Presentation is loading. Please wait.

Presentation is loading. Please wait.

Participating in Public Housing Tax Credit Equity Financing: An Investment Opportunity for Community Banks MRHA VIII/SMHD Mixed Finance Training MHC 2013.

Similar presentations


Presentation on theme: "Participating in Public Housing Tax Credit Equity Financing: An Investment Opportunity for Community Banks MRHA VIII/SMHD Mixed Finance Training MHC 2013."— Presentation transcript:

1 Participating in Public Housing Tax Credit Equity Financing: An Investment Opportunity for Community Banks MRHA VIII/SMHD Mixed Finance Training MHC 2013 Affordable Housing Conference

2 I. Introduction A.Panel Participants: Brian Heeger, Managing Director Duvernay + Brooks, LLC Jennifer Brunetti, Baker, Donelson, Bearman, Caldwell, & Berkowitz, P.C. Don Peterson, Managing Director, Raymond James & Associates, Inc. Aron Weisner, Enterprise Community Investment B.South Mississippi Housing and Development Corporation Instrumentality of Mississippi Regional Housing Authority VIII Mission to Preserve and Develop Affordable Housing MHC 2013 Affordable Housing Conference

3 I. Introduction SMHD Corporate Highlights SMHD is a non-profit instrumentality community development corporation established by MRHA VIII. SMHD has served as co-developer of more than 1,000 tax credit and public housing units for families and seniors: Azalea Gardens, 900 Camp Street, Lumberton, MS (Under Construction) McIntosh Homes, 1320 Highway 63 North, Leakesville, MS (Under Construction) The Preserve at Fairground Village, County Farm Road, Gulfport, MS Baywood Place Apartments, 1900 Switzer Road, Gulfport, MS Highland Springs Apartments, 8100 Seaman Road, Ocean Springs, MS Morrison Village Apartments, 2503 Old Mobile Hwy., Pascagoula, MS Regency Way Apartments, th Street, Gulfport, MS Taylor Heights Apartments, 2313 Old Mobile Highway, Pascagoula, MS The Estates at Juan De Cuevas, Gorenflo Road, DIberville, MS Timber Grove Apartments, Auto Mall Pkwy., DIberville, MS Village Place Apartments, Robinson Road, Gulfport, MS MHC 2013 Affordable Housing Conference

4 I. Introduction Raymond James Corporate Highlights Total capital of $11.9 billion; equity capital of more than $3 billion; capacity to underwrite up to $7.1 billion. More than 14,000 employees, including more than 7,000 financial advisors in the U.S. 100 straight quarters of profitability. Fixed Income Capital Markets More than 180 Public Finance professionals in 26 offices nationwide. More than 400 Institutional Fixed Income Sales and Trading Professionals. Top 10 retail network and among 10 largest municipal institutional desks in the industry. More than 2,800 offices throughout the United States. Raymond James Tax Credit Funds Raymond James Tax Credit Funds, Inc. (RJTCF) ranks in top 5 for LIHTC dollars raised and invested. Since 1986, RJTCF has raised more than $3 billion in equity for more than 1,300 properties in 44 US states. Experienced professionals focused on regional product and market expertise. MHC 2013 Affordable Housing Conference

5 I. Introduction Enterprise Community Investment Corporate Highlights Since 1982, Enterprise has invested more than $12 billion in equity, grants and loans to help build or preserve nearly 300,000 affordable homes to create vital communities and more than 410,000 jobs. Enterprise Community Partners is a nonprofit that provides expertise to local developer partners, carries out policy work and initiatives, provides grants and predevelopment financing to affordable housing developers. Enterprise Community Investment is vehicle through which we bring capital into projects, including offers equity for New Markets, Low-Income Housing, and Historic Tax Credit transactions and permanent mortgage financing for affordable and market rate housing. Enterprise in the Gulf Coast Since 2005, Enterprise has invested nearly $180 million to support the production of more than 6,400 affordable homes in Louisiana and Mississippi. Enterprise operates nine Impact Markets nationally, including one in New Orleans that covers the Gulf Coast Region, including the majority of the State of Mississippi. Enterprise Green Communities supported the development of over 1,300 green homes in the Gulf region. MHC 2013 Affordable Housing Conference

6 I. Introduction D+B Corporate Highlights Consultant to public- and private-sector developers of affordable housing, as well as a developer of urban revitalizations and affordable housing developments Advised housing authorities and developers on the closing of more than 115 residential and mixed-use developments in the last ten years, comprising nearly 14,000 rental and homeownership units, these closings have totaled over $2.1 billion. D+Bs financial and development advisory services include the following: Planning and Structuring Development Programs Analyzing Government Regulations Preparing Financing Plans Feasibility Analysis Financial Modeling and Analysis Proposal Evaluation/Due Diligence Developer Selection and Negotiations Selecting and Negotiating with Investors, Lenders and Third-Party Professionals HUD Knowledge and Experience Advising on and Coordinating Closings Strategic Advisory Services. MHC 2013 Affordable Housing Conference

7 I. Introduction Baker Donelson Corporate Highlights For more than 120 years, Baker Donelson has built a reputation for achieving results for our clients on a wide range of legal matters. While providing legal services is our focus, it is how we deliver them that sets us apart. Our goal is to provide clients with more than what they have come to expect from a law firm. Our unique approach to providing legal services is enabled by our extensive support structure. As the 72nd largest law firm in the U.S., Baker Donelson gives clients access to a team of more than 600 attorneys and public policy advisors representing more than 30 practice areas, all seamlessly connected across 18 offices to serve virtually any legal and policy need. The experience, integrity and commitment we bring to our clients have earned Baker Donelson numerous distinctions, including: 76 attorneys across 26 practice areas recognized by Chambers USA as leaders in their field (2012); 25 practice areas also recognized by Chambers USA as leading practices in individual states (2012); 229 attorneys in Best Lawyers in America® 2013 edition; and 150 attorneys recognized as Super Lawyers. MHC 2013 Affordable Housing Conference

