Presentation on theme: "GOVERNOR’S HOUSING CONFERENCE 2013 Creative Financing Sources/Structures to Produce Affordable Housing."— Presentation transcript:
GOVERNOR’S HOUSING CONFERENCE 2013 Creative Financing Sources/Structures to Produce Affordable Housing
Limited Financing Tools for “Traditional” Affordable Housing Low Income Housing Tax Credits (LIHTC) Community Development Block Grant (CDBG) HOME Investment Partnerships (HOME) HOPE VI Redevelopment Program Public Housing and Annual Contribution Contract (ACC) Local Subsidy Tax Exempt Bond Financing Federal Housing Administration (FHA) Loans PHAs & Affordable Housing Providers Have Limited Universe of Tools
Past Successes At the Inception of the LIHTC Program HOC Financed 8 Partnerships Utilizing 9% Credits. 316 Units Preserved Robust Funding Allocation for Housing Choice Voucher Program and Capital Fund Program. Local Subsidy HistoricallyToday VouchersBudget Cuts Have Lowered Payment Standards Capital Fund ProgramBreak-Even Subsidy HistoricallyToday Reliable Funding PoolRequired Subsidy Has Skyrocketed to 2x/3x. Greater Need, Less Resources!
Paradigm Shift: Blend/Shake/Mix Our Challenge is to Creatively Leverage Traditional Tools with Market Driven Debt and Equity 1. Who do we serve? Paradigm: Everyone, with a heavy focus on at risk and underserved populations. Shift: How Can Blending in Market Rate Units Advance the Mission? 2. What’s our product? Paradigm: Mixed Income, Mixed Use, Amenity Rich Communities in Transit Oriented Locations Shift: Build a product that communities ask for regardless of end-users! 3. How do we identify creative solutions and bring other products and/or uses to the site? Partnerships = Risk Mitigation / Leverage Leverage Private Capital = Mixed Income TOD Monetize Land Basis in Portfolio = RAD / Legacy Assets Increase Density and Sell off Portion to Complementary Use; Create a Sense of Place and Push Demand = Create Equity for Hard to Build, Deeply Affordable Projects
Case Study: Partnership at Chevy Chase Lakes 68 Units on 11 Acres Montgomery County 500 Square Miles High Land Costs Median Household Income = $95,660 Shrinking Green Space Opportunity Rehabilitate Existing (Low Leverage/Low Impact) Redevelop Existing (High Impact/High Risk) Balance Risk + Return = Partner + Redevelop 70 Luxury Townhomes (For Sale) +/-200 Apartments (Rental) Serving 0 – 120% AMI Across Site Deep Long Term Affordability on Rentals Affordable / Workforce Options on For Sale Expect Significant Equity from Land Sale = Internal Subsidy for New Building + Other Opportunities Chevy Chase LakesChevy Chase Lakes 2.0 # UnitsAMI Level 47120% 2150%
Case Study: RAD at Elizabeth House 165 Units of Age Restricted Public Housing 1960s Infrastructure ¼ mile from Next Door to Alexander House (312 Units of Mixed Income) Adjacent to 1 Acre of Mid-Century Low Rise Commercial (Private Owner) Partner with Commercial Property Owner Build Replacement Housing On Site Redevelop Commercial Site and former Public Housing Site Re-Calibrate Income Diversity Revitalize Commercial Uses w/New Tenants Develop Robust Offer of New Amenities for both Residents & Community Elizabeth House Assemble the Entire Block (375K Sqft of FAR)
Case Study: Acquisition Platform Tax Exempt Bonds Advantages: Historically Lower Rates, Long Term Hold Challenges: Timing, Restrictions Local Financing Advantages: Cash Flow Contingent, Low Rates, Deferred Until Sale or Refinance Challenges: Limited Resources, Increased Needs Low Income Housing Tax Credits Advantages: Long Term Equity Source, Mission – Centric, Long Term Hold Challenges: Timing, Uncertainty of Award (9%), Market Rate Perception Institutional Equity Advantages: Speed, Perception of Sellers, Shared Risk, Certainty of Execution, Mitigate Deal/Opportunity Loss Challenges: Market Driven Returns, Forced Return of Capital (Sale or Refinance) Partner w/Long-Term Holders Advantages: Alignment of Interests, Long Term Investment Horizon Challenges: Different Objectives, Risk of Needs Changing During Hold Period Conventional Debt Advantages: Speed, Availability, Perception Challenges: Incongruent with Long Term Hold, Interest Rate Risk Traditional Public Financing Tools Access Capital Markets & Private Investors