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SERC 2014 Judy Vandyke, CEO/Managing Partner, BGC judy@thebennettgrp.net Holly Knight, Vice President of Development,

SERC 2014 Judy Vandyke, CEO/Managing Partner, BGC judy@thebennettgrp.net Holly Knight, Vice President of Development, BGC holly@thebennettgrp.net. Operating Subsidy Funding. 103% . 84??% . 82 % . 94.968% . 100% . 88.42% . Flat rent impact?. Capital Fund Capital Funding Trends.

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SERC 2014 Judy Vandyke, CEO/Managing Partner, BGC judy@thebennettgrp.net Holly Knight, Vice President of Development,

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  1. SERC 2014 Judy Vandyke, CEO/Managing Partner, BGC judy@thebennettgrp.net Holly Knight, Vice President of Development, BGC holly@thebennettgrp.net

  2. Operating Subsidy Funding • 103% • 84??% • 82% • 94.968% • 100% • 88.42% Flat rent impact?

  3. Capital Fund Capital Funding Trends

  4. Typical PHA Revenue versus Expenses

  5. Average Administrative Trends

  6. Typical Expense Trends

  7. What is best plan for residents? • Diversify • Borrow funds for improvements • New cutting edge programs • Partner • Reposition • RAD • Mixed finance • Compliance is not going away even if there is temporary relief • Need to over come funding and sequestration

  8. State Allocating Agency TAX CREDITS Land Lease Tax Credits Tax Losses .01% $$$ Equity .01% Right of First Refusal Option to Purchase

  9. Development Considerations • New Construction, Rehabilitation, or Acquisition Rehab • Degree of Difficulty in Obtaining 9% or 4% Tax Credits • If Rehab, Can’t Rely on old PNAs. RAD PCA is Critical First Step • If FHA Rehab Financing, Must Obtain 55 Year Maximum Useful Life • Relocation Options – Off-Site if New, On-Site if Rehab • Entire Portfolio or a Portion – Impact on COCC • The Development Partner Has a Fiduciary Responsibility to The Housing Authority • Best and Highest Use • Seller take back finance –protection for the PHA

  10. Structuring the Development Partnership Understand the Balance Between Risks/Capabilities and Benefits • The Lender & Investor will Want Guarantees – Construction Completion, Operating Deficit, Ongoing Credit Delivery, With Assets at Risk • Who Takes on the Various Risks Determines Ownership Split, Fee Split, and Distributions • The Development Partner Will Want to Protect its Guarantees • Responsibility for Pre-Development Costs • Property Management by Experienced Tax Credit Manager is Essential If Credits Involved – Use Third Party Compliance (BGC Advantage) • Insurance/Property Taxes • If Authority is to Manage at Some Point, Must Strengthen Management Capabilities • Structure of Right of First Refusal at end of Tax Credit Compliance Period

  11. Financing • Availability of FHA 223(f) & 221(d)(3) insurance, with priority processing • Access to FHA LIHTC Pilot processing • Ability to tap 9% & 4% LIHTCs, including “short bond” structures • Ability to support transaction with public housing reserves and capital funds, including Replacement Housing Factor funds • Access to HOME and CDBG for development budgets • Available sales proceeds can support other affordable housing purposes

  12. Compare Projects • Sunny Dell

  13. Change • Take the first step in faith. You don’t have to see the whole staircase, just take the first step. -Martin Luther King, Jr.

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