lihtc advisors · belgrade northeast of bozeman yellowstone international airport on tubb road and...

LIHTC Advisors

Farmhouse Apartments I, II, & III60 Units | 101 Jackrabbit Lane | Belgrade, MT 59714

EXCLUSIVE OFFERING

2 LIHTC ADVISORS FARMHOUSE I, II, & III | 60 UNITS

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The information contained in this package is confidential and is intended for review solely by the person receiving it directly from LIHTC Advisors. It should not be copied, distributed, nor made available to any person without the written consent from LIHTC Advisors. The information in this package has been obtained from sources we believe reliable. However, LIHTC Advisors has not verified and will not verify, any of the information contained herein and makes no guarantee, warranty, or representation about it. It is the sole responsibility of any interested parties to independently confirm the accuracy and completeness of the information provided herein. All prospective clients must conduct their own due diligence and take appropriate measures to verify all information.

12639 W. Explorer DriveSuite 200Boise, ID 83713

John Nicolas800.840.3021 (phone)208.891.8901 (direct)888.506.2771 (fax)[email protected]

Jeff Irish800.840.3021 (phone)208.286.5013 (direct)888.506.2771 (fax)[email protected]

Jordan Skyles800.840.3021 (phone)208.631.4981 (direct)888.506.2771 (fax)[email protected]

www.lihtcadvisors.com

LIHTC Advisors


Farmhouse I, II, & III60 Units

101 Jackrabbit LaneBelgrade, MT 59714

Table of Contents

PROPERTY OVERVIEW

DescriptionArea Highlights

SummaryPhotos

Area Maps

FINANCIAL ANALYSIS

Income & ExpensesCash Flow Summary

Unit MixIncome & Rent Limits

Historical AMI, MAX Rent, & FMR

DEMOGRAPHIC ANALYSIS

Demographic Analysis


Property Overview

• Existing Three Phase LIHTC Property with Placed in Service Dates of 1996, 1997, & 2000

• Current Rents are Well Below Max Net Rents

• Located 8 Miles From Bozeman and 2 Miles From the Bozeman Yellowstone International Airport

• Minimal Deferred Maintenance

HIGHLIGHTS


Property Description

Farmhouse Apartments is a 60-unit affordable housing community located in Belgrade, MT. The property was built and placed in service in 1996, 1997, & 2000 under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. The property is located within minutes to retail, schools, restaurants, and Bozeman Yellowstone International Airport.

Recent improvements include re-sealed & re-striped parking lots, painted curbs & speed bumps, repaired & replaced chipped sidewalks, new property sign, replaced common area carpets in select buildings, painted entrance decks & stairs, and landscape work.

Farmhouse I was built and placed in service in 1996 under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. There is an existing regulatory agreement in place which requires units to be rented to income qualifying residents earning no more than 60% of Area Medium Income (AMI) limits, which are provided by the Montana Housing Authority.

Farmhouse II was built and placed into service in 1997 under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. There is an existing regulatory agreement in place which requires units to be rented to income qualifying residents earning no more than 60% of Area Medium Income (AMI) limits, which are provided by the Montana Housing Authority.

Farmhouse III was built and placed into service in 2000 under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. There is an existing regulatory agreement in place which requires units to be rented to income qualifying residents earning no more than 50% of Area Medium Income (AMI) limits, which are provided by the Montana Housing Authority.

The property is out of its initial 15-year tax credit compliance period. Please see the Property Summary page for further details. A qualified purchaser can be a non-profit or for-profit entity that agrees to maintain the affordability restrictions.

Farmhouse Apartment community offers one and two bedroom apartment homes featuring full appliance package, open floor plan, on-site leasing office, on-site laundry facility, and playground.

COMMUNITY AMENITIES

• On-Site Leasing Office• On-Site Laundry Facility• Playground

UNIT AMENITIES

• Full Appliance Package• Open Floor Plan


Area Highlights

Belgrade is a city in Gallatin County, Montana and has a population of 8,254 as of July 2016, up 10.7% since 2010. It is the largest city in Montana that is not a county seat. Belgrade is part of the Bozeman, MT Micropolitan Statistical Area.

The Gallatin Speedway is located on the outskirts of Belgrade northeast of Bozeman Yellowstone International Airport on Tubb Road and hosts stock car racing events from May to September.

