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NEW MEXICO MORTGAGE FINANCE AUTHORITY

Board Meeting 344 4th St. SW, Albuquerque, NM

Wednesday, May 18, 2016 at 9:30 a.m.

Agenda Chair Convenes Meeting Roll Call (Jay Czar) Approval of Agenda – Board Action Approval of 4/20/15 Board Meeting Minutes – Board Action Approval of 4/20/15 Board Training Meeting Minutes – Board Action

Board Action Items Action Required? Finance Committee 1 HOME Rule Changes Internal Audit (Jessica Bundy, REDW) YES 2 3/31/16 Quarterly Financial Statements (Gina Hickman) YES

3/31/16 Quarterly Investment Report (Kathy Keeler) YES 3 Approval of Broker, Dealers, Custodians & Depositories (Gina Hickman) YES 4 Federal Home Loan Bank (FHLB) Borrowing Resolution (Gina Hickman) YES 5 External Audit Services Award (Yvonne Segovia) YES Allocation Review Committee 6 Proposed 2016 Low Income Housing Tax Credit (“LIHTC”) Awards (Susan Biernacki & Dan Puccetti) YES Contracted Services/Credit Committee & Housing Trust Fund Committee 7 Villa Hermosa – HOME Loan (Michael Scott & Dan Puccetti) YES 8 Villa Hermosa – Housing Trust Fund Loan (Michael Scott & Dan Puccetti) YES 9 Proposed Extension of Governmental Services Agreement with John W. Anderson (Marjorie Martin) YES 10 Proposed Extension of Governmental Services Agreement with David R. Schmidt (Marjorie Martin) YES 11 Approval of 2016/2017 DOE Plans (Troy Cucchiara and Rose Baca-Quesada) YES

Other Board Items Information Only 12 (Staff is available for questions)

Staff Action Requiring Notice to Board 2016 Series A Single Family Bond Pricing Summary

Monthly Reports No Action Required 13 (Staff is available for questions)

Communications Department Reports Quarterly Reports No Action Required 14 (Staff is available for questions)

Quarterly Board Report Announcements and Adjournment Discussion Only Confirmation of Upcoming Board Meetings

June 15, 2016 – (Gallup – location to TBD) July 20, 2016 - Wednesday – 9:30 a.m. (MFA) August 17, 2016 – Wednesday – 9:30 a.m. (Albuquerque International Balloon Museum) August 17-18, 2016 – Board Retreat (Albuquerque International Balloon Museum)


Board Meeting 344 4th St. SW, Albuquerque, NM

Wednesday, May 18, 2016 at 9:30 a.m.

Agenda Chair Convenes Meeting Roll Call (Jay Czar) Approval of Agenda – Board Action Approval of 4/20/15 Board Meeting Minutes – Board Action Approval of 4/20/15 Board Training Meeting Minutes – Board Action

Board Action Items Action Required? Finance Committee 1 HOME Rule Changes Internal Audit (Jessica Bundy, REDW) - REDW was engaged to evaluate MFA’s

compliance with the 2013 Final HUD HOME Rule changes. REDW is presenting their HOME Rule Changes internal audit, along with the results.

2 3/31/16 Quarterly Financial Statements (Gina Hickman) - ongoing 3/31/16 Quarterly Investment Report (Kathy Keeler) - ongoing

3 Approval of Broker, Dealers, Custodians & Depositories (Gina Hickman) - At least annually and as needed, MFA staff reviews and updates the Broker, Dealer, Custodian and Depository list. Staff recommends approval of the addition of Moreton Capital Markets, LLC and Zion’s Bank Capital Markets/Zions Direct to the MFA Broker, Dealer, Custodian and Depository list. Both Moreton and Zions meet the established qualifications in the MFA Investment Policy.

4 Federal Home Loan Bank (FHLB) Borrowing Resolution (Gina Hickman) - It is recommended that the Board approve a $40mm Federal Home Loan Bank of Dallas (“FHLB”) borrowing resolution to offer Idaho Housing Finance Association (“IHFA”) a line of credit to assist in the purchase of eligible mortgage loans using the unrestricted General Fund investment portfolio as collateral. During the course of the first 16 months of the new IHFA contract, it is estimated that MFA will generate approximately $500,000 in warehouse interest income. MFA will obtain a first-position security interest in the mortgage loans purchased by IHFA.

5 External Audit Services Award (Yvonne Segovia) - The Board approved the RFP for External Audit Services on March 16, 2016. We received one response, which met the Minimum Requirements and was scored. This audit will be conducted as a joint venture with the Office of the State Auditor (OSA). Staff recommends the approval of the sole source procurement for the External Audit Services to be provided by the OSA and the joint venture award for External Audit Services be made to Moss Adams pending OSA approval.

Allocation Review Committee 6 Proposed 2016 Low Income Housing Tax Credit (“LIHTC”) Awards (Susan Biernacki & Dan Puccetti) - Staff

requests approval of five LIHTC awards. MFA received 17 LIHTC Applications proposing to build or rehabilitate 1,115 low income units. Five applications are for new construction, nine are acquisition /rehabilitation, and three are a combination of the two. All Applications include participation by either a non-profit, housing authority or tribally designated housing entity and all agreed to some level of green building. The average cost per unit for new construction (before land and reserves) is $186,332, which is down from $191,211 in 2015. Staff recommends the allocation of all 2016 Tax Credits ($3mm) plus an estimated forward allocation of $2 mm of 2017 Tax Credits in order to fully fund the top five ranking Projects.

Contracted Services/Credit Committee & Housing Trust Fund Committee 7 Villa Hermosa – HOME Loan (Michael Scott & Dan Puccetti) - Villa Hermosa LLC (Santa Fe): HOME &

Housing Trust Fund Loan requests (Michael Scott) – Santa Fe Civic Housing Authority (SFCHA) is requesting two construction-to-permanent loans from MFA, a HOME loan in the amount of $400,000 and a Housing Trust Fund loan in the amount of $500,000. These loans will assist in financing the acquisition and rehabilitation of Villa Hermosa, a 116 unit senior-restricted projected in Santa Fe, which has received a preliminary 2016 LIHTC allocation. SFCHA is an experienced, developer, owner, and manager of affordable housing units in Santa Fe.

8 Villa Hermosa – Housing Trust Fund Loan (Michael Scott & Dan Puccetti) – same as above

MFA Board Agenda May 18, 2016 Page 2 9 Proposed Extension of Governmental Services Agreement with John W. Anderson (Marjorie Martin) - MFA

staff recommends that MFA approve a one year extension of the Governmental Services Agreement between MFA and John W. Anderson, pursuant to the provisions of that agreement, which otherwise expires on June 20, 2016.

10 Proposed Extension of Governmental Services Agreement with David R. Schmidt (Marjorie Martin) - MFA staff recommends that MFA approve a one year extension of the Governmental Services Agreement between MFA and David R. Schmidt, pursuant to the provisions of that agreement, which otherwise expires on June 20, 2016.

11 Approval of 2016/2017 DOE Plans (Troy Cucchiara and Rose Baca-Quesada) - The NM Energy$mart program helps low-income New Mexicans save money on utility bills. Homeowners and renters who qualify for the program receive an average of $6,000 in weatherization measures. The Department of Energy is the primary funding source because they set the rules and regulations for the program and they are the only funding source that provide for vehicles and equipment and a training and technical assistance budget. In order to receive the funding the “State Plan” must be submitted no later than May 1, of every year. The Department of Energy (DOE) funding for the 2016/2017 program year is $1,646,802.00. We are projecting that Central NM Housing Corporation will weatherize 102 homes and SW Regional Housing will weatherize 38 homes for a total of 140 homes with this funding.

Other Board Items Information Only 12 (Staff is available for questions)

Staff Action Requiring Notice to Board 2016 Series A Single Family Bond Pricing Summary

Monthly Reports No Action Required 13 (Staff is available for questions)

Communications Department Reports Quarterly Reports No Action Required 14 (Staff is available for questions)

Quarterly Board Report Announcements and Adjournment Discussion Only Confirmation of Upcoming Board Meetings

June 15, 2016 – (Gallup – location to TBD) July 20, 2016 - Wednesday – 9:30 a.m. (MFA) August 17, 2016 – Wednesday – 9:30 a.m. (Albuquerque International Balloon Museum) August 17-18, 2016 – Board Retreat (Albuquerque International Balloon Museum)

Minutes

NEW MEXICO MORTGAGE FINANCE AUTHORITY Board Meeting

344 4th St. SW, Albuquerque, NM Wednesday, April 20, 2016 at 9:30 a.m.

Chair Burt convened the meeting on April 20, 2016 at 9:32 a.m. Secretary Czar called the roll. Members present: Chair, Dennis Burt, Angel Reyes, Lieutenant Governor John Sanchez, Treasurer Tim Eichenberg and Steven Smith. Absent: Attorney General Hector Balderas and Randy McMillan. Czar informed the Board that everyone had been informed about today’s meeting in accordance with the New Mexico Open Meetings Act. Chair Burt welcomed board meeting attendees and noted that the meeting was being webcast, making reference to the microphone sensitivity. Approval of Agenda - Board Action. Motion to approve the April 20, 2016 Board agenda as presented: Reyes. Second: Eichenberg. Vote: 5-0. Approval of 3/19/16 Board Meeting Minutes – Board Action. Motion to approve the 3/19/16 Board Meeting Minutes as presented: Sanchez. Second: Eichenberg. Vote: 5-0. Finance Committee 1 Acceptable Use and Data Security Policy (Joseph Navarrete). Navarrete began his presentation by

providing background information, informing the board in June 2015 REDW performed an internal audit of New Mexico Mortgage Authority’s (MFA) data privacy and security processes and controls. This audit was performed to assist management in determining if the confidentiality, integrity and availability of sensitive data were adequately protected in compliance with data privacy and security best practices. He further informed the board that based on that testing, most policies and procedures appeared to be consistently followed and errors/issues identified throughout the audit were minimal. However, REDW did find that MFA lacked the appropriate policy structure to support some data privacy and security requirements. In response to the findings identified in the internal audit and to strengthen the information technology control environment, staff has developed a policy on overall acceptable use and data security to address this risk. Navarrete stated that REDW had reviewed this policy and made recommendations which have been incorporated. He reviewed the list of items the proposed policy will include, which is located behind tab one and will become of a part of the official board packet. Discussion ensued regarding, breaches, security testing, internal scanning and making some of the recommended changes sooner than six months. Motion to approve the Acceptable Use and Data Security Policy as recommended: Smith. Second: Sanchez. Vote: 5-0. (See Attachment A)

2 Investment Policy Revisions (Gina Hickman/Kathy Keeler). Hickman began by identifying the documents provided behind tab two which she reviewed during her presentation which included the Government Portfolio Advisors (GPA) Investment Program Review and the redlined version of the Investment Policy – General Fund. She informed the board that MFA hired GPA to perform an analysis of the General Fund investment program and to recommend revisions to the Policy, including the asset allocation strategy. Hickman reminded the board GPA presented their observations and recommendations at the 2015 Board Retreat. A copy of GPA’s executive summary is attached (Exhibit A). Staff reviewed GPA’s observations and recommendations and incorporated those most advantageous to MFA into the Policy. Hickman reviewed the summary of the proposed changes to the Policy and the proposed Asset Allocation Strategy which are listed in the memo and will be made a part of the official board packet. Keeler spoke about the interest rate environment and risk versus return. Hickman further informed the board that the next step would be to update the reporting packet. She stated that they will take the plan to both board committees in July to request feedback, incorporate the changes and start the new reporting process in the following quarter. Motion to approve the Investment Policy Revisions as recommended: Reyes. Second: Smith. Vote: 5 -0. (See Attachment B)

Other 3 Appointment of the Nominating Committee to Elect Officers (Chair, Dennis Burt). Chair Burt informed

the board that he appointed a Nominating Committee to Elect Officers. The Nominating Committee appointed

MFA Regular Board Meeting Minutes April 20, 2016 Page 2

include the following members: Lieutenant Governor John Sanchez, Attorney General Hector Balderas and himself. No Action Required. (See Attachment C)

4 Ventana Fund Update (Monica Abeita/Michael Scott). Ventana Fund Update (Monica Abeita/Michael Scott). Abeita began her presentation with background information on Ventana Fund. It was established in 2014 to meet the critical need for an increased supply of financing for affordable housing construction and rehabilitation in New Mexico. Current and founding board members are Todd Clarke – Chair and Executive Director, Mark Allison – Vice Chairman, Elizabeth Bernal – Secretary, Steve Anaya – Treasurer; other board members include: Robbie Levey, Catherine Hummel and Dan Puccetti. Abeita spoke of the relationship with MFA. MFA made a $3.2 million, multi-year grant to Ventana Fund with which Ventana Fund has made 5 loans to date. Two to 3 additional loans are expected this year. MFA also provides staffing for Ventana Fund under professional services and loan servicing contracts; the staffing relationship has existed successfully for 2 years. Other accomplishments include: robust policies and procedures for lending, including loan loss reserve; strategic plan and annual report; audits; tax returns; prospectus for capital raising; 501(c)3 non-profit status. She encouraged the board to visit the website at ventanafund.org. Michael Scott presented the milestones within the MFA grant agreement. Scott stated that Ventana Fund received its CDFI certification in 2015 but did not receive the CDFI financial assistance grant it applied for. The organization was too young and the lack of audits was a major factor. Ventana Fund submitted a second CDFI financial assistance grant application on April 15, 2016 for the maximum amount of $700,000. It is also negotiating a bank loan for $500,000 with First National Rio Grande and has had preliminary and positive discussions with BBVA Compass Bank. Chair Burt stated it has been a delightful journey to watch. Staff is to be complimented with what has been achieved; the effort has leveraged MFA resources to provide more affordable housing in New Mexico communities. No Action Required. (See Attachment D)

Other Board Items - Information Only 5 A question was asked of staff regarding Staff Actions Requiring Board Notice.

Staff Action Requiring Notice to Board –Member Reyes asked for update regarding the loan made to Commonweal Conservancy, Inc. It is listed behind tab five, under the staff actions report; which will be made a part of the official board packet. Staff responding included Izzy Hernandez and Dan Puccetti. They presented the history and status of the loan to date.

Monthly Reports - No Action Required 6 There were no questions asked of staff

2/28/16 Financial Statements Communications Department Reports

Announcements and Adjournment - Confirmation of Upcoming Board Meetings. Chair Burt informed the Board that the next meeting will be on May 18, 2016 at the offices of the MFA at 9:30 a.m. and made mention of the June board meeting location in Gallup, NM. There being no further business the meeting was adjourned at 10:25 a.m. Approved: May 18, 2016 Chair, Dennis Burt Secretary, Jay Czar


MFA Board of Directors Study Session – Housing Development Cost Efficiency Research MFA

344 4th St. SW, Albuquerque, NM Wednesday, April 20, 2016

The meeting convened at 10:40 a.m. Members present: Chair Dennis Burt, Angel Reyes, Mark Van Dyke (Designee for Lieutenant Governor John Sanchez), State Treasurer Tim Eichenberg Steven Smith and Randy McMillan. Members Absent: Attorney General Hector Balderas. The public has been informed about today’s meeting, in accordance with the New Mexico Open Meetings Act. Staff in attendance included: Jay Czar, Gina Hickman, Izzy Hernandez, Monica Abeita, Dan Puccetti, Susan Biernacki, Sabrina Su, Michael Scott, Sandra Marez and General Counsel Joshua Allison. On Wednesday, April 20, 2016 the Board of Directors of the New Mexico Mortgage Finance Authority (MFA) conducted a study session following the MFA Board of Directors meeting to go over Cost Efficiency Research regarding MFA Low Income Housing Tax Credit (LIHTC) Program and Affordable Housing Rental Projects - New Construction. Chair Burt began by thanking the Board for their time and commitment. He explained that a reputable organization had been commissioned to conduct a study which was presented to the Board in November 2014 and fell short of what was needed. The board members are stewards of MFA’s resources; this has been Randy’s message. The more we can drive down the cost without being draconian, the better product for the dollar and the better we can serve by developing low income housing. Kudos to those who got us to where we are; we now have materials so we can get our minds around what we need to be doing. Jay Czar introduced MFA staff in attendance. He thanked the board for their participation. He stated that New Mexico is in a leadership role and continues to do more than any other state. He mentioned the report presented to the board in November 2014 and MFA’s disappointment with the results. He made reference to other reports that staff had researched and reminded the board that the U.S. Government Accountability Office is working on a three part study for the LIHTC program. The third part of the study will address cost issues and is due this fall. All states are looking at this. He made reference to the Meyer Memorial Trust Report – The Cost of Affordable Housing Development in Oregon, which is part of today’s materials. He read excerpts from certain sections. He reviewed some of the changes MFA had made to the QAP (Qualified Action Plan) to reduce the costs of the developments. He commented that these changes have been incremental, which was the original plan, rather than changing the QAP so significantly as to cause an upheaval in our system. We need to make sure we maintain developer interest in the program, not just in this state but others as well. He further commented that there are a lot of factors to consider and hoped we could all work together to come up with an appropriate level of incentives and still achieve the very best product along with the most efficient use of tax credits. Czar stated it is very difficult to compare market/non-market costs as will be seen in the study session. MFA is entrusted by the US Treasury and the state of New Mexico to be great stewards of these LIHTC and public funds. Abeita explained that she would cover two sections of the memo provided; they are Methodology and the Findings sections. In terms of methodology, she explained that MFA has struggled to provide an apples-to-apples comparison because market-rate and affordable rental projects are two different business models entirely. There are some fundamental differences with market rate projects; typically they are bigger which typically makes them more efficient. In the absence of having comparable data for all costs, staff separated out the costs that could be compared and analyzed the costs that weren’t readily comparable. Abeita reviewed the memo, which will become of a part of the official board study session packet. She stated that MFA staff analyzed the budgets of 16 affordable new construction rental projects for which developers requested LIHTCs in 2014 and 2015. All projects represent new construction; no acquisition/rehabilitation projects were considered.

Cost Efficiency Research on MFA LIHTC & Affordable Housing Rental Projects-New Construction Minutes April 20, 2016 - Page 2

Because MFA does not have access to budgets of comparable market-rate projects, staff sought publically available data through RS Means (online estimating database that is regionally adjusted) to provide a comparison. RS Means does not provide comparables for all line items in the affordable rental budgets; therefore, staff divided the budgets into the following categories for the purpose of analysis and discussion: Construction Costs; Land, Site Work, Construction Contingency and Construction GRT; Soft Costs and LIHTC/Affordable Housing-Specific Costs. Abeita made reference to exhibits in the memo: Exhibit A: Costs per Gross Square Foot, Exhibit B: Costs per Unit, Exhibit C: Soft Cost Comparison and Exhibits D&E (sample projects). Abeita then reviewed the Findings; which included the following; 1) Affordable housing construction costs do not differ from market-rate construction costs in RS Means, with both averaging approximately $114 per gross square foot among 16 projects; 2) Soft costs add an average of $13 per gross square foot to a project; and 3) Primarily due to the developer fee, the LIHTC Program adds an average of $27 per gross square foot to a project. Abeita explained that while we see room for improvement in the soft costs, they only represent 7% of the total development costs and will therefore not have a large impact on cost reduction. The findings show that the real difference in costs between affordable and market-rate properties is the developer fee. Market-rate developers make their profit over time through higher rents, rent increases, and capital gains when projects are sold at a profit. Affordable rental developers must abide by lower rents set by HUD, are not free to raise their rents at will, and commit to 30-45 years of affordability. Because of these differences, affordable housing developers make their profit by taking a developer fee up front, since they will make little to no profit after the project is placed in service. Dan Puccetti discussed LIHTC Process and Time Frames; mainly driven by questions from board members. Izzy Hernandez presented past Changes MFA has taken to Incentivize Lowering Costs and the 2015 LIHTC Qualified Allocation Plan Changes. Board members made the following observations and suggestions:

• Continue to use the cost categories used in the study session for board presentation purposes. • In the future, compare cost certification line items to application costs. • Look at incentives for developers to come in under budget. • Consider unintended consequences of increasing points for efficient use of credits (i.e. does it

negatively impact small deals, Pueblos, new construction)? • Need to address equity for acquisition/rehab vs, new construction in the QAP through set-aside or

other point category. Currently acquisition/rehab has an advantage and this is of concern. • Cost is only one element and board members also need to consider access to capital and credit

worthiness when approving these projects. The role of board members is broader than a singular focus on cost.

• If we were stakeholders we would want to make more deals and provide more access. These programs are so meaningful to the state. LIHTCs are oversubscribed at least 4 or 5 to 1 every year; we don’t have enough funds to fill the needs either through tax credits or loans. Denying access to this capital would be problematic if we become too narrow minded or focused.

Chair Burt thanked everyone for their participation and hard work. He also stated that he would like to continue the dialogue and understand the importance of this issue for next month’s board meeting. He commented that last month’s decision to deny a project raised everyone’s attention. It was a bold step the board took but we have to remember the critical nature of what we have to do moving forward.

There being no further business the meeting was adjourned at 1:55 p.m. Approved: May 18, 2016

Chair, Dennis Burt Secretary, Jay Czar

New Mexico Mortgage Finance Authority

HOME Rule Changes Internal Audit

February 2016


HOME Rule Changes Internal Audit

Table of Contents

Page

Introduction 1

Purpose and Objectives 1

Scope and Procedures Performed Including Recommendations and Management Responses 2

Observations and Management Responses 4

1


HOME Rule Changes

Internal Audit

Report


Board of Directors

INTRODUCTION

We performed the internal audit services described below to assist New Mexico Mortgage

Finance Authority (MFA) in evaluating compliance with the 2013 Final HUD HOME Rule

changes (HOME Rule changes).

Our services were performed in accordance with the Consulting Standards issued by the

American Institute of Certified Public Accountants, Generally Accepted Government Auditing

Standards, and the terms of our contractual agreement for internal audit services. Since our

procedures were applied to samples of transactions and processes, it is possible that significant

issues related to the areas tested may not have been identified. Although we have included

management’s responses in our report, we do not take responsibility for the sufficiency of these

responses or the effective implementation of any corrective action.

PURPOSE AND OBJECTIVES

Our internal audit focused on evaluating various MFA processes to determine if they met the

requirements and were in compliance with the HOME Rule Changes. The 2013 Final HOME

Rules were modified to incorporate the key changes in regulation intended for the following:

Accelerate the timely production and occupancy of assisted housing,

Strengthen the performance of Participating Jurisdictions (PJs) and their partners in

producing and preserving affordable housing units,

Provide PJs with greater flexibility in the design and implementation of their programs, and

Increase administrative transparency and accountability.

2

SCOPE AND PROCEDURES PERFORMED INCLUDING

RECOMMENDATIONS AND MANAGEMENT RESPONSES

Interviews and Rule Change Implementation:

We obtained a listing of the HOME Rule changes and gained an understanding of the processes

and controls in place to ensure compliance is met. We inquired with MFA personnel as to the

processes that were updated and implemented to comply with each of the HOME Rule changes.

We interviewed the following employees:

Yvonne Segovia, Controller

Izzy Hernandez, Deputy Director of Programs

Patrick Ortiz, Lead Housing Programs Analyst

Rose Baca-Quesada, Director of Community Development

Daniel Puccetti, Director of Housing Development

Sabrina Su, Housing Development Program Manager

Below is a table listing the changes that were applicable to MFA’s operations. The compliance

with changes was determined based on discussions with MFA personnel, verification of the

process through supporting documentation, and testing a sample of items if a population was

available. We performed the following detailed testing:

Obtained the Open Items Listing and verified the fund date to the current date did not

exceed 4 years for any of the in-process projects.

Selected 2 of the 4 completed HOME projects (after effective date) to determine if they were

occupied within the required 18 months.

Obtained the Community Housing Development Organizations (CHDO) set-aside funds

tracking workbook and verified the funds were tracked separately to ensure they were

committed and expended timely.

Selected a CHDO that received HOME funds and verified certification documentation was

on file.

Obtained a listing of all HOME Projects and selected 4 of the 9 projects with 10+ units to

determine if the financial condition of the projects was evaluated. Additionally, we verified

that the on-site monitoring was performed according to the inspection schedule.

Selected 4 of the 4 total HOME projects completed within the last two years and tested that

the initial inspection occurred within 12 months of project completion.

HOME Rule Change MFA Process

Complies (Yes/No)

Timely Production and Occupancy of Assisted Housing

HOME projects must be completed within 4 years of commitment. Yes

HOME-assisted rental units must be occupied by income-eligible Yes

3


Complies (Yes/No)

households within 18 months of project completion.

HOME-assisted rental units not rented within 6 months of project

completion must be reported to HUD and an enhanced marketing

plan should be in place.

Yes

CHDO set-aside funds must be committed to specific projects

within 24 months of the PJ receiving its HOME allocation.

Yes

CHDO set-aside funds must be expended within 5 years. Yes

Property Standards and Construction Oversight

Property standards are updated to reference current national codes

and to require that PJs establish standards that will sustain quality

assisted housing for at least the affordability period.

Yes

PJs must identify and plan for major systems repairs. For rental

rehabilitation projects with 26+ units, this must be done via a

capital needs assessment. For homeownership housing, major

systems must have a useful life of at least five years upon project

completion.

Yes

PJs must develop inspection policies and procedures. Yes

CHDO Qualification and Capacity Requirements

To qualify as a CHDO, a nonprofit must have paid staff whose

experience qualifies them to undertake CHDO set-aside activities.

There is an exception of using a consultant for the first year.

Yes

Each time a PJ commits HOME funds, it must re-certify a

nonprofit’s qualifications to be a CHDO.

Yes

The roles of owner, developer, and sponsor for CHDOs using set

aside funds are more specifically defined.

Yes

Long-Term Viability of Rental Projects

During the affordability period, PJs must examine the financial

condition of projects with 10 or more HOME-assisted units at least

annually, and must take action where feasible to correct problems

that threaten a project’s financial viability.

Yes

Provide Flexibility in Program Design and Administration

PJs may utilize a risk-based monitoring system and adjust the

schedule of ongoing rental unit inspections, but inspections must

occur no less frequently than every 3 years. The first on-site

inspection must occur within 12 months of project completion.

No

PJ’s are permitted to charge certain fees: reasonable application Yes

4


Complies (Yes/No)

fees, homebuyer counseling fees, and ongoing rental monitoring

fees.

Increase Administrative Transparency and Accountability

PJ’s must develop risk-based monitoring systems for all HOME

funded activities and projects, including on-site monitoring

schedules and financial oversight protocols for rental properties.

Yes

OBSERVATIONS AND MANAGEMENT RESPONSES

We identified the following weaknesses related to the implementation of the HOME Rule

changes:

1. First On-Site Inspection within 12 Months of Project Completion

The first on-site inspection must occur within 12 months of project completion. One of the four

HOME projects tested did not meet the requirement of having the first on-site inspection

completed within 12 months of project completion due to the distance of the location of the

project from MFA.

Risk Level: Low- There appears to be a process in place to inspect properties within 12 months

of project completion and in the instance identified MFA did not inspect within the timeframe

due to the location of the project.

Recommendation

MFA should update processes to ensure that initial inspections are completed timely to meet this

requirement.

Management Response

Management agrees. Staff will (1) begin tracking HUD HOME property/unit allocations for

multifamily rental properties at the time loans are committed and the project is setup in the IDIS

database; and (2) integrate HUD HOME properties with the MFA pipeline for Low Income

Housing Tax Credit program allocations. This will allow for the most lead time to ensure the

initial compliance monitoring visit for HUD HOME units occurs within the first 12 months from

the date of project completion; and will enhance the overall pipeline management process to

accommodate increases within the MFA portfolio.

* * * * *

This report is intended solely for the information and use of MFA management, the finance

committee, members of the Board and others within the organization. If additional procedures

had been performed, other matters might have come to our attention that would have been

reported to you.

5

We would be pleased to meet with you to discuss our observations and answer any questions.

We discussed and resolved other minor observations with management. We sincerely appreciate

the courtesy extended to our personnel.

Albuquerque, New Mexico

April 20, 2016


Combined Financial Statementsand Schedules

March 31, 2016

1


FINANCIAL REVIEW

For the six-month period ended March 31, 2016

NEW ISSUES:

Single Family issue: $21.2 mm 2015 Series E Bonds-Refunding Transaction (December)

Multi-family issue: None.

