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SUPPORTIVE HOUSING
CONFERENCE: June 9, 2011
DEMYSTIFYING BOND FINANCING TO BUILD
SUPPORTIVE HOUSING
1
Three models of Bond Financing:
Schermerhorn- 100% supportive housing
units
Urban Pathways -100% supportive housing
units with NYS OMH funds
Lindeguild Hall - Integrated - 'mixed income'
market rate with middle, low income, and
supportive
2
Schermerhorn House: 160 Schermerhorn St.,
Brooklyn
3
4
5
6
7
8
Schermerhorn House: Studio Apartment
9
Schermerhorn House: Green Roof
10
Schermerhorn House: Common Space
11
Schermerhorn House: Accessory Community Space
– Brooklyn Ballet
12
Project Financing Capital Structure Schemerhorn
13
Urban Pathways – Hughes House
14
Urban Pathways
New York State Housing Finance
Agency
Sources & Uses
Hughes House (Urban Pathways)
Bronx, New York
Sources of Funds - Construction
Amount
Gross sqft.
35,421
Percent of Total
Amount Per Unit Development Cost
OMH Construction Loan
Letter of Credit
$10,156,885
$847,167
$184,671
$15,403
59.1%
4.9%
Federal Low Income Tax Credits
Federal Home Loan Bank
OMH Grant
Developer's Equity/Deferred Fee
Total Sources of Funds - Construction
First Mortgage & DSRF as a % of Aggregate Basis
$4,041,457
$710,587
$192,500
$1,235,034
$17,183,629
65.11%
$73,481
$12,920
$3,500
$22,455
$312,430
23.5%
4.1%
1.1%
7.2%
100.0%
$11,050,000
$4,662,057
$710,587
$192,500
$568,485
$17,183,629
$200,909
$84,765
$12,920
$3,500
$10,336
$312,430
64.3%
27.1%
4.1%
1.1%
3.3%
100.0%
$1,238,027
$10,912,804
$2,900,043
$0
$2,132,755
$17,183,629
$22,510
$198,415
$52,728
$0
$38,777
$312,430
7.2%
63.5%
16.9%
0.0%
12.4%
100.0%
Sources of Funds - Permanent
HFA Bonds
Federal Low Income Tax Credits
Federal Home Loan Bank
OMH Grant
Developer's Equity/Deferred Fee
Total Sources
Uses of Funds
Land and Other Acquisition Costs
Hard Construction Costs
Soft Costs
Reserves and Escrows
Developer Fee
Total Uses
Developer Fee Paid During Construction
Deferred Developer Fee
Total Developer Fee Paid During
Conversion
Total Developer Fee
-$893,115
$11,050,000
100.00%
$897,721
$568,485
Paid Developer Fee
Unrestricted Fee ($7,500/unit x 55 units)
Restricted Fee to be put into reserve acccounts
$1,564,270
$2,132,755
$1,564,270
$1,564,270
$412,500
$1,151,770
17,183,629
17,201,054
17,425
4,679,482
15
4,662,057
17,425
LINDENGUILD HALL
• 104 unit new construction project developed by the Lantern Group
• Closing anticipated in June 2011
• Mixed Population
•52 studio units with DOHMH rental subsidies thru NY/NY III paying 60%
ami rents and services—targeted to homeless veterans
•51 two-bedroom units to be rented to low income households via HDCsupervised lottery
• On-site supportive services
• LEED Silver with NYSERDA Energy Award
16
SOURCES AND USES
Construction Sources
HDC First Mortgage
HDC Second Mortgage
HPD Third Mortgage - SHLP
FHLB AHP
NYSERDA Energy Award
Tax Credit Equity
Deferred Developer's Fee
GAP(SURPLUS)
TOTAL SOURCES
LINDENGUILD HALL FINANCING
$17,700,000
$04,694,060
$05,800,000
$01,398,790
$00,229,000
$00,662,225
$03,903,977
$000000000
$34,388,052
per DU
$170,192
$045,135
$055,769
$013,450
$002,202
$006,368
$037,538
$00000,0
$330,654
% of total
51.47%
13.65%
16.87%
4.07%
0.67%
1.93%
11.35%
0.00%
100.00%
Permanent Sources
HDC First Mortgage
HDC Second Mortgage
HPD Third Mortgage - SHLP
FHLB AHP
NYSERDA Energy Award
Tax Credit Equity
Deferred Developer Fee/Sponsor Loan
GAP(SURPLUS)
TOTAL SOURCES
$04,220,000
$06,760,000
$05,800,000
$01,398,790
$00,229,000
$13,500,523
$02,479,739
$000000000
$34,388,052
$040,577
$065,000
$055,769
$013,450
$002,202
$129,813
$023,844
$00000,0
$330,654
12.27%
19.66%
16.87%
4.07%
0.67%
39.26%
7.21%
0.00%
100.00%
Uses
Acquisition Cost
Construction Cost
Soft Cost
Developer's Fee
TOTAL USES
$01,786,743
$23,100,000
$05,933,165
$03,568,143
$34,388,052
$017,180
$222,115
$057,050
$034,309
$330,654
5.20%
67.17%
17.25%
17 10.38%
100.00%
CURRENT SITE
18
ARCHITECTURAL RENDERING
19
What Are Tax Exempt Bonds
 What are the benefits of financing?