NEIGHBORHOOD AMENITIES

• Domino’s (0.1 miles)• Belgrade Middle School (0.3 miles)• Belgrade High School (0.5 miles)• Belgrade Community Library

(0.6 miles)• Albertson’s (0.7 miles)• Bozeman Yellowstone International

Airport (2.2 miles)

LOCATION HIGHLIGHTS

• Population: 8,254• Belgrade is one of the fastest

growing communities in Montana with a population increase of 10.7% since 2010

• Located 8 miles west of Bozeman

BELGRADE TOP EMPLOYMENT INDUSTRIES

• Education, Health Care, & Social Services

• Construction• Retail• Manufacturing

Belgrade as been one of the fastest growing communities in Montana for the last 10 years. Its “open arms” policy to business, as well as access to transportation and excellent school system, has attracted everything from manufacturing to bio tech businesses.

Belgrade is located 8 miles west of Bozeman and is in the hub of the Gallatin Valley. It boasts many outdoor activities including access to Bridger Bowl and Big Sky Ski areas, In addition to spectacular skiing options, the Gallatin River, located nearby, provides the opportunity for world class fishing.


NAME & LOCATIONProperty Name Farmhouse Apartments I, II, & IIIProperty Address 101 Jackrabbit Lane

Belgrade, MT 59714

SECTION 42 LIHTC RESTRICTIONSPlaced in Service Phase I: 1996; Phase II: 1997; Phase III: 2000End of Initial Compliance Period Phase I: 12/31/2010; Phase II: 12/31/2011; Phase III: 12/31/2014End of Extended Use Period Phase I: 12/31/2025; Phase II: 12/31/2026; Phase III: 12/31/2030

SITE INFORMATIONAssessor’s Parcel Number RFF14714 & RFF44525Number of Units 60Number of Buildings 7Number of Stories 2Rentable Square Feet 43,880Year Built Phase I: 1996; Phase II: 1997; Phase III: 2000Lot Size 5.49 AcresDensity 10.93 Units/AcreType of Ownership Fee SimpleLandscaping Mature Trees, Shrubs & GrassTopography Relatively Flat

UTILITIESWater City of BelgradeElectric/Gas North Western Energy

CONSTRUCTIONExterior Vinyl SidingRoof Composite Shingle

# OF UNITS

RENTABLESF

PLACED IN SERVICE

LOT SIZE

60 43,880 Phase I: 1996Phase II: 1997Phase III: 2000

5.49 acres

Property Summary


Aerial Map

Farmhouse I, II, & III60 Units

101 Jackrabbit LaneBelgrade, MT 59714


Local Map

Farmhouse

Domino’s (0.1 miles)

Belgrade Middle School (0.3 miles)

Belgrade High School (0.5 miles)

Belgrade Community Library, US Post Office (0.6 miles)

Starbucks, Burger King, McDonald’s, Subway, DQ, Albertson’s (0.7 miles)

Heck/Quaw Elementary School (0.8 miles)

Bozeman Yellowstone International Airport (2.2 miles)

A

B

C

D

E

F

G

A

B

F

E

G

D

C


Local Map

FARMHOUSEBelgrade High

School

Belgrade Middle School

Heck/Quaw Elementary School

Belgrade Community Library

Q


Regional Map

• Bozeman, MT (11 miles)

• Helena, MT (88 miles)


Financial Analysis


Income & Expenses

OPERATIONAL ANALYSIS PROFORMA PER UNIT

INCOME

Gross Potential Rent $448,169 $0.85POTENTIAL RENTAL INCOME $448,169 $7,469 (1)

Economic LossVacancy Loss 4.00% ($17,927) ($299) (2)Bad Debt 0.00% $0 $0Concessions 0.00% $0 $0

Total Economic Loss 4.00% ($17,927) ($299)

NET RENTAL INCOME $430,242 $7,171

Other IncomePet Rent $7,458 $124Late Charges, Rent $3,960 $66Misc. Other Income $9,927 $165

Total Other Income $21,345 $356

EFFECTIVE GROSS INCOME $451,587 $7,526

EXPENSES

FIXED OPERATIONAL EXPENSETotal Real Estate Property Taxes 9% $41,678 $695 (3)Total Property Insurance Expense 4% $16,500 $275Total Property Utility Expense 11% $48,410 $807

