What s old is new preservation projects
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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

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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


Joint venture partners

Joint Venture Partners


Canterbury village

Canterbury Village


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

Yorkshire Manor


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


Canterbury rehab

Canterbury Rehab


Yorkshire rehab

Yorkshire Rehab


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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