Resources for Multifamily Development Rural Workforce Housing Summit The 7 Rivers Alliance June 1, 2016 Wisconsin Housing and Economic Development Authority

2 Created in 1972 by Wisconsin statute to make housing loans for those of low and moderate income Loans for Multifamily Development Loans for Single Family Homes Guarantees for Small Business Administers the Low Income Housing Tax Credit program in Wisconsin Recipient of New Market Tax Credits for economic revitalization WHEDA

3 Multifamily Loans Current portfolio: $665 million Nearly 20,000 affordable units Low Income Housing Tax Credits LIHTC allocations in excess of $240 million to create more than 40,000 affordable units WHEDA is the Contract Administrator for 22,000 Section 8 units and 2,300 vouchers across Wisconsin. Multifamily Activity

4 Tax Exempt Bond financing Tax Credit financing Preservation 7/10 Flex Financing Term sheets for all loan programs can be found on Multifamily Loan Products

5 “Pooled” bond issue or “Stand Alone” bond issue Minimum DCRs of 1.10 to 1.20 LTV: 85% to 90% 30 year term & amortization are typical. May agree to longer term & amortization for new construction Tax Exempt Bond Financing

6 Tax exempt “Pooled” WHEDA absorbs cost of bond issuance Fixed-rate, hedged to closing date. Locked at loan approval WHEDA takes rate risk to bond issue $20-30 million of deals within one bond issue New Construction or Acquisition/Rehab Current rate: 5.10% Tax Exempt Financing

7 Variable Rate product Version of “pooled” tax-exempt bonds Short term bonds…rate resets weekly a/k/a “low floaters” Rate: SIFMA + (approximately) 290 basis points Borrower must meet strict criteria Interest rate reserve, cap or swap required New Construction or Acquisition/Rehab Tax Exempt Financing

8 “Stand Alone” Bonds Credit-enhanced by WHEDA Borrower pays cost of bond issuance Rate set at/just before closing – typically, below the pooled tax-exempt bond rate Works best for properties with a loan in excess of $8-$10 million One development/one bond issue Timing & pricing flexibility for borrower Tax Exempt Financing

9 Permanent Loan product Designed for 9% LIHTC Developments Typically have a year term, with 30 year amortization Current rate is 5.90% May be combined with WHEDA’s short-term Construction Plus loan product Tax Credit Financing

10 “ Preservation Plus” product Version of “pooled” tax exempt bond product Automatic write down 25 basis points off published 30 year fixed rate Acquisition/Rehab for existing affordable rental housing Minimum rehab of $15,000 per-unit Designed primarily to enhance 4% preservation credit structures Preservation - Tax Exempt Financing

11 Flexible on use, set-aside, rate, term Use: New Construction, Acquisition, Refinance of existing development. Set-aside: 20% of the units at 80% CMI Rate: Fixed, build up based on 7/10 Year Treasury + risk-based spread of 2.50% to 3.25% Term: 30 year term and amortization, rate resets every 7 or 10 years. Must have strong balance sheet and loans are typically recourse. 7/10 Flex Financing

12 Created and driven by Section 42 of the Internal Revenue Code Designed to encourage private, non- individual investment in low-income rental housing Credit is a dollar for dollar offset to federal tax liability Generally, credit is received over 10 year period but affordability extends up to 30 years Low Income Housing Tax Credits

13 Create Qualified Allocation Plan (QAP) Allocate Credits Approximately $14.3 million per year of “competitive” LIHTCs Monitor developments for compliance Report violations to IRS Section 42

14 9% (a/k/a “competitive”) State’s federal allocation is ~ $14.3 million per year Scarce resource – very competitive Demand typically exceeds 2:1 One allocation cycle per year 4% (a/k/a “non-competitive”) Tied to state’s tax-exempt bond volume cap Year-round allocation cycle Types of LIHTCs

competitive LIHTC awards were made on May 2 nd 28 awards for more than $14 million of LIHTCs Will create more than 1300 rental units 89% of the units will be affordable The 2017/2018 Qualified Allocation Plan should be finalized by late-June competitive applications will have an early-February application deadline Recent LIHTC Awards

16 Bryan Antony Business Development m (608)