COMPARATIVE YEAR-TO-DATE FIGURES:

6 months 6 months % Change Forecast Actual to Forecast/Target

3/31/16 YTD 3/31/15 YTD Year / Year 3/31/16 YTD Forecast 9/30/16

PRODUCTION

1 Single family issues (new money): $0.0 $35.0 -100.0% $0.0 0.0% $39.0

2 Single family loans sold (TBA): $125.6 $55.2 127.5% $58.5 114.7% $117.0

3 Multifamily issues: $0.0 $11.0 -100.0% $0.0 0.0% $0.0

4 Payoffs: $35.9 $41.3 -13.1% $38.2 -6.0% $76.4

BALANCE SHEET

5 Avg. earning assets: $932.3 $996.1 -6.4% $949.4 -1.8% $930.0

6 General Fund Cash and Securities: $77.3 $76.6 0.9% $72.2 7.1% $71.9

7 General Fund SIC FMV Adj.: ($475.9) $348.5 -236.6% $0.00 N/A $0.00

8 Total bonds outstanding: $694.9 $790.8 -12.1% $712.2 -2.4% $685.5

INCOME STATEMENT

9 General Fund expenses: $4.1 $4.2 -2.0% $6.0 -31.8% $12.1

10 General Fund revenues: $7.5 $7.2 4.4% $7.3 2.6% $14.7

11 Combined excess revenue over expenses: $3.9 $3.6 6.5% $2.5 55.0% $4.6

12 Combined net position: $206.8 $201.8 2.5% $205.4 0.7% $207.5

13 Combined return on avg. earning assets: 0.76% 0.67% 13.7% 0.48% 57.9% 0.50%

14 Net TBA profitability: 1.60% 2.16% -25.9% 1.15% 39.1% 1.15%

15 Combined interest margin: 0.79% 0.64% 23.4% 0.63% 25.4% 0.63%

MOODY'S BENCHMARKS

16 Net Asset to debt ratio (5-yr avg): 23.37% 19.99% 17% 23.72% -1% 23.72%

17 Net rev as a % of total rev (5-yr avg): 7.53% 6.07% 24% 7.43% 1% 7.43%

Legend: Positive Impact, Negative Impact, Caution/Known Trend

2

MONTHLY FINANCIAL TRENDS & VARIANCES:

During March MFA paid $25 mm in Multifamily and Single family bond debt service.

CURRENT YEAR FINANCIAL TRENDS & VARIANCES:

Still continue to see significant volatility in relation to valuations for interest rate sensitive investments which impact non-operating income

(i.e. State Investment Council funds & Mortgage Backed Securities)

Our FY16 estimates anticipate continued improvement in the interest rate environment and economy in general providing higher

investment yields and potential for bond issuance for both the single and multifamily programs which will help stabilize the balance sheet.

Growth in our portfolio of Single family program loans and mortgage backed securities has shown a decrease of (6.8%) since the beginning

of the fiscal year. Year-to-date (6 months) decrease in total assets is (4.0%). Growth in assets is estimated to be a (5.7%) decrease this fiscal

year as it is still assumed prepayments will exceed new assets as MFA utilizes the secondary market to fund the Single Family Mortgage

Program as needed based on market conditions. In this funding execution, MFA does not issue debt to fund the program but instead the

mortgage backed securities are sold to investors.

Due to unanticipated demand in the Single Family Mortgage Program, TBA transactions fees exceed the budget by the $852,500 or 62%.

Positive expenditure budget variances are primarily related to timing, including the $593,000 contribution to the Ventana Fund.

Credit risk remains stable. Year-to- date (6 months) MFA has written off 46 DPA loans totaling a little over $233,200. During the course of

the year there will continue to be write-offs in this portfolio as it is approximated that there are $1.2 mm of DPA loans with first mortgages in

foreclosure. Additionally, staff will be implementing the non-performing loan policy approved in January which will result in approximately

$301,000 (59 loans) of DPA loan write-offs.

Based on Moody’s issuer credit rating scorecard, MFA’s 23.37% net asset ratio (5-year average), which measures balance sheet strength,

indicates a strong and growing level of resources for maintaining HFA's creditworthiness under stressful circumstances (> 20%). The net

revenue as a percent of total revenue measures performance and profitability and MFA’s 7.53% ratio (5-year average) points to a satisfactory

profitability with consistent trends (5%-10% range).

MONTHLY FINANCIAL GRAPHS

Target

2015 2016

Loans Effective yield 4.45% 4.50%

Cash & Investments Effective yield 2.34% 2.35%

Rate of Return on Average Earning Assets 0.49% 0.50%

(1) Weatherization Assistance Programs; Emergency Shelter Grant; State Homeless; Housing Opportunities for People With Aids; NM State Tax Credit; Governor's

Innovations; EnergySaver; Tax Credit Assistance Program; Tax Credit Exchange; Neighborhood Stabilization Program; Section 811 PRA; Homeownership Preservation

Program (2) NM Affordable Housing Charitable Trust Fund; Land Title Trust Fund; Housing Trust Fund

1,301,724 1,157,046 1,024,233 965,425 926,415

$2,715,713 $2,633,330

$2,530,234 $2,549,825 $2,576,005

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2012 2013 2014 2015 2016

Assets Under Management as of 9/30/2016

($ in thousands)Other Grants (1)

HOME

Section 8

Low Income Housing Tax Credit

Trusts (2)

Rental Housing Program

General Fund

Single Family Mortgage Program

Book Assets

4.43%

0.76%

2.35%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%Yield Targets 9/30/2016

2012-2013

5,300

2013-2014

5,186 2014-2015

3,641 2015-2016

3,879 Target 2015-

2016

2,488

-

1,000

2,000

3,000

4,000

5,000

6,000

YTD Excess Revenues over Expenses as of

3/31/2016

2012-2013 2013-2014 2014-2015 2015-2016 Target 2015-2016

($ t

ho

usa

nd

s)

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

YTD Annualized Payoffs as a Percentage of Single Family Mortgage Portfolio as of

9/30/2016

Payoffs/Portfolio

10 year Treasury rate

QUARTERLY FINANCIAL GRAPHS

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000($

th

ou

san

ds)

Total Assets

Combined Assets Earning Assets

-

2,000

4,000

6,000

8,000

10,000

12,000

($ t

ho

usa

nd

s)

YTD Excess Revenue over Expenses

Annualized

YTD Excess Revenue over Expenses YTD Excess Revenue over Expenses excluding SIC FMV

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

Return on Average Earning Assets

4/14/2016 12:25 PM

YTD 3/31/16 YTD 3/31/15

ASSETS:

CURRENT ASSETS:

CASH & CASH EQUIVALENTS $29,910 $27,671

RESTRICTED CASH HELD IN ESCROW 11,270 -

SHORT-TERM INVESTMENTS 1,805 -

ACCRUED INTEREST RECEIVABLE 3,395 3,846

MORTGAGE PAYMENT CLEARING 76 153

OTHER CURRENT ASSETS 1,380 1,505

ADMINISTRATIVE FEES RECEIVABLE (PAYABLE) - (0)

INTER-FUND RECEIVABLE (PAYABLE) - -

TOTAL CURRENT ASSETS 47,836 33,175

CASH - RESTRICTED 24,244 55,025

LONG-TERM & RESTRICTED INVESTMENTS 59,724 64,781

FNMA, GNMA, & FHLMC SECURITIZED MTG. LOANS 597,840 670,132

MORTGAGE LOANS RECEIVABLE 196,812 182,394

ALLOWANCE FOR LOAN LOSSES (2,518) (2,566)

FIXED ASSETS, NET OF ACCUM. DEPN 949 1,069

OTHER REAL ESTATE OWNED, NET 467 553

OTHER NON-CURRENT ASSETS - -

INTANGIBLE ASSETS 62 79

TOTAL ASSETS 925,416 1,004,641

DEFERRED OUTFLOWS OF RESOURCES

REFUNDINGS OF DEBT 1,000 1,231

TOTAL ASSETS & DEFERRED OUTFLOWS OF RESOURCES 926,415 1,005,872

LIABILITIES AND NET POSITION:

LIABILITIES:

CURRENT LIABILITIES:

ACCRUED INTEREST PAYABLE 3,631 4,517

ACCOUNTS PAYABLE AND ACCRUED EXPENSES 4,518 4,916

ESCROW DEPOSITS & RESERVES 11,270 -

TOTAL CURRENT LIABILITIES 19,419 9,433

BONDS PAYABLE, NET OF UNAMORTIZED DISCOUNT 694,916 790,838

MORTGAGE & NOTES PAYABLE 4,930 3,500

ACCRUED ARBITRAGE REBATE 82 83

OTHER LIABILITIES 251 244

TOTAL LIABILITIES 719,598 804,098

NET POSITION:

INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT 949 (751)

UNAPPROPRIATED NET POSITION (NOTE 1) 63,709 64,322

APPROPRIATED NET POSITION (NOTE 1) 142,159 138,203

TOTAL NET POSITION 206,817 201,774

TOTAL LIABILITIES & NET POSITION 926,415 1,005,872


COMBINED STATEMENT OF NET POSITION

MARCH 31, 2016

(THOUSANDS OF DOLLARS)

4/14/2016 12:25 PM

YTD 3/31/16 YTD 3/31/15

OPERATING REVENUES:

INTEREST ON LOANS $17,616 $19,073

INTEREST ON INVESTMENTS & SECURITIES 1,343 1,388

LOAN & COMMITMENT FEES - 186

ADMINISTRATIVE FEE INCOME (EXP) 3,407 2,656

RTC, RISK SHARING & GUARANTY INCOME 79 139

HOUSING PROGRAM INCOME 555 548

LOAN SERVICING INCOME (257) (150)

OTHER OPERATING INCOME 161 1

SUBTOTAL OPERATING REVENUES 22,904 23,841

NON-OPERATING REVENUES:

ARBITRAGE REBATE INCOME (EXPENSE) 5 -

GAIN(LOSS) ASSET SALES/DEBT EXTINGUISHMENT (640) 343

OTHER NON-OPERATING INCOME (4) 16

GRANT AWARD INCOME 20,550 22,759

SUBTOTAL NON-OPERATING REVENUES 19,912 23,117

TOTAL REVENUES 42,816 46,958

OPERATING EXPENSES:

ADMINISTRATIVE EXPENSES 3,848 3,733

INTEREST EXPENSE 15,270 17,291

AMORTIZATION OF BOND/NOTE PREMIUM(DISCOUNT) (1,447) (1,885)

PROVISION FOR LOAN LOSSES 70 265

MORTGAGE LOAN & BOND INSURANCE - -

TRUSTEE FEES 43 45

AMORT. OF SERV. RIGHTS & DEPRECIATION 66 69

AMORTIZATION OF BOND ISSUANCE COSTS - -

BOND COST OF ISSUANCE 264 780

SUBTOTAL OPERATING EXPENSES 18,113 20,298

NON-OPERATING EXPENSES:

CAPACITY BUILDING COSTS 191 274

GRANT AWARD EXPENSE 20,633 22,745

SUBTOTAL NON-OPERATING EXPENSES 20,824 23,019

TOTAL EXPENSES 38,936 43,317

EXCESS REVENUES OVER EXPENSES 3,879 3,641

OTHER FINANCING SOURCES (USES) - -

EXCESS (DEFICIENCY) OF REVENUES OVER

EXPENSES AND OTHER FINANCING SOURCES(USES) 3,879 3,641

NET POSITION AT BEGINNING OF YEAR 202,938 198,133

NET POSITION AT 3/31/2016 206,817 201,774

FOR THE SIX MONTHS ENDED MARCH, 2016

(THOUSANDS OF DOLLARS)


STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

NOTES TO FINANCIAL STATEMENTS

(For Informational Purposes Only)

(Thousands of Dollars)

(Note 1) MFA Net Position as of March 31, 2016:

UNAPPROPRIATED NET POSITION:

$ 36,866 is held by Bond Program Trustees and is pledged to secure repayment of the Bonds.+

$ 26,787 is held in Trust for the NM Housing Trust Fund and the NM Land Title Trust Fund.

$ 56 held for New Mexico Affordable Housing Charitable Trust .

$ 63,709 Total unappropriated Net Position

APPROPRIATED NET POSITION: GENERAL FUND

By actions of the Board of Directors on various dates, General Fund net assets have been appropriated as follows:

$ 92,081 for use in the Housing Opportunity Fund ($69,358 in loans plus $22,723 unfunded, of which $10,165 is

committed).

$ 20,458 for future use in Single Family & Multi-Family housing programs.

$ 10,743 for loss exposure on Risk Sharing loans.

$ 949 invested in capital assets, net of related debt.

$ 7,955 for the future General Fund Operating Budget Y E 9/30/16 ($12,070 total budget

less $4,115 expended budget through 03/31/16.)

$ 132,186 Subtotal - General Fund

APPROPRIATED NET POSITION: HOUSING

By actions of the Board of Directors on December 7, 1999, Housing assets have been appropriated as follows:

$ 10,923 for use in the federal and state housing programs administered by MFA.

$ 10,923 Subtotal - Housing Program

$ 143,109 Total appropriated Net Position

$ 206,817 Total combined Net Position at March 31, 2016

Total combined Net Position, or reserves, at March 31, 2016 was $206.8 million, of which $63.7 million was pledged

to the bond programs, Affordable Housing Charitable Trust and fiduciary trusts. $143.1 million of available reserves, with

$77.3 million primarily liquid in the General Fund and in the federal and state Housing programs and $65.8 million illiquid

in the programs of the General Fund, have been

- for use in existing and future programs

- for coverage of loss exposure in existing programs, and

- for support of operations necessary to carry out the programs.

MFA's general plan for bond program reserves as they may become available to MFA over the next 30 years is to

use the reserves for future programs, loss exposure coverage, and operations.

ONE YEAR TO YEAR TO DATE UNDER/(OVER) UNDER/(OVER) EXPENDED

MONTH DATE PRO RATA YTD ANNUAL ANNUAL ANNUAL BUDGET

ACTUAL ACTUAL BUDGET BUDGET BUDGET BUDGET PERCENTAGE

REVENUES

OPERATING REVENUES

INTEREST INCOME 445,355 2,725,743 3,091,377 365,633 6,182,753 3,457,010 44.09%

ADMIN INCOME 806,081 4,747,043 3,722,406 (1,024,637) 7,444,812 2,697,769 63.76%

OTHER OPERATING INCOME (70,259) 537,596 514,369 (23,228) 1,028,737 491,141 52.26%

SUBTOTAL OPERATING REVENUES 1,181,177 8,010,383 7,328,151 (682,232) 14,656,302 6,645,919 54.65%

NON-OPERATING REVENUES 37,737 (489,986) 50 490,036 100 490,086 -489985.78%

TOTAL REVENUES 1,218,915 7,520,397 7,328,201 (192,196) 14,656,402 7,136,005 51.31%

EXPENSES

OPERATING EXPENSES

COMPENSATION 440,010 2,726,636 3,040,622 313,985 6,081,243 3,354,607 44.84%

TRAVEL & PUBLIC INFO 34,934 141,687 214,130 72,443 428,259 286,572 33.08%

OFFICE EXPENSES 63,874 343,243 402,715 59,471 805,429 462,186 42.62%

OTHER OPERATING EXPENSES 98,701 562,046 705,261 143,215 1,410,522 848,476 39.85%

SUBTOTAL OPERATING EXPENSES 637,519 3,773,613 4,362,727 589,114 8,725,453 4,951,841 43.25%

NON-OPERATING EXPENSES 42,581 190,538 599,438 408,899 1,198,875 1,008,337 15.89%

SUBTOTAL OPERATING & NON-

OPERATING EXPENSES 680,101 3,964,151 4,962,164 998,013 9,924,328 5,960,177 39.94%

SERVICING & CAPITAL OUTLAY 37,933 55,124 720,338 665,214 1,440,675 1,385,551 3.83%

NON-CASH ITEMS 14,106 95,918 352,345 256,427 704,690 608,772 13.61%

TOTAL EXPENSES 732,140 4,115,192 6,034,847 1,919,654 12,069,693 7,954,501 34.10%

EXCESS REVENUE OVER EXPENSES 486,775 3,405,204 1,293,355 2,111,850 2,586,709 818,495 68.36%

LESS CAPITALIZED ASSETS 5,999 32%

TOTAL EXPENSES LESS CAPITALIZED ASSETS 3,411,203

NEW MEXICO MORTGAGE FINANCE AUTHORITY GENERAL FUND & HOUSING

BUDGET VARIANCE REPORT

FOR THE SIX MONTHS ENDED 3/31/16

TOTAL General Fund Dollars Allocated: 92,080,621$ Outstanding: at an average yield of 5.36%

Primero Primero PRLF

Primero Working

Capital

Partners SF 1st

Mortgage Build It Guaranty DPA Mortgages HERO 1st Mortgages Emerging Markets MF Access Total

Original

Allocation $5,161,468 $0 $350,000 $6,838,000 $2,500,000 $28,746,739 $10,000,000 $1,550,000 $29,983,000 $85,129,208

Transfers ($207,000) $925,000 ($350,000) ($378,000) ($2,500,000) $8,035,133 ($6,471,133) ($1,550,000) $2,496,000 $0

3rd Party Award $3,013,000 $2,000,000 $1,938,413 $6,951,413

Current

Allocation $7,967,468 $2,925,000 $0 $6,460,000 $0 $38,720,286 $3,528,867 $0 $32,479,000 $92,080,621

2,954 108 n/a 252 units 105 units 10,954 63 units None 1,589 units 16,025 units

$15,982,384 $2,000,000 $35,000 $13,052,511 $0 $57,865,111 $9,258,705 $0 $30,722,224 $128,915,935

Repayments $9,806,258 $14,794 $35,000 $7,675,293 $0 $24,294,107 $5,729,838 0 $1,838,375 $49,393,666

Available $1,791,342 $939,794 $0 $1,082,782 $0 $5,149,282 $0 $0 $3,595,151 $12,558,352

$18,519 n/a n/a

1,017 108 0 193 None 5,373 28 None 1,424 8,143

$2,888,463 $1,473,402 $0 $5,377,218 $0 $30,175,813 $3,528,867 $0 $25,913,849 $69,357,612

3.75% 3.00% 0.00% 0% 0% 5.82% 5.24% n/a 6.39% 5.36%

Collateral

1st or 2nd mtg on

SF or MF

development

1st or 2nd mortg

on MF

development

1st mortgage on

SF rentals

1st mortgage on

SF homes

2nd mortgage on SF or

MF development

2nd mortgage on

SF homes

1st mortgage on SF

homesn/a

1st mortgage on MF

development

45% at 60% or

below Up to 120% n/a

60% or below in

Taos,SF & LA and

10 lowest

household

counties. 54% at 60% or below

Until 2003: Up to

80% & 95% Up to 140% n/a 90% at 60% or below

55% at 80% or

above

50% or below all

other areas

46% at 80% or above Since 2003: M$VR

limits

10% at market

57% Albuq, SF &

LC MSAs 100% Rural n/a

61% Albuq, SF &

LC MSAs 15% Albuquerque

83% Albuq, SF &

LC MSAs

Teachers, Police,

Firefighters, Nurses,

Military n/a

44% Albuq, SF & Las

Cruces MSA

43% Tribal &

Rural

39% Rural 85% Rural 17% Rural 81% MSA 19% Rural 56% Tribal & Rural

Delinquency

Rate34.45% 0.00% 0.00% 17.10% 0.00% 16.41% 7.14% n/a 0.00% 11.41%

Default Rate 3.39% 0.00% 0.00% 0.00% 0.00% 8.79% 0.00% n/a 0.00% 8.49%

Loan Loss

Allowance 70,000 - - - - 1,229,417 3,584 n/a - 1,303,001

$8,045

Outstanding &

Yield

AMI Served

Geographic

Distribution

HOUSING OPPORTUNITY FUNDMarch 31, 2016

Funded/

Committed

Subsidy/ Unit$5,410 $51,796 $0 $5,283 $146,964 $19,334

New Mexico Mortgage Finance AuthorityEffect of GASB31 on Financials

($ in millions)

$(50)

$(40)

$(30)

$(20)

$(10)

$-

$10

$20

$30

2011 2012 2013 2014 2015 As of12/31/15

As of3/31/16

$ m

illi

on

sGASB 31 Changes in Fair Value of Assets

2011-2016

$(40)

$(30)

$(20)

$(10)

$-

$10

$20

$30

2011 2012 2013 2014 2015 As of

12/31/15

As of

3/31/16

$ m

illi

on

s

MFA Income With and Without GASB 31

Adjustment, 2011 - 2016

Income with GASB 31 Income without GASB 31

Quarterly InvestmentReview

May 10, 2016 Quarterly Investment Review Agenda for Discussion at Finance Committee Meeting

Meeting Date: May 10, 2016

For reference: Minutes of the February 9, 2015 investment discussion during the Finance Committee meeting. For discussion: Quarterly Investment Review of MFA General Fund investments

~Diversification and Asset Allocation Strategies – LGIP, bond ladder and SIC Investment Funds

~Market values and portfolio yield ~Economic outlook ~Liquidity needs Review of General Fund cash flow projections


Minutes of Quarterly Investment Review (Taking place during the Finance Committee May 10, 2016) Present: Chair Steven Smith and Member Dennis Burt Participating by Telephone: Lt. Governor Proxy, Mark Van Dyke MFA Staff Present: Jay Czar, Gina Hickman, Isidoro Hernandez, Yvonne Segovia and Kathy Sysak-Keeler Quarterly Review of MFA General Fund investments: Review of Diversification and Asset Allocation Strategies: Keeler reminded the Committee that

information is being report as of March 31, 2016 which is prior to the time that the Board adopted the new investment policy. She then reviewed MFA’s investment strategy and fund balances. Operating funds are invested in the Local Government Investment Pool (“LGIP”) and the MFA warehouse facility for the single family program, both of which are short-term investments. The warehouse facility will only have a balance when loans are actually being warehoused which was not the case on March 31, 2016. The bond ladder and mortgage backed securities are intermediate term investments and long term investments are split between the Core Plus Bonds Pool and the Large Cap Index Pool of the State Investment Council (“SIC”). The asset allocation for the SIC investment is targeted at 80% to the Core Plus Bonds Pool and 20% to the Large Cap Index Pool. As of March 31, 2016, the allocations were 78% in Core Plus Bonds Pool and 22% in the Large Cap Index Pool which is within target range.

Market values and portfolio yield: Keeler informed the Committee that as of March 31, 2016, MFA

had approximately $8.6 million invested in the LGIP (short-term investment) and no investments in the Warehouse. Both of these investments are within investment policy ranges.

She went on to explain that intermediate investments are comprised of approximately $9 million in the bond ladder and $13.2 million of mortgage backed securities for a total of approximately $22.2 million of intermediate term investments which is within the Investment Policy range. Investments in the State Investment Council (“SIC”) Pools which are long-term investments totaled approximately $27.3 million.

Keeler reviewed a series of graphs and charts with the Committee outlining the market value, yield

and/or rate of return of the LGIP, bond ladder, mortgage backed securities and SIC funds. The average rate of return for the SIC funds combined is 4.02% for the first two quarters of FY 2016. As of March 31, 2016, the yield on the LGIP is 0.37%, the yield to maturity on the mortgage backed securities is 5.39%, and the yield on the bond ladder is 1.25%.

Benchmark: Barclays US Agency Index Yield to Maturity is 1.08% for a portfolio with an average

maturity of 1-3 years and for a portfolio of 1-5 years the yield to maturity is 1.27% as of March 31, 2016. MFA’s bond ladder has an average maturity of 38 months and the average yield to maturity of 1.25% as of March 31, 2016.

Housing Trust Fund: Keeler also reviewed the Housing Trust Fund which is invested 100% in the

Core Plus Bonds Pool. She also pointed out RV Kuhns reported a calendar year to date return of -0.58% on those funds as of December 31, 2015 the latest date for which information is available.

Economic outlook: Keeler highlighted a study prepared by Brooks Pearsall Zantow LLC regarding the

housing market in the greater Albuquerque area. Liquidity needs: Keeler reviewed the Statement of Cash Flows which indicated that the actual ending

cash and securities balance for March 31, 2016 was $88.1 million. Over the next two fiscal years, ending cash and securities balances are estimated to be between $82 million to $85 million.

New Mexico Mortgage Finance Authority Minutes of Quarterly Investment Review (Taking place during the Finance Committee February 9, 2016) Present: Chair Steven Smith Participating by Telephone: Lt. Governor Proxy, Mark Torres MFA Staff Present: Jay Czar, Gina Hickman, Isidoro Hernandez and Kathy Sysak-Keeler Quarterly Review of MFA General Fund investments: Review of Diversification and Asset Allocation Strategies: Keeler reviewed MFA’s investment

strategy and fund balances. Operating funds are invested in the Local Government Investment Pool (“LGIP”) and the MFA warehouse facility for the single family program, both of which are short-term investments. The warehouse facility will only have a balance when loans are actually being warehoused which was not the case on December 31, 2015. The bond ladder and mortgage backed securities are intermediate term investments and long term investments are split between the Core Plus Bonds Pool and the Large Cap Index Pool of the State Investment Council (“SIC”). The asset allocation for the SIC investment is targeted at 80% to the Core Plus Bonds Pool and 20% to the Large Cap Index Pool. As of December 31, 2015, the allocations were 77% in Core Plus Bonds Pool and 23% in the Large Cap Index Pool which is within target range.

Market values and portfolio yield: Keeler informed the Committee that as of December 31, 2015,

MFA had approximately $7.4 million invested in the LGIP (short-term investment) and no investments in the Warehouse. Both of these investments are within investment policy ranges.

She went on to explain that intermediate investments are comprised of approximately $9 million in the bond ladder and $13.5 million of mortgage backed securities for a total of approximately $22.5 million of intermediate term investments which is within the Investment Policy range. Investments in the State Investment Council (“SIC”) Pools which are long-term investments totaled approximately $26.6 million.

Keeler reviewed a series of graphs and charts with the Committee outlining the market value, yield

and/or rate of return of the LGIP, bond ladder, mortgage backed securities and SIC funds. The average rate of return for the SIC funds combined is 1.27 % for the first quarter of FY 2016. As of December 31, 2015, the yield on the LGIP is 0.21%, the yield to maturity on the mortgage backed securities is 5.40%, and the yield on the bond ladder is 1.10%.

Benchmark: Barclays US Agency Index Yield to Maturity is 1.37% for a portfolio with an average

maturity of 1-3 years and for a portfolio of 1-5 years the yield to maturity is 1.65% as of December 31, 2015. MFA’s bond ladder has an average maturity of 41 months and the average yield to maturity of 1.10% as of December 31, 2015.

Housing Trust Fund: Keeler also reviewed the Housing Trust Fund which is invested 100% in the

Core Plus Bonds Pool. She also pointed out RV Kuhns reported a calendar year to date return of -0.42% on those funds as of September 31, 2015 the latest date for which information is available.

Economic outlook: Keeler presented two Federal Reserve press releases and an article regarding

existing home sales. Liquidity needs: Keeler reviewed the Statement of Cash Flows which indicated that the actual ending

cash and securities balance for December 31, 2015 was $85.8 million. Over the next two fiscal years, ending cash and securities balances are estimated to be between $82 million to $84 million.

GRAPH 1

AUGUST 2005 APPROVED GENERAL FUND INVESTMENT MAY 2011 APPROVED REVISION TO INVESTMENT POLICYFEBRUARY 2008 APPROVED NEW LARGE CAP INDEX ETF POOL APRIL 2012 APPROVED REVISION TO INVESTMENT POLICYJANUARY 2009 APPROVED REVISION TO INVESTMENT POLICY APRIL 2013 APPROVED REVISION TO INVESTMENT POLICYOCTOBER 2010 APPROVED REVISION TO INVESTMENT POLICY

August 2005, the Board decidedto go with Option 2.

Option 1 Reconfirmed at the April 2013Board meeting.

Option 2

Total as of 3/31/2016 = $22.2 million As of 3/31/2016=$27.3 million As of 3/31/2016, MFA has invested

LGIP = $8.6 million Bond Ladder = $9.0 million (Long-Term Investments - 78% in Core Plus Bonds Pool and 22%

Warehouse = -0- Mortgage Backed Securities = $13.2 million Investment Policy Range: in Large Cap Index Pool***

(LGIP: (Investment Policy Target = $20 million Excess Funds)

Investment Policy Target: $5 million Investment Policy Range = $10-$25 million) 20% to Large Cap Index Pool**

Investment Policy Range: $3-$12 million

Warehouse:

Investment Policy Target: $15 million

Investment Policy Range: $0-$25 million)

* Core Bonds Pool: seeks to exceed returns of the Barclays US Aggregate Bond

Index through active external management using complementary core-plus strategies.

The Core Bonds Pool name has changed to Core Plus Bonds Pool.

** US Large Cap Index Pool: seeks to generate returns similar to the Russell 1000

index, at a very low cost.

MFA General FundSource: www.sic.state.nm.us/invest_pools.htm

7/28/2014 Total Fund Benchmark

*** On April 30, 2012, MFA's assets in the Large Cap Active-ETF Pool were transferred to the

Large Cap Index Pool since the Large Cap Active ETF Pool was dissolved. Source: New Mexico State Investment Council

*Performance shown is gross of fees.

