1. Leveraging Assets for Tax-Exempt Multi-Family Loan Production
NCSHA Presentation
Leveraging Assets for Tax-Exempt Multi-Family Loan Production
October 2017

2. HFA’s have faced two significant financial challenges since 2008
The Management Challenge
HFA’s have faced two significant financial challenges since 2008
Executing tax-exempt bond-financed loans has been increasingly difficult
New affordable loan products and structures offer developers many more options than in the past (FHA Tax Credit Pilot, Conduit, etc.)
Tax-exemption on bonds has not provided a significant funding advantage
Persistent low interest rates and investment opportunities have reduced HFA’s earnings
Elimination of the guaranteed investment contract market limits investments options
Most cash is invested in money market funds or other low yielding investments

3. The Management Challenge
MassHousing seeks to provide lending for affordable multi-family housing developments requiring substantial rehabilitation or new construction, in such a way as to:
Offer attractive and feasible financing for projects that utilize 4% Low Income Housing Tax Credits;
Provide financing using its FHA Risk-Share program:
with 30 to 40 year fixed rate, fully amortizing loans, and
so that borrowers can process projects significantly faster than under FHA MAP lending program (whose delays have deterred many borrowers);
Enable MassHousing to add such lending to its balance sheet, to strengthen the Agency’s long-term sustainability; and
Help maintain and strengthen the projected cash flow performance of its Housing Bond Resolution.

4. Parameters for a Program to Leverage Indenture Cash
6/24/2018 3:45 PM
MassHousing’s Solution
Parameters for a Program to Leverage Indenture Cash
Equity
Parameters
Amount of Equity
Up to $50 million
Goal of Resolution Equity
Maximize Tax-Exempt Loan Production with return on Equity of approximately the 10-year US Treasury Bond
Debt
Max. Cost-of-Capital
Max of 10-Yr UST bps
Variable/Fixed Mix
Limit new variable to approximately $50 million of $200 million in debt
Loans
Amount
Up to $250 Million
Loan rate
Max of 10-Yr UST bps
Spread to be earned
Minimum 50 bps
Tax-Exempt Program
$250MM Loans at
10-Year UST +
190 bps
Equity
Up to $50 MM
Locked
in Housing
Bond Resolution
Debt
$150 MM
Fixed Rate
Debt
$50MM
Hedged Variable 1

5. MassHousing’s Solution

6. Results have exceeded expectations
25 Projects, 2,693 tax credit units
$414 million financed to date
60 bps of spread to date