1 / 38

515 Portfolio AT RISK!

515 Portfolio AT RISK!. New Construction VS Rehabilitation. According to the Comprehensive Physical Assessment report submitted by a private contractor: “We believe that the 515 portfolio generally exhibits attributes of preservation worthiness.” .

monty
Download Presentation

515 Portfolio AT RISK!

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. 515 PortfolioAT RISK!

  2. New Construction VS Rehabilitation • According to the Comprehensive Physical Assessment report submitted by a private contractor: “We believe that the 515 portfolio generally exhibits attributes of preservation worthiness.”

  3. Multi-Family Housing Preservation and Revitalization Program (MPR) • Purpose • MPR Tools • Eligibility • Processing • Pre-application • Scoring • Ranking • Final Applications • Underwriting • Final Approval

  4. Purpose • Aging properties and ownership • Irreplaceable rural rental housing option • Revitalization is “to extend and enhance the use of each MFH property that continues to serve the affordable housing needs in its community” • Reserve requirements have not kept up with rehabilitation, replacement, and updating needs

  5. MPR • Only owners or purchasers of existing Rural Development (FmHA) financed properties can apply • Section 515 (direct Rural Rental Housing) • Section 514/516 (direct Labor Housing Loan/Grant)

  6. MPRTransaction Types • Simple – No changes in ownership • Complex – Property transfers (in accordance with 7 CFR 3560.406) or transactions with subordinations to 3rd party financers • Portfolio Sale – Multiple project sales that will be closed with a common purchaser within 1 state Note: MPR Transfers must meet 7 CFR 3560.406

  7. MPR TOOLS Primary Tool • Debt Deferral: - 514 or 515 loans obligated prior to 10-1-91 - balloon payment of P & I due at end of the deferral period - Interest accrues at Note rate - Subsidy applied per Interest Credit Agreement - No interest charged on deferred interest

  8. Other MPR Tools • Revitalization Grant: - NP applicants only - Only for costs to correct health and safety violations - Administered per 7 CFR part 3015 • Revitalization Loan: - 0% loan - 30-year amortization

  9. Other MPR Tools (Continued) • Soft Second (Bullet) Loan: - 1% loan - Balloon of deferred P&I - Due when the latest maturing 514 or 515 loan is due

  10. Other MPR Tools (Continued) • Traditional Section 515 Loan: • 1% Loan w/Interest Credit • Up to 50-year amortization • Traditional Section 514 Loan: • 1% loan • Up to 33-year amortization • Grants limited to 90% of total costs

  11. Other MPR Tools (Continued) • Existing Regulatory Approvals: • Transfers • Subordinations • Consolidations • Re-amortizations • Debt Forgiveness • Debt Write-Down

  12. Funding Opportunities Conditions • Provide affordable, decent, sanitary housing for at least 20 years • No rent increases except for normal O&M costs • Execute a Conditional Commitment • Execute a Restrictive Use Covenant

  13. Eligibility • Applicant eligibility: • 7 CFR part 3560.55 – Section 515 • 7 CFR part 3560.555 – Section 514/516 • Section 515 only : (Avg. 12 mos.) - Vacancy NTE 10% (16+ units) - Vacancy NTE 15% (<16 units) • Section 514 only: • Positive Cash flow 3 years (Exception: Market Survey showing overwhelming demand)

  14. Eligibility (Continued) • Ability to ownand operate after MPR (Transferee = applicant) • Demonstrate CNA and restructuring financially feasible and necessary

  15. ProcessingPre-application Submission • MPR Pre-application (NOFA Attachment) http://www.rurdev.usda.gov/rd/nofas/index.html • MPR Electronic Pre-application http://www.rurdev.usda.gov/rhs/mfh/MPR/MPRhome.htm • .pdf format • fillable • “SEND IT” – e-mails it to ORHP • Receipt date and time • Breaks scoring ties • Hard copy = 5:00 p.m. ET • Electronic = actual time

  16. ProcessingPre-application Submission (Continued) • Attach Purchase Agreement or Market Survey • Acknowledgement of Receipt • Due date is specified in the Notice of Funding Availability published in the Federal Register

  17. ProcessingPre-application Submission (Continued) • - Hard copy to: • Office of Rental Housing Preservation-STOP 0782 (Room 1263-S) U. S. Department of Agriculture Rural Housing Service 1400 Independence Avenue, SW Washington, DC 20250-0781

  18. ProcessingScoring • Points based on: • Pre-application data • MFIS data • Documented written evidence of commitments • Verify accuracy of data • Borrower ID • Project ID • Operational date • Classification • Units

  19. ProcessingScoring (Continued) 1. Contribution of other funds: • $3,000 to $5,000/unit/property = 15 pts. or • $5,000/unit/property = 20 pts. Total Possible Points = 20 2. Owner contribution $5,000/project for TR costs= 5 pts.

