SERC 2014 Judy Vandyke, CEO/Managing Partner, BGC [email protected] Holly Knight, Vice President of Development, BGC [email protected]
Jan 14, 2016
SERC 2014
Judy Vandyke, CEO/Managing Partner, [email protected]
Holly Knight, Vice President of Development, [email protected]
Operating Subsidy Funding
2014 2013 2012 2011 2010 2009 $-
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$4,900,000,000 $4,921,341,060
$4,149,983,999 $4,594,294,060 $4,611,918,201
$5,031,106,183
OFND Annual Amount
OFND Annual Amount (U.S.) Proration
84??% 82% 94.968% 100% 103% 88.42%
Flat rent impact?
Capital Fund Capital Funding Trends
1 2 3 4 5 60
500000000
1000000000
1500000000
2000000000
2500000000
2009 2010 2011 2012 2013 2014
$2,341,258,000 $2,365,835,000
$1,910,035,000 $1,790,000,000
$1,696,372,000 $1,800,000,000
Typical PHA Revenue versus Expenses
2009 2010 2011 2012 2013$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
Total Revenue over Total Expenses
Total RevenueTotal Expenses
Dolla
rs
Average Administrative Trends
Typical Expense Trends
FYE 2009 FYE 2010 FYE 2011 FYE 2012
Total Maintenance 594383 692426 711099 803869
$50,000
$150,000
$250,000
$350,000
$450,000
$550,000
$650,000
$750,000
$850,000
Total Maintenance
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
TOWERS SENIOR PLACE LTD
PHA property
General Partner
Special Limited Partner (PHA)
Limited Partner99.98%
.01%
.01%
$$$
Tax CreditsTax Losses
Equity
State Allocating AgencyTAX CREDITS
Right of First RefusalOption to Purchase
Land Lease
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
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
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
Compare Projects
Sunny DellCOST BENEFIT ANALYSIS
158/debt 158/4% 206/debt 206/4% Per Unit Hard Cost 13,000 25,000 12,000 25,000 Gross Potential Income $ 887,220 $ 887,220 $ 1,240,020 $1,187,700 First Mortgage Amount 3,120,200 2,131,600 2,931,400 4,071,900 Developer Fee to PHA 150,000 530,400 150,000 665,600.0 Administrative Fee 154,000 113,000 201,000 140,000 Management Fee - 51,523 72,095 69,053 CASH FLOW $ 40,955 $ 55,895 $ 76,948 $ 53,446
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.