8 I. Introduction B.SMHD Mixed Finance Development Azalea Gardens, Lumberton, MS SMHD General Partner and Co-Developer with Landmark Development Services, LLC 48 Units for Seniors in Four Two-Story Elevator Buildings 50% Public Housing, 50% Section 8 Project-Based Voucher Tax-Exempt Bond Financed/4% LIHTC MRHA VIII Public Housing Capital and Other Funds (RHF, 901) MHC 2013 Affordable Housing Conference

9 II. Public Housing Mixed Finance Development A.Role of Housing Authorities Self-Develop vs. Third Party Developer Turn Key vs. Long-term Ownership Owner Member or Managing Member/GP Lender Land Owner and Ground Lessor Subsidy Provider (ACC and PBV) MHC 2013 Affordable Housing Conference

10 II. Public Housing Mixed Finance Development B.Legal/Regulatory Framework HUD Issues Capital and Replacement Housing Funds Faircloth Unit Limit Formula Based Annual Appropriations TDC Limits Public Housing Operating Subsidy Formula Based Annual Appropriations PBV Rents Section 8 Rent Payment Standards and FMR 25% of Authoritys Vouchers can be Project-Based MHC 2013 Affordable Housing Conference

11 II. Public Housing Mixed Finance Development B.Legal/Regulatory Framework Procurement Ownership Structure Transaction Participants Equity Investor Acquisition, Construction and Permanent Lenders Bond Underwriters and Purchasers Credit Enhancers/Mortgage Insurers MHC 2013 Affordable Housing Conference

12 II. Public Housing Mixed Finance Development C.Azalea Gardens Transaction Participants Landmark Development Services Lead Developer SMHD Co-Developer SMHD Affiliate Managing Member MHC Bond Issuer Investor Member: Enterprise Community Capital $2.4 million LIHTC Equity Investment Underwriter: Raymond James $4.5 million Bond Issue Subordinate Construction and First Priority Permanent Loan: MRHA VIII $7.18 million Cash Collateral MHC 2013 Affordable Housing Conference

13 II. Public Housing Mixed Finance Development B.Legal/Regulatory Framework HUD Approvals Public Housing Mixed Finance Approval Mixed Finance Submission and HUD Panel Review HUD OGC Document (Evidentaries) Review Local Office Management and Legal Review Design Review Environmental Approval Subsidy Layering Review MHC 2013 Affordable Housing Conference

14 III. Unique Issues for Public Housing LIHTC/Bond Developments A.Equity Syndicator Perspective Economics vs. Other LIHTC/Bond Transactions Subsidy/Market Risk Layering unit types, subsidy programs, and funding sources Greater Operating Complexity Partner Experience, Guarantees, Net Worth/Liquidity Track record with mixed-finance/public housing is critical Five-year operating deficit reserve and long-term tax credit guarantees required Substantial liquidity necessary (varies depending on the amount of equity invested) Reserves ACC Reserve for Public Housing funding delays/reductions Transition Reserve for appropriation risk Other Investor and Current Equity Market Considerations Identify investor and lender early to coordinate and assure execution Make sure all partners understand and support your target market and operating plan MHC 2013 Affordable Housing Conference

15 III. Unique Issues for Public Housing LIHTC/Bond Developments B.Bond Underwriter Perspective MHC 2013 Affordable Housing Conference

16 FHA Current Market Rates 3.40 – 4.00%* Amort: 40 yrs Maturity: 40 yrs LTV: ~90% Min DSC: x Timeline: 6-12 months *Including MIP. Criteria FNMA/Freddie 5.00 – 5.75% Amort: yrs Maturity: 18/30 yrs LTV: 80-90% Min DSC: 1.15x Timeline: days Conventional 4.50 – 5.50% Amort: 30 yrs Maturity: yrs LTV: 80-90% Min DSC: 1.25x Timeline: days S&P Unenhanced 4.25 – 5.50% Amort*: 30 yrs Maturity*: 30 yrs LTV*: 70-90% Min DSC*: x Timeline: days * Depends solely on the strength of the real estate and/or the sponsors. MHC 2013 Affordable Housing Conference TRADITIONAL MARKET EXECUTIONS

17 48-unit senior housing development located in Lamar County, Mississippi. Closed on December 21, Bond Yield: 0.55% (lowest coupon recorded as of pricing). Investment Yield: 0.217%. Maturity: 18 months. Rating: AA+ (S&P). Bonds priced at 2.5x Treasuries. Real estate not pledged as collateral. Retail and institutional investor participation. MISSISSIPPI HOME CORPORATION CMHB Transaction Highlights 17 MHC 2013 Affordable Housing Conference

18 IV. Trends in Public Housing Mixed Finance Development A.Opportunities with New and On-Going HUD Programs RAD Choice Neighborhoods Refinancings/Refundings Year 15 MHC 2013 Affordable Housing Conference

19 V. Questions/Discussion MHC 2013 Affordable Housing Conference


Download ppt "Participating in Public Housing Tax Credit Equity Financing: An Investment Opportunity for Community Banks MRHA VIII/SMHD Mixed Finance Training MHC 2013."

Similar presentations


Ads by Google