TOTAL FIXED OPERATIONAL EXP 24% $106,588 $1,776

VARIABLE OPERATIONAL EXPENSETotal Maint. Contract Services 3% $13,091 $218Total Repairs & Maintenance 9% $39,000 $650Total Administrative Expenses 4% $16,925 $282Total Leasing & Marketing 0% $426 $7Total Payroll and Salary Expenses 14% $61,949 $1,032Property Management Fee 5.00% $22,579 $376Miscellaneous Expense 0.16% $700 $12

TOTAL VARIABLE OPERATIONAL EXP 34% $154,671 $2,578

TOTAL FIXED & VARIABLE EXPENSES 58% $261,259 $4,354

Reserves & Replacements $15,000 $250

TOTAL OPERATING EXPENSES 61% $276,259 $4,604

NET OPERATING INCOME $175,328 $2,922


Comments to Income & Expenses

(1)

(2)

(3)

REAL ESTATE TAX ANALYSIS

Parcel #: RFF14714 and RFF44525

2016 2017Land $446,204 $344,002Improvements $2,924,296 $3,505,698Total Market Value $3,370,500 $3,849,700Exemptions $0 $0Value after Exemptions $3,370,500 $3,849,700Assessment Ratio 1.35% 1.35%Assessed Value $45,502 $51,971

Tax Rate 80.196% 80.196%Ad Valorem Taxes $36,490 $41,678Sales Tax Credit $0 $0Total Taxes Due $36,490 $41,678

Notes

NOTES TO PROFORMA

Potential Rental Income: Analysis assumes Unit Mix Proforma Rents (see page 16) annualized.

Vacancy: Based on the rent roll from 8/22/17, occupancy is 97%. Analysis uses a 4% vacancy factor going forward.

Real Estate Taxes: See notes below.

Per the County Assessor's office, properties are appraised every 2 years and 2017 is the reappraisal year. Taxable value is 1.35% of market (appraised) value.

Analysis estimats taxes by applying 2016 Tax Rate with 2017 Assessed Value.


PROPERTY CASH FLOW ANALYSIS - ASSUMPTIONS

YEAR 1 OPERATIONS BASED ON Proforma

Gross Potential Rent Growth NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Other Income Growth NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Loss to Lease 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Vacancy 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%Bad Debt 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Concessions 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Property Taxes NA 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%Insurance NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Utilities NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Property Management Fee 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%Other Expenses NA 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%Replacement Reserves NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

CASH FLOW SUMMARY Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

INCOMEGross Potential Rent $448,169 $459,373 $470,857 $482,629 $494,694 $507,062 $519,738 $532,732 $546,050 $559,701

Gain (Loss) to Lease $0 $0 $0 $0 $0 $0 $0 $0 $0 $0POTENTIAL RENTAL INCOME $448,169 $459,373 $470,857 $482,629 $494,694 $507,062 $519,738 $532,732 $546,050 $559,701

Economic Operational LossVacancy Loss ($17,927) ($18,375) ($18,834) ($19,305) ($19,788) ($20,282) ($20,790) ($21,309) ($21,842) ($22,388)Bad Debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Operational Loss ($17,927) ($18,375) ($18,834) ($19,305) ($19,788) ($20,282) ($20,790) ($21,309) ($21,842) ($22,388)

NET RENTAL INCOME $430,242 $440,998 $452,023 $463,324 $474,907 $486,779 $498,949 $511,423 $524,208 $537,313

Total Other Income $21,345 $21,878 $22,425 $22,986 $23,560 $24,149 $24,753 $25,372 $26,006 $26,656

EFFECTIVE GROSS INCOME $451,587 $462,876 $474,448 $486,309 $498,467 $510,929 $523,702 $536,795 $550,214 $563,970

OPERATIONAL EXPENSESFIXED OPERATIONAL EXPENSE

Total Real Estate Property Taxes $41,678 $42,929 $44,217 $45,543 $46,910 $48,317 $49,766 $51,259 $52,797 $54,381Total Property Insurance Expense $16,500 $16,913 $17,335 $17,769 $18,213 $18,668 $19,135 $19,613 $20,104 $20,606Total Property Utility Expense $48,410 $49,620 $50,860 $52,132 $53,435 $54,771 $56,140 $57,544 $58,983 $60,457

