI annually reinvests at least 10 percent of
our net earnings into affordable housing in
partnership with our members
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
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
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
2013 AHP Allocation to be determined
2012 AHP Contribution (based on 2011 results)
Competitive AHP
$9 million
$4.8 million
2012 Highlights
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
Implementation Plan
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
Establishes competitive application round
deadlines and set-aside holdback dates
Allocates required annual contributions
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)
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
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
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
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
Eligible AHP Uses
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)
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
AHP 2012 Award Summary
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
Lowest score = 52.7
Highest score = 68
Average total subsidy for rental projects =
Average subsidy per unit for rental projects =
2013 AHP
A single funding round in 2013
 Competitive application process
 Maximum grant $500,000 per project
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
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
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
Habitat for Humanity projects
Neighborhood revitalization projects
AHP Key Thresholds:
Development team
General contractor
Green specialist
Site control and zoning
 Funding commitment
Funding gap
Demonstrated market need for housing
Financially feasible
Key 2013 Scoring Categories
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
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
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
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
Project is habitable
Rents and incomes are in compliance with
targeting commitments
AHP Technical Assistance
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
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)
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
8250 Woodfield Crossing Blvd., Indianapolis, IN
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
HOP – Homeownership Opportunities Program
NIP – Neighborhood Impact Program
Owner-occupied rehabilitation for eligible homeowners
DRP – Disaster Relief Program
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
2012 Disbursement Summary
Funds Disbursed
Who uses Homeownership Initiatives?
Member institutions - often used for their own
mortgage business
Members often partner with non-profit or
government sponsors
Non-profit partners providing required homeownership
counseling or manage owner-occupied rehabilitation
Municipalities or Land Banks with NSP/HOME/CDBG
or other local funds
Member electives and program best-practices
Limit to existing customers or require customer
to establish banking relationship
Limit to employees (great for staff recruitment/
Limit scope of NIP to basics: windows/doors,
siding/ insulation, roofing, etc.
Customize program to meet your institution’s
Require partner organizations attend FHLBI
Execute MOUs, agency contract or similar
agreement with partnering organizations
Homeownership Initiatives Participation Requirements
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
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
Funding on a first come – first served basis
Available balance posted on FHLBI Website
and updated regularly
HOP Recipient Requirements
First-time homebuyer
Up to $10,000 for member originated mortgages
Up to $5,000 for non-member mortgages with 3:1
eligible matching funds
$1,000 cash contribution from homebuyer
Approved homebuyer counseling (up to $150 of HOP
funds allowed toward cost)
No more than $250 cash back to buyer at closing
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
Up to $10,000 with required 3:1 eligible matching
funds or member first lien-holder
Up to $7,500 with no match
Funding must be used toward eligible repairs, i.e.:
 roofing
 gutters
 siding
 windows
 doors
Own and occupy property for minimum of 6 months
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
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)
Other CIP member benefits
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.
Eligible CIP Uses
Use CIP to provide financing for
predevelopment, purchase, construction,
rehabilitation, or refinance:
Housing (residential)… AHP projects qualify
Economic development (nonresidential)
Mixed use (combination of residential &
Or to fund:
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!)
The application process is easy!
Complete the short application (available
Multiple ways to qualify a project…
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
The rest is easier!
Documentation required at project qualification
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
Future Project
CIP Funding
CIP Housing Project Qualification
Ownership Residential
Individual owner-occupied units owned or purchased
All household incomes <=115% of Area Median Income (AMI)
Documentation Required: List of originated mortgages
Rental Residential
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
CIP Commercial and Economic Development
Project Qualification:
Small Business Concern
Small Business Administration revenue/size standards
(North American Industry Classification System Codes
Documentation Required: Proof of revenue
Job creation/retention at qualified wage levels
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
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
Services and benefits to a qualified area
Project provides services/benefits to urban or rural area
 <=100% AMI for urban areas
 <=115% AMI for rural areas
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
CIP Mixed Use Project Qualification
Combination of housing project and economic
Project only required to qualify as economic
Small Business Concern
Job creation/retention at qualified wage levels
Services and benefits to income targeted location
or targeted area
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
Q & A / Contact Information
MaryBeth Wott, Community Investment Officer
[email protected]
Marjorie Green, Development Manager
[email protected]
Contact Information – Homeownership Initiatives
Shannon Fountain, Community Lending Manager
[email protected]
Ronna Edwards, Compliance Analyst
[email protected]
Contact Information – Competitive AHP
Trish Lewis, AHP Portfolio Manager
[email protected]
Becky Hyink, Compliance Analyst
[email protected]
Rose Marie Roberts, Compliance Analyst
[email protected]