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What’s Old Is New: Preservation Projects. Yorkshire Manor & Canterbury Village Mike Bouchee, Rocky Mountain Development Group. Joint Venture Partners. Canterbury Village. Canterbury Village 2513 Willow St, South Sioux City. Multifamily 96 Units / 4 Buildings 88 Units - Section 8

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What s old is new preservation projects

What’s Old Is New: Preservation Projects

Yorkshire Manor &

Canterbury Village

Mike Bouchee, Rocky Mountain Development Group




Canterbury village 2513 willow st south sioux city
Canterbury Village2513 Willow St, South Sioux City

  • Multifamily

  • 96 Units / 4 Buildings

  • 88 Units - Section 8

  • Constructed 1971

  • Developed by Sheldon Harris

  • Managed by Jim Harris & Pete Godwin

  • Original 221(d)(3) Mortgage

  • 1994 refinance - subordinate 241(f) LIHPRHA loan



Yorkshire manor 2600 north laverna st fremont
Yorkshire Manor2600 North Laverna St, Fremont

  • Multifamily

  • 84 Units / 4 Buildings

  • 84 Units - Section 8

  • Constructed 1971

  • Developed by Sheldon Harris

  • Managed by Jim Harris & Pete Godwin

  • Original 236 Mortgage

  • 1994 refinance - subordinate 241(f) LIHPRHA loan


The twins
The “Twins”

  • Same owner / same management company

    • Strong seller desire for simultaneous closings

  • Family legacy properties

  • Same subordinate 241(f) LIHPRHA financing

  • 2010 LIHTC Applicants

  • Contractor – Barry Larson & Son

  • Architect – Alley Poyner Macchietto Architecture

  • Similar substantial rehabilitation projects


Substantial rehabiliations
Substantial Rehabiliations

  • New Roofs

  • New HVAC Systems

  • New Doors and Windows

  • Foundation Waterproofing

  • New Kitchens and Bathrooms

  • New Flooring and Paint

  • Site and Safety Improvements

  • New Community Buildings

  • ACM and LBP Abatement


Rent increase lihprha
Rent Increase & LIHPRHA

  • Rehab construction budgets ~ $40,000/unit

  • Total development budgets ~ $9MM

  • Necessitated rent increase of ~ 15%

  • HAP Contracts: OCAF or BBRI

  • LIHPRHA Use Agreements: OCAF or BBRI

  • Recent HUD guidance – new debt service includable BBRI factor in LIHPRHA projects.

  • Preserving LIHPRHA became project imperative


Original financing strategy
Original Financing Strategy

  • Assume existing subordinate 241(f) LIHPRHA loans with Midland Bank

  • LIHPRHA loans can only be subordinate to HUD financing

  • Pay off existing primary mortgages

  • Combine with new 221(d)(4) financing from Wells Fargo Bank

  • LIHTC Equity from Midwest Housing Equity Group

  • Omaha HUD - Production Office:

    • TPA, 221(d)(4), BBRI, HAP Assignment and Extension


Round one applications
Round One Applications

January 2010

  • Assumption of 241(f) subordinate loans – Midland Bank

  • New 221(d)(4) loans – Wells Fargo Bank

  • Syndicator – Midwest Housing Equity Group

    March 2010

  • Both properties failed to pass threshold review

  • Back to the drawing board for Round Two


Round two applications
Round Two Applications

March 2010

  • Assumption of 241(f) subordinate loans – Midland Bank

  • New 221(d)(4) loans – Wells Fargo Bank

  • Syndicator – Raymond James Tax Credit Funds

    May 2010

  • Canterbury Village awarded tax credits!

  • Yorkshire Manor not awarded tax credits

  • Projects are now decoupled


Key lihprha discovery
Key LIHPRHA Discovery

May 2010

  • Previously understood BBRI tied to continued existence of 241(f) loans.

  • Instead, BBRI is tied to existence of LIHRPHA Use Agreements; existence of 241(f) loan immaterial.

  • Ability to pay off 241(f) loans opened up new financing strategies.


Revised financing strategy
Revised Financing Strategy

  • Pay off 241(f) LIHPRHA loans

  • Original thought - larger 221(d)(4) loans

    • Too slow and cumbersome

  • Freddie Mac Mod-Rehab Loans

    • PNC Multifamily Capital

    • Freddie Mac Waiver (~$18K/unit vs. ~$40K/unit)

  • LIHTC Equity

    • Boston Financial Investment Management

  • Des Moines HUD – Asset Management Office

    • Preservation, BBRI, HAP Assignment and Extension


Round three application
Round Three Application

  • Yorkshire Manor only

  • Open to all Round 2 unsuccessful applicants

    July 2010

  • Pay off 241(f) subordinate loans

  • New Mod-Rehab loans – PNC Multifamily Capital

  • Syndicator – Boston Financial Investment Management

    September 2010

  • Yorkshire Manor awarded tax credits!


Decoupled twins
Decoupled Twins

  • Canterbury Village – May award

  • Alert NIFA to new Canterbury Village financing and equity partners/structure

  • Submit revised Yorkshire Manor application with new financing and equity partners/structure

  • Yorkshire Manor – September award

  • Extend site control (both)

  • Financing and equity due diligence (both)

  • LIHTC reservation extension (both)


The closing table
The Closing Table

  • Finalize due diligence and underwriting

  • Negotiate reserves and guarantees

  • Negotiate partnership and closing documents

  • Ready to close both properties in early December

  • Fannie Mae decides properties are now de-stabilized!

  • Both transactions close simultaneously:

    December 29, 2010


Rehab is underway
Rehab is Underway

  • Notices to Proceed – December 29

  • 12-month construction schedules

  • Projects will be complete and placed in service in 2011




Preservation best practices
Preservation “Best Practices”

  • Minimize Subsidy/Unit

  • Work with LIHTC-experienced partners

  • Develop sufficient and consistent specifications

  • Give due diligence highest level of scrutiny

  • Fully understand QAP; ensure partners do as well


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