TOTAL FIXED OPERATIONAL EXP $106,588 $109,461 $112,412 $115,444 $118,558 $121,756 $125,042 $128,417 $131,883 $135,444

VARIABLE OPERATIONAL EXPENSETotal Maint. Contract Services $13,091 $13,419 $13,754 $14,098 $14,450 $14,812 $15,182 $15,561 $15,950 $16,349Total Repairs & Maintenance $39,000 $39,975 $40,974 $41,999 $43,049 $44,125 $45,228 $46,359 $47,518 $48,706Total Administrative Expenses $16,925 $17,348 $17,782 $18,226 $18,682 $19,149 $19,628 $20,118 $20,621 $21,137Total Leasing & Marketing $426 $437 $448 $459 $471 $482 $494 $507 $520 $533Total Payroll and Salary Expenses $61,949 $63,498 $65,085 $66,712 $68,380 $70,090 $71,842 $73,638 $75,479 $77,366Property Management Fee $22,579 $23,144 $23,722 $24,315 $24,923 $25,546 $26,185 $26,840 $27,511 $28,198Miscellaneous Expense $700 $700 $700 $700 $700 $700 $700 $700 $700 $700

TOTAL VARIABLE OPERATIONAL EXP $154,671 $158,520 $162,466 $166,510 $170,655 $174,904 $179,259 $183,723 $188,299 $192,988

TOTAL FIXED & VARIABLE EXPENSE $261,259 $267,981 $274,878 $281,954 $289,213 $296,660 $304,301 $312,140 $320,182 $328,433

Replacement Reserves $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000

TOTAL OPERATING EXPENSES $276,259 $282,981 $289,878 $296,954 $304,213 $311,660 $319,301 $327,140 $335,182 $343,433

PROPERTY NET OPERATING INCOME $175,328 $179,895 $184,570 $189,356 $194,254 $199,269 $204,401 $209,655 $215,033 $220,537

1ST MTG DEBT SERVICE EXPENSESFirst Mortgage Interest $87,553 $86,101 $84,581 $82,992 $81,330 $79,592 $77,773 $75,871 $73,882 $71,801First Mortgage Principal $31,619 $33,072 $34,591 $36,180 $37,842 $39,581 $41,399 $43,301 $45,290 $47,371

TOTAL 1ST MTG DEBT SERVICE $119,172 $119,172 $119,172 $119,172 $119,172 $119,172 $119,172 $119,172 $119,172 $119,172

CASH FLOW AFTER DEBT SERVICE $56,155 $60,722 $65,398 $70,183 $75,082 $80,096 $85,229 $90,483 $95,860 $101,365

DEBT SERVICE COVERAGE RATIO 1.47 1.51 1.55 1.59 1.63 1.67 1.72 1.76 1.80 1.85INDICATED CAPITALIZATION RATE 7.16% 7.34% 7.53% 7.73% 7.93% 8.13% 8.34% 8.56% 8.78% 9.00%

Concessions

Cash Flow


UNIT TYPE SET-ASIDE # OF UNITS

UNIT SIZE

CURRENT AVG. RENT

RENT PER SF

PROFORMARENT

PROFORMA RENT

PER SF

MAXTC RENT

CURRENT UA

MAXNET RENT

1 BD 1 BTH (Phase I) 60% 8 610 $583 $0.95 $600 $0.98 $810 $80 $730 1 BD 1 BTH (Phase III) 50% 12 550 $535 $0.97 $551 $1.00 $675 $104 $571 1 BD UNIT TOTAL 20 11,480 $11,080 $11,412 $14,580 $12,6921 BD UNIT AVG 574 $554 $0.97 $571 $0.99 $729 $635

2 BD 1 BTH (Phase II) 60% 16 810 $632 $0.78 $665 $0.82 $972 $107 $865 2 BD 1 BTH (Phase I) 60% 22 810 $638 $0.79 $665 $0.82 $972 $107 $865 2 BD 1 BTH (Ph. I Office) 60% 1 810 $0 $0.00 $0 $0.00 $972 $107 $865 2 BD 1 BTH (Ph. I Res. Asst.) 60% 1 810 $0 $0.00 $665 $0.82 $972 $107 $865 2 BD UNIT TOTAL 40 32,400 $24,145 $25,935 $38,880 $34,6002 BD UNIT AVG 810 $604 $0.75 $648 $0.80 $972 $865

TOTAL 60 43,880 $35,225 $37,347 $53,460 $47,292AVERAGE 731 $587 $0.80 $622 $0.85 $891 $788* Unit mix above based on 8/22/17 rent roll.