5.63%

December 2015

Ending

5.13%

Ending

1.27% -0.22% -0.22% 4.18%

Ending

0.86% 0.77%

December 2015

Ending

0.77% 4.13%

December 2015

Year to Date

December 2015 December 2015

Quarter

AUGUST 2005 CURRENT GENERAL FUND INVESTMENT

At the Board meeting in

Excess funds from the LGIP will be dollar-cost averaged into SIC Pools

Until target amount is reached, then excess funds to SIC

Allocation

INTERMEDIATE TERM INVESTMENTSSHORT TERM INVESTMENTS

Total as of 3/31/2016=$8.6 million

Most Recent Performance Report*

3 Years Current 1 Year 5 Years

Local Government Investment Pool

("LGIP") Approximately

$20 million

Bond Ladder

Approximately $26 million

LGIP -- Target

$5 million

State

Investment Council Pools

("SIC")

100% to Core Bonds Pool*

80% to Core Bonds

Pool**

Mortgaged

Backed Securities ("MBS")

Warehouse Short-Term Investments

Bond

Ladder

S:\Finance\Qtrly Investment Review\Graphs\Graph 1

GRAPH 2

11.79%

2.59%

13.92%

3.57%

8.49%

0.54%

4.02%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Per

cen

tag

e

Fiscal Years

Annual Rate of Return

on SIC Investments for

FY 2010 to 2016*

*FY 2016: 10/1/15-3/31/16

S:\Finance\Qtrly Investment Review\Graphs\Graph 2 Annual Rate of Return

GRAPH 3

3.86%

1.81% 2.22%

-1.36%

5.34%

-2.76%

3.48%

4.41%

2.80%

2.69%

-3.20%

4.74%

0.63%

0.48%

2.29% 2.27%

-1.62%

4.13%

-1.75%

2.44% 2.62%

-0.24%

-2.75%

5.77%

-1.24%

0.81%

1.30%

-1.89%

1.94%

-6.02%

-2.74%

8.10%

0.33%

-1.80%

-5.38%

-0.03%

6.97%

0.37%

1.43%

-1.98%

-2.59%

0.58%

-0.80%

1.42% 1.47%

-0.19% -0.48%

1.42%

1.01%

0.01%

0.97% 1.41%

0.24% -0.21%

1.13%

-0.99%

1.03%

0.45%

-0.22%

1.87%

-0.27%

0.31%

-3.00%

-0.22%

-1.06%

0.35%

-0.72%

-0.62%

1.16%

-0.51%

-0.80%

0.52%

0.45%

2.17%

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

Mar

-13

Apr-

13

May

-13

Jun

-13

Jul-

13

Aug

-13

Sep

-13

Oct

-13

Nov

-13

Dec

-13

Jan-1

4

Feb

-14

Mar

-14

Apr-

14

May

-14

Jun

-14

Jul-

14

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

Jan-1

5

Feb

-15

Mar

-15

Apr-

15

May

-15

Jun

-15

Jul-

15

Aug

-15

Sep

-15

Oct

-15

Nov

-15

Dec

-15

Jan-1

6

Feb

-16

Mar

-16

Rat

e o

f R

etu

rn

Month-Year

Rate of Return by Month-Core Plus Bond Pool &

Large Cap Index Pool-General Fund Large Cap Index Rate

of Return:

FY2012: 26.48%

FY2013: 20.88%

FY2014: 18.97%

FY2015: -0.55%

FY2016: 7.76%

Core Plus Bond Rate

of Return:

FY2012: 11.66%

FY2013: 0.04%

FY2014: 5.91%

FY2015: 0.84%

FY2016: 3.00%

S:\Finance\Qtrly Investment Review\Graphs\Graph 3 Rate of Return Core-Large Cap

GRAPH 4

-$650,000

-$600,000

-$550,000

-$500,000

-$450,000

-$400,000

-$350,000

-$300,000

-$250,000

-$200,000

-$150,000

-$100,000

-$50,000

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

$550,000

$600,000

$650,000M

ar-1

3

Apr-

13

May

-13

Jun-1

3

Jul-

13

Aug-1

3

Sep

-13

Oct

-13

Nov-1

3

Dec

-13

Jan-1

4

Feb

-14

Mar

-14

Apr-

14

May

-14

Jun-1

4

Jul-

14

Aug-1

4

Sep

-14

Oct

-14

Nov-1

4

Dec

-14

Jan-1

5

Feb

-15

Mar

-15

Apr-

15

May

-15

Jun-1

5

Jul-

15

Aug-1

5

Sep

-15

Oct

-15

Nov-1

5

Dec

-15

Jan-1

6

Feb

-16

Mar

-16

Ap

pre

ciat

ion/D

epre

ciat

ion

Month-Year

Monthly Appreciation/Depreciation-

Core Plus Bonds Pool &

Large Cap Index Pool-General Fund

Core Plus Bonds Pool

Large Cap Index Pool

S:\Finance\Qtrly Investment Review\Graphs\Graph 4 Monthly Appreciation-Depreciation

GRAPH 5

-20.00%

-17.50%

-15.00%

-12.50%

-10.00%

-7.50%

-5.00%

-2.50%

0.00%

2.50%

5.00%

7.50%

10.00%

12.50%

15.00%

17.50%

20.00%M

ar-1

3

Apr-

13

May

-13

Jun

-13

Jul-

13

Aug-1

3

Sep

-13

Oct

-13

Nov-1

3

Dec

-13

Jan-1

4

Feb

-14

Mar

-14

Apr-

14

May

-14

Jun

-14

Jul-

14

Aug-1

4

Sep

-14

Oct

-14

Nov

-14

Dec

-14

Jan-1

5

Feb

-15

Mar

-15

Apr-

15

May

-15

Jun

-15

Jul-

15

Aug-1

5

Sep

-15

Oct

-15

Nov-1

5

Dec

-15

Jan-1

6

Feb

-16

Mar

-16

Rat

e o

f R

etu

rn

Month-Year

Comparison of SIC Portfolio and Bond Ladder

Returns-General Fund

Bond Ladder:

Average Monthly Rate of

Return from March

2013 to March 2016: 1.23%

Average Rate of Return

for FY 2016*: 1.20%

SIC Portfolio

Average Monthly Rate of

Return from March 2013

to March 2016: .37%

Cumulative rate of return

for FY 2016*: 4.02%

*FY 2016: 10/1/15-3/31/16

Approved CUSIP (per Wells) Yield

Broker/Dealer Custodian or Account Carrying Value Market Value Unrealized to

or Depository Number 03/31/2016 03/31/2016 Gain/(Loss) Maturity**

BOND LADDER:

Wells Fargo Bank FHLB FHLB Obligation 10/23/12 $ 1,000,000.00 1,000,000.00 0.00 10/23/17 0.900 % 0.900 %

Call Date

Anytime after 01/23/2013

Wells Fargo Bank FHLB Fannie Mae Obligation 03/12/13 $ 1,000,000.00 1,003,400.00 3,400.00 03/12/18 1.100 % 1.100 %

Call Date


Wells Fargo Bank FHLB Federal Farm Credit Bank 03/12/13 $ 1,000,000.00 998,900.00 (1,100.00) 03/12/18 1.030 % 1.030 %

Obligation Call Date


Wells Fargo Bank FHLB Freddie Mac Obligation 04/30/13 $ 1,000,000.00 1,000,600.00 600.00 04/30/18 1.020 % 1.020 %

Call Date


Wells Fargo Bank FHLB Fannie Mae Obligation 05/21/13 $ 1,000,427.13 999,600.00 (827.13) 05/21/18 1.030 % 1.009 %

Call Date

05/21/14

Wells Fargo Bank FHLB FHLB Obligation 10/28/15 $ 1,000,000.00 1,001,600.00 1,600.00 10/28/20 1.720 % 1.720 %

Call Date


Wells Fargo Bank FHLB Freddie Mac Obligation 10/29/15 $ 1,000,000.00 1,000,100.00 100.00 10/29/20 1.250 % 1.250 %

Call Date Step Up

Quarterly 01/29/2016 1.500 %

Wells Fargo Bank FHLB Fannie Mae Obligation 11/25/15 $ 1,000,000.00 997,800.00 (2,200.00) 11/25/20 1.720 % 1.720 %

Call Date

Quarterly 05/25/2016

Wells Fargo Bank FHLB Fannie Mae Obligation 02/24/16 $ 1,000,000.00 1,002,100.00 2,100.00 11/24/20 1.500 % 1.500 %

Call Date

02/24/17

MORTGAGE BACKED SECURITIES:

Wells Fargo Bank FHLB FNMA/GNMA Obligation Various 11/15/94 - 07/01/09, $ 13,187,049.57 14,340,283.21 1,153,233.64 10/01/24 - 09/20/35-2044 4.580 - 7.300% 5.391 %

5/21/04-9/1/05, 9/12/12

6/27/14, 8/25/14 3/26/15

7/31/15, 12/10/15,12/14/15

WAREHOUSE SHORT-TERM INVESTMENTS:

Zions Bank Zions Bank Warehouse Short-Term N/A N/A N/A N/A N/A N/A N/A

Investments

LOCAL GOVERNMENT INVESTMENT POOL:

State Treasurer's Local Short Term 7283-1370 Various $ 8,557,194.53 N/A 04/01/16 0.264 % 0.366 %

Office Office

TOTAL $ 30,744,671.23 23,344,383.21 $ 1,156,906.51

Bond Ladder: Maturity Yield to For the one-year period ended 3/1/16, Barclay's Mortgage Backed Yield toYield to Warehouse Short- Yield to Local Government Yield to

Months Maturity U.S. Agency* Index yield to maturity on a 1-3 year Securities: MaturityMaturity Term Securities: Maturity Investment Pool: Maturity

portfolio (12-36 months) is 1.08%. For a 1-5 year

38 1.253% portfolio (12-60 months) the yield to maturity is 5.391% N/A 0.366%

1.27%.

*Barclay's U.S. Agency index includes native currency agency debentures for issuers such as Fannie Mae, Freddie Mac and federal Home Loan Bank.

Investment Fund

3136G2Y35

N/A

3134G43F3

3135G0XA6

Date of

3130A6MH7

3134G7S44

3135g0g56

Purchase Date Rate

313380Z34

3136G1EP0

3133ECHS6

Type of

Investment

New Mexico Mortgage Finance Authority - Schedule of Investments

General Fund - March 31, 2016

Stated

Maturity Interest

New Mexico Mortgage Finance AuthorityGeneral Fund Securities Outstanding (in thousands) Shown by Maturity Date and First Call Date

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Jan

-Mar

201

6

Ap

r-Ju

n 2

01

6

July

-Sep

t 20

16

Oct

-De

c 2

01

6

Jan

-Mar

201

7

Ap

r-Ju

n 2

01

7

July

-Sep

t 20

17

Oct

-De

c 2

01

7

Jan

-Mar

201

8

Ap

r-Ju

n 2

01

8

July

-Sep

t 20

18

Oct

-De

c 2

01

8

Jan

-Mar

201

9

Ap

r-Ju

n 2

01

9

July

-Sep

t 20

19

Oct

-De

c 2

01

9

Jan

-Mar

202

0

Ap

r-Ju

n 2

02

0

July

-Sep

t 20

20

Oct

-De

c 2

02

0

Bond Ladder to Maturity--as of 3/31/16

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Jan

-Mar

20

16

Ap

r-Ju

n 2

01

6

July

-Se

pt

20

16

Oct

-Dec

201

6

Jan

-Mar

20

17

Ap

r-Ju

n 2

01

7

July

-Se

pt

20

17

Oct

-Dec

201

7

Jan

-Mar

20

18

Ap

r-Ju

n 2

01

8

July

-Se

pt

20

18

Oct

-Dec

201

8

Jan

-Mar

20

19

Ap

r-Ju

n 2

01

9

July

-Se

pt

20

19

Oct

-Dec

201

9

Jan

-Mar

20

20

Ap

r-Ju

n 2

02

0

July

-Se

pt

20

20

Oct

-Dec

202

0

Bond Ladder to First Call Date--as of 3/31/16

NEW MEXICO MORTGAGE FINANCE AUTHORITY GENERAL FUND

CHANGE IN NET ASSET VALUE

FOR THE MONTH ENDED

March 31, 2016

Core Plus Bonds Large Cap Index Total

Market Value 2/29/2016 $20,814,625.15 $5,672,924.45 $26,487,549.60

CONTRIBUTIONS 0.00 0.00 0.00

WITHDRAWALS 0.00 0.00 0.00

FEES 0.00 0.00 0.00

INCOME EARNED 70,132.67 2.46 70,135.13

CAPITAL APPR/DEPR 381,152.32 395,265.17 776,417.49

Market Value 3/31/2016 $21,265,910.14 $6,068,192.08 $27,334,102.22

Prepared by: State Investment Council

Long-Term Policy

Market Value % of Total Policy Range

Core Plus Bonds 21,265,910.14$ 78% 80% 70%-95%

Large Cap Index 6,068,192.08 22% 20% 5%-30%

Total 27,334,102.22$

Prepared by : MFA Staff

PORTFOLIO ALLOCATION

FOR THE MONTH ENDED MARCH 31, 2016

NM MORTGAGE FINANCE AUTHORITY HOUSING TRUST

CHANGE IN NET ASSET VALUE

FOR THE MONTH ENDED

March 31, 2016Core Plus Bonds Total

Market Value 2/29/2016 $10,996,460.75 $10,996,460.75

CONTRIBUTIONS 52,889.11 52,889.11

WITHDRAWALS 0.00 0.00

FEES 0.00 0.00

INCOME EARNED 37,229.60 37,229.60

CAPITAL APPR/DEPR 202,330.83 202,330.83

Market Value 3/31/2016 $11,288,910.29 $11,288,910.29

Prepared by: State Investment Council

Long-Term Policy

Market Value % of Total Policy Range

Core Plus Bonds $11,288,910.29 100% 100% 95%-100%

Total $11,288,910.29

Prepared by: MFA Staff

PORTFOLIO ALLOCATION

FOR THE MONTH ENDED MARCH 31, 2016

Brooks Pearsall Zantow LLC [1] April 2016

1st Quarter 2016 Market Conditions Summary

Greater Metro Area—Albuquerque—Rio Rancho Residential Market Activity

Market Conditions: The Greater Albuquerque Market

From 2004 to 2007 the Albuquerque market experienced one of the best periods for residential

real estate in the city’s history with both existing home sales and new home construction setting

records. However, real estate markets are cyclical and a market correction, which started in the

summer of 2006, reclaimed the gains from the boom years.

The Albuquerque Housing "Bubble"

The following chart summarizes the "Albuquerque Housing Bubble" from 1993 through 2015.

The 2015 median price is

15.7% below the historic

price trend line.

From 1993 to 2004, housing in the Greater Albuquerque metro area (including Albuquerque, Rio

Rancho, Corrales, Los Lunas, and unincorporated areas of Bernalillo, Santa Fe, and Valencia

counties; all property types) experienced stable price appreciation with a compound annual

growth rate of 3.5%.

Beginning in 2004 prices began to inflate well in excess of the historic price trend with an

average annual price increase (median price, grouped data) of nearly 11.5% from 2004 to 2007

(price increases were in excess of 12.5% in 2005 and 2006 compared to the historic price

appreciation rate of 3.5%). The rapid price increases continued into late summer of 2006 when

the first signs of a market correction appeared; although prices continued to increase into 2007,

the rate of increase had slowed. Prices began to decline in 2008 and the actual and historic price

trend lines converged steadily. In early 2010, the median price fell below the extended historic

median trend price.


The decline continued through 2011 when the actual median price was 12.3% below the historic

trend price. The 2011 median price of $160,000 was down 16.9% from the 2007 median price

peak of $192,500.

In 2012 the median price increased for the first time since 2007. The increase continued through

2015, to a median price of $175,000; better, but still 15.7 percent below the historic trend value

of $207,690. From 2011 through 2015 the compound annual growth rate was 2.3%.

There is no magic to the historic trend line—prices could eventually end up higher or lower—

however, it provides an interesting, and useful, historical perspective.

Sales Volume and Financing Trends

In 2015 there were 11,213 sales reported in the Greater Metro Area (all residential

property classes) by the Southwest Multiple Listing Service; there were 9,772 sales

reported for 2014; there were 10,037 sales reported for 2013. There were 2,422 sales

reported for the first three months of 2016.

Conventional financing accounted for 42% of the 2015 sales compared to 44% in 2014

and 41% in 2013. By comparison, 78% of the total sales in 2006 (14,278 sales) had

conventional financing; 39% of the 1st quarter 2016 sales had conventional financing.

FHA has reestablished its traditional lending role and reclaimed market share although

recently FHA's market share has been slipping. In 2015, 25% of the sales had FHA

financing compared to 20% in 2014 and 23% in 2013. Only 7% of the 2006 sales had

FHA financing; 28% of the 1st quarter 2016 sales had FHA financing.

Cash sales accounted for 19% of the sales in 2015 compared to 22% in 2014 and 23% in

2006; just 10.5% of the sales were for cash. 20% of the 1st quarter 2016 sales were for

cash.

Seller concessions were reported in 19 percent of the 2015 sales; the percentage increased to

21% in the first quarter 2016. Concessions are not prevalent in the resale market; however,

builder incentives, both financial and in the form of varying appliance packages, are the norm in

the new construction sector.

Greater Metro Area Listing Inventory

On April 4, 2016 the SWMLS reported a listing inventory of 5,781. There were 5,391 listings on

March 2, 2016. Inventory peaked in June 2011 with 7,271 listings.


Single-Unit Residential Construction

Housing starts in the metro area, as evidenced by building permit activity, ballooned in 2004 and

2005, peaking in 2005 when 8,598 permits were issued before going into free fall through 2008;

the number of building permits pulled in the metro area in 2008 fell below 2,000 (1,746) for first

time since 1990 (1,927). Housing starts have stabilized over the past seven years, but at far

reduced levels.

The following chart tracks building permit activity in the Metro Area, the City of Albuquerque &

the City of Rio Rancho from 1986 through 2015.

Metro Area, City of Albuquerque & Rio Rancho Single-Unit Building Permits Since 1986

The metro area tallied 1,645

permits in 2015 compared to

1,576 permits in 2014, an

increase of 4.4%.

This was the fourth consecutive

year of modest increase but a

whopping 81% below the 2005

peak when 8,598 permits were

pulled.

The number of permits bottomed" in 2011 when just 1,192 permits were pulled, a roughly 30-

year-low.

Albuquerque permits increased 5.2% in 2015 with 984 permits issued compared to 935 permits

in 2014. Rio Rancho building permits dropped 6.5%, from 479 permits in 2014 to 448 permits in

2015.

The following chart shows building permit activity by quarter since 2004 and the 2005 peak.


Quarterly Building Permits

The chart shows the peak, and

subsequent decline, in new home

construction.

Since 2009 new construction has

bounced along at a relatively low

level which may be the "new

normal".

Single-unit construction has not been the locomotive to pull the recovery train; perhaps the little

engine that could – but there is no light at the end of the tunnel.

The homebuilders have had some epic misses in their predictions for new home sales. A more

measured view is that new home construction will continue to move mostly sideways at these

low levels, barely clearing the low bar that has been set over the past seven years.


City of Albuquerque Market Trends

The City of Albuquerque is the economic driver for the metro area. The following chart shows

the Albuquerque monthly median price and sales volume trends from January 2000 through

March 2016.

The median price trend was fairly stable until the second quarter of 2002 when prices started to

heat up. Then, as the housing bubble inflated, the median price increased sharply, cresting in July

2007 at $208,000, before declining as the market began to correct. The correction continued

through the first quarter 2012 when the median price trend turned positive. The median price "hit

bottom" at $155,000 in March 2012 and again in January 2013. The median price trend turned

positive in the summer 2012 and continued until June 2015 when the median price abruptly

turned negative; the negative trend has continued.

The March median price was $179,000, down 13.9% from the apex of the housing bubble but up

15.5% from the low point of the market correction. The monthly median price trend is shown by

the red trend line in the preceding chart.

The number of sales peaked in June 2005 when 1,058 sales were reported and "bottomed" in

January 2009 with just 265 sales. There were 701 sales reported in March.

Because of the volatility of the metrics, I have included a 24-period moving average for both the

median price (the green trend line) and sales volume (the purple trend line) in the above chart;

both show a steady four-year increase although the trend is moderating.


Short-Trend Analysis

The monthly median price and sales volume trends over the past year are shown in the following

chart.

Over the past year the monthly

median price fell 6.5%. The

straight-line, linear monthly

median price trend is shown in

red.

The 701 sales reported in

March, with a median price of

$179,000, compare to 626

sales in March 2015 when the

median price was $175,000.

Simple Linear Regression for Price Time Trends Over the Past Year

Median price trends tell only part of the story. Housing statistics are "noisy" and monthly median

prices, a measure of central tendency, can be highly volatile, influenced by a legion of non-

market, external events. My analysis also includes a linear-trend time series to model price trends

as a measure of changes in market conditions over the past year. The simple linear regression

formula (sale price and time) indicates that nominal, cash equivalent sale prices in Albuquerque

fell 3.8% over the past year.

Of course, past trends are not a guarantee of future performance.

mailto:[email protected]


Supply Analysis

This chart tracks:

the number of sales in the

past 12-months (red)

the number of active

listings (blue)

the number of pending

sales (brown)

from January 2011 through

March 2016 as reported by the

SWMLS on the first of each

month.

A comparison of sales volume, active listings and pending sales is shown in the preceding chart.

Over the study period, the number of sales has been increasing, the number of listing has

declined, and pending sales have been pretty stable.

On April 4, 2016 the SWMLS reported 3,578 listings in the City of Albuquerque. Inventory

peaked at 4,522 listings in June 2011. There were 1,366 listings "under contract" on April 4

(38.2%). A year ago (April 2, 2015) there were 3,661 listings; 1,154, or 31.5 percent, were

pending. Note: Headline inventory reports from the Realtors are based on "active" listings only,

without consideration of pending sales (listings that are under contract but have not closed).

In the past 12 months there were 7,808 sales. At the current sales velocity, with 650.7 sales per

month, the standing inventory represents a 5.5 month supply. A residential market is generally

considered "in balance" with a six-month supply of houses for sale. The median price for the

active listings is $223,000; the median list price for the pending sales is $182,500; the median

price for the sales that closed in the past 12 months was $180,000.

Albuquerque "Distressed Sales" (Bank Owned and Short Sale) Activity

"Distressed sales" is an ill-defined category but, of the combined 11,386 current listings and

sales in the past year (as of April 4, 2016), 1,539, or 13.5 percent, are reported as "bank owned"

or "short sales" in the MLS. These distressed properties provide a proxy measure of foreclosure

activity and a measure of market distress. The percentage of distressed properties peaked in

February 2012 at 31.4 percent and has been in steady decline.

Some neighborhoods and market areas will, of course, fare better, or worse, than others.


City of Rio Rancho Market Trends

The following chart shows the monthly median price and sales volume trend for the City of Rio

Rancho from January 2004 through March 2016.

Beginning in 2004, as the housing bubble inflated, the monthly median price increased

dramatically through spring 2006. Although the increase moderated, the median price spiked to

its historic peak of $202,500 in February 2009.

Although volatile, the median price was in general decline from about the middle of 2007

through early 2011 when prices began to stabilize; however, monthly price "spikes" were

common. The median price "bottomed" at $141,750 in February 2011. The historic monthly

median price trend is shown by the polynomial trend line, in red.

The March median price was $165,000, down 18.5% from the apex of the housing bubble but up

16.4% from the low point of the market correction.

The number of sales peaked in March 2006 when 243 sales were reported and "bottomed" in

February 2009 when just 60 sales were reported. There were 175 sales reported in March.

Because of the volatility of the metrics, I have included a 24-period moving average for both the

median price (the green trend line) and sales volume (the purple trend line) in the above chart;

both show a steady four-year increase although the trend is moderating.


Short-Trend Analysis

The monthly median price and sales volume trends over the past year are shown in the following

chart.

Over the past year the

monthly median price

increased 2.9%. The

straight-line, linear monthly

median price trend is shown

in red.

The 175 sales reported in

March, with a median price

of $165,000, compare to 176

sales in March 2015 when

the median price was

$156,950.

Simple Linear Regression for Price Time Trends Over the Past Year

Median price trends tell only part of the story. Housing statistics are "noisy" and monthly median

prices, a measure of central tendency, can be highly volatile, influenced by a legion of non-

market, external events. My analysis also includes a linear-trend time series to model the

nominal, cash equivalent sale price trend as a measure of changes in market conditions the past

year. The simple linear regression formula (sale price and time) indicates that prices in Rio

Rancho increased 5.4% over the past year.

Of course, past trends are not a guarantee of future performance.

Supply Analysis

On April 4, 2016 the SWMLS reported 903 listings in Rio Rancho. Inventory peaked at 1,169

listings on June 3, 2013. There were 386 listings "under contract" on April 4 (42.7%). A year ago

(April 1, 2015) there were 1,048 listings; 31.4% were pending.


This chart tracks

the number of sales in the

past 12-months (red)

the number of active

listings (blue)

the number of pending

sales (brown)

January 2011 through

March 2016

as reported by the SWMLS at the

first of each month.

In the past 12 months there were 1,956 sales. At the current sales velocity, with 163 sales per

month, the standing inventory represents a 5.5 month supply. A residential market is generally

considered "in balance" with a six month supply of houses for sale. Note: Headline inventory

reports from the Realtors are based on "active" listings only, without consideration of pending

sales (listings that are under contract but have not closed). The median price for the active

listings is $235,000, the median list price for the pending sales is $169,700, the median price for

the sales that closed in the past 12 months was $164,500.

Rio Rancho "Distressed Sales" (Bank Owned and Short Sale) Activity

"Distressed sales" is an ill-defined category but, of the combined 2,859 current listings and sales

in the past year (as of April 4, 2016), 557, or 19.5% percent, are reported as "bank owned" or

"short sales" in the SWMLS. These distressed properties provide a proxy measure of foreclosure

activity and a measure of market distress. The percentage of distressed properties peaked in

February 2012 at 40% and has been in steady decline.

Some Rio Rancho neighborhoods, and market areas, will fare better, or worse, than others.


Outlook

Rio Rancho's housing market has improved although prices are highly volatile and uneven at the

neighborhood level. Headline media reports tell exaggerated tales of "booms" and "busts" that

are based on short-term movements in the market. Rio Rancho has a seasonal housing market

with sales volume and prices trending higher in the spring and summer and declining in the fall

and winter—a predictable story. Monthly price volatility and seasonal fluctuations should be

viewed in the context of historic trends and the larger economic picture.

While things are better, with improvement in most housing metrics, the improvement is largely

because the previous numbers were so soft. Don't let growth from historic lows obscure the

reality that this has been a painfully weak housing recovery and we still are not close to

recovering the equity lost when the housing market collapsed. Challenges remain. Traditional

housing markets are driven by population and employment. It has been said that "jobs = housing

and housing = jobs"; New Mexico is struggling in both areas.

According to state population estimates released by the U.S. Census Bureau, New Mexico's

overall population has declined for each of the past two years. The population loss is startling

when compared to neighboring states—Arizona, Utah, Texas and Colorado—which rank among

the fastest growing states in the nation.

Nationally, New Mexico continues to rank at, or near the top in unemployment and at or near the

bottom for job growth. According to the U.S. Bureau of Labor Statistics, the Land of

Enchantment is still thousands of jobs short of its pre-recession employment high.

The following chart compares:

1) The unemployment rate in New Mexico with the U.S. unemployment rate;

2) New Mexico's unemployment rate with the unemployment rate in neighboring Sunbelt

states; and

3) Over-the-year job growth in New Mexico and the U.S.


The chart compares the New

Mexico unemployment rate

trend (turquoise) and the U.S.

unemployment rate trend (tan)

since February2011.

During the "Great Recession",

New Mexico's not seasonally

adjusted jobless rate peaked at

8.3% in the summer of 2010.

Chart Courtesy of NMDWS

The lack of housing demand and the soft housing recovery has been blamed, alternately, on the

myth of strict lending standards, low supply, bad weather, debt default, right-to-work, etc etc etc.

But it's not mortgage rates or lending standards or weather or inventory that are keeping buyers

out of the market—it's simply that so many New Mexicans don't make enough money to take on

the debt of a mortgage. Debt-to-income matters in an economic sector that is 90 percent

dependent on mortgages and low interest rates have not significantly changed the demand

equation. The real "housing" problem is a "jobs" problem—the persistent lack of good paying

jobs and stagnant income levels.

All the King's Horses and All the King's Men

As described by Winthrop Quigley:

New Mexico is a very poor state for many complicated reasons, including

history, culture, geography, climate, a shallow bench of business professionals

and poor political leadership. We rely on unreliable and volatile sources of

business activity for jobs and taxes, including natural resource extraction and

federal contracting. Our personal income is low, and too much of it comes in

the form of transfer payments, which includes Social Security, disability

payments and unemployment compensation. We do not accumulate sufficient

wealth in the private sector, and of the wealth that is generated, not enough is

invested in our own economy. Albuquerque Journal, April 10, 2016

No matter what all the King's horses and all the King's men do...if we don't see a meaningful,

sustained improvement in the jobs picture, with real wage growth, we will not have a housing

recovery because people here just don't make enough money.


About the Numbers

Unless otherwise identified, the primary source for the sales data and descriptive statistics is the

Southwest Multiple Listing Service; compilation by Brooks Pearsall Zantow LLC. The charts,

with a little practice, are created in Excel.

The price and price per square foot for specific, individual sales is influenced by a number of

factors—dwelling size, site appeal, condition of the improvements, and amenities, among others.

However, property characteristics are generally not "time sensitive"; it is reasonable to assume

that a similar mix of attributes is found in the sales occurring across the time spectrum.

The significance of the data is in the price trend over the study period, not in the specific,

individual prices.

Measures of central tendency, such as those discussed, should be taken as a general magnitude,

not high fidelity information, and they should be viewed with the understanding that the smaller

the sample, the more easily the data set can be skewed by a few "outlier" sales. The mean and

median price measures should be also viewed with the understanding that these numbers are

affected by the mix of properties in the sales sample.

The preponderance of sales included in the MLS database are resales; building contracts and

builder inventory homes are usually not included in the MLS reporting data.

Marketing times and list:sale price ratios reported by the multiple listing do not accurately reflect

the market history for listings that have expired or were "withdrawn" and were then re-listed.

However, in most instances, the days on market reported by the MLS provide a reasonable

marketing time estimate at the final list price.