  20. ProcessingScoring (Continued) 3. Age of Project: • Operational date: • Prior to 12-21-79 = 25 points • After 12-21-79 before 12-15-89 = 20 points • On or after 12-15-89 before 10-1-91 = 15 points Total possible points = 25

  21. ProcessingScoring (Continued) 4.Troubled Project: • Classification B (Stay-in Owners) = 25 pts. • Classification C or D 24 or more months = 20 pts. • Classification C or D < 24 months = 15 pts. Total Possible Points = 25

  22. ProcessingScoring (Continued) Comprehensive Needs Assessment to determine needs, timing and funding 5. Prior Agency Approvals: • CNA approved: • After 10-1-06 & prior to 10-1-07 = 10 pts. • After 10-1-07 but before 4-1-08 = 20 pts. Total Possible Points = 20

  23. ProcessingScoring (Continued) 6. Energy Generation: • Installation of energy generation systems funded by 3rd party = 5 pts. 7. Energy Conservation: • Rehab earning ENERGY STAR label = 5 pts.

  24. ProcessingScoring (Continued) 8. Tenant Service Provision: • New tenant services provided by NP or Government Agency at no cost to tenants = 5 pts.

  25. ProcessingRanking • ORHP receives MPR Pre-applications • Score • Rank • By State • By total score • By category • Portfolio sale (Avg. score of projects) • Complex • Simple

  26. ProcessingRanking • States: • confirm eligibility • 2 highest-ranked portfolio sale transactions • 4 highest-ranked complex transactions • 10 highest-ranked simple transactions 16 Total Pre-applications • return incomplete preaps • send rejection w/appeals • National Office: • Re-scores • Selects portfolio sales NTE $150,000,000 in deferral

  27. ProcessingFinal Applications • States obtain: • SF 424 applications • 1 portfolio sale • 2 complex • simple transactions [NTE a total of 5] • CNA • appraisal, if applicable • additional information per “MPR Application Requirements Checklist” Deadline: 45 days or by 9-1-08

  28. ProcessingFinal Applications (Continued) CNA Guidance: http://www.rurdev.usda.gov/rhs/mfh/MPR/MPRHome.htm Forms: http://forms.sc.egov.usda.gov/eforms/mainservlet

  29. ProcessingUnderwriting • State Underwriters: • determine eligibility • determine financial feasibility • identify needed resources • replace ineligible, infeasible, withdrawals

  30. ProcessingUnderwriting Guidelines Purpose: • Minimize cost to the Government • Help assure a balanced utilization of tools • Assure the long-term economic viability of revitalized projects

  31. Underwriting Guidelines (Continued) • Soft Second Loan – NTE $5,000/unit • Revitalization Grant – NTE $5,000/unit • Total Revitalization Grant, 0% Loan, Soft Second Loan – NTE $10,000/unit • 515 Loan – NTE $20,000/unit • 514 Loan – NTE $20,000/unit

  32. Underwriting Guidelines(Continued) • Generally, tax credit properties will only receive debt deferral • Properties assisted with deep tenant subsidy (75% +) will receive rehab and Section 514 or 515 loans before grant and soft second loans • Necessary rent increases NTE 10% per year • Budgeted increases to reserve NTE 3% per year

  33. Underwriting Guidelines(Continued) • Full RTO must be budgeted • Sufficient project revenue must cover a 10% O&M increase in the 2nd year after restructuring • Reserve balance at 20 years should be 2 X avg. annual needs (including inflation)

  34. ProcessingFinal Approval • Final funding recommendations by Loan Committee • Obligation 1st come, 1st served within each of the 3 funding queues and to result in approximately the following ratios: - 30% portfolio sales - 50% complex - 20% simple

  35. ProcessingFinal Approval (Continued) • States issue MPR Conditional Commitment (restructuring offer) for applicant signature/acceptance. • Offers expire after 15 days. • At closing, the applicant must execute a Restrictive Use Covenant • RD and 3rd party lenders subordination to RUC

  36. ProcessingFinal Approval (Continued) • Term of Restriction: Existing loan(s) term, term of existing restrictions, or 20 years, whichever is longer. • All adverse determinations regarding applicant eligibility and awarding of points are appealable. • Approval by September 15, 2008 • Obligation by September 22, 2008

  37. Voluntary Community Market Rent Demonstration • Rents set above basic (non-RA units) • Eligible tenants pay < 30% of income • Tenants do not pay overage • Owner can get 50% difference between basic and new community market rent Example: Basic = $350 Community Market Rent = $410 Difference = $60 Owner Retains = $30 Project Retains = $30

  38. Questions

More Related