Unit Mix


Tax Credit Property Income LimitsINCOME 50% 60%1 Person $25,200 $30,2402 Person $28,800 $34,5603 Person $32,400 $38,8804 Person $36,000 $43,2005 Person $38,900 $46,6806 Person $41,800 $50,1607 Person $44,650 $53,580

Farmhouse I, II, & III is a Section 42 LIHTC property which means that federal tax credits were given to help finance the property. The property currently is required to hold the maximum rent charged at or below a level considered appropriate for the households that have incomes at or below 50% and 60% of the local Area Median Income (AMI) for the county.

Gallatin CountyEffective Year: 2017

Area Median Income: $71,000

Tax Credit Maximum Allowable RentsSet Aside Unit

Type # of

UnitsMax Rent

Current UA

Max Net Rent

50% 1 BD 12 $675 $104 $57160% 1 BD 8 $810 $80 $73060% 2 BD 40 $972 $107 $865

33%

67%

Unit Breakdown By Unit Type

1 BD 2 BD

$554$604$635

$865

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

1 BD 2 BD

Asking Rents to Net Max Tax Credit Rents

Asking Rent Net Max Rent


Max Allowable LIHTC Rent Growth- 2BD/ 60%

Year Rent % Change

2012 $913 -2013 $921 0.88%2014 $960 4.23%2015 $960 0.00%2016 $972 1.25%2017 $972 0.00%

3 Yr Avg 0.42%5 Yr Avg 1.27%

$64,000

$66,000

$68,000

$70,000

$72,000

$74,000

$76,000

2012 2013 2014 2015 2016 2017

AMI Growth RateYear AMI % Change

2012 $67,600 -2013 $68,200 0.89%2014 $71,100 4.25%2015 $68,600 (3.52%)2016 $74,200 8.16%2017 $71,000 (4.31%)

3 Yr Avg 0.11%5 Yr Avg 1.09%

$880

$890

$900

$910

$920

$930

$940

$950

$960

$970

$980

2012 2013 2014 2015 2016 2017

SOURCE: novoco.com

*The high watermark year was 2016 at $74,200


Fair Market RentsYear 1 BD 2 BD

2012 $555 $7222013 $594 $7452014 $596 $7472015 $615 $7712016 $639 $7882017 $672 $848

$630

$650

$670

$690

$710

$730

$750

2012 2013 2014 2015 2016 2017

FMR AveragesYear FMR Avg. % Change

2012 $639 -2013 $670 4.86%2014 $672 0.30%2015 $693 3.20%2016 $714 2.96%2017 $760 6.52%

3 Yr Avg 4.23%5 Yr Avg 3.57%

SOURCE: novoco.com


Demographics

BELGRADEMEDIAN HOME COST

BELGRADEMEDIAN RENT

BELGRADEUNEMPLOYMENT RATE

BELGRADEJOB GROWTH

$305,500 $1,372 3.9%(7/2017)

0.4%(since 1/2017)

SOURCE: zillow.com, homefacts.com


0

500

1,000

1,500

2,000

2,500

Under $25,000 $25,000- $50,000 $50,000- $75,000 $75,000- $100,000 $100,000- $125,000 $125,000- $150,000 $150,000- $200,000 $200,000+

Demographic Analysis

POPULATION 1 MILE 3 MILES 5 MILES

2017 Estimated Population 6,961 17,430 22,410Population Growth 2010-2017 9.02% 12.49% 15.77%

HOUSEHOLDS

2017 Estimated Households 2,805 6,658 8,616Household Growth 2010-2017 10.00% 13.62% 17.11%

INCOME

2017 Household Income: Average $57,764 $71,558 $76,931 2017 Household Income: Median $47,468 $59,467 $62,017

HOUSEHOLD INCOME LEVELS BY POPULATION

OWNER73%

RENTER27%

OCCUPIED96% VACANT

4%

SOURCE: CoStar

www.lihtcadvisors.com

LIHTC Advisors

lihtc advisors · belgrade northeast of bozeman yellowstone international airport on tubb road and...

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