GENERAL FUND

STATEMENT OF CASH FLOWS

(in thousands)

Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected

Sources (Uses) of Cash

Qtr Ending

12/31/15

Qtr Ending

3/31/16

Qtr Ending

6/30/16

Qtr Ending

9/30/16 YTD 9/30/16

Qtr Ending

12/31/16

Qtr Ending

3/31/17

Qtr Ending

6/30/17

Qtr Ending

9/30/17 YTD 9/30/17

Qtr Ending

12/31/17

Qtr Ending

3/31/18

Qtr Ending

6/30/18

Qtr Ending

9/30/18 YTD 9/30/18

BEGINNING CASH & CASH EQUIVALENTS 35,308 36,364 39,464 38,216 35,308 37,906 37,503 38,063 38,034 37,906 37,998 36,639 37,753 37,122 37,998

CASH FLOWS FROM OPERATING ACTIVITIES

Purchase of Loans (2,000) (2,283) (2,057) (2,650) (8,990) (1,765) (3,230) (1,765) (3,230) (9,990) (1,815) (2,815) (1,815) (1,815) (8,260)

Loan Principal Repayments 1,338 2,132 1,236 1,236 5,943 1,263 1,263 1,263 1,263 5,053 1,292 1,292 1,292 1,292 5,167

Loan Acquisition Costs/MSR 0 0 (683) (683) (1,365) (585) (585) (585) (585) (2,340) (585) (585) (585) (585) (2,340)

Discount (Premium) on Loans 0 34 0 0 34 0 0 0 0 0 0 0 0 0 0

Loan & Commitment Fees 0 0 0 0 0 21 21 21 21 83 11 11 11 11 44

Mortgage Interest Income 863 546 1,116 1,116 3,641 1,185 1,185 1,185 1,185 4,738 1,223 1,223 1,223 1,223 4,893

Receipts for Services 762 1,218 1,913 2,305 6,198 1,774 3,107 2,224 2,798 9,902 1,920 3,350 2,370 2,934 10,574

Payments to Employees (1,513) (1,351) (1,344) (1,568) (5,776) (1,881) (1,384) (1,384) (1,615) (6,264) (1,938) (1,425) (1,425) (1,663) (6,452)

Payments to Vendors (699) (519) (1,402) (809) (3,429) (919) (919) (1,319) (919) (4,077) (992) (992) (992) (992) (3,967)

Other Receipts (Payments) 43 104 26 26 199 26 26 26 26 103 26 26 26 26 103

Transfers From (To) Other Prog 1,790 2,325 (1,021) 0 3,093 (821) 0 (821) 0 (1,642) (821) 0 (821) 0 (1,642)

NET CASH PROVIDED (USED) BY

OPERATING ACTIVITIES 584 2,206 (2,215) (1,026) (452) (1,703) (517) (1,156) (1,057) (4,433) (1,679) 85 (717) 431 (1,880)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES

Proceeds from Bonds & Notes 528 459 459 0 1,447 0 0 0 0 0 0 0 0 0 0

Repayment of Bonds & Notes 0 (70) 0 (650) (720) 0 (74) 0 0 (74) 0 (74) 0 0 (74)

Interest Paid on Bonds & Notes (10) (32) (13) (14) (69) (10) (29) (9) (10) (57) (10) (28) (9) (44) (90)

Bond Issuance Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0


NONCAPITAL FINANCING 519 358 447 (664) 659 (10) (103) (9) (10) (131) (10) (102) (9) (44) (164)

CASH FLOWS FROM CAPITAL

FINANCING ACTIVITIES

Purchases of Fixed Assets 0 (6) 0 0 (6) 0 (10) 0 0 (10) 0 (10) 0 0 (10)

Proceeds from the Sale of

Fixed Assets 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Proceeds from Capital Debt 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Repayment of Capital Debt 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Interest Paid on Capital Debt 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Capital Debt Issuance Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0


CAPITAL FINANCING ACTIVITIES 0 (6) 0 0 (6) 0 (10) 0 0 (10) 0 (10) 0 0 (10)

CASH FLOWS FROM INVESTING ACTIVITIES

Notes Receivable, net of Repayments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Sale (Purchase) of REO 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Purchase of Investments (3,562) (1,000) (1,000) 0 (5,562) 0 0 0 0 0 (2,000) (2,000) (3,000) (1,000) (8,000)

Discount (Prem) on Investments 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0

Proceeds from Maturity & Sale of Investments 3,297 1,337 1,106 1,009 6,748 920 840 766 699 3,226 1,973 2,842 2,729 631 8,174

Gain(Loss) Sale of Securities 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Investment Interest Income 217 206 415 372 1,209 390 349 370 332 1,441 356 299 366 283 1,305


INVESTING ACTIVITIES (47) 543 520 1,380 2,397 1,311 1,189 1,136 1,031 4,667 329 1,141 95 (87) 1,479

NET INCREASE(DECREASE) IN

CASH & CASH EQUIVALENTS 1,056 3,100 (1,248) (310) 2,598 (402) 560 (29) (36) 93 (1,359) 1,114 (631) 301 (576)

ENDING CASH & CASH EQUIVALENTS 36,364 39,464 38,216 37,906 37,906 37,503 38,063 38,034 37,998 37,998 36,639 37,753 37,122 37,423 37,423

SECURITIES OUTSTANDING 49,414 48,675 48,768 47,960 47,960 47,241 46,605 46,043 45,551 45,551 45,786 45,153 45,636 46,218 46,218

ENDING CASH AND SECURITIES 85,777 88,139 86,984 85,865 85,865 84,744 84,667 84,077 83,549 83,549 82,425 82,907 82,758 83,641 83,641

YEAR ENDING 9/30/2017 YEAR ENDING 9/30/2018YEAR ENDING 9/30/2016

CASHPRO2016 4/26/2016

New Mexico Mortgage Finance Authority 344 Fourth St. SW, Albuquerque, NM 87102 tel. 505.843.6880 toll free 800.444.6880 housingnm.org

MEMORANDUM

TO: MFA Board of Directors

Through: Finance Committee – May 10, 2016 Through: Policy Committee – April 25, 2016

FROM: Gina Hickman DATE: May 18, 2016 SUBJECT: Approval of Brokers, Dealers, Custodians and Depositories Recommendation: Staff recommends approval of the Broker, Dealer, Custodian and Depository list. Background: At least annually and as needed, MFA Staff reviews and updates the list of brokers, dealers, custodians and depositories. The Board last approved the Broker, Dealer, Custodian and Depository list in January 2016. All parties on our list must meet the required criteria in the Investment Policy for Authorized Financial Dealers. Discussion: At this time, Staff proposes that we add Moreton Capital Markets, LLC and Zion’s Bank Capital Markets/Zions Direct to our list of approved broker-dealers. Both entities will support Staff in the purchase and sale of General Fund Investments including government bonds, agency obligations and other authorized investments. Both Moreton and Zions meet the established qualifications in the MFA Investment Policy. Summary: At least annually and as needed, MFA staff reviews and updates the Broker, Dealer, Custodian and Depository list. Staff recommends approval of the addition of Moreton Capital Markets, LLC and Zion’s Bank Capital Markets/Zions Direct to the MFA Broker, Dealer, Custodian and Depository list. Both Moreton and Zions meet the established qualifications in the MFA Investment Policy.

NEW MEXICO MORTGAGE FINANCE AUTHORITY APPROVED BROKER/DEALERS, CUSTODIANS AND DEPOSITORIES

2016 Recommended Broker/Dealers: Underwriting Team and underwriters with local offices who have expressed interest in working with MFA

(by responding to our most recent RFPs or by participating in our selling group and who meet the required criteria):

Raymond James RBC Capital Markets J.P. Morgan Securities, LLC Charles Schwab & Co., Inc. LPL Financial

Bank of America Merrill Lynch, Pierce, Fenner & Smith Bidding Agent: CSG Advisors

Investment Departments of Banks and Other Registered Broker/Dealers Approved for Broker/Dealer Relationship:

Wells Fargo Bank New Mexico/Wells Fargo Brokerage Services Federal Home Loan Bank of Dallas

BOSC, Inc. Moreton Capital Markets, LLC Zions Bank Capital Markets/Zions Direct

Recommended Custodians: Wells Fargo Bank New Mexico/Wells Fargo Brokerage Services

Federal Home Loan Bank of Dallas Zions Bank

Recommended Depositories: Wells Fargo Bank New Mexico Bank of Albuquerque/BOKF, NA

Washington Federal Bank of America US Bank Federal Home Loan Bank of Dallas

Bank of the West Note: Additionally, for certificate of deposit investments, MFA has the authority to utilize approved depositories as per the Collateral Review Report prepared by the State Treasurer’s Office as part of their risk assessment program.


MEMORANDUM


Through: Finance Committee – May 10, 2016 Through: Policy Committee – April 26, 2016

FROM: Gina Hickman DATE: May 18, 2016 SUBJECT: FHLB Borrowing Resolution Recommendation: It is recommended that the Board approve a $40mm Federal Home Loan Bank of Dallas (“FHLB”) borrowing resolution to offer Idaho Housing Finance Association (“IHFA”) a line of credit to assist in the purchase of eligible mortgage loans acquired in connection with MFA’s Single Family Mortgage Program using the unrestricted General Fund investment portfolio as collateral. Background: To support MFA’s mission, staff is continually focused on strategies to better utilize existing assets in creating opportunities for increased revenue to the organization. One of the revenue generating components of the new Servicing Expansion model is loan warehousing whereby MFA provides a line of credit to IHFA to assist in the purchase of eligible mortgage loans that IHFA acquires in connection with MFA’s Single Family Mortgage Program. MFA is an FHLB approved non-member mortgagee eligible to receive advances to support this line of credit to IHFA. Discussion: IHFA and MFA have agreed to enter into a contractual relationship effective June 1, 2016 whereby IHFA will purchase and service certain eligible mortgage loans under the Authority’s Single Family Mortgage Program. In the first sixteen months of the new contract with IHFA, staff recommends that MFA provide a line of credit to IHFA by borrowing the needed capital from the FHLB using the unrestricted General Fund investment portfolio as collateral. In turn, MFA will receive a first-position security interest in the mortgage loans being purchased by IHFA to secure the line of credit. It has been determined that by borrowing these funds from the FHLB and simultaneously

lending them to IHFA a beneficial revenue stream is provided to MFA based on the positive interest rate spread between the interest collected on the mortgage loans held as collateral less the servicing fee and the cost of funds from the FHLB. Currently, the stated borrowing rate through FHLB is approximately .50%. The current mortgage rates range from 3.5% to 4.75%. We anticipate that during the course of the first sixteen months of the new contract with IHFA, MFA will generate approximately $500,000 in warehouse interest income.

Summary: It is recommended that the Board approve a $40mm Federal Home Loan Bank of Dallas (“FHLB”) borrowing resolution to offer Idaho Housing Finance Association (“IHFA”) a line of credit to assist in the purchase of eligible mortgage loans using the unrestricted General Fund investment portfolio as collateral. During the course of the first 16 months of the new IHFA contract, it is estimated that MFA will generate approximately $500,000 in warehouse interest income. MFA will obtain a first-position security interest in the mortgage loans purchased by IHFA.

1

FHLB Borrowing Resolution

A RESOLUTION

OF THE NEW MEXICO MORTGAGE FINANCE AUTHORITY (THE “AUTHORITY”) AUTHORIZING THE BORROWING OF UP TO $40,000,000 FROM THE FEDERAL HOME LOAN BANK OF DALLAS TO SUPPORT A LINE OF CREDIT TO THE IDAHO HOUSING FINANCE ASSOCIATION FOR THE PURCHASE OF ELIGIBLE MORTGAGE LOANS ACQUIRED IN CONNECTION WITH THE AUTHORITY’S SINGLE FAMILY MORTGAGE PROGRAM. WHEREAS, the Legislature of the State of New Mexico (the “State”), at its 1975 regular

session, adopted Chapter 303, Laws of New Mexico, 1975, known and cited as the Mortgage Finance Authority Act, being Sections 58-18-1 through 58-18-27, inclusive, NMSA 1978, and subsequently adopted Chapter 173, Section 1, Laws of New Mexico, 1981, being Section 2-12-5, NMSA 1978, as amended (collectively, the “Act”); and

WHEREAS, there was created by the Act, a public body politic and corporate, separate

and apart from the State, constituting a governmental instrumentality known and identified as the New Mexico Mortgage Finance Authority (the “Authority”), the Authority being created and established to serve a public purpose and to act for the public benefit by improving the health, safety, welfare, and prosperity of the State and the general public; and

WHEREAS, the purposes of the Authority are to provide decent, safe, and sanitary

residential housing to persons of low or moderate income, and the Authority has determined that it will serve and fulfill the purposes for which it was created by the establishment of a program to finance the purchase of mortgage loans made by eligible mortgage lenders for the financing of residential housing; and

WHEREAS, the Authority is authorized by the Act to purchase and contract to purchase,

mortgage loans, or securities backed by mortgage loans, originated by mortgage lenders to finance residential housing for persons of low or moderate income under rules adopted by the Authority; and

WHEREAS, Idaho Housing Finance Association (“IHFA”) and the Authority have

agreed to enter into a contractual relationship effective June 1, 2016 and memorialized by a Mortgage Loan Servicing and Single-Family Program Support Services Agreement (the “Servicing Agreement”), whereby IHFA will purchase and service certain Eligible Mortgage Loans under the Authority’s Single Family Mortgage Program (as defined in the Servicing Agreement); and

WHEREAS, the Eligible Mortgage Loans purchased by IHFA will be placed into loan pools, which pools shall subsequently be the basis for issuance by IHFA of mortgage backed securities; and

2

WHEREAS, IHFA has requested the Authority to provide it a line of credit to provide IHFA funds to purchase the Eligible Mortgage Loans; and

WHEREAS, the Authority desires to offer IHFA a line of credit to loan funds to IHFA for the purpose of purchasing the Eligible Mortgage Loans; and

WHEREAS, as security for the funds loaned to IHFA, IHFA will grant the Authority a first-position security interest in (i) each such mortgage loan and all mortgage backed securities based thereon, and (ii) the proceeds from the sale of such mortgage loans and mortgage backed securities; and

WHEREAS, the terms and conditions for this line of credit to IHFA are outlined in a Mortgage Warehouse Loan and Security Agreement between the Authority and IHFA; and

WHEREAS, the Authority has determined that by borrowing funds from the Federal Home Loan Bank of Dallas (“FHLB”) to support the Authority’s line of credit to IHFA, a beneficial revenue stream can be generated for the Authority based on a positive interest rate spread between the interest on the mortgage loans held as collateral less the servicing fee and the cost to the Authority of borrowing funds from the FHLB; and

WHEREAS, the Authority has been approved as a non-member mortgagee eligible to

receive advances from FHLB and has entered into certain financing agreements with the FHLB; IT IS THEREFORE RESOLVED: The Authority is authorized to borrow up to $40,000,000 (forty million dollars) from the

Federal Home Loan Bank of Dallas for a period up to three months and to use the proceeds of that advance or advances to purchase eligible mortgage loans acquired by IHFA in connection with the Authority’s Single Family Mortgage Program.

The Authority is authorized to pledge unrestricted General Fund investments, as security

for repayment of the advance(s) from the FHLB. The appropriate officers of the Authority, including without limitation, the Chair, Vice

Chair, Secretary, Executive Director, Deputy Director of Finance and Administration, and Controller are hereby authorized and directed to execute and deliver all notes, pledges, loan documents, and other instruments necessary or convenient to consummate the transactions contemplated by this resolution.

This resolution shall become effective immediately upon its adoption.

Aye: [Insert names or number of members who voted yes here] Abstain: None Nay: None

3

Absent: None PASSED AND APPROVED BY THE NEW MEXICO MORTGAGE FINANCE

AUTHORITY THIS 18th day of May, 2016.

___________________________ Chairman (SEAL) ATTEST: ______________________ Secretary


MEMORANDUM

TO: Board of Directors

Through: Finance Committee – May 10, 2016 Through: Policy Committee – May 3, 2016

FROM: Yvonne Segovia, Controller DATE: May 18, 2016 SUBJECT: External Audit Services Award Recommendation: Staff recommends the approval of the sole source procurement for the External Audit Services to be provided by the Office of the State Auditor (OSA) and the joint venture award for External Audit Services be made to Moss Adams pending OSA approval. Background: The Board approved the RFP for External Audit Services on March 16, 2016. The RFP was advertised in the Albuquerque and Santa Fe local newspapers and publicized on MFA’s website. In addition, ten firms were directly solicited to respond to the RFP. We received one response, which met the Minimum Requirements and was scored. This audit will be conducted as a joint venture with the Office of the State Auditor (OSA). The OSA will conduct 40% of the audit. The OSA will bill MFA directly at cost, not to exceed $108,000. The OSA fees will be in addition to the fees to be charged by the independent public accounting firm awarded under this RFP. Discussion: Minimum Requirements: 1. Offeror must be included on the New Mexico Office of the State Auditor 2016

Approved Audit Firms List;

Board of Directors May 18, 2016 Page 2

2. Offeror must be a certified public accounting firm in good standing as a registrant with the Public Company Accounting Oversight Board (PCAOB);

3. Offeror must be licensed in the State of New Mexico; 4. Offeror must maintain professional liability insurance of at least $1,000,000; Services to be Performed: Services required to be provided under and to be incorporated into the contract to be awarded pursuant to this RFP include, but are not limited to, the following: 1. Financial Statement Audit consisting of the Statement of Net Position, Statement of

Revenue, Expenses and Changes in Net Position, Statement of Cash Flows and the Notes to the financial statements for the fiscal year ended September 30, 2016 in accordance with auditing standards generally accepted in the United States of America, Government Auditing Standards, and 2.2.2 NMAC Audit Rule 2016 (available at www.saonm.org) issued by the New Mexico Office of the State Auditor;

2. Federal Audit for the fiscal year ended September 30, 2016 in accordance with Government Auditing Standards issued by the Comptroller General of the United States and Office of Management and Budget (OMB) 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards;

3. Financial Statement Preparation; 4. GNMA Compliance Reports; 5. Delivery of the Financial Statements and GNMA Compliance Reports within one hundred

twenty (120) days after fiscal year end; 6. Delivery of the Financial Statements and Federal Audit Reports within one hundred twenty

(120) days after fiscal year end; 7. Electronic submission of the financial statements, and preparation and submission of the

Data Collection Form to the Federal Audit Clearinghouse within 30 days after release of Single Audit;

8. Because the MFA’s bonds are publicly offered and held, the auditor may be asked to consent to inclusion of the auditor’s report in the MFA’s official statements and on certain occasions to issue letters to underwriters in connection with the offering of MFA’s bonds on a fee basis;

9. Presentation of reports to the Board and/or Finance Committee regarding recent accounting, audit and tax updates that may affect the housing finance industry and/or MFA financial statements;

10. In accordance with NMAC 2.2.2.10 G. the Offeror shall be required to identify significant state statutes, rules and regulations applicable to the MFA and perform tests of compliance.

Evaluation & Scoring: The RFP responses were reviewed by an internal committee of four members. They were scored individually and the final scores reflect the average of all scores.

http://www.saonm.org/

Board of Directors May 18, 2016 Page 3

Criteria Max. Points Moss Adams Available resources 5 5 Meets independence standards 2 2 External Quality Control Peer Review 10 10 References 3 2 Organization and completeness of proposal

3 3

Knowledge of audit objectives, MFA needs, and product

5 5

Technical Plan and time estimate 7 7 MFA staff support required 8 8 Approach for planning and conducting subsequent year audits

2 2

Governmental audit experience of manager

10 10

Specialization with HFAs, public securities, and financial institutions

10 10

GASB experience 10 10 Governmental component units experience

5 5

Experience with State Audit Act 5 5 Firm Strengths 5 5 Audit Fees 10 10 TOTAL 100 99

Summary: The Board approved the RFP for External Audit Services on March 16, 2016. We received one response, which met the Minimum Requirements and was scored. This audit will be conducted as a joint venture with the Office of the State Auditor (OSA). Staff recommends the approval of the sole source procurement for the External Audit Services to be provided by the OSA and the joint venture award for External Audit Services be made to Moss Adams pending OSA approval.

2

• Fifteen projects were determined to be “Eligible” for Tax Credit awards with two projects rejected because one project violated the Prohibited Activities section of the QAP and the other project did not commit to a 30 year use restriction period as required in the QAP. Appeals were filed by each of these projects. Both appeals were heard by the ARC on 5/12/16. The ARC upheld staff’s recommendation on the latter appeal and ruled in favor of the Appellant on the former appeal.

• ARC recommends awarding $3,024,673 in 2016 Tax Credits and a forward allocation of $1,713,366 of 2017 Tax Credits to fully fund the top five scoring eligible projects.

• The remaining 11 eligible projects will make up the wait list. • The 10% Non-Profit Set-Aside was achieved and no awards are being made under the USDA Rural

Development Set-Aside. • All of the recommended projects have a sponsor or co-sponsor that is a non-profit entity, local housing

authority or local tribally designated housing entity (TDHE). • Of the five recommended projects, one will serve households with children, three will serve special

needs households and one will serve seniors. • The five projects are located in the following counties: Taos, Eddy, Santa Fe, Bernalillo and Cibola. • All of the projects are in Areas of Statistically Demonstrated Need. • The five recommended projects contain unit sizes ranging from 30 to 116 units. • Three of the five recommended projects involve acquisition and rehabilitation of existing housing, one

project is completely new construction and the fifth project involves 26 units of new construction and 44 units to be rehabilitated.

• All of the 366 units to be constructed or rehabilitated will be low income units. The table below details the unit rental restrictions for the units to be constructed or rehabilitated.

Unit Rental Restriction for Recommended Projects

30% 40% 50% 60% Not Employee

AMI AMI AMI AMI Restricted Occupied

39 0 263 64 0 0

10.6% 0% 71.8% 17.5% 0% 0%

• The Development Cost Analysis (cost/gross square foot) for each of the recommended Projects is as follows:

Tierra Montosa Development Cost Budget* Total % TDC Cost/GSF**

MFA 2016 Cost Study Avg

Cost/GSF***

Construction Costs (as defined by R.S. Means) (1) 4,760,030$ 44% 71$ 114$ Construction-Related Costs (2) 3,305,176$ 30% 49$ 34$ Soft Costs (3) 1,222,716$ 11% 18$ 13$ Affordable Housing Costs (4) 1,572,079$ 14% 23$ 27$ Total Development Costs (TDC) (5) 10,860,001$ 100% 162$ 188$

3

(1) Vertical construction, contractor overhead, general conditions, contractor profit, architect fees (2) Land, demolition, access. structures, site work, off-site improvements, construction contingency, GRT

(3) Engineering, appraisal, legal, insurance, financing, marketing, other

(4) Developer fee, market study, architectural review, environmental review, other

* See Appendix A for detailed breakdown of costs

**Gross square footage: See attached Appendix A’s for each Project

***Average cost/GSF among new construction LIHTC projects examined in 4/20/16 Cost Efficiency Board Study Session.

Colonial Hillcrest Development Cost Budget* Total % TDC Cost/GSF**


Cost/GSF***

Construction Costs (as defined by R.S. Means) (1) 5,185,432$ 36% 81$ 114$ Construction-Related Costs (2) 5,763,679$ 40% 90$ 34$ Soft Costs (3) 901,726$ 6% 14$ 13$ Affordable Housing Costs (4) 2,565,359$ 18% 40$ 27$ Total Development Costs (TDC) (5) 14,416,196$ 100% 225$ 188$

Villa Hermosa Development Cost Budget* Total % TDC Cost/GSF**


Cost/GSF***

Construction Costs (as defined by R.S. Means) (1) 7,225,997$ 49% 89$ 114$ Construction-Related Costs (2) 4,670,385$ 31% 57$ 34$ Soft Costs (3) 690,244$ 5% 8$ 13$ LIHTC/Affordable Housing Costs (4) 2,271,212$ 15% 28$ 27$ Total Development Costs (TDC) (5) 14,857,838$ 100% 183$ 188$

Rio Vista Apts. Development Cost Budget* Total % TDC Cost/GSF**


Cost/GSF***

Construction Costs (as defined by R.S. Means) (1) 4,515,225$ 36% 72$ 114$ Construction-Related Costs (2) 5,009,539$ 40% 80$ 34$ Soft Costs (3) 642,684$ 5% 10$ 13$ Affordable Housing Costs (4) 2,265,637$ 18% 36$ 27$ Total Development Costs (TDC) (5) 12,433,085$ 100% 199$ 188$

PAHA LIHTC Homes #1 Development Cost Budget* Total % TDC Cost/GSF**

Cost Study

Avg Cost/GSF***

Construction Costs (as defined by R.S. Means) (1) 5,340,764$ 75% 128$ 114$ Construction-Related Costs (2) 767,747$ 11% 18$ 34$ Soft Costs (3) 163,000$ 2% 4$ 13$ Affordable Housing Costs (4) 851,078$ 12% 20$ 27$ Total Development Costs (TDC) (5) 7,122,589$ 100% 171$ 188$

4

Summary:

Staff and the ARC recommend approval of the following five LIHTC awards.

1. Tierra Montosa, Taos $984,401 2. Colonial Hillcrest, Carlsbad 852,000 3. Villa Hermosa, Santa Fe 1,150,000 4. Rio Vista, Albuquerque 984,000 5. PAHA LIHTC Homes #1** 767,638

Total $4,738,039

**This recommendation is subject to receipt of a comprehensive market study of the housing needs of low-income individuals in the area to be served by the project, which market study must not contain any adverse findings or conclusions about the project.

Attachments:

1. Table 1 – 2016 LIHTC Ceiling 2. Table 7 – 2016 Proposed Initial LIHTC Awards and Wait List 3. Appendix A’s for each of the five recommended projects.

2016 HOME Rental Award – Villa Hermosa LLC Page 1 of 4

2016 HOME RENTAL AWARD SUMMARY Project Name & Address

Villa Hermosa: 1510-1520 Luisa Street - Santa Fe, NM – Santa Fe County

Proposed Award Amount Construction & Permanent: $400,000

Rate 0% per annum

Summary Term 32 Years Type Construction: 24 months, converting to Permanent Loan: 30 years (i.e. 360 equal P & I payments)

Borrower

Villa Hermosa LLC, which will be .01% owned by VH RAD, LLC, whose sole member will be the Santa Fe Civic Housing Authority (SFCHA), and 99.99% an equity investor, which is expected to be U.S. Bancorp CDC.

Management Monarch Properties, Inc. is a private corporation chartered in 1982, headquartered in Dallas, Texas and has a full service branch office in Albuquerque. It operates in the South and Southwest and has over 13,000 units under management. Monarch’s VP in Albuquerque, Jack MacGillivray, has over 30 years of experience.

Developer & Managing Member

Santa Fe Civic Housing Authority (SFCHA) was created in 1961 to build and operate housing for low income families in the City of Santa Fe. The mayor, with approval from city council, appoints a voting majority of SFCHA’s governing board. SFCHA has 605 public housing units throughout the city and approximately 514 Section 8 vouchers for rental assistance. The Executive Director, Ed Romero, has held the position since 2003 and is supported by 43 staff members. SFCHA is a component unit of the City of Santa Fe whose CPA-reviewed (unaudited) financial statements for FYE 6/30/15 show $42.1 million in assets, an extremely low debt to worth of 0.17 to 1, positive net income and operating cash flow. Internal statements for the 6 months ended 12/31/15 show continued satisfactory financial condition.

Project Type & Size Acquisition and Rehabilitation of 116 units, all of which serve low income senior households (33 units at 60% AMI, 59 at 50% AMI, and 24 at 30% AMI)

Development Costs Development Cost Budget* Total % TDC Cost/GSF**

MFA Cost Study Avg $/GSF***

Construction Costs (as defined by R.S. Means) (1) 7,225,997 49% 89 114

Construction-Related Costs (2) 4,670,385 31% 57 34

Soft Costs (3) 690,244 5% 8 13

LIHTC/Affordable Housing Costs (4) 2,271,212 15% 28 27

Total Development Costs (TDC) (5) $14,857,838 100% $183 $ 188 (1) Vertical construction, contractor overhead, general conditions, contractor profit, architect fees

(2) Land, demolition, access. structures, site work, off-site improvements, construction contingency, GRT

(3) Engineering, appraisal, legal, insurance, financing, marketing, other (4) Developer fee, market study, architectural review, environmental review, other

* See Appendix A for detailed breakdown of costs **Gross square footage: 67,203 ***Average cost/GSF among new construction LIHTC projects examined in 4/20/16 Cost Efficiency Board Study Session.


