Housing Assistance Housing Assistance CouncilCouncil

Building Rural Communities since Building Rural Communities since 19711971

Southeast Regional Mutual Self-HelpSoutheast Regional Mutual Self-Help Housing Conference Housing Conference

“Other Funding Sources”“Other Funding Sources”

Wednesday, June 19, 2013Wednesday, June 19, 2013

HAC’s MissionHAC’s Mission“Improve housing conditions for the rural poor

with an emphasis on the poorest of the poor in the most rural places.”

Loan Fund ObjectiveHelp establish and strengthen a housing delivery system that will provide, on a

continual basis , additional decent, safe, and affordable houses in rural areas for low-

income people.

Housing Assistance Housing Assistance CouncilCouncil

• Established in 1971

• National nonprofit organization

• AAA+2 CARs rated CDFI

• Provide services to local, state, and national nonprofit organizations and developers

• High needs areas: Indian County, Southwest Border Colonias, Mississippi Delta, and Appalachia

• High needs groups: farm-workers and minorities

Housing Assistance Housing Assistance CouncilCouncil

HAC emphasizes:

Local Solutions

Empowerment of the poor

Reduced dependence

Self-Help strategies

Homeownership

Safe and Sustainable communities

Services OfferedServices Offered

Technical Assistance & Training

Loan Funds Research,

Publications & Information

HAC Loan FundsHAC Loan Funds

HAC Loan FundsHAC Loan Funds(from inception to March 31, 2013)(from inception to March 31, 2013)

Loan Fund Capitalization $62.0 million (includes SHOP & other loans) 67% equity; 33% debt investments

Approved Commitments $300 million 2,244 loans 68,301 housing units and water/sewer

connections

Current Loan Portfolio 165 loans = $36.5 million 80 borrowers = 37 states

Rural Housing Loan Rural Housing Loan FundFund

Uses• predevelopment• land acquisition• site

development• construction up

to $750,000• gap/interim• Land banking• Loan fund

investment

Structure:• Up to five years• Interest rate

5% nonprofits; 8% for-profits

• Quarterly interest payments

• 1% service fee• Maximum 100% LTV• Adequate

security/collateral• Committed take-out

source

Pre-Development

Standard 3 year term or less 1% HAC service fee No maximum loan amount Maximum 100% LTV Security of lien position on real property

and/or assignments and UCC-1 filings on unrestricted net assets of borrower.

Repayment typically upon sale of developed lots or closing of construction/permanent financing

Construction Loans

$750,000 cap per loan and borrower Standard 2 year term with option to extend

for 1 year. A 1% extension fee applies. 1% HAC service fee Maximum 100% LTV as supported by

current appraisal Security of lien position on the project

property Repayment upon sale of developed lots or

closing permanent financing Permanent, take-out financing committed

prior to disbursement.

Preservation Revolving Preservation Revolving Loan Fund Loan Fund

Uses•

predevelopment

• land acquisition

• rehab• Equity by USDA

approval only

Structure:• Up to 15 years

amortized over 30 years

• Interest rate 5% nonprofits

• Quarterly interest payments

• 1% service fee• Maximum 100% LTV• Adequate

security/collateral• Repayment

structure: operating income of project, permanent financing.

FocusPreservation of at

risk USDA-financed multifamily, elderly or farm-labor rental complexes.

Site Acquisition

Standard 5 year term 1% HAC service fee Maximum 100% LTV as supported by

current appraisal Security of lien position on the project

property Repayment upon sale of developed lots or

closing of construction/permanent financing

Eligible BorrowersEligible Borrowers

Community-based nonprofit organizations Housing development corporations Farm worker organizations Housing cooperatives and condo

associations Native American tribes Public agencies and units of local

government Public utility districts

Eligible ProjectsEligible Projects

Located in areas, which are rural in character (preference for projects located in towns with populations of less than 25,000)

Serve low- to very- low income persons, which includes persons earning less than 80% AMI

Minimum of 51% of the resulting housing units must be affordable to low- or very-low income people

Loan Uses & Loan Uses & StructureStructure

Uses• predevelopment• land acquisition• site development• construction• preservation• gap/interim

Structure• loans• guarantees• compensating

deposits• letters of credit• lines of credit

Sample ProjectsSample Projects Acquisition and infrastructure development

of a subdivision for affordable housing units. Acquisition and site development of

scattered site lots for self-help unit construction.

Acquisition and rehab of existing apartment complex serving farm-workers or other workforce group.

Acquisition loan to tenants of manufactured housing community seeking to

cooperatively purchase the park. Loan to another nonprofit lender to

capitalize their rural lending initiatives ( water/sewer, rehab loan program).

The SHOP program is authorized under Section 11 of the Housing Opportunity Program Extension Act of 1996

Funded through the U.S. Department of Housing & Urban Development (HUD)

Provides grant monies for land acquisition and infrastructure improvement costs associated with the development of self-help units

Self-Help Self-Help Homeownership Homeownership

Opportunity Program Opportunity Program (SHOP)(SHOP)

Land Acquisition• Purchase of real property pursuant to a

deed or minimum 25 year lease

• Financing and closing costs associated with the land acquisition transaction

Infrastructure Improvements• Water & sewer lines (or wells & septic)• Roads, curbs and gutters, sidewalks • Utilities, gas, electric• Environmental testing & remediation• Soft costs (legal, closing, etc.)

SHOP Eligible ActivitiesSHOP Eligible Activities

HUD requirements• Public or private nonprofit organization

under federal or state law• 100+ hours of family sweat equity labor• $15,000 per unit maximum• Rural or urban areas

HAC requirements• Competitive review• Security required• Ongoing reporting required• 0% interest• 90% forgivable upon unit completion

and other loan agreement condition

SHOP Program DesignSHOP Program Design

• Subsidize lot costs (keep $$ in project)

• Loans/Grants to families• 5-year, 30-year loans• soft seconds

• Capitalize internal development fund

• SHOP-eligible uses ONLY

SHOP Grant Conversion SHOP Grant Conversion FundsFunds

Loan ProcessLoan Process1. Inquiry/Pre-screening.2. Submission of loan application.3. Comprehensive underwriting process.4. Internal management review.5. Loan committee review.6. If accepted, loan commitment issued.7. Pre-closing conditions satisfied before

disbursement of funds.8. Loan closing and disbursement.9. Servicing/monitoring loan throughout the

term of the loan.10.Full repayment of loan.

HAC Loan Fund at a HAC Loan Fund at a GlanceGlance

Contact InformationContact InformationHousing Assistance CouncilHousing Assistance Council

(202) 842-8600 (202) 347-3447 Fax(202) 842-8600 (202) 347-3447 Fax