 What types of housing can be built with tax exempt
bonds, qualified rental housing?
 In terms of financing tools, how should the development
community think about the differences between 9% and
4% credits?
 Who can issue bonds?
 Who are the parties in a bond transaction?
20
What Are Tax Exempt Bonds Cont’
What are the obligations of the
sponsor/developer with respect to
the bonds?
What special rules apply to a
501(c)(3) sponsor?
21
TAX-EXEMPT BOND REQUIREMENTS
• 50% Test—volume cap required for private activity bonds
• 95/5 Cost Certification
• TEFRA Notice and Hearing
• Low Income election – typically 100% of units are tax credit eligible low
income units; minimum is 20% of units at 50% ami or 25% of units at
60% AMI
• Regulatory Agreement to obligate compliance with affordability and rent
restrictions
• Tax credit application to allocating agency (HPD); DOCE letter required
prior to closing
22
HDC BOND FINANCED SUPPORTIVE HOUSING
 Generally follows Low Income Affordable Marketplace Program(LAMP)
 Tax exempt private activity bonds to meet 50% test
 As of right 4% Federal Low Income Housing Tax Credits
 Construction Loans—fully enhanced by bank to insulate bondholders from real
estate risk
 Permanent Loans – sized to project NOI, insured or credit enhanced for term
 Rental assistance and supportive services contract required for all supportive
units
23
BUDGET CONSIDERATIONS FOR BOND DEALS
 Bond Costs of Issuance (1.5% of Construction bond)
 Negative Arbitrage (interest paid on fully funded construction bond
amount)
 NYS Bond Issuance Charge
 Credit Enhancement Fees
 Type and amount of rental assistance for supportive units
 Supportive services on budget or off budget.
24
How To Apply for Funds
How does a project apply?
Why would you apply to
HFA vs. HDC ?
25
Credit Enhancement—and role of
private lender
 What is the role of bank in bond financing?
 How does bank analyzing a supportive housing
transaction? Underwriting concerns?
 What impact does the equity investor have on
how a bank underwrites the deal?
 What are the typical costs of Letter of Credit?
26
OMH Transactions- Alternative to Letter
of Credit – OMH Letter of Credit

 What are the challenges to financing OMH deals?
 What is a quick draw letter of Credit?
27
FUTURE
What steps are state and city taking to
increase access to bond financing for
supportive housing and integrated housing?
28
29
SUPPORTIVE HOUSING DEVELOPMENT LIST
30% of Units
for
Formerly
Homeless
Supportive
Housing
Integrated
Housing
Senior Housing
with Rental
Assistance and/or Services
Development Name
Washington Avenue
600 Concord Avenue
Claremont Park Apartments
Casa del Sol Apartments
15 East Clarke Place
Urban Horizons II
Prospect Avenue
45 Malta St.
1068 Gerard Avenue
Morrisania Terrace
830 Fox Street
St. Peter's Avenue Apartments
1211 Southern Blvd
East Tremont Ave Apts
West 153rd Street
St. Ann's Terrace CDE
Schermerhorn, L.P.
Pitt Street Development
Silverleaf
Cedars Project
Pitt Street Development
1825 Atlantic Avenue
Serviam Towers
Lindenguild Hall
Kings County Senior Residence
Serviam Towers
Riverway Apartments
Astoria Senior Residence
Crown Heights Senior Residence
Council Towers VI
Self Help KVII
Units
100
83
98
114
102
128
124
48
82
42
58
58
127
73
85
314
217
263
118
95
263
150
160
104
173
160
115
184
144
78
92
Borough
Bronx
Bronx
Bronx
Bronx
Bronx
Bronx
Bronx
Brooklyn
Bronx
Bronx
Bronx
Bronx
Bronx
Bronx
Manhattan
Bronx
Brooklyn
Manhattan
Bronx
Bronx
Manhattan
Brooklyn
Bronx
Bronx
Brooklyn
Bronx
Brooklyn
Queens
Brooklyn
Queens
Queens
Close Date
07/17/03
12/22/03
07/22/04
06/23/05
06/29/05
11/30/05
12/28/05
12/28/05
12/28/05
12/28/05
06/29/06
06/29/06
06/29/06
06/29/06
06/30/06
06/25/09
12/14/05
12/28/06
06/29/04
11/01/06
12/28/06
06/28/07
12/23/08
ACTIVE
06/30/05
12/23/08
ACTIVE
12/22/06
12/20/07
06/29/10
12/22/10
Questions and Answers
31
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