Construction Sources

Permanent Sources Total Award Per Unit % of TDC

MFA Housing Trust Fund loan - 1st lien 500,000 4,310 3%MFA HOME Loan - 2nd lien 400,000 3,448 3%SFCHA Cash Floe Loan - 3rd lien 1,340,864 11,559 9%City of Santa Fe Donation (land = fee waivers) 1,350,000 11,638 9%GP Equity 100 1 0%LIHTC Equity 11,266,874 97,128 76%Total Sources 14,857,838 128,085 100%

Project Description Acquisition/rehabilitation of an existing 116 unit senior-restricted public housing project consisting of six resident structures. The improvements are currently owned by SFCHA and the underlying land is owned by the City of Santa Fe. The buildings will be conveyed to the new borrowing entity (VH RAD LLC) and the city of Santa Fe will grant a new long-term land lease. SFCHA has received HUD approval to convert all of the units from public housing to Section 8 project-based housing vouchers under HUD’s Rental Assistance Development (RAD) pilot program and has been awarded a “Commitment to enter into Housing Assistance Payment” contract (CHAP). Subject is located 2.1 miles southwest of downtown Santa Fe, on 8.4 acres. Adjacent single and multifamily homes are generally in good condition. The site is located in close proximity to services, employment, public transportation, and retail. The scope of work includes upgrades to all unit interiors, new energy efficient HVAC systems, upgraded kitchens and bathrooms with new fixtures, trim and doors, EnergyStar LED lighting and appliances. Planned site improvements include enhanced outdoor space to create a comfortable, flexible environment with improved accessibility and mobility for its senior residents. There will also be new interconnected walk paths as well as a new community center building with kitchen and laundry facilities for exclusive resident use. The project will be constructed to LEED green building standards and will feature a rooftop photovoltaic system. The 116 units are comprised of 59 one BDRMs (637 sq. ft.) and 57 two BDRMs (767 sq. ft.). Net rents range from $430 to $536 per month. A 4/4/16 Vogt Strategic Insights (VSI) market study ordered by MFA shows strong, ongoing demand for the units, with a current waitlist of 256 senior households, and a growing senior population that is expected to grow by 15% from 2015 to 2020. Under the RAD conversion, tenants will continue to pay not more than 30% of their income in rent.

Affordability Total of 4 affordable HOME units at Low HOME Rents at 50% AMI or less (two 1-bedroom units and two 2-bedroom units), for which a Land Use Restriction Agreement (LURA) will be filed in Santa Fe County. The HOME affordability period is 30 years, comprised of the 15-year HUD minimum for Acquisition/rehabilitation, plus a 15-year MFA extended affordability period (i.e. in concurrence with the loan term). The affordability period begins on the date of acceptance by HUD of a final HOME project completion report and ends 30 years later.

Repayment and Disbursement

Payments: No payments during construction period not to exceed 24 months; thereafter, 360 equal principal payments based on 30-year amortization (0% interest). All outstanding principal due at the earlier of maturity, refinance, or sale of the project. Disbursement: Allow three draws: one at acquisition, one for construction costs, and final disbursement upon submission of HUD project completion report.

Total Award Per Unit % of TDC

US Bank Construction Loan - 1st lien 8,292,707 71,489 56%MFA HTF Loan - 2nd lien 500,000 4,310 3%MFA HOME Loan - 3rd lien 400,000 3,448 3%Ventana Fund - 4th lien 725,000 6,250 5%SFCHA Cash Flow Loan - 5th lien 1,900,000 16,379 13%City of Santa Fe Donation (land + fee waivers) 1,350,000 11,638 9%GP Equity 100 1 0%LIHTC Equity 1,690,031 14,569 11%Total Sources 14,857,838 128,085 100%


Special Conditions 1. Loan is subject to MFA’s final underwriting for project feasibility. The loan amount may be reduced if the financing gap is less and/or terms revised (i.e. interest rate & amortization) in line with projected cash flow at closing,

2. Any changes or additions to the following development team members listed in the loan application must be approved by MFA; developer, general partner, contractor, management company, consultant or architect,

3. Financing commitments must be acceptable to MFA prior to funding on all funding sources,

4. HUD Environmental Assessment (EA) approval prior to acquisition & construction start plus adherence to any EA approval conditions,

5. HOME loan to be in 3rd lien position during the construction period and no less than 2nd lien position during the permanent loan period,

6. If other than minimal funds are used during construction (i.e. $50,000 or less) MFA will require a guarantee from the developer, Santa Fe Civic Housing Authority,

7. Acceptance of 2016 allocation of Low Income Housing Tax Credits (LIHTC), 8. Other conditions as determined by staff, and 9. Subject to availability of funds.

Other MFA Commitments to This Project

2016 9% LIHTC – Villa Hermosa LLC - $1,150,000 2016 HTF – Villa Hermosa LLC - $500,000

MFA Commitments to Other Projects

2007 HOME - Villa Consuelo - $390,000 2009 4% LIHTC - Villa Alegre Senior - $311,043 2009 Risk Share - Villa Alegre Senior - $890,000(1) 2009 TCAP - Villa Alegre Senior - $1,894,287 2009 Energy$avers - Villa Alegre Family - $250,000 2009 9% LIHTC - Villa Alegre Family - $963,071 2009 TCAP - Villa Alegre Family - $2,881,067 2011 9% LIHTC - Campo - $603,542 2013 9% LIHTC - Village in the Bosque - $1,150,000 2013 HTF - Village in the Bosque - $500,000 2013 HOME – Village in the Bosque - $450,000 2014 4% LIHTC – Santa Fe Community Living - $767,624 2014 MFA Tax Exempt Bonds – Santa Fe Community Living - $11,000,000(2) 2014 HOME – Santa Fe Community Living - $600,000 2014 HTF – Santa Fe Community Living - $500,000 TOTAL MFA EXPOSURE = $19,355,354 (excludes LIHTC, grants & loans pending approval) (Note: (1)Risk Share loans carry 10% MFA risk; (2)Bonds are non-recourse to MFA)

HOME Funds Available

$1,019,929 as of 04/01/2016

Prepared by Michael Scott, Program Manager Date May 3, 2016

Reviewed by Daniel Puccetti, Director of Housing Development


Gross Square Footage 81,327 Cost/GSF

Vertica l Construction 5,993,845 73.70 Contractor Overhead & Genera l Conditions 504,087 6.20 Contractor Profi t 378,065 4.65 Archi tect Fees 350,000 4.30

Subtotal 7,225,997$ $88.85

Land & Bui lding Acquis i tion 3,196,341 39.30 Si te Work 307,230 3.78 Construction Contingency 637,978 7.84 Construction GRT 528,836 6.50

Subtotal 4,670,385$ $57.43Soft CostsProfessional Service Costs Engineering/Survey 50,000 0.61 Accounting/Cost Certi fi cation 25,000 0.31 Lega l (Real Es tate) 30,000 0.37 Appra isa l 6,000 0.07 Construction Financing Costs Hazard Insurance 45,000 0.55 Liabi l i ty Insurance 20,000 0.25 Performance Bond 78,700 0.97 Interest 176,643 2.17 Origination/Discount Points 81,480 1.00 Bui lding Permit & Review Fees 53,659 0.66 Inspection Fees 30,000 0.37 Ti tle and Recording 30,000 0.37 Permanent Financing Costs Ti tle and Recording 25,000 0.31 Other: Soft Cost Contingency/Marketing/FF&E 38,762 0.48

Subtotal 690,244$ $8.49LIHTC/Affordable Housing-Specific Costs Market Study/Archi tectura l Review 5,000 $0.06 Envi ronmenta l 6,000 $0.07 Tax Credi t Fees 80,000 $0.98 LEED Certi fi cation/Permits 61,238 $0.75 Lega l (Construction & Permanent Lender) 65,000 $0.80 Relocation 75,000 $0.92 Organization--Genera l Partner 25,000 $0.31 Syndication Costs --Investor 30,000 $0.37 Developer Fee 1,621,741 $19.94 Reserves - Lease-up 50,000 $0.61 Reserves - Operating 252,233 $3.10

Subtotal 2,271,212$ $27.93TOTAL DEVELOPMENT COST 14,857,838$ $182.69

Construction Costs (as defined by R.S. Means)

Appendix A: Villa Hermosa Development Cost Budget

Constrution-Related Costs

2016 HTF Rental Award – Villa Hermosa LLC Page 1 of 4

2016 NM HOUSING TRUST FUND (HTF) RENTAL AWARD SUMMARY Project Name & Address

Villa Hermosa: 1510-1520 Luisa Street - Santa Fe, NM – Santa Fe County

Proposed Award Amount Construction & Permanent: $500,000

Rate 3.0% per annum

Summary Term 32 Years Type Construction: 24 months, converting to Permanent Loan: 30 years (i.e. 360 equal P & I payments)

Borrower

Villa Hermosa LLC, which will be .01% owned by VH RAD, LLC, whose sole member will be the Santa Fe Civic Housing Authority (SFCHA), and 99.99% an equity investor, which is expected to be U.S. Bancorp CDC.

Management Monarch Properties, Inc. is a private corporation chartered in 1982, headquartered in Dallas, Texas and has a full service branch office in Albuquerque. It operates in the South and Southwest and has over 13,000 units under management. Monarch’s VP in Albuquerque, Jack MacGillivray, has over 30 years of experience.

Developer & Managing Member

Santa Fe Civic Housing Authority (SFCHA) was created in 1961 to build and operate housing for low income families in the City of Santa Fe. The mayor, with approval from city council, appoints a voting majority of SFCHA’s governing board. SFCHA has 605 public housing units throughout the city and approximately 514 Section 8 vouchers for rental assistance. The Executive Director, Ed Romero, has held the position since 2003 and is supported by 43 staff members. SFCHA is a component unit of the City of Santa Fe whose reviewed financial statements for FYE 6/30/15 show $42.1 million in assets, an extremely low debt to worth of 0.17 to 1, positive net income and operating cash flow. Internal statements for the 6 months ended 12/31/15 show continued satisfactory financial condition.

Project Type & Size Acquisition and Rehabilitation of 116 units, all of which serve low income senior households Development Costs

Development Cost Budget* Total % TDC Cost/GSF** MFA 2016 Cost

Study Avg $/GSF***

Construction Costs (as defined by R.S. Means) (1) 7,225,997 49% 89 114

Construction-Related Costs (2) 4,670,385 31% 57 34

Soft Costs (3) 690,244 5% 8 13

LIHTC/Affordable Housing Costs (4) 2,271,212 15% 28 27

Total Development Costs (TDC) (5) $14,857,838 100% $183 $188

(1) Vertical construction, contractor overhead, general conditions, contractor profit, architect fees

(2) Land, demolition, access. structures, site work, off-site improvements, construction contingency, GRT

(3) Engineering, appraisal, legal, insurance, financing, marketing, other (4) Developer fee, market study, architectural review, environmental review, other

* See Appendix A for detailed breakdown of costs **Gross square footage: 67,203 ***Average cost/GSF among new construction LIHTC projects examined in 4/20/16 Cost Efficiency Board Study Session.


Construction Sources

Permanent Sources Total Award Per Unit % of TDC

MFA Housing Trust Fund loan - 1st lien 500,000 4,310 3%MFA HOME Loan - 2nd lien 400,000 3,448 3%SFCHA Cash Floe Loan - 3rd lien 1,340,864 11,559 9%City of Santa Fe Donation (land = fee waivers) 1,350,000 11,638 9%GP Equity 100 1 0%LIHTC Equity 11,266,874 97,128 76%Total Sources 14,857,838 128,085 100%

Project Description Acquisition/rehabilitation of an existing 116 unit senior-restricted public housing project consisting of six resident structures. The improvements are currently owned by SFCHA and the underlying land is owned by the City of Santa Fe. The buildings will be conveyed to the new borrowing entity (VH RAD LLC) and the city of Santa Fe will grant a new long-term land lease. SFCHA has received HUD approval to convert all of the units from public housing to Section 8 project-based housing vouchers under HUD’s Rental Assistance Development (RAD) pilot program and has been awarded a “Commitment to enter into Housing Assistance Payment” contract (CHAP). Subject is located 2.1 miles southwest of downtown Santa Fe, on 8.4 acres. Adjacent single and multifamily homes are generally in good condition. The site is located in close proximity to services, employment, public transportation, and retail. The scope of work includes upgrades to all unit interiors, new energy efficient HVAC systems, upgraded kitchens and bathrooms with new fixtures, trim and doors, EnergyStar LED lighting and appliances. Planned site improvements include enhanced outdoor space to create a comfortable, flexible environment with improved accessibility and mobility for its senior residents. There will also be new interconnected walk paths as well as a new community center building with kitchen and laundry facilities for exclusive resident use. The project will be constructed to LEED green building standards and will feature a rooftop photovoltaic system. The 116 units are comprised of 59 one BDRMs (637 sq. ft.) and 57 two BDRMs (767 sq. ft.). Net rents range from $430 to $536 per month. A 4/4/16 Vogt Strategic Insights (VSI) market study ordered by MFA shows strong, ongoing demand for the units, with a current waitlist of 256 senior households, and a growing senior population that is expected to grow by 15% from 2015 to 2020. Under the RAD conversion, tenants will continue to pay not more than 30% of their income in rent. The reviewer assigned this HTF application a score of 76 out of 100 points (minimum 50 required).

Affordability Total 116 units for senior households earning at or below 60% AMI (i.e. 33 units at 60% AMI, 59 units at 50% AMI, and 24 units at 30% AMI), for which a Land Use Restriction Agreement (LURA) will be filed in Santa Fe County. The HTF affordability period is 30 years, comprised of 20 years per Affordable Housing Act Rules plus 10 years MFA extended affordability period (i.e. in concurrence with the loan term) and starts on the date the project is placed in service (i.e. the date of the last certificate of occupancy).

Repayment and Disbursement

Payments: Interest monthly during the construction period not to exceed 24 months. Beginning on the 25th month principal & interest payments based on 30 year amortization. Outstanding principal and interest will be due at the earlier of maturity, refinance or sale of the project. Disbursement: Multiple disbursements upon evidence of costs incurred, not more frequently than monthly.

Total Award Per Unit % of TDC

US Bank Construction Loan - 1st lien 8,292,707 71,489 56%MFA HTF Loan - 2nd lien 500,000 4,310 3%MFA HOME Loan - 3rd lien 400,000 3,448 3%Ventana Fund - 4th lien 725,000 6,250 5%SFCHA Cash Flow Loan - 5th lien 1,900,000 16,379 13%City of Santa Fe Donation (land + fee waivers) 1,350,000 11,638 9%GP Equity 100 1 0%LIHTC Equity 1,690,031 14,569 11%Total Sources 14,857,838 128,085 100%


Special Conditions 1. Loan is subject to MFA’s final underwriting for project feasibility. The loan amount may be reduced if the financing gap is less and/or terms revised (i.e. interest rate & amortization) in line with projected cash flow at closing,

2. Any changes or additions to the following development team members listed in the loan application must be approved by MFA; developer, general partner, contractor, management company, consultant or architect,

3. Financing commitments acceptable to MFA prior to funding on all funding sources, 4. HTF loan to be in no less than 2nd lien position during the construction period and no less

than 1st lien position during the permanent loan, 5. MFA will require a guarantee during construction from the Santa Fe Civic Housing

Authority, 6. Other conditions as may be determined by staff, and 7. Subject to availability of funds.

Other MFA Commitments to This Project

2016 9% LIHTC – Villa Hermosa LLC - $1,150,000 2016 HOME – Villa Hermosa LLC - $400,000

MFA Commitments to Other Projects

2007 HOME - Villa Consuelo - $390,000 2009 4% LIHTC - Villa Alegre Senior - $311,043 2009 Risk Share - Villa Alegre Senior - $890,000(1) 2009 TCAP - Villa Alegre Senior - $1,894,287 2009 Energy$avers - Villa Alegre Family - $250,000 2009 9% LIHTC - Villa Alegre Family - $963,071 2009 TCAP - Villa Alegre Family - $2,881,067 2011 9% LIHTC - Campo - $603,542 2013 9% LIHTC - Village in the Bosque - $1,150,000 2013 HTF - Village in the Bosque - $500,000 2013 HOME – Village in the Bosque - $450,000 2014 4% LIHTC – Santa Fe Community Living - $767,624 2014 MFA Tax Exempt Bonds – Santa Fe Community Living - $11,000,000(2) 2014 HOME – Santa Fe Community Living - $600,000 2014 HTF – Santa Fe Community Living - $500,000 TOTAL MFA EXPOSURE = $19,355,354 (excludes LIHTC, grants & loans pending approval) (Note: (1)Risk Share loans carry 10% MFA risk; (2)Bonds are non-recourse to MFA)

HTF Funds Available

$4,837,244 as of 04/01/2016

Prepared by Michael Scott, Program Manager Date May 3, 2016

Reviewed by Daniel Puccetti, Director of Housing Development


MEMORANDUM


Through: Contracted Services – May 10, 2016 Through: Policy Committee – April 11, 2016

FROM: Marjorie A. Martin DATE: April 6, 2016

SUBJECT: Proposed Extension of Governmental Services Agreement with John W. Anderson

Recommendation: MFA staff recommends that MFA approve a one year extension of the Governmental Services Agreement with John W. Anderson

Background: May 21, 2014 – The MFA Board of Directors approved the selection of John W. Anderson as one of MFA’s two Governmental Services Consultants.

July 2, 2014 – MFA and John W. Anderson entered into a Governmental Services Agreement. The Agreement was for an initial two year term, but provided for a total of two (2) additional one-year extensions, at the Board’s discretion. The Agreement shall expire on June 20, 2016 unless extended for another year by decision of the Board.

Discussion: The current term of the Governmental Services Agreement between MFA and John W. Anderson expires on June 20, 2016. The Agreement provides MFA the option to extend the Agreement at this time for one (1) additional one-year period. Notice to John W. Anderson of intent to exercise this option must be provided in writing no less than 30 days prior to the expiration of the initial term.

Summary: MFA staff recommends that MFA approve a one year extension of the Governmental Services Agreement between MFA and John W. Anderson, pursuant to the provisions of that agreement, which otherwise expires on June 20, 2016.

Tab 10


MEMORANDUM


Through: Contracted Services – May 10, 2016 Through: Policy Committee – April 11, 2016

FROM: Marjorie A. Martin DATE: April 6, 2016

SUBJECT: Proposed Extension of Governmental Services Agreement with David R. Schmidt

Recommendation: MFA staff recommends that MFA approve a one year extension of the Governmental Services Agreement with David R. Schmidt

Background: May 21, 2014 – The MFA Board of Directors approved the selection of David R. Schmidt as one of MFA’s two Governmental Services Consultants.

July 2, 2014 – MFA and David R. Schmidt entered into a Governmental Services Agreement. The Agreement was for an initial two year term, but provided for a total of two (2) additional one-year extensions, at the Board’s discretion. The Agreement shall expire on June 20, 2016 unless extended for another year by decision of the Board.

Discussion: The current term of the Governmental Services Agreement between MFA and John W. Anderson expires on June 20, 2016. The Agreement provides MFA the option to extend the Agreement at this time for one (1) additional one-year period. Notice to David R. Schmidt of intent to exercise this option must be provided in writing no less than 30 days prior to the expiration of the initial term.

Summary: MFA staff recommends that MFA approve a one year extension of the Governmental Services Agreement between MFA and David R. Schmidt, pursuant to the provisions of that agreement, which otherwise expires on June 20, 2016.

Tab 11


MEMORANDUM TO: MFA Board of Directors

Through: Contract Services Committee – May 10, 2016 Through: Policy Committee – April 26, 2016

FROM: Troy Cucchiara and Rose Baca-Quesada DATE: May 18, 2016 SUBJECT: Approval of 2016/2017 DOE Annual and Master State Plans Recommendation Approval of the NM Energy$mart 2016/2017 Department of Energy (DOE) Weatherization Assistance Program Annual and Master State Plans. Background For Program Year 2016/2017 we anticipate total funding for the NM Energy$mart Program will be $5,818,270.02. The state plan only refers to the $1,646,802 we will receive from the Department of Energy.

Funding **Estimated NM Gas Baseload & Baseload Plus Units

*Estimated Fully Weatherized Units

Department of Energy (DOE) $1,646,802.00 140 LIHEAP $2,500,000.00 375 Public Service Company of NM $ 110,000.00 20 Central Valley Electric Coop $ 35,000.00 5 Columbus Electric Coop $7,500.00 2 Climate Change Leadership Institute

$20,000.00 4

NM Gas Leverage NM Gas Multi-Family **NM Gas Baseload **NM Gas Baseload Plus

$533,964.39

$265,170.30

$61,222.22

$638,611.11

242

464

84

42

Total $5,818,270.02 706 672

*The total number of units is estimated by dividing the program operations portion of each funding source by $6,000.00. Utility funding is used to both increase the amount of work each home receives and through baseload and baseload plus add to the total number of units. It is unpredictable how much work each home will need prior to initial assessments, therefore the 706 homes to be fully weatherized is only an estimate. **Baseload and Baseload Plus units are fully weatherized at a later date and do not count as individual units. Administration of the DOE Weatherization Assistance Program (DOE WAP) is performed in accordance with the DOE Annual and Master Plans which are submitted to DOE as a “State Plan”. The plan will be submitted to DOE on April 28, 2016 contingent upon MFA’s Board of Directors approval. The DOE Annual Plan for program year 2016/2017 includes a detailed breakdown of how the funds will be allocated. The Master Plan details how the program will be managed overall by the NM Energy$mart Program. On February 18, 2015, the MFA Board of Directors approved Central NM Housing Corporation, and Southwestern Regional Housing as Service Providers for the NM Energy$mart Program for an initial two year contract with an option of three one year renewals. This year is the second year of the two year contract. The $1, 646,802.00 award to New Mexico from DOE will be broken down as follows:

MFA Central NM Housing Corporation

SW Regional Housing

Total

Administrative $82,340.10 $59,937.05 $22,403.05 $164,680.20 Leverage $16,468.02 .00 .00 $16,468.02 Capital Outlay $100,000.00 .00 .00 $100,000.00 Training & Technical Assistance

$87,494.00 $88,000.00 $132,000.00 $307,494.00

Program Operations

.00 $537,049.19 $200,736.30 $737,785.49

Health & Safety .00 $173,817.44 $64,968.85 $238,786.29 Financial Audit Billed under

admin $10,000.00 .00 $10,000.00

Liability Insurance

Billed under admin

$41,588.00 $30,000.00 $71,588.00

Total $286,302.12 $910,391.68 $450,108.20 $1,646,802.00 Estimated DOE Units

102 38 140

Comparison of Plans for PY 2015/2016 and 2016/2017 Elements 2015/2016 2016/2017

DOE Funding Amount $1,475,444.00 $1,646,802.00 Capital Items $9,000.00 $100,000.00 Number of Service Providers 2 2 Statewide Per Unit Average $6,000.00 $6,000.00 Administration Budget $147,544.00 $164,680.20

There are no significant changes to this year’s State Plan. Process The State Plan is subject to a 10 day public comment and review period. It was advertised in 18 statewide New Mexico newspapers and was posted on the MFA website since April 11, 2016. A Weatherization Assistance Program Policy Advisory Committee (WAP-PAC) meeting and public hearing was held on April 21, 2016 in the MFA Board Room. No comments were received. Summary The NM Energy$mart program helps low-income New Mexicans save money on utility bills. Homeowners and renters who qualify for the program receive an average of $6,000 in weatherization measures. The Department of Energy is the primary funding source because they set the rules and regulations for the program and they are the only funding source that provide for vehicles and equipment and a training and technical assistance budget. In order to receive the funding the “State Plan” must be submitted no later than May 1, of every year. The Department of Energy (DOE) funding for the 2016/2017 program year is $1,646,802.00. We are projecting that Central NM Housing Corporation will weatherize 102 homes and SW Regional Housing will weatherize 38 homes for a total of 140 homes with this funding.

IV.1 Subgrantees

Subgrantee (City) Planned Funds/Units

Central NM Housing Corporation (Albuquerque) $910,391.68

102

Southwest Regional Housing Community Development Corporation (Deming) $450,108.20

38

Total: $1,360,499.88

140

IV.2 WAP Production Schedule

Weatherization Plans Units

Total Units (excluding reweatherized) 140

Reweatherized Units 0

Note: Planned units by quarter or category are no longer required, no information required for persons.

Average Unit Costs, Units subject to DOE Project Rules

VEHICLE & EQUIPMENT AVERAGE COST PER DWELLING UNIT (DOE RULES)

A Total Vehicles & Equipment ($5,000 or more) Budget $100,000.00 B Total Units Weatherized 140 C Total Units Reweatherized 00 D Total Dwelling Units to be Weatherized and Reweatherized (B + C) 140 E Average Vehicles & Equipment Acquisition Cost per Unit (A divided by D) $714.29

AVERAGE COST PER DWELLING UNIT (DOE RULES)

F Total Funds for Program Operations $737,785.00 G Total Dwelling Units to be Weatherized and Reweatherized (from line D) 140 H Average Program Operations Costs per Unit (F divided by G) $5,269.89 I Average Vehicles & Equipment Acquisition Cost per Unit (from line E) $714.29 J Total Average Cost per Dwelling (H plus I) $5,984.18

IV.3 Energy Savings

Method used to calculate savings: WAP algorithmgfedcb Other (describe below)gfedcb

Units Savings Calculator (MBtus) Energy Savings

This Year Estimate 140 29.3 4102

Prior Year Estimate 120 30.5 3660

Prior Year Actual 89 30.5 2714

Method used to calculate savings description:

New Mexico uses the DOE WAP algorithm to estimate energy savings. The 2015/2016 Program year is not yet complete however we estimate that we will weatherize 125 homes as of June 30, 2016 and by using the algorithm we estimate we will save 3516 MBTU's. For program year 2016/2017 we estimate 3926 MBTUs will be saved in 140 homes.

DOE F 540.2 OMB Control No: 1910-5127

(08/05) Expiration Date: 11/30/2016

U.S. Department of Energy

WEATHERIZATION ASSISTANCE PROGRAM (WAP)

WEATHERIZATION ANNUAL FILE WORKSHEET

(Grant Number: EE0006171, State: NM, Program Year: 2016)

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IV.4 DOEFunded Leveraging Activities

Leveraging Activities

DOE’s yearly funding helps only a fraction of New Mexico’s lowincome homes in need of weatherization. MFA recognizes that increasing the number of weatherized homes requires additional funding and pursues other funding sources accordingly. Leveraging funds from other local partners has become crucial to maintaining the service level in New Mexico. We use these funds to defray costs from DOE and LIHEAP by utilizing multiple funding sources in each home which frees up funding from DOE and LIHEAP so that more homes can be weatherized across the state. The amount designated for leveraging is included on the budget section of this plan. MFA is requesting $16,467.00 of the grant for leveraging funding.

MFA received $2.1M from the New Mexico Income Support Division, LIHEAP. With our continued outreach efforts it is anticipated that the LIHEAP grant will be increased by $400,000.00 for a total of $2.5M for the 2016/2017 program year. In an effort to increase and stabilize weatherization funding we continue to outreach our program to Electric Coops throughout the State of New Mexico. Our goal remains to acquire funding from the utility companies to provide lowincome weatherization in the service territory of each of the agencies.

Our Coop outreach efforts continues to be in several stages however we still have a $35,000.00 contract with Central Valley Electric Coop and a contract for $7,500.00 with Columbus Electric Coop and active Coops and a $20,000.00 contract with Climate Change Leadership Institute (CCLI). In July 2016, the New Mexico Energy$mart Program will be presented to the New Mexico Coop annual meeting and we hope to get more participation from that outreach effort as well. Our outreach efforts and negotiations are very time consuming up front however we believe that after establishing a relationship and providing quality work with proven energy savings, it will be an ongoing funding source for the program.

The New Mexico legislature passed the Efficient Use of Energy Act (the Act) in 2005, which required public utility companies to place a tariff on their customers' utility bills. Both the electric and gas utility companies must redistribute the funds to the customers in the form of energy efficiency programs. MFA’s receipt of these funds continues to be contingent upon award of DOE funds. We have partnered with Xcel Energy to provide $279,480.00 in Energy Efficiency measures. Xcel Energy has a very small service territory in New Mexico so in order to expend these funds we are concentrating on multifamily properties. After these funds are expended we hope to continue our partnership with Xcel Energy in the future.

In January 2016, MFA signed a renewal contract with the Public Service Company of New Mexico in the amount of $110,000.00. This program year we have negotiated approval of LED installations and replacing like for like refrigerators. The utility will increase this years funding to cover the cost of expanded measures and if we can increase the number of homes that we weatherize they will increase the contract accordingly. In addition, we have presented them with a proposal for a "rebate" program and projections of expenditures of $200,000.00. If approved by the PRC that program will begin in January 2017. The "rebate" program means that the Subgrantees will receive reimbursement on a per kWh basis. The rebates will be provided directly to the Subgrantees when the actual kWh savings has been determined by a calibrated energy audit. The New Mexico Gas Company (NMGC) remains at $1,577,861.00. With $279,127.00 being used for multifamily activity and $1,298,734.00 will continue to be used for NM Energy$mart Leverage, Baseload and Baseload Plus. Households receiving Baseload or Baseload Plus will be placed on the waiting list for full weatherization at a future date. Leverage program beginning April 2017. New Mexico Gas Company Baseload Program

New Mexico Gas Company Baseload Program allows our service providers to use NMGC funds in a significantly expanded number of homes. Subgrantees will use existing waiting lists and target NMGC customers and service areas through NM Energy$mart outreach efforts. Individuals on this wait list will be ranked and prioritized for the traditional NM Energy$mart Program, with priority points assigned for income level and the presence of elderly, disabled and young children in the home. New Mexico Gas Company Baseload Plus (Space Heating)

New Mexico Gas Company Baseload Plus (Space Heating) is a program that balances the need to deliver services to more NMGC customers and also provides more significant savings to the home owners. The utility funding is used to provide furnaces or insulation several months to a year prior to the use of DOE funds. As determined by the need of the home and the energy auditor, a subset of the homes served by the NMGC Baseload program will receive additional services. Individuals on this wait list will also be ranked and prioritized for the traditional NM Energy$mart Program.

The criteria for this program entails a NM Energy$mart energy auditor to check the house systems directly related to space heating under Baseload Plus, a home is eligible for attic insulation or a furnace. NM Energy$mart Leverage

For the traditional Leveraging program, our Service Providers are required to complete a NEAT/MHEA energy audit. If there are gas measures that need to be installed, NM Gas funding is used to offset what DOE or LIHEAP would otherwise pay for. MFA did not receive State funds this year however staff will continue pursuing State funds with State agencies and the State legislature, and remain involved with the proposals submitted by other public utility companies to the PRC in order to receive more funding under the Act.

IV.5 Policy Advisory Council Members







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Check if an existing state council or commision serves in this category and add name below gfedcb

Ferdinand Garcia

Type of organization: Nonprofit (not a financial institution) Contact Name: Phone: (575)3746207 Email: [email protected]

Hope Reed

Type of organization: Unit of State Government Contact Name: Phone: (505)4760415 Email: hope@[email protected]

Isaac Perez

Type of organization: Indian Tribe Contact Name: Phone: (505)7719291 Email: [email protected]

Jack MacgGillivray, CPM

Type of organization: Forprofit or Corporate (not a financial institution or utility) Contact Name: Phone: (505)6817778 Email: [email protected]

Joseph Ortega


Joseph Stevens


Priscilla Lucero

Type of organization: Unit of Local Government Contact Name: Phone: (575)3881509 Email: [email protected]

Steve Casey

Type of organization: Utility Contact Name: Phone: 5056973568 Email: [email protected]

Vanessa Palacios

Type of organization: Utility Contact Name: Phone: 5052414486 Email: [email protected]

Veronika Molina


Vivian Ulibarri

Type of organization: Unit of State Government Contact Name: Phone: 5058277258 Email: [email protected]

IV.6 State Plan Hearings (Note: attach notes and transcripts to the SF424)

Date Held Newspapers that publicized the hearings and the dates the notice ran

04/21/2016 April 6, 2016 Union County Leader Clayton; April 7, 2016 Valencia County News Bulletin; April 8, 2016 Roswell Daily Record, Clovis News Journal, Carlsbad CurrentArgus, Hobbs NewsSun, The New Mexican Santa Fe, The Daily Times San Juan County, Las Vegas Optic, Silver City Daily Press, Albuquerque Journal, Deming Headlight, Las Cruces Sun, Gallup Independent, Alamogordo Daily News, Los Alamos Monitor; April 10, 2016 Rio Rancho Observer, The Lovington Leader; April 11, 2016 Posted on the MFA Website

IV.7 Miscellaneous

Business Recipient Business Officer







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Isidoro "Izzy" Hernandez [email protected] 344 4th Street SW Albuquerque, NM 87102 (505) 7672275 Recipient Principal Investigator Amy Gutierrez [email protected] 344 4th Street SW Albuquerque, NM 87102 (505) 7672268 NOTE: The submission of this application is contingent on approval from our Board of Directors which meets on XXXX, 2016.







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This worksheet should be completed as specified in Section III of the Weatherization Assistance Program Application Package. V.1 Eligiblility

V.1.1 Approach to Determining Client Eligibility

Provide a description of the definition of income used to determine eligibility

Definition of income used to determine eligibility:

The 2014 US Census American Community Survey 1 year estimates identified 206,022 households in the state with incomes at or below 200% of the poverty level, the WAP eligibility limit. These households equal 27% of the state's population. Additionally, the 2014 US Census American Community Survey provides other significant findings about persons with incomes at or below the poverty level:

l 247,555 households with 1 or more people under 18 years of age; l 50,749 households contained children that were under 6 years of age;

From 2015 US Census American Community Survey regardless of poverty status:

l The number of dwelling units in which the elderly reside was estimated at 208,642; l The number of dwelling units in which people with disabilities reside was estimated at 292,759.

Definition of income used to determine eligibility: LowIncome means income in relation to family size. The basis for eligibility for assistance under DOE is at or below 200% of the Federal poverty guidelines.

The NM Energy$mart Priority factors:

The priority ranking addresses the neediest households (e.g. children, elderly, people with disabilities). Subgrantees will weatherize eligible households on the basis of the household’s need. Priority among eligible applicants for the receipt of NM Energy$mart services is established by the NM Energy$mart Online system, which allocates priority points on the basis below.

Related factors and priority for weatherization assistance is given to:

1. Households with children 2. Disability 3. Elderly 4. High Energy Burden

1. Age Point

Add up all family members' age point based on the following chart: Age Group

Point

0 to 1

5

2 to 4

4

5 to 9

3

10 to 12

2

13 to 17

1

60 to 65

1



STATE PLAN/MASTER FILE WORKSHEET


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2. Disability

For each family member with a disability, add 1 point.

3. Elderly

Add up all family members' age point based on the chart above:

4. High Use and High Burden

High residential energy use is defined, as energy usage above average as a result of household composition or unusual needs for energy. Households with a “high energy burden” where 20% or more of the household income is going towards energy can also be a priority for weatherization.

66 to 71

2

72 to 77

3

78 to 83

4

84 +

5

High Use and High Burden Point When Burden is > 15% 3 When Burden is >10% and < 16% 2 When Burden is >5% and <11% 1

Describe what household Eligibility basis will be used in the Program

Before a home is qualified for weatherization, the client must be approved. This approval process begins with receipt of an application. A NM Energy$mart intake staff member reviews applications to ensure that clients qualify for the program. A client will not be qualified unless the following items are provided for the file.

A completed application

Income verification

Proof of ownership and or landlord sign off

A current utility bill for gas & electric service

Proof of income may be in the form of:

Documented verification from income sources

Current income tax return

Copies of pay checks or check stubs

Proof of ownership may be in the form of:

Evidence of mortgage payments

Property deeds or proof of tax payment

For renters, rental agreements from landlords must be obtained and accompanied with a landlord agreement.

Intake staff also reviews the documentation for demographic information such as:

Proper identification of head of household





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Other household members are identified as applicable for disability or child status

Proof of disability (Medical documentation is requested to ascertain disability status) Reweatherization: Homes Weatherized on or before September 30, 1994 may be reweatherized, however homes that have never been weatherized will be prioritized over homes that have been previously weatherized. Notification: Applicants are immediately notified of their eligibility status. Ineligible applicants are notified in writing, stating the reason for ineligibility.

Client Appeals Policy

All Subgrantees shall establish and maintain a policy allowing a client to appeal a denial of service. The policy must be part of the agency’s weatherization program manual. In addition, the agency must post the policy on the agency’s website, so clients have access to submit a formal appeal for denial of services. The policy must clearly state how the client can initiate the appeal, who will make the determination and the timeline for review.

Steps that should be part of Subgrantee's policy include:

When the agency defers a unit or otherwise denies a client weatherization services, the agency must transmit a formal letter to the client indicating the specific reason(s) for the denial.

If an appeal is received, the agency should have a minimum of a 1 tier review of the client’s application by a staff member in the organization with a supervisory position in the agency hierarchy. The person reviewing the appeal must be someone other than the person who made the initial decision to deny the client services. The individual must also be familiar with the regulations regarding eligibility.

The person reviewing the appeal should compare the provisions of the relevant regulation(s) to the application, speak to the agency staff involved in the initial denial, and speak to the client before making a decision.

If a determination is made that the original determination was correct, a formal letter must be sent to the client outlining the determination of the appeal and once again articulating why services were denied. The letter should include the process that took place to confirm the denial.

If the person reviewing the appeal determines the appeal is granted, the client should be provided a letter stating such and detailing when their home will be weatherized. The letter should include the process that took place to confirm the approval.

Describe the process for ensuring qualified aliens are eligible for weatherization benefits

MFA requires Subgrantees to collect proof of a social security number/Identity for at least one adult living in the residence. If a social security number is not available for the remaining members of the household, we require a NonCitizen Immigrant Status for all other members of the household. Immigrants are eligible under the current law referenced on the U.S. Department of Health and Human Services website. http://aspe.hhs.gov/hsp/immigration/restrictionssum.shtml In addition, we require a birthdate be provided. The Subgrantee passes the information through our online system which has a secure server where the information is encoded. All data has been redacted after it has been put into our online system. Our online system scrambles the data for protection of the client.

V.1.2 Approach to Determining Building Eligibility

Procedures to determine that units weatherized have eligibility documentation

A dwelling unit is eligible for weatherization assistance if it is occupied by a family whose total income is at or below 200 percent of the poverty income level or if the households contains a member who has received SSI for disability or TANF at any time during the 12month period preceding the determination of eligibility for weatherization assistance. In addition, the client must have evidence of mortgage payment, property deed or proof of tax payment to be qualified. For renters, rental agreements from landlords must be obtained and accompanied with a landlord agreement.

Describe Reweatherization compliance





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New Mexico does not encourage reweatherization of homes however if an individual applies for weatherization and their home had been weatherized prior to September 30, 1994 we will allow reweatherization under the below conditions.

l The Subgrantee must determine that the applicant is eligible l A DOE approved energy audit must be run on the home l All health and safety issues must be addressed l When applicable we use leverage funding instead of DOE funding for any measure that qualifies

Households located in a disaster area would be considered as priorities for weatherization as long as the households are eligible and meet one of the priorities established in regulation and are free and clear of any insurance claim resulting from damage incurred from the disaster.

Households located in a disaster area would be considered as priorities for weatherization as long as the households are eligible and meet one of the priorities established in regulation and are free and clear of any insurance claim resulting from damage incurred from the disaster.

Describe what structures are eligible for weatherization

Housing types qualifying for weatherization include single family, multifamily, and mobile homes. A dwelling unit is eligible for weatherization assistance if it is occupied by a family whose income is at or below 200 percent of the poverty level, contains a member who has received SSI or TANF at any time during the 12month period preceding the determination of eligibility for weatherization assistance, or is eligible for assistance under the LowIncome Home Energy Assistance Act of 1981. Nontraditional dwelling units such as shelters or dwelling units sharing a wall with a business will be discussed with the DOE project officer prior to commencement of the project and full caution will be exercised to be sure the particular units are eligible. Weatherization of nonstationary campers and trailers that do not have a mailing address associated with the eligible applicant are not eligible and will not be allowed.

Buildings should be deferred if they have a deficiency in their structure or condition that makes it impractical to weatherize effectively. If the area is known to have redevelopment plans then weatherization will be deferred until development is complete. Health and safety issues requiring more than what is allowed by WPN 116 will be deferred.

Describe how Rental Units/Multifamily Buildings will be addressed

Rental Units/MultiFamily Buildings We have updated our Admin Manual to include a rental plan and procedure that outlines the following four points: 1. Benefits or the services accrue primarily to the low income tenants 2. The tenants have a way to complain if they feel that the rent has increased as a result of these services. The landlords provide a statement notifying tenants of this procedure. 3. The plan ensures that no undue or excessive enhancement shall occur to the dwelling unit. 4. Rent and permission of the building owners are always obtained before commencing work. Our Admin Manual already states that not less than 66 percent (50 percent for duplexes and fourunit buildings, and certain eligible types of large multifamily buildings) of the dwelling units in the building are eligible dwelling units, or will become eligible dwelling units within 180 days. Single Family Rental Units

Single Family Rental units qualify for weatherization as long as the landlord agrees to the weatherization, commits to a contribution of 20% of the materials being installed in the home and signs a waiver stating that they will not raise the rent on the units for a minimum of 1 year unless those increases are related to matters other than the weatherization work performed.

To ensure that no undue or excessive enhancements are made to the home, a NEAT or MHEA audit must be run on the home prior to the scope of work being outlined.

The necessary steps that must be taken to ensure proper documentation for weatherizing a single family rental unit include:

l An application must be fully filled out by the client;

l Proof of income must be provided;

l Proof of a lease must be obtained;

l Current copies of the clients gas and electric bills must be obtained;

l Written permission must be obtained from the landlord/agent committing that they are willing and able to pay a 20% of materials contribution to the project prior to commencement of the Weatherization Project;

l The 20% materials contribution will be based on the estimated costs from the NEAT or MHEA audit that is performed;

l Subgrantee must obtain certification from the landlord that the rent of the property will remain the same for at least one year following performance of weatherization work;





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l Landlords are not responsible for any additional costs over the written estimate. If the actual (final) materials costs are higher than the estimate, then the Program will pay the difference.

l The Weatherization Subgrantee is responsible for obtaining the required landlord contribution;

l Landlord cash contribution received should be applied to supplement the cost of the Project;

l Subgrantee should report landlord cash contributions on the Statement of Expenditures for the month in which they are received;

l MFA will monitor compliance with this policy only to the extent that the 5% to 10% sample monitoring method MFA employs to verify compliance will include rental Projects weatherized through the Program.

Single family landlord contribution may be waived under the conditions described below. Affordability restrictions may not be waived.

l The Landlord qualifies for the Program under the same guidelines used to qualify homeowners for assistance;

l The home in question has health and safety issues that could cause imminent danger to the individual and/or family living in the unit, and the owner does not have the financial means to address those issues. Proof of health and safety issues must be documented by the lead NM Energy$mart auditor for the NM Energy$mart Agency providing weatherization services. Health and safety issues will be addressed as part of the scope of work;

l The Owner provides documentation that improvements have been made to the property within the previous 12 months, the cost of which is equal to 20% of the cost of materials for the proposed weatherization services.

MultiFamily Rental Units

MultiFamily Rental units qualify for weatherization as long as the clients that are housed in the property qualify for weatherization. The owner/agent must agree to the weatherization, commit to a contribution of 20% of the entire weatherization project and sign a waiver stating that they will not raise the rent on the units for a minimum of 1 year unless those increases are related to matters other than the weatherization work performed.

To ensure that no undue or excessive enhancements are made to the home, a TREAT audit must be run on the complex prior to the scope of work being outlined.

The necessary steps that must be taken to ensure proper documentation for weatherizing a single family rental unit include:

l Obtain the written permission of the owner or his agent;

l Verify that not less than 66 percent (50 percent for duplexes and fourunit buildings, and certain eligible types of large multifamily buildings) of the dwelling units in the building are eligible dwelling units, or will become eligible dwelling units within 180 days;

l Ensure that the benefits of weatherization assistance in connection with such rental units including units where the tenants pay for their energy through their rent, will accrue primarily to the lowincome tenants residing in such units;

l By way of use of the TREAT audit, Subgrantee must make certain that no undue or excessive enhancements are made to the units;

l Completed applications must be obtained from each of the clients in the rental units; and

l Current copies of Gas and Electric bills must be obtained from each of the rental units.

Once the above information is in place, an approval request, in the form of a Treat Audit must be submitted to MFA in order to weatherize multifamily units larger than a 4plex. A description of the process that determined the measures being installed must be provided with the Treat Audit. MFA staff will determine if the project is viable to send to DOE for final approval.

Procedures for Owner Contributions are as follows:

l A 20% commitment of the entire weatherization project is required from the Owner prior to commencement of the Weatherization Project. The Owner contribution is based on the estimated costs from the TREAT energy audit. For large projects estimated cost for an engineer’s estimate of HVAC costs is added to the energy audit costs;

l Owners are not responsible for any additional costs over the written estimate. If the actual (final) cost of the project is higher than the estimate, then the Program will pay the difference;

l A memorandum of understanding will be executed between the Owner and Subgrantee prior to the commencement of work. The Contract will detail the amount of the Owner contribution and commit the Owner to certify that he/she will maintain rent at the HUD designated “High Home Rent” levels (Affordable Rent) for a period of one year following performance of weatherization work;

l The Subgrantee is responsible for obtaining the required landlord contribution;

l Landlord cash contribution received should be applied to supplement the cost of the Project;

l Landlord cash contributions should be reported on the Statement of Expenditures for the month in which they are received;

l MFA will monitor compliance with this policy only to the extent that the 5% to 10% sample monitoring method MFA employs to verify compliance will include rental Projects weatherized through the Program.

Describe the deferral Process

There are some situations in which an agency or contractor should not, or may choose not to, weatherize an otherwise eligible unit. In order to deal with such cases, the MFA implements the deferral policy for all agencies administering the NM Energy$mart Program. This policy allows weatherization staff to postpone services when certain conditions or circumstances exist. Under no circumstances will partial weatherization be allowed. All units reported must be inspected by a QCI and determined to be complete. Deferral is allowed





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under certain conditions. However, an agency should define its intentions at the time a condition occurs. The agency/contractor deferral/postponement policy must contain these elements:

l Postponement of Weatherization Services: An agency or contractor may postpone weatherization services under the following conditions:

l Located in an area slated for redevelopment. l A dwelling unit is vacant. l A dwelling unit is for sale. l A dwelling unit is scheduled for demolition. l A dwelling proves to be dilapidated or structurally unsound and unsafe. Dilapidated units are classified as those which do not provide decent, safe, and sanitary shelter in

their present state and have defects so serious and numerous that the repairs required to revive the structure to standard condition would not be economically feasible. l A dwelling unit is deemed by the auditor to pose a threat to the health or safety of the crew or contractor. l A mobile home is improperly installed (for example, without adequate supports). l A dwelling unit is uninhabitable (for example, a burnedout apartment). l A building is affected by mold and mildew and the area affected is too large for the weatherization crew or contractor to remediate. l The client is uncooperative with the weatherization agency or its contracted agent, either in demanding that certain work be done, refusing higher priority work which is

needed, being abusive to the work crew or contractor, or by being unreasonable in allowing access to the unit. Every attempt should be made to explain the program and the benefits of the work. If this fails, work should be suspended and the MFA should be consulted. In such cases, documentation is required.

l Obvious discrepancies are found between the information supplied by the client on the application and observed conditions at the time of weatherization. The agency or contractor must resolve these discrepancies before weatherization work can continue.

l If, at any time prior to the beginning of work (work officially begins when the audit is performed), the agency or contractor determines that the client is no longer eligible, or personnel believe that circumstances may have changed, the unit shall not be weatherized until updated information can be obtained from the client.

l There are rats, bats, roaches, reptiles or insects present that could cause harm to the crew or other animals or varmints that are not properly contained on the premises. l There are health or safety hazards that must be corrected before weatherization services may begin including, but not limited to:

The presence of animal feces and/or other excrement, Disconnected waste water pipes, Hazardous electrical wiring, The presence of unsafe levels of mold or mildew, or Unvented combustion appliances or actionable levels of ambient carbon monoxide. There are illegal drugs or illegal activities occurring on the premises. The client or owner is physically or verbally abusive to any personnel. The dwelling unit or parts thereof are being remodeled and weatherization work is not coordinated with a housing rehabilitation program. The eligible household moves from the dwelling unit where weatherization activities and services are in progress. In such a case, the agency or contractor must determine whether to complete the work, and the circumstances must be documented in the client file. One or more occupants in a dwelling have been diagnosed with a contagious and lifethreatening disease. When a person’s health may be at risk and/or the work activities could constitute a health and safety hazard,the occupant at risk will be required to take appropriate action based on the severity of the risk. Failure or the inability to take appropriate actions must result in deferral of the weatherization work. In unusual situations not covered above or where other problems of a unique nature exist, MFA should be consulted.

Procedure

If an agency or contractor cannot, or chooses not to weatherize a dwelling unit, it must notify the client or owner/authorized agent by use of the Deferral of Services Form should include:

¡ The nature and extent of the problem(s) and how the problem(s) relate(s) to the determination not to weatherize the unit; ¡ Any corrective action required before weatherization services can be initiated; ¡ A time limit for correcting problems so that weatherization services may be rescheduled; ¡ The name of the person or entity responsible for correcting the problem(s); and ¡ The right of appeal. ¡ All documentation justifying the decision to postpone services must be kept in the client file.

V.1.3 Definition of Children

Definition of children (below age): 19

V.1.4 Approach to Tribal Organizations

Recommend tribal organization(s) be treated as local applicant? gfedcb





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If YES, Recommendation. If NO, Statement that assistance to lowincome tribe members and other lowincome persons is equal.

Lowincome members of an Indian Tribe ineligible to apply under the Navajo Grant for weatherization services are eligible to apply for services under this plan. MFA has a staff member dedicated to Indian Housing issues who has been instrumental in our program weatherizing more homes on native lands. Low income members of an Indian tribe will receive benefits equivalent to the assistance provided to other lowincome persons within the state.

V.2 Selection of Areas to Be Served

The NM Energy$mart Program is a statewide program serving the 33 counties of New Mexico: San Juan; McKinley; Cibola; Rio Arriba; Taos; Colfax; Los Alamos; Santa Fe; Mora; San Miguel; Union; Harding; Quay; Curry; Guadalupe; DeBaca; Roosevelt; Sandoval; Bernalillo; Valencia; Torrance; Catron; Grant; Hidalgo; Luna; Socorro; Sierra; Dona Ana; Lincoln; Chavez; Otero; Eddy; Lea.

The Program also serves the Pueblos of Zuni, Acoma, Laguna, Santa Clara, Ohkay Owingeh, Taos, Picuris, Nambe, Tesuque, Pojoaque, Cochiti, Isleta, Jemez, San Felipe, San Ildefonso, Sandia, Santa Ana, Santo Domingo, Zia, Jicarilla Apache Reservation, and the Mescalero Apache Reservation.

The 2014 US Census American Community Survey was used to compile the data used for the distribution formula. The funding allocations for each county and pueblo are based on the number of households with elderly, young children, disabled and low income occupants, weighted by heating degree days.

DOE, LIHEAP and State funds (if awarded) will be allocated statewide. Utility funds will be allocated to the areas served by the participating utility companies.

V.3 Priorities for Service Delivery

Subgrantees will be required to disseminate information to the general public about the availability of services within thirty (30) days of receipt of the contractual agreement and shall retain proof of such dissemination in their records.

Subgrantees are required to update the waiting lists annually to include written notification to individuals on the waiting list to determine if they still desire services. Updating will allow the Subgrantees to identify the higherranking clients regardless of the amount of time on the waiting lists.

Priority among eligible applicants for the receipt of NM Energy$mart services is established by the NM Energy$mart Online system, which follows the requirements specified in CFR 440.16 (b). Priority is given to identifying and providing weatherization assistance to:

(1) Elderly persons (a person who is 60 years of age or older);

(2) Persons with disabilities;

(3) Families with children (households with dependents not exceeding 18 years of age); (4) Households with high energy burden

V.4 Climatic Conditions

V.4 Climatic Conditions

New Mexico is the 5th largest of the 50 United States with a total area of 121,599 square miles (121,365 square miles land and 234 square miles covered by water). Within its boundaries, elevations reach as high as 13,161 feet above sea level (Wheeler Peak in Taos County) and as low as 2,842 feet above sea level (Red Bluff Reservoir in Eddy County). The vast land area, variations in local topography, and elevation disparities cause measurable differences in climate even within each of the (2) identified regions. Likewise,





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LawrenceBerkley National Laboratories (LBNL) has identified (3) distinct climactic zones, that are independent of the particular heatingcooling demand associated with the region, but still significantly effect the performance of homes within each zone. The Department of Energy has defined (3) distinct climate zones that cover parts of New Mexico. These climate zone help approximate the performance of a building within each zone due to the effects of heatingcooling demand, precipitation, and relative humidity. A rough map of the DOE climate zones has been uploaded and this information has not changed.

Due to the variations in climate throughout the state, each energy audit shall be adjusted to most accurately model the climactic conditions of the individual location. Likewise, each energy audit shall indicate the model climate used (either a location included in the DOEapproved auditing software, or the HDD base 65 /CDD base 74 factors).

Heating Degree Day (HDD) and Cooling Degree Day (CDD) data may be found in various sources. Two (2) acceptable sources are listed below:

1) Western Regional Climate Center at www.wrcc.dri.edu/summary/climsmnm.html

2) DegreeDays.net – www.degreedays.net

V.5 Type of Weatherization Work to Be Done

V.5.1 Technical Guides and Materials

The NM Energy$mart Program is committed to full compliance with 10 CFR 440.21(i) and WPN 154 for energy audit procedures. All installations are using materials that are listed in Appendix A of 10 CFR 440. The NM Energy$mart Program has approached the goal of meeting the specifications, desired outcomes, and objectives of the Standard Work Specifications (SWS) with several successful methods. Our Subgrantees have been in the practice of utilizing the SWS as full implementation from the beginning of PY 2014. Below is a list of manuals and guides with dates of issue. Each of these has been uploaded with the State Plan in addition to the links provided below.

l NM Energy$mart Administrative Manual http://www.housingnm.org/community_development/energysmart

¡ Reissued 07/01/2014, updated 04/05/2016 l NM Energy$mart Technical Standards http://www.housingnm.org/community_development/energysmart

¡ Reissued 07/01/2014, updated 04/15/15 l Field Guide Deck of Cards

¡ Issued 11/21/2014, updated 03/04/2015

There are five ways the documents are made available to our Subgrantees:

1. The Administrative Manual and Technical Standards are available to our Subgrantees and the general public on our website. www.housingnm.org 2. We are communicating with our Subgrantees on a regular basis referencing the necessary materials. This is either triggered by a question, conversation, or monitoring. 3. Technical Committee calls are held on a monthly basis. During these calls, the Technical Standards and SWS are discussed with challenges, successes, and innovative

approaches to compliance. The attendees for these meetings are the energy auditors, program managers, and Quality Control Inspectors and the Santa Fe Community College.

4. During the RFP process, the links to the manuals are provided with the RFP package. 5. Subgrantee use of the documents are verified through the monitoring process.

All of the existing contracts that the NM Energy $mart Program has with our Subgrantees references compliance to the SWS. The contracts contain the following statement:

Subgrantees will be responsible for providing services as required by the Department of Energy (DOE) Standard Work Specifications (SWS). The SWS requirements for Single family homes & Manufactured housing can be accessed at https://sws.nrel.gov. If these specifications are not followed, payment will not be made.

Our Subgrantees have also incorporated language in their contracts with their subcontractors requiring compliance to the SWS. All of the contracts between any entities using WAP funds have signatures from both parties verifying acknowledgement of the aforementioned expectations.

V.5.2 Energy Audit Procedures

Audit Procedures and Dates Most Recently Approved by DOE

SingleFamily : NEAT, Approved in October 2013.

Manufactured MHEA, Approved in October 2013.





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Housing :

MultiFamily : MFA does not have an approved MF audit. Before working on a multifamily property, MFA works with DOE Project Officers for each MF to determine cost effective, energy efficiency upgrades for eligible units using TREAT audits.

Comments

We will be submitting for approval the use of TREAT as a multifamily auditing software. This section will detail the minimum required diagnostic testing to be completed on each weatherized home. It is recommended that the energy auditor responsible for the home complete any additional diagnostics necessary to ensure the effectiveness of weatherization measures and the safety of the occupants.

The following diagnostics shall be done prior to the installation of any weatherization measure: Combustion Safety Assessment Follows NM Technical Standards, BPI Testing Standards, and Standard Work Specification Requirements 1. Thermal Bypass Assessment 2. Thermal Envelope Assessment

a. Insulation inspection, location, quantity, and quality

b. Blower Door air barrier assessment

i. Leakage from connected or “tuckunder” garage

ii. Leakage from basement or crawlspace

iii. Leakage from attic space

iv. Leakage from any space containing possible contaminant

3. ForcedAir Distribution System Assessment a. Visual duct inspection

b. Dominant Duct leakage test

c. Pressure Pan Testing

d. System balance assessment

4. Indoor airquality assessment

a. Identify potential contaminant sources

b. Exhaust fan flow tests

c. ASHRAE 62.22013 Minimum Ventilation

In the event that potentially dangerous friable materials (e.g. Leadbased paint dust, disturbed asbestos, or hazardous organic materials) may become airborne due to depressurization testing, any testing requiring the use of a blower door may be omitted. Such conditions must be documented including photographs, and included in the unit file. For the purposes of energy auditing and airsealing specification, the energy auditor may assume an initial envelope leakage rate of up to 200% of the Minimum Ventilation Rate (CFM50) as calculated in accordance with the current airsealing standard (ASHRAE 62.22013).

To ensure eligible occupants of multifamily housing will receive cost effective weatherization services, each weatherized unit will have a computerized energy audit which complies with 10 CFR 440.21(b) completed prior to the installation of any weatherization measures. This energy audit will be included in each unit file. For singlefamily units, a NEAT audit will be completed. For mobile home units, a MHEA audit will be completed. Multifamily units may be audited using TREAT, or with prior written permission, a NEAT audit may be completed. Prior to multifamily audit approval, we will stay below the 20% threshold. Our system has been developed to streamline the process of communication between MFA, multifamily owners, Subgrantees, and other necessary parties. Our field assessment methods and modeling audit procedures are being refined and tracked so they can be used for multiprotocol approval in this program year. Until that time, we understand the necessary information required to have projects approved on a casebycase basis.





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V.5.3 Final Inspection

No Subgrantee may report a dwelling as having been weatherized until all weatherization materials identified for installation at said dwelling have been installed and the Subgrantee, or authorized representative, has performed a final inspection(s) of said dwelling, including any mechanical work performed, and certified that the work has been completed in a workmanlike manner and in accordance with the priority determined by the audit procedures required by 10 CFR 440.21. All Subgrantee's final inspections will continue to be performed by a certified Quality Control Inspector (QCI). As of the time of this application, our Subgrantees all have certified QCI on staff. There are currently plans to expand the number of QCI Inspector in each agency as well as continued Tier 1 education for multifamily QCI for the existing individuals that hold those certifications.

The Subgrantee must verify that all weatherization materials identified for installation at the particular dwelling have been installed in a workmanlike manner and in accordance with the priority determined by the auditing procedure as required by 10 CFR 440.21 prior to reporting the completed unit. Said verification must include, at a minimum, the following verifications and tests:

1) All weatherization measures installed by agency’s crew(s)

2) All mechanical work performed, including verification of new equipment size and rating

3) All weatherization measures installed by outside contractors

4) CAZ Depressurization Check (BPI Protocol)

5) PostRetrofit Blower Door Depressurization Test, Zone Pressure Diagnostics (See Energy Audit Section for more detail)

a. Minimum Ventilation Compliance Verification

6) If Ductsealing was performed:

a. Dominant Duct Leakage Check

b. Pressure Pan Testing

c. System Balance Testing (maximum 3pa pressurization) 7) If Mechanical Ventilation has been installed, then the inspector shall verify continuous and peak flow output of the unit through Flow Hood Testing. NOTE: For HRV/ERV installations which use the central supply and return ductwork, Flow Hood Tests may be required at all supply and return register locations. All mechanical ventilation must comply with ASHRAE 62.2 2013. 8) Client satisfaction interview and dialogue 9) Visual inspection of all work completed 10) Detailed and thorough file inspection

The final inspection for each weatherized unit shall be performed by a certified Subgrantee QCI, or a contracted MFA approved certified QCI within thirty (30) workingdays of the final day of weatherization work being completed by agency crew(s) or contractors. Any required rework shall be completed in a timely manner, and must be verified by the original inspector.

In the event an energy auditor also needs to inspect the units due to the QCI requirement, MFA's Green Initiatives Technical Manager will inspect 10% of the completed units for that Subgrantee.

Note: The final inspector may perform minor adjustments to previously installed retrofits in order to attain satisfactory inspection results. Such adjustments must not exceed one (1) working hour per unit, and will not be considered a “weatherization retrofit” as noted above.

Once completed, Subgrantees must upload detailed information on each measure installed in the unit, including estimated & actual cost, energy savings and SIR. During the invoicing process, MFA Green Initiatives Technical Manager reviews the information on the units to determine the accuracy and technical implications of the data. Disciplinary actions for inadequate inspection processes are outlined in the attached Technical Standards and determined by 100% desk monitoring in addition to the required 5% to 10% field monitoring. Attached are final inspection forms, final diagnostic testing forms, and technical field monitoring forms.

V.6 Weatherization Analysis of Effectiveness





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MFA qualified staff, our inhouse online reporting system and the NM Energy$mart Academy provide longterm stability of the program. The Academy, developed in partnership with Santa Fe Community College, has earned a growing reputation as one of the premier training centers in the Weatherization Assistance Program. The Academy is IREC accredited in all four training job categories. MFA and our partners use these pieces to enhance communication and target resources where they are needed. Enhanced communication that the systems enable will remain in place going forward and will be used to help align with the announced DOE program requirements. In order to assess effectiveness, the NM Energy$mart Online System (System) captures the unit production data on a monthly basis. The completed unit data is captured for each agency and shows the projected energy savings in MMBTUs for each auditor in the agency. The System also shows the frequency with which each agency and auditor installs individual measures. The System also allows MFA to assess each Agency’s performance in a number of areas. The Systemlevel assessment allows MFA to select individual units for inspection. A separate unit inspection database collects information from inspected units. Monitoring data follows the path of information sharing that occurs through the online system.

MFA uses the System to conduct a 100% desk audit of all units completed prior to paying Subgrantee invoices. Measures installed on each home are compared to determine the relationship between estimated costs and actual costs. SIR and projected energy savings are tracked for each measure and for the unit as a whole. For some measures, more detailed information is collected, including R values of added insulation, Manual J calculations of new heating systems and air reductions relative to the initial blower door reading, air sealing target and the achieved reduction. During the MFA unit inspection process of completed units, the techniques used to achieve such reductions and the efficacy of installation methods for all measures is observed and any concerns or findings noted.

MFA provides the Subgrantee information on production, energy savings and measures install during monitoring visits and during peer exchange meetings. During these meetings, the System enables the agency with the most production and the most energy savings to attain status relative to their peers. In addition, the data generated by the System, or during Technical Monitoring and Unit Inspections stimulates dialogue between agency management, MFA's Green Intitiatives Technical Manager and the NM Energy$mart Academy Training Academy. Stakeholders can quickly determine the need for additional training. Due to the specific nature of the System’s reporting capability, specific training can be directed at specific auditors, inspectors and/or weatherization crews in order to resolve deficiencies in their skill set. The first is a monthly report that is sent out to of the energy auditors detailing MMBTU savings, client monetary savings as average and total numbers. This will enable the team to see how they compare with others and the national number of 29.3 MMBTUs per home. The second component is the practice of comparing energy auditing estimates with utility bill usage. This helps the team realize how accurate their models are in comparison to actual usage and helps to spawn training where needed. In the event Subgrantees fail final inspections; they are given the opportunity to remedy the problem within a reasonable time period. This rework is not eligible for reimbursement. The home may be reinspected by MFA’s QCI, depending on the nature of the failure. If it is a repeated problem, the training center is notified of the area of weakness and modifies the classes or additional classes are scheduled in extreme cases.

When a Subgrantee has management findings or concerns, the Subgrantee is asked to explain how they will improve. This may entail updating their policies and procedures, closer monitoring by MFA, or Tier 2 training to help the Subgrantee understand how the problem occurred and how to prevent it.

The costs of measures are reviewed on a monthly basis prior to invoices being processed to compare with market costs of those particular measures. If something appears to be high, a detailed explanation is requested, or the agency’s procurement may be examined for that item.

Continuous progress and improvement is the goal of the combined training and monitoring programs. Through the Tier 1 training, staff continues to be cross trained to widen the capabilities, in addition to ensuring the existing staff understands the basics of the program on the most fundamental levels. Technical monitoring and regular conversation helps determine Tier 2 training needs or additional Tier 1 needs.

V.7 Health and Safety

See attached Health and Safety Plan.

V.8 Program Management

V.8.1 Overview and Organization

The New Mexico Mortgage Finance Authority (MFA) was created by the New Mexico State Legislature in 1975 as a statewide government "enterprise" to provide financing for affordable housing to medium and lowincome persons and receives no money from the state to operate. MFA is governed by a board of seven members. Four members are appointed by the Governor and three members serve by virtue of their state office: the State Attorney General, the Lt. Governor and the New Mexico State Treasurer. The Chairman of the Board is appointed by the Governor. Rules and regulations formulated by the MFA are approved by a Legislative Oversight Committee of the State Legislature. The committee is comprised of eighteen members. By Executive Order 9701, the State Governor transferred all federally funded housing programs to MFA on January 14, 1997. The Weatherization Assistance Program (WAP) was included in this transfer. Consequently, MFA took over the administration of the WAP during the ongoing plan for 199697. Shortly thereafter, MFA staff produced its first plan (199798). MFA does not administer the State Energy Plan nor LIHEAP.

MFA has assigned significant managerial resources to the Weatherization Assistance Program to ensure its successful administration. A list of MFA personnel with direct WAP responsibilities is provided here. MFA has integrated WAP as a core activity throughout its organization; e.g. Information Technology, Legal, Planning, Human Resources. Thus the whole organization is available to act on WAP activities and issues. Weatherization Program and Support Staff: Rose BacaQuesada is the Director of Community Development and she is responsible for the successful implementation of the weatherization program. She provides direction to staff and promotes the weatherization efforts externally. Her oversight includes directing the activities and acceptable performance of the weatherization Subgrantees and ensures





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that MFA and Subgrantees are in compliance with all regulatory and contractual requirements of the program. She ensures the monitoring of Subgrantees is in compliance with their contracted programs in accordance with regulations outlined in federal/state contractual agreements and MFA’s Compliance Manuals. Ms. BacaQuesada works with staff in assisting the efforts to build their capacity through training and providing technical assistance on the program development. Ms. BacaQuesada also oversees the efforts to increase funding for the program. Amy Gutierrez has been the Program Manager for the Weatherization Program since 2016. She came to the position with 20 years of management experience with a concentration in contracts, budgets and finance. She is responsible for overall program direction and supervision of the program, leverage efforts, coordination with grantee staff; and the overall management of Subgrantees. Troy Cucchiara is the Green Initiative Manager and is responsible for the technical aspects of the program which include training and technical assistance and health and safety issues. Troy is responsible for the NM Energy$mart Program's compliance with all DOE technical requirements.His qualifications include 10 years of field experience and he holds certificates for several areas in the field of weatherization including QCI and MultiFamily QCI Certification. His responsibilities include 5.0% to 10% of file and onsite unit inspections in addition to technical monitoring. The Program Manager and the Green Initiative Manager will work closely together to monitor Subgrantees' activities. They will conduct a minimum of one financial and operations monitoring visit and one technical monitoring visit per year for each agency. In addition, the team conducts 100% of desk monitoring for each invoice and unit through our online system for all funding sources. A prescribed monitoring tool is used for all monitoring visits. The team provides training and technical assistance to our Subgrantees as needed throughout the program year. Controller and Accountants: The Controller and five additional accountants are responsible for reviewing Subgrantee monthly reports, preparing reimbursements, and maintaining all required financial records to account for Grantee and Subgrantee expenditures and balances. They will also be responsible for Subgrantee financial management and quarterly reporting to DOE. Administrative Support: The Administrative Support staff provides Human Resources, Office Management, and Marketing and Information Technology support to weatherization staff necessary to carry out the functions of the weatherization program. MFA will comply with the record keeping requirements prescribed on section 10 CFR 440.24, and with the reporting requirements on section 10 CFR 440.25. Managers and Staff: The Senior Managers and MFA Staff include seven people who will be responsible for the successful implementation of the program. They will provide direction to staff and promote the weatherization efforts externally.

V.8.2 Administrative Expenditure Limits

MFA will not be requesting additional admin funds for our Subgrantees as both of them exceed the $350,000 threshold.

V.8.3 Monitoring Activities

Monitoring Approach

MFA assists its Subgrantees with their efforts to resolve problems encountered in the administration and operation of the NM Energy$mart Program and to ensure compliance with all applicable Federal and State laws, rules, and regulations. To achieve this goal, Amy Gutierrez, the Program Manager will conduct the programmatic monitoring, and Troy Cucchiara the QCI Technical Manager will conduct the technical monitoring. $2,888 of the training and technical assistance funds will be used for monitoring purposes. The primary areas of oversight include:

l General Organization l Reporting l Rental Property l Procurement Procedures for Vehicles, Equipment and Materials l Current Contract(s) and Budget(s) l External Audit Procedures l Fiscal Operations l Financial Management Controls l Internal Weatherization Processes l Technical Operation l Complete Intake Files l Quality Workmanship l SWS Compliance

Program staff coordinates all activities and provides clear and concise direction to comply with the applicable standards and regulations. Staff conducts field monitoring of Subgrantee financial activities including financial audits, production and reporting requirements. Program staff also assists Subgrantees to improve operations through training and





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technical assistance to correct noted problem areas. In addition to the staff that conducts the monitoring, MFA's Accounting Department and Internal Auditor are available when needed to review Subgrantee financial operations.

At a minimum, the staff conducts one onsite programmatic monitoring visit and one onsite technical monitoring visit each year. A comprehensive monitoring tool is used as part of a thorough review of each Subgrantee. If necessary, a followup monitoring visit will be conducted to verify that corrective action has been initiated or completed. Through our online reporting system, for a more thorough review, the staff conducts monthly spot checks of work done in completed units as well as financial reporting.

Staff will perform an onsite monitoring visit to SW Regional Housing and Central NM Housing Corporation in the OctoberNovember 2016 timeframe. In addition to the onsite programmatic and technical monitoring visits. In addition to the monitoring, MFA staff has developed their own QCI inspection policies. Troy Cucchiara will perform certified QCI reviews of client files and inspect the corresponding homes of 5% to 10%. This will occur on a continual basis to ensure that SWS is being followed and the quality work plan is being managed properly. In the event quality is not up to standards training will be provided immediately to correct the issues. MFA also requires Subgrantees be audited in accordance with section 10 CFR 440.23(d). For program year 2016/2017, only one of the NM Energy$mart Subgrantees met the 2 CFR 200 threshold amount of $750,000.00. To complete the approval of the annual external financial audits, the first layer of review is by the Program Manager. The second layer of review and approval is either done by the Director of MFA's Community Development Department or MFA’s Controller.

As a follow up to each visit, MFA staff provides the Subgrantee with a written report that describes noncompliance or problem areas and best practices. The report is submitted to the Subgrantee within 30 working days of the visit and the Subgrantee is required to respond within a reasonable period of time to MFA with a Corrective Action Plan as a formal letter that addresses any findings, concerns, and recommendations. This is tracked by an online tracking system that is referred to as Tracker. Follow up communication through phone conversations, email, and necessary onsite visits is continual until the problem is resolved. The Subgrantee is made aware of the monitoring instrument used for the visits, since it is accountable for implementation of the program in accordance with the standards and procedures. In all instances, MFA is committed to working closely with Subgrantee to succeed. However, if after numerous attempts have been made towards compliance or if a Subgrantee is either unwilling or unable to resolve a noncompliance issue, MFA would start to work toward defunding the agency.

When a problem is resolved to the mutual satisfaction of the Subgrantee and MFA, MFA staff will send a followup letter to close the finding.

If there is any suspicion of mismanagement, fraud, waste or abuse or if any significant problems are found, MFA will immediately notify the Inspector General and DOE’s Golden Office, in Denver CO.

The MFA will submit annual reports to DOE's Golden Office describing its monitoring efforts to date. The report will include at least the following:

l Number of monitoring visits to each Subgrantee; l General nature of the findings; l A discussion of significant corrective actions;

MFA will also have all monitoring reports available, upon request, for DOE inspection;

The MFA will summarize and review its monitoring activities and findings for internal assessment of Subgrantee needs, strengths and weaknesses and annual planning. This data will be incorporated in the New Mexico Consolidated Plan and Annual Performance report.

Credentials

MFA staff has substantial experience in monitoring NM Energy$mart and other Federal and State programs. The NM Energy$mart Program Manager, Amy Gutierrez, and the Green Initiatives Manger Troy Cucchiara are responsible for all NM Energy$mart related monitoring. MFA staff attends Weatherization and related training to maintain current knowledge, practices and regulations. Amy Gutierrez, NM Energy$mart Program Manager. Ms. Gutierrez joined the MFA in 2016 as a Program Manager of the NM Energy$mart Weatherization Assistance Program. Prior to joining MFA, she has 20 years of management experience working as a Billing Administrator in 2 law firms. During her employment with each law firm she managed contracts, budgets and all financial business aspects of each firm. Troy Cucchiara is the Green Initiatives Manager and QCI for the New Mexico Mortgage Finance Authority and is the technical manager for the NM Energy$mart Program. Troy has been involved with the home retrofit industry for 16 years and has been an integral part of the Weatherization Assistance Program for different agencies since 2006. Troy has earned numerous certifications including Commercial Energy Auditor, Water Specialist IV, CBI Thermographer, Lead Certified Renovator, Lead Dust Sampling Technician, AHERA, OSHA 30, Building Analyst, Building Envelope, and Home Energy Professional Quality Control Inspector, and MultiFamily QCI. Troy has been a BPI Proctor for the Santa Fe Community College. Troy’s technical experience includes energy auditing, home inspections, program management, water treatment design, inventory control, public speaking, staff training, and client education. Levels of Agency Performance

High Performance or Exemplary Agencies

By way of monitoring review, an agency has demonstrated performance standards that meet or exceed standards that are commonly observed in the following areas:





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Program operations:

No Health and Safety findings are identified in previous monitoring report.

No procedural findings related to program rules, and policies and procedures.

Fiscal:

No annual program specific audit findings.

No material findings in the agency external audit.

Technical:

Provide comprehensive service utilizing the latest building science and renewable technology, in a costeffective manner in accordance with NM Energy$mart Weatherization Assistance Program guidelines.

Production:

In general an agency’s production is high relative to funding.

Qualified staff:

Agency will receive higher credit for exemplary status with NM Energy$mart Training Academy staff through participation in the NM Energy$mart Training Plan.

Risk:

No “atrisk” elements are found in major categories for an agency.

If the above is met a final visit may be made by an MFA weatherization coordinator for final confirmation of achievement.

Stable Agency Performance:

Typically, the frequency of monitoring will be (1) fiscal/operational visit and (1) technical visit per year by NM Energy$mart staff. The need for additional visits within the same year will be determined by the agency’s program funding and production level, and the timely responses to any outstanding monitoring findings. MFA expects every agency to meet these standards of performance:

Wellestablished systems for program administration and operations, with no more than one finding in the following areas:

Compliance with major program requirements, such as, leadbased paint procedures, cost allocation.

l No more than one program specific finding in the annual monitoring visit. l No more than one fiscal specific finding in the annual monitoring visit. l Staff is well trained in performance of specific job duties. l Agency has complete and organized files. l Evidence of prudent decision making as to the use of program resources: l Complete scopes of work. l NEAT/MHEA/TREAT documentation is current and consistent with billing. l Staff is proficient in the use of auditing software. l Evidence that NEAT/MHEA/TREAT is used with actual and true pre audit data (including costs). l Evidence that NEAT/MHEA/TREAT is used effectively and thoughtfully in determining costeffective measures. l Staff and contractors have demonstrated proficiency in technical applications, including diagnostics. l Agency has a minimal number of procedural findings (as related to programs rules, policies and procedures) and health and safety findings from previous monitoring report. l Agency complies with OSHA and MFA safety rules, as applicable. l The agency maintains a professional working relationship with MFA. l Past corrections are made and reported in a timely manner. l Participate in NM Energy$mart Peer Exchange meetings. l No “atrisk” elements are found in major categories for an agency.

Vulnerable Agency Performance

If an agencies performance is deficient in some or all of the following levels of performance MFA will prepare a plan to help the agency clear the deficiencies and will provide additional monitoring within the same year:





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Has a wellestablished systems for program administration and operations, with no more than one finding in the following areas:

l Compliance with major program requirements, such as, leadbased paint procedures, cost allocation plan/indirect rate, required contractor information. l No more than one program specific finding in the annual monitoring visit. l No more than one fiscal specific finding in the annual monitoring visit. Staff is well trained in performance of specific job duties. l Lack of prudent decision making as to use of program resources. l Complete scopes of work. l NM Energy$mart online reporting is current and consistent with billing. l Staff is proficient in its use of the NM Energy$mart online payment system. l Evidence of the NM Energy$mart online payment system is used with actual and true prepost data (including costs). l Evidence of the NM Energy$mart online payment system is used effectively and thoughtfully in determining costeffective measures. l Staff and contractors have not demonstrated proficiency in technical applications, including diagnostics. l Agency has a number of and severity of procedural findings (as related to programs rules, policies and procedures) and health and safety findings from previous monitoring

report. l Agency does not comply with OSHA and MFA safety rules, as applicable. l The agency does not maintain a professional working relationship with MFA. l Past corrections were not made and reported in a timely manner. l Agency does not participate in NM Energy$mart Exchange meetings. l Agency does not report as outlined in program manual. l Several “atrisk” elements are found in major categories for an agency.

AtRisk Agency Performance

Atrisk agencies may be identified as a result of a variety of factors that may include:

l The agency’s probation, i.e. an agency’s first year with the program. l There is evidence of significant administrative or program substandard performance; for example, repetitive pattern of findings, failure to have copies of permits on file or

lack of compliance with historical preservation rules. l The agency is not in compliance with program policies, procedures and specifications. l The agency has repeated health and safety findings. l Agency staff members/crew has deficient technical skills. l There has been a change in key staff. l There has been a change in key weatherization Subgrantees. l The agency has deficient scopes of work (work plan is insufficient). l The agency has program specific audit findings. l The agency has fiscal specific audit findings. l The agency files are incomplete or disorganized. l The agency staff is unresponsive to MFA requests and deadlines. For example, the agency consistently fails to provide monthly reports and contract closeouts in a timely

manner. l Agency production is low relative to funding.

Atrisk agencies will be monitored no less than twice annually. Other factors in the frequency of monitoring visits may be based upon the requirements of specific funding sources.

V.8.4 Training and Technical Assistance Approach and Activities

Objective

Through Tier 1 and Tier 2 training, MFA’s Training and Technical Assistance program will provide the weatherization staff on the Grantee and Subgrantee levels the skills needed on a regular basis to ensure a solid weatherization program with best practices and high quality workmanship.

Historically, the training has addressed the Weatherization Assistance Program from two perspectives, technical weatherization work and program management. This perspective continues to maintain a path improvement for the Program and resolve emergent issues that rise through monitoring and dialogue with Subgrantees and to prepare for Department of Energy program changes.

Tier 1 and Tier 2 Plans, Maintaining Certification

The majority of training will be occurring in the Tier 1 category as outlined in this plan. The mandatory Tier 1 training serves numerous accomplishments including review of basic JTA material for certified individuals, updates on changes, cross training to increase capacity, and maintaining workforce credentials. Maintaining QCI certification is of particular





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importance as it enables compliance with 154.

Financial Management Control

Although MFA allows and encourages Subgrantees to budget for program management training and attend DOE conferences, the Tier 1 training is mandatory and prescheduled. Tier 2 training, the remaining budget amount from the required Tier 1 includes prescriptive training resulting from monitoring, financial classes, OMB classes, conferences, and other program management training.

The T and TA funding is closely monitored. Prior to attending a training of any kind, the Subgrantee is required to send an approval request to MFA that includes tuition and all associated costs of the training.

Regular Comprehensive Training, Feedback from DOE Visits

The scheduled training is determined by existing number of staff in each of the four categories, the desired number in each category, monitoring results, and unit inspections. The training schedule may be changed to reflect feedback from the DOE Project Officer monitoring visits. Contractual requirements bind Subgrantees to the training schedule, and mandate MFA allot and approve sufficient T &TA funds to cover the cost of the entire training cascade.

This approach will continue to address both core training to expand workforce capacity, advanced training to develop further specialization and leadership within the workforce, in addition to answering questions related to New Mexico’s unique housing stock and climate regions. The program embraces MFA and Subgrantee staff, and focuses on incorporating state technical standards as well as continued compliance with regulatory standards.

This training program builds on increased understanding and utilization of building science to deliver greater energy savings to client homes and ensure homes throughout the state consistently have access to the range of weatherization measures to realize maximum savings.

Training Activities

In order to standardize weatherization practices across the state and through all New Mexico’s Subgrantees, DOE Standard Work Specifications (SWS) have been developed. These SWS's describing the weatherization process and how specific weatherization measures will be performed, have been incorporated in the customized curriculum to be made available through the IREC Accredited Weatherization Training Center (Academy) and trainers. Implementation of the SWS ensures more uniform energy savings for clients and reduced production costs for the program.

MFA works with the Academy to provide weatherization training. The Academy works with MFA and Subgrantees to develop a comprehensive training calendar each year. In addition to specific course modules, the Academy has the capability of providing Tier 2 training and even additional Tier 1 training as needed in order to resolve emergent issues from MFA or DOE monitoring.

The schedule minimizes production downtime and allows sufficient opportunities for Subgrantees to complete mandatory trainings in a timely manner. The Academy provides both classroom space and a wellequipped lab to optimize skills acquisition across all training levels through a combination of lecture, hands on demonstration and field training. The Training Academy is fully equipped with a mobile rig, a diagnostic cabin, and demonstration units for insulation, attic air sealing, mobile home training, combustion appliances and an online training platform. Access to an expanded staff of specialists will allow additional training in OSHA, Lead Renovator/Dust Sampling, and HVAC.

MFA supported the Academy’s IREC accreditation for all four weatherization training programs: Installer, Crew Chief, Auditor and Quality Control Inspector. The structured training cascade, coupled with testing will provide the opportunity for certification of job categories. Attendance of the following training by the Subgrantee selected staff is mandatory:

Retrofit Installer Technician

The Retrofit Installer Technician training is a 2part series of courses focused on developing the skills and knowledge of current and potential Weatherization Installers. Before attending the inperson class, all attendees will have completed the 710 hour Retrofit Installer online class offered by the New Mexico Energy $mart Academy.

The class covers introduction to weatherization, basic math, health and safety issues, tools and maintenance, materials identification, local construction

details, basic blower door, windows and doors, work scope/inventory/equipment, house as a system, basic building science, insulation and air sealing, venting and moisture, combustion safety.

The inperson class offers five days of building science review, handson lab exercises, and inthefield work orderbased weatherization activities to improve the quality and performance of a home. The class has been designed to reinforce and extend the knowledge of building science and tools and techniques for insulating, airsealing buildings, reducing baseload, and drywall repair, and communication skills.

With a focus on performance, each student is responsible for the appropriate use of insulation blowing machines, blower doors, duct blasters, pressure pans, airsealing props, installing baseload measures, windows, doors and bath fans, drywall repair, and combustion appliance safety testing for draft and carbon monoxide.

By attending this course, the Installer will gain a deeper understanding about weatherization work scope, job planning, and site management. Successful completion of this course plus OSHA 10, and Lead RRP classes, makes the student eligible for Retrofit Installer Technician certification.

Crew Leader (Steps 1 through 4)

Crew Leader covers the complete Installer training, OSHA 30, RRP, Lead Safe Weatherization, First aid and CPR, role of the crew chief, effective crew management, inventory, advanced materials and maintenance, codes, adult learning strategies, hands on diagnostics (blower door, worst case depressurization, pressure pan, basic zone pressure diagnostics), reading an audit, developing a work scope, and additional diagnostics as needed.





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These courses focus on developing the skills necessary to be an effective Crew Leader. Step 4 offers three days of theory, roleplaying, and handson field exercises to prepare Crew Leaders for success in crew management, organization, inventory control, safety, understanding work orders, and quality control. In addition, participants will be discussing building codes and the State Standards for installing weatherization measures in New Mexico. Completion of this course qualifies participants for certification as a Crew Leader.

Energy Auditor

Energy Auditor series of classes prepare candidates for the BPI Home Energy Professional Energy Auditor Certification exams. This course focuses on developing the skills necessary to be an effective Energy Auditor consisting of theory, roleplaying, and handson field exercises to prepare Energy Auditors for success in performing a comprehensive energy audit. The course covers introduction to weatherization and auditing, health and safety issues specific to weatherization, construction details, building science, equipment, basic math,code compliance, data gathering, HVAC for auditors, NEAT and MHEA, OSHA30, RRP, Lead Safe Weatherization, AHERA, ASHRAE 62.22013, Communication skills, Advanced NEAT and MHEA.

Diagnostic tests included:

l Blower door & pressure differential

l Duct pressurization & pressure pan

l Ventilation flan flow rate

l Combustion safety (gas leaks, worsecase CAZ, spillage, draft, CO)

l HVAC assessment, temperature rise, steady state efficiency

QCI

Quality Control Inspector will cover Introduction to weatherization and auditing, health and safety issues specific to weatherization, construction details, introduction to building science, equipment, math basics, blower door and pressure diagnostics, worst case combustion testing/combustion safety, purpose of monitoring and inspecting, interpreting diagnostics, understanding and interpreting the NM technical standards.

Compliance With Mandatory Tier 1 Training While the Academy maintains a record of trainings attended and credentials obtained, each service provider is responsible for ensure that staff attend all required trainings for their job classification. MFA encourages Subgrantees to budget for initial training and training sufficient to maintain credentials. MFA monitors the Subgrantees for compliance. If a Subgrantee does not have sufficiently trained staff, including new staff, the agency must develop and implement a training plan sufficient to achieve compliance. MFA will monitor training milestones to help support the path toward compliance.

New Employment Training MFA encourages Subgrantees to hire certified staff from the network however, if that is not possible, MFA does not require Subgrantee staff to have certification prior to hiring. Each Subgrantee is required to have a Training Plan for each job position. Upon hire, the employee is required to complete the online training curriculum within the first 90 days of employment. In addition, Subgrantees must have an internal training/shadowing on the job mentoring plan. Each new staff member is responsible to attend and pass all the courses required for their job category within a year of being hired. MFA monitors to this requirement and if the employee is not within compliance they will not be allowed to work in the homes until the requirement is completed.

LeadSafe Weatherization

MFA will offer RRP and LeadSafe Weatherization training at least four times per year. All Subgrantees are required to be trained in LSW work practices and to attend the 8hour training. This training includes the curriculum developed by DOE. The LSW training is a combination of classroom exercises and demonstration of tools and materials. The focus is on the practical application of LSW work practices and the inclusion of required educational materials and appropriate documentation of LSW containment procedures in all client files. Further training in Dust Sampling will be provided for more advanced crew members.

Health and Safety

Health and safety is continuously assessed and discussed throughout the year during our monthly technical calls, and unit inspections. Dialogue also takes place on a weekly basis between the field staff and MFA’s technical manager with health and safety questions, comments or issues noticed from monthly reporting or day to day routine assessments. All of this communication can result in Tier 1 or 2 training that can be anything from structured classroom setting to “ride alongs” where the instructor actually accompanies the crew on an actual job site.

Job Safety

All Subgrantee field staff will be required to complete OSHA 10 training, and Crew Chiefs, Auditors and Inspectors will be required to complete OSHA 30. These courses will be construction safety courses configured to weatherization through use of Job Hazard Analysis and existing accident and injury logs of the Subgrantees.

Web Accessible Curriculum

The Online Weatherization Workforce Development Program, in English and Spanish, will serve as a gateway into classroom training by providing core knowledge necessary to succeed in more advanced trainings. This will ensure the Academy makes efficient use of trainers and facilities. Core content of the Program will be consistent with existing DOE weatherization training, customized to meet New Mexico needs in terms of climate, housing stock and policies.

Client Education

In tandem with a well trained workforce, a wellinformed consumer will help make best choices in maximizing effect of weatherization measures. Understanding measures to be





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implemented at a home is key to garnering homeowner and occupant cooperation during installation and afterward. Therefore, a Consumer Education module has been developed along with the Online Curriculum. This module will be available to consumers through a secondary web portal, and also through a DVD that can be left at homes. The Consumer Education module will also be available in both English and Spanish to reach the largest portion of New Mexico population.

The SWS has been thoroughly examined for all client education points. A list of all sections that specifically spell out what needs to be delivered to the clients has been given to the Subgrantees and the Subgrantee utilization of these topics are currently part of what monitoring and unit inspections include.

Training Needs Assessment Policy MFA closely communicates with Subgrantees on a consistent basis. In addition to the 5% to 10% quality control site visit and the annual onsite programmatic and technical monitoring, MFA is able to assess training needs very accurately. This is an ongoing process and communicated immediately to the Subgrantees when a training need is determined. NM Energy$mart Exchange Meetings

In addition to the Training Program, MFA will continue to meet with Subgrantees a minimum of three times per year to discuss emergent issues. This type of communication helps maintain consistency in the services provided throughout the state. Each of these meetings will serve a core group of the weatherization workforce, in addition to including a gathering of program directors to discuss the program. These meetings will include a Program Director round table and, when necessary, staff discussion covering a specific topic, including fiscal, administrative, technical intake and client education issues.

The NM Energy$mart program also has a Technical Committee which meets monthly. The committee is composed of lead technical weatherization staff from each of the Subgrantees, technical members of MFA’s Energy$mart staff and Santa Fe Community College. The purpose of the Technical Committee is to identify challenges and share best practice among the agencies. Future Program Requirements

In addition to following all WAP Program Notices, MFA staff stays in close contact with NASCSP, Energy Out West, and other industry experts. Information gathered from phone meetings, conferences, emails, and updates is regularly dispersed to the Subgrantees and the Training Center. If the industry changes or updates warrant a change in training or policies, that is implemented soon after communication or training has taken place.

Effectiveness of Energy Savings and NM Energy$mart On Line System

In order to assess effectiveness, the NM Energy$mart Online System (System) captures the unit production data on a monthly basis. The completed unit data is captured for each agency and shows the projected energy savings in MMBTUs for each auditor in the agency. This information is useful in that it can compare agency to agency, and auditor to auditor. Though the climatic conditions are vastly different from the northern part of the state to the southern, these comparisons can be helpful in determining weaknesses and individual training needs.

The System also shows the frequency with which each agency and auditor installs individual measures. The System also allows MFA to assess each Agency’s performance in a number of areas. The System level assessment allows MFA to select individual units for inspection. A separate Unit Inspection database collects information from inspected units. Monitoring data follows the path of information sharing that occurs through the online system. MFA shares this information during desk audits of invoices, during monitoring and during Peer Exchange meetings.

NM Energy$mart OnLine System In order to assess effectiveness, the NM Energy$mart Online System (System) captures the unit production data on a monthly basis. The completed unit data is captured for each agency and shows the projected energy savings in MMBTUs for each auditor in the agency. The System also shows the frequency with which each agency and auditor installs individual measures. The System also allows MFA to assess each Agency’s performance in a number of areas. The Systemlevel assessment allows MFA to select individual units for inspection. A separate Unit Inspection database collects information from inspected units. Monitoring data follows the path of information sharing that occurs through the online system. MFA shares this information during desk audits of invoices, during monitoring and during Peer Exchange meetings.

Weatherization Plus

MFA encourages Subgrantees to coordinate the weatherization assistance program with other MFA rehabilitation and Healthy Home programs. When applicable, this maximizes the level of assistance on eligible homes. MFA will offer Subgrantee's training necessary for them to participate in the coordination with builders, developers and Subgrantees for MFA’s rehabilitation program.

State Weatherization Program Manuals

New Mexico’s Program Manual is divided into three parts.

l The Administrative Programmatic Manual. The manual will be updated as rules, regulation and policies change. MFA staff encourages the Subgrantees to “first” go to the manual for guidance. If their questions are not answered through the manual we then request that they call the Program Manager as a “second” level of information. This will allow for consistence guidance across the state and will also provide needed feedback from our Subgrantees if information is missing or not clear in the manual.

l The SWS Field Guide, Deck of Cards, acts as our field guide. l NM Energy$mart Technical Standards outlines everything that is not associated to a specific measure which is addressed in the Deck of Cards.

In order to provide the Subgrantees with easy access to the current manuals, MFA has posted them on the MFA website.





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Community Education

MFA will continue advertising our program, conducting education and outreach in communities across New Mexico and participating in lowincome/energy efficiency policy groups.

MFA participates in the Lowincome Energy Efficiency Work Group, a collaboration of organizations interested in lowincome energy affordability issues. The group seeks to establish a reliable, recurring funding stream for Weatherization and LIHEAP activities. MFA’s continued membership ensures that this group advocates for low income energy conservation programs to include weatherization.

MFA Staff will continue to work to educate members of New Mexico’s Public Regulatory Commission (PRC) on the NM Energy$mart Program to support future utility funding.

All Subgrantees will continue distributing the required Lead Based Paint notice to all applicants. MFA will continue to require that program participants be asked to complete satisfaction forms after completion of measures.

Grantee Assessment

MFA has a technical and programmatic staff member assigned to the NM Energy$mart Program. While both employees remains in close, coordinated contact, the specialization allows each member of the team to pursue training and education sufficient to expand their understanding of the Program. The Technical Program Manager will attend trainings related to maintaining Quality Control Inspector Certification and broader trainings related to building science, program operations and DOE rules & regulations. Programmatic staff will attend trainings offered through NASCSP and DOE conferences.

V.9 Energy Crisis and Disaster Plan

Objective: The objective of the New Mexico disaster response plan is to implement response activities that ameliorate the effects of the disaster to affected lowincome persons with due consideration to the limited funds available during the program year.

Definition: A disaster is an event or development in the State declared by a Presidential or Gubernatorial order to be either a Federal or State emergency. Procedures: Declaration of an energy crisis enables a Subgrantee to place households affected by the crisis at the top of the weatherization waiting list. Subgrantee must follow WPN 127 and complete all allowed measures by the energy audit. Partial weatherization is not allowed. Once a QCI has approved the work, the crews can move to the next identified unit that qualifies. If at all possible, the Subgrantee should complete the emergency units within the current program year. If it is not possible, however, the state will work with the Subgrantee Agency to assure the work can be completed during the following program year.

The Subgrantees must maintain a list of the homes served during the crisis and provide the list of measures for each unit and the proposed date for full weatherization during invoice submission.

Criteria include:

1. Households must meet current income guidelines. 2. Priority will be given to elderly person, persons with disabilities, families with children, high residential energy users, and household with high energy burdens. 3. Priority will be determined through the program priority list for the particular disaster area. 4. Homes weatherized after September 30, 1994 can receive additional assistance under “Energy Crisis”. 5. Incidental repairs to an eligible dwelling will be allowed if the repairs are necessary to make the installation of weatherization materials effective. 6. Elimination of health and safety hazards will be allowed when it is necessary before the installation of weatherization materials.





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Tab 12

1 G:\Board Reports\Staff Actions\Staff Actions 2016

Staff Actions Requiring Notice to Board During the Period of April 1 - 30, 2016

Department and Program

Project Action Taken Comments

Housing Development – Primero Supportive Housing Pre-Development Grant

Faith & Justice Center Approval of a $55,642.05 pre-development grant for feasibility expenses of the Faith & Justice an proposed 60-unitsenior housing project in downtown Albuquerque

Approved by Policy Committee 4/5/16

Housing Development – Housing Trust Fund Loan Award

Domingo Housing Project

Approval of a loan award modification to correct the affordable unit mix as requested by applicant

Approved by Deputy Director of Programs, Isidoro Hernandez, 4/18/16

Housing Development – Primero Loan Award

Domingo Housing Project

Approval of a loan award modification to correct the affordable unit mix as requested by applicant

Approved by Deputy Director of Programs, Isidoro Hernandez, 4/18/16

CDD – Environmental Reviews

All Environmental Reviews

Approve MFA Internal Environmental Review Responsibilities

PC approved on 4/19/16

Servicing Dept. 2/28/2016 Quality Control Review

Approval of report issued by REDW. No findings.

Approved by Policy Committee 4/19/2016

New Mexico Mortgage Finance Authority 344 4th St. SW, Albuquerque, NM 87102 tel. 505.843.6880 toll free 800.444.6880 fax 505.243.3289 housingnm.org

MEMORANDUM TO: MFA Board of Directors

Through: N/A

FROM: Kathleen M. Sysak-Keeler DATE: April 28, 2016 SUBJECT: Single Family Mortgage Bonds 2016 Series A – Pricing Summary The 2016 Series A transaction is a combination new money and refunding bond issue which closed on April 27, 2016. The following is a summary of the bond sale: ~Structure: The bond issue is a $62.790 million tax-exempt traditional bond issue which provides for non-AMT serial and term bonds along with an AMT premium planned amortization class (“PAC”) bond. ~Marketing: Bonds were marketed to retail and institutional investors. New Mexico retail investors generated $2.0 million of in-state retail orders. However, retail interest was in the term bonds and not in the serial bonds due to the low interest rates. Institutional investors were very interested in the long serial bonds and the PAC bond. ~Use of Bond Proceeds: The bond issue is comprised of a new money portion and a refunding portion. The $40 million new money portion of the transaction is being used to originate new mortgage loans (the “new money portion”) and to roll forward a subsidy generated from prior bond issues which helped maintain competitive mortgage rates. The weighted average mortgage rates are as follows:

Program Government Conventional FIRST HOME 3.726% 4.143%

The $22.790 million refunding portion of the bond issue is being used to refund the 2006 Series D, 2006 Series E and 2006 Series F bond issues (the “refunding portion”).

Board of Directors Page 2 April 28, 2016 RE: 2016 Series A Pricing Summary

~Spread: The spread on the transaction is 1.123%. Spread is the difference between the mortgage yield and the bond yield. Maximum spread permitted by federal tax law is 1.125%. The net present value benefit of the transaction including the subsidy generated by the refunding is $2.2 million, or approximately 3.6% of the amount of the bond issue. ~Investment of Bond Proceeds: Funds from the new money portion of the bond issue are invested in Federated Government Obligations Fund Institutional Shares through Zions Bank, the General Indenture Trustee. Funds from the refunding money portion of the bond issue are invested in US Treasury securities through Zions Bank, the General Indenture Trustee, until June 30, 2016. On July 1, 2016 the funds will be used to call bonds from the 2006 Series D, 2006 Series E and 2006 Series F bond issues. The following Exhibit 1 contains a table summarizing more detailed information about the 2016 Series A bond issue along the 2015 Series E which was issued in December, 2015. Following Exhibit 1 is a comprehensive in-depth “Post-Sale Analysis” which was prepared by MFA’s Financial Advisor, CSG Advisors.

EXHIBIT 1

For Info Only For Info Only

2015A 2015E 2016ANew Money Taxable Refunding New Money &

Refunding

Tax-Exempt

Type of Structure Traditional Pass Through Traditional

1 Tax Exempt Bonds $35,000,000 n/a $40,000,000

Taxable Bonds n/a n/a n/a

Tax-Exempt Refunding Bonds n/a n/a 22,790,000

Taxable Refunding Bonds n/a $21,230,097 n/a

Total Amount of Bonds Issued $35,000,000 $21,230,097 $62,790,000

2 Bond Issue(s) Refunded n/a 2006A, B and C 2006D, E and F

3

($4.0

million)/$648,000 None/$1,529,209

$2.1 million/$7.5

million/$2.2 million

4 Original Bond Ratings:

Standard & Poor's None None None

Moody's Aaa Aaa Aaa

5 Pricing Date(s) 2/19/2015 11/17/2015 3/14-15/16

6 Bond Closing Date 3/26/2015 12/10/2015 4/27/2016

7 Serial Bond Maturities

AMT None None None

Non-AMT 3/1/16-9/1/26 None 3/1/17 - 9/1/26

Taxable None None None

8 Term Bond Maturities 9/1/30, 9/1/35, 9/1/2037 9/1/27, 9/1/31,

9/1/40, 9/1/45 9/1/36, 9/1/41,

9/1/46

9 Premium PAC Maturity 3/1/45 None 3/1/46

10 Split Between FIRST HOME

Government and Conventional Loans

Government n/a n/a 91%

Conventional n/a n/a 9%

Mortgage$aver Plus/Zero 88% n/a n/a

Mortgage$aver 12% n/a n/a

11 Weighted Average Loan Rates+

FIRST HOME - Government n/a n/a 3.726%

FIRST HOME - Conventional n/a n/a 4.143%

Mortgage$aver Zero 3.68%/4.11% n/a n/a

Mortgage$aver Zero 3.45%/3.75% n/a n/a

12 10-Year Treasury Rate at Pricing 2.07% 2.25% 1.97%

13 GIC Rates**

Acquisition Fund Rate n/a n/a n/a

Float Fund Rate n/a n/a n/a

14 MFA Contribution at Closing

Cost of Issuance (COI) $405,000 $280,000 $640,000

COI as a % of Bonds Issued 1.16% 1.32% 1.02%

Negative Arbitrage Deposit $400,000 n/a $300,000

15 Yield Spread 1.124% n/a 1.123%

16 Administrative Fee (to MFA) 0.250% 2.439% 0.250%

17 Bond Allocation System Followed*** Yes Yes Yes

*Subsidy was generated by a prior bond issue.

+Weighted average rate of loans in the pipeline.

**The Guaranteed Investment Contract is competitively bid.

***The bond allocation system that is followed is common in the investment banking industry and is as follows:

The lead manager keeps track of when the orders are received which is referred to as an order flow tracking system.

The bond allocation system also dictates that Bonds are awarded to managers prior to any selling group members

even though group members may have entered orders first. In-state retail orders receive first priority, followed by

orders for the benefit of the group which are allocated by management fee percentage; next are net designated orders

placed through the senior manager where the buyer designates the sales credit to specific managers, and finally,

member orders receive the lowest priority.

MFA Subsidy*/Benefit-(Subsidy

created)/ Present Value Economic

Benefit

New Mexico Mortgage Finance AuthoritySummary of 2016 Bond Issue Characteristics

$62,790,000 New Mexico Mortgage Finance Authority

Single Family Mortgage Program Class I Bonds 2016 Series A-1 (Non-AMT) $40,000,000

2016 Series A-2 (AMT) $22,790,000

POST-SALE ANALYSIS

KEY RESULTS FOR MFA Purpose. This transaction is a traditional single-family bond issue with semi-annual interest and principal, though bonds are redeemed quarterly. Its purpose, like similar prior issues and monthly pass-through bond issues is to finance new loan production at as close to the maximum spread permitted by the IRS as possible. Additionally, this transaction was issued so as to reallocate zero participation loans from prior series (2015 Series A) within the required time of 18 months for which to reallocate loans. Approach and Strategy. Over the past year, MFA has generally used monthly pass-through bonds to refund prior bond issues at lower rates. It has used traditional bond structures—such as 2015 Series A last year and now 2016 Series A—to finance new production (and refund older bonds in conjunction with the new issue). An important reason for using this traditional bond structure is to retain and utilize its zero participation interest subsidies; MFA must, on a regular basis, include these zero participations in a traditional bond issue (since they cannot effectively be stored and later reallocated with pass-through bonds). The last time this was done was in February 2015. Using this traditional structure on 2016 Series A is therefore important to MFA’s ongoing financing program. By carrying forward the zero participations, MFA is able to help protect itself against rate risk on its loan pipeline. From a strategic point of view, MFA has been:

1. Reserving loans each week taking into account current expected rates on a traditional structure, 2. Issuing bonds when those loans are packaged into mortgage-backed securities several months

later, and 3. Protecting itself against rates rising before bonds are sold, by using zero participation interest

subsidies it has earned from past transactions. Primary Objectives. MFA therefore has three primary objectives:

1. Finance existing production at the lowest yield possible,

2. Use as few of MFA’s $2.1 million of zero participations (prior to issuing 2016A) as possible to achieve full spread, thus preserving more zero participations for future production, and

3. Raise premium so as to purchase the MBS from the servicer at 101%, to fund cash flow lag, and to fund a portion of the negative arbitrage and costs of issuance of the transaction.

Structure. The 2016 Series A bonds:

Included $40,000,000 in 2016 Series A-1 to finance new pipeline production and provide sufficient proceeds to use and store zero participations,

Included $22,790,000 under 2016 Series A-2 to refund prior MFA bonds that are optionally callable on July 1, 2016,

Were structured with serials, term bonds and a Planned Amortization Class (PAC) bond,

NM MFA 2016 Series A-1 and A-2 Post-Sale Analysis Page 2 of 5

Sold the PAC bonds at a premium of $1,394,292,

Provided 6 weeks from pricing to closing, enabling MFA to finance more of its pipeline production and lock in rates sooner, thus reducing both interest rate risk and negative arbitrage,

Allowed GNMA or FNMA MBS depending on MFA’s loan pipeline,

Provided MFA an optional 9-year par call if it proves profitable to redeem the bonds in the future, and

Deposited $300,000 in a negative arbitrage account for securities – including those to be financed by the zero participations – that had not yet been originated by bond closing.

Results. The bond structure consisted of three major components: Non-AMT serial bonds of Series A-1, Non-AMT term bonds of Series A-1, and an AMT PAC bond for all of Series A-2. Investor interest for the PAC bond was very strong, with 4 orders for all of the $22.7 million PAC bond. As a result, yields were able to be reduced on the PAC bond. The underwriters initially offered the Non-AMT serial and term bonds at aggressive rates. However, investor interest on the Non-AMT serial and term bonds was weak and yields had to be increased during the pricing, in some cases by 10 basis points from the original aggressive levels. 1. Yields.

a. The bond yield (net interest cost) assuming 100% FHA prepayments was 2.86%.

b. For comparison, recent Non-AMT tax-exempt pass-through bond yields for new money had average yields of about 2.7% (on Minnesota the week prior), or about 80 basis points above the 10- year Treasury. MFA’s traditional bond issue had a yield of about 95 basis points over the 10-year Treasury. One benefit of a traditional bond structure, as on 2016 Series A, is that all the mortgage-backed securities do not have to be securitized and purchased before bond closing.

2. Use of Zero Participations. In order to achieve full spread, MFA used $2.1 million of its zero

participations but created $7.5 million in zeroes for future bond issues (assuming participation with future issue in 17 months).

3. Net Economic Benefits. The transaction’s projected net present value including the zeroes generated for the future at 150% PSA prepayment speed is $2.2 million, or approximately 3.6% of the amount of the issue.

Bond Results. Following are key highlights: 1. Retail Interest. A separate one-day retail order period was established with first priority to orders from

New Mexico retail investors. This resulted in $2.0 million of in-state retail orders, as well as an additional $4.6 million of national retail orders, for a total of $6.6 million. Most of the retail interest was in the term bonds, with retail being generally uninterested in the low absolute level of shorter-term serial rates. Of the $20.4 million of serial bonds prior to the final serial maturity in 2027, a total of $1 million of retail orders was received. This is similar to what occurred on the 2015 A bonds when no retail orders were received on any of the serial bonds.

2. Institutional Interest. There was strong institutional interest in the PAC bond, which was 4 times oversubscribed and was lowered in yield by 5 basis points. As for the $40 million of non-PAC bonds, there was a total of $32.9 million of institutional orders. This included one institutional investor who


put in an order for all the long serial bonds. 3. Timing. The bonds were priced for retail on Monday March 14th and for institutional on Tuesday

morning March 15th.

After the Federal Reserve began to raise short-term rates in December, for the first time in 8 years, short-term Treasury yields increased as expected. However, long-term rates, that had been expected to rise, actually dropped, as declines in the Chinese stock market followed by a more modest decline in the U.S. stock market drove investors toward the safety of bonds. The 10-year Treasury yield is below 2% and the yield curve between short and long bonds has flattened. Municipal bonds outperformed Treasuries last fall, but so far this year, municipal bond rates have increased while Treasury rates fell. Municipal bonds are thus cheap to Treasuries. During the pricing, the Treasury market was stable, closing at 1.97% on the 10 year Treasury both on Monday and Tuesday. The municipal market weakened slightly, with municipal bond yields rising 2 to 3 basis points.

4. Comparable Transactions. The AMT PAC bond was priced extraordinarily well. Even though it was

AMT, the spread to the equivalent MMD maturity was virtually the same as other HFAs’ Non-AMT PAC bonds. Normally AMT PAC bonds would be 10 to 15 basis points higher than Non-AMT. For MFA’s Non-AMT bonds, the yields were about the same as Nebraska’s and slightly higher than Missouri and Illinois which have significant in-state retail demand. Michigan and Massachusetts are lower-rated and thus less comparable.

Comparison to Other Single-Family New Money Tax-Exempt Traditional Bond Issues

MFA 2016 A

Nebraska 2016 A

Michigan 2016 A

Missouri 2016 A

Massachusetts Series 181

Illinois 2016 A

MFA 2015 A

Pricing Date March 15, 2016

March 16, 2016

March 10, 2016

March 10, 2016

March 9, 2016 March 1, 2016 Feb. 19, 2015

Size $ 62.7 m $ 90 m $ 96.8 m $76.3 m $ 32 m $65.9 m $ 35 m Senior Manager

JP Morgan JP Morgan Barclays Stifel Wells Fargo RBC JP Morgan

Purpose New Money and

Refunding

New Money New Money New Money New Money New Money New Money

Rating Aaa AA+ Aa2 / AA+ AA+ Aa2/AA Aaa AA+ Structure Traditional Traditional Traditional Traditional Traditional Traditional Traditional 10 year Non-AMT spread to MMD

2.65% +77 bp

2.60% +75 bp

2.85% +97 bp

2.55% +67 bp

2.50% +69 bp

2.95% +87 bp

15 year Non-AMT

3.20% +88 bp

3.20% +92 bp

3.35 +102 bp

3.20% +87 bp

3.25% +92 bp

3.125% +84 bp

3.55% +103 bp

20 year Non-AMT

3.50% +91 bp

3.50% +95 bp

3.70% +109 bp

3.45 +84 bp

3.60% +99 bp

3.45% +87 bp

3.85% +112 bp

30 year Non-AMT

3.80% +96 bp

3.85% +101 bp

3.75% +97 bp

4.0% +112 bp

PAC bond yield spread to equiv. MMD

2.10% +97 bp AMT

2.06% +94 bp Non-AMT

2.15% + 105 bp

Non-AMT

2.0% + 90 bp

Non-AMT

2.05% +96 bp

Non-AMT

1.91% +94 bp

Non-AMT

1.95% +79 bp

Non-AMT


MARKET DETAILS Key Dates: Pricing Date: Monday March 14th and Tuesday March 15th, 2016

Closing Date: Wednesday April 27th, 2016 Economic Calendar. In the week leading up to the sale, the calendar of data releases was relatively light and showed mixed economic signals suggesting moderate growth. The Consumer Credit figure for January came in at $10.5 billion, far below the consensus forecast of $16.5 billion but up from $6.4 billion for December. Wholesale Inventories for January were up 0.3%, compared to a -0.2% market consensus. Initial Unemployment Claims and Continuing Unemployment Claims were both slightly below the consensus forecast and the prior month. On the Tuesday of the sale, retail sales and the Producer Price Index were both slightly down from the prior month and in line with expectations. Treasuries. The 10-year Treasury bond yield has fluctuated based on perceived strength of the domestic economy, expectations of Federal Reserve rate increases, and overseas conditions. The 10-year Treasury yield started the year at 2.24%. Rates briefly touched a low of 1.63% on Feb. 11th before backing up in early March. A modest strengthening of oil prices, continuing moderate domestic growth and recent reports of new Chinese efforts to maintain their rate of economic growth have contributed to the rise in rates. The 10 year yield was 1.97% on the date of sale. From a longer-term point of view, the slowing of economic growth in China, the low price of oil and continuing weak growth in the Eurozone are likely to moderate domestic economic growth and increase international demand for U.S. Treasuries and Agencies. This will likely keep the Fed’s short-term rate increases – and their impact on long-term rates – quite modest. Indeed, the main result since the Fed’s December announcement has been a flattening of the yield curve, with short-term rates rising and long-term rates generally dropping. Municipals. After significantly outperforming Treasuries in November and December, municipal bonds have underperformed Treasuries this year. In January the 10-year MMD was 84% of the 10-year Treasury; it is now up to 97%. Similarly, the ratio of the 30-year MMD to the 30-year Treasury rose from 95% to 105%. These new ratios, with municipals trading cheap to Treasuries, are similar to those that prevailed during most of 2015. Supply and Demand. In the last four months of 2015, municipal issuance dropped significantly and

there were significant positive inflows to tax-exempt funds. Declines in the stock market led investors to consider fixed income generally, and municipals especially. As a result, there is greater demand related to municipal supply than last spring or summer, despite ongoing news about pending defaults in Puerto Rico. So far in 2016, municipal supply has increased while there have been continuing moderate positive inflows to municipal bond funds.

Low rates. Recognition that the Federal Reserve’s tightening will be quite slow and modest has made investors more willing to shift to longer maturities for higher yields. Despite the absolute low level of rates, there has been ongoing investor interest.

Credit spreads. Credit spreads widened in 2015, partly as a result of Puerto Rico bankruptcy news. The

spread between AAA and A MMD is approximately 55 basis points for both 10 and 30-year bonds, similar to that at the beginning of the year. Among higher quality bonds, the differential between AAA and AA is approximately 22 basis points for both 10-year and 30 bonds, down from about 45 basis points in January.


Issue Date 10-Year 10 Year

Treasury

10-Year 10 Year MMD

MMD/ MMD to Treasury

Ratio

30-Year 30 Year

Treasury

30-Year 30 Year MMD

MMD/ MMD to Treasury

Ratio 2013 A 12/12/12 1.72% 1.62% 94.2% 2.90% 2.59% 89.3% 2013 B 5/9/13 1.81% 1.75% 96.7% 3.01% 2.87% 95.3% 2013 C 8/7/13 2.61% 2.73% 104.6% 3.68% 4.28% 116.3% 2014 A 12/5/13 2.88% 2.73% 94.5% 3.92% 4.19% 106.9% 2015 A 2/19/15 2.11% 2.07% 98.1% 2.73% 2.88% 105.5% 2016 A 3/15/16 1.97% 1.88% 95.4% 2.73% 2.84% 104.0% Change from 2015A to 2016A

- 14 bps - 19 bps -2.7% - 0 bps - 4 bps -1.5%

UNDERWRITING Underwriter. JP Morgan served as senior managing underwriter and RBC Capital Markets as co-manager. Underwriting Fees. The underwriter discount of $6.84 is reasonable compared to other similarly sized issues in the market. Performance. JP Morgan as senior and RBC Capital Markets as co-manager worked well together. The underwriters took down a significant amount of unsold balances, especially in the shorter maturities. The total was $10.8 million (or about $8.3 million after stock orders).

Tab 13

April 14 – May 9, 2016

MEDIA COVERAGE

4-15 ABQ Business First Project Coalesced With Unprecedented Mix of Stakeholder 4-18 Las Cruces Sun-News Q-1 home sales leap 13% 4-28 Ruidoso News ENMU-Ruidoso receives scholarship award 5-2 Silver City Sun-News Land Title Trust gives scholarships, grants Las Cruces Sun-News 5-4 ABQ Business First Why a New York firm is investing $4.5m in NM apartments for the first time

PRESS RELEASES, NEWSLETTERS and LENDER MEMOS

4-29 Press Release WNMU Receives Scholarship Award 4-29 Press Release ENMU-Ruidoso Receives Scholarship Award 5-9 Tribal Update Coalition meeting May 19 5-9 Press Release Northern NM College Receives Scholarship Award

PROJECT COALESCEDWITH UNPRECEDENTEDMIX OF STAKEHOLDERSWhat's the formula for a successful project? A

marketdriven development, the support of thepublic and a cityowned lot seems like a goodplace to start. And the most important element?

"You can have the greatest idea for a project, but if you can'tget the financing, it won't happen," said Chris Baca, president and CEO of YES Housing Inc., which has been developing apartment projects across the state for 25 years and is codeveloper of Downtown's Imperial Building.The Imperial Building, an almost $20 million project, ran

into a financing challenge early on.Geltmore LLC, which was chosen by the city in 2013 to

develop the Downtown grocery store site, knew the projectneeded more than just commercial space, so they decided to addmarketrate apartments into themix.

This was at a time, however, when Downtown's marketrate rentals and forsale condos

were struggling. The nearby GoldAvenue Lofts and Banque Lofts,affected by the recession andtighter lending practices, werechallenged to attract many buyers, leaving investors nervous.And the Imperial Building siteneeded an influx of cash to dealwith a soil problem it ran into.

Paul and David Silverman, thefather and son team at Geltmore,had to think fast.

"There is a real need for more

market rate apartments inDowntown Albuquerque, whichwas our intention of the mixed

use building when we started theproject in 2012. However, whenwe ran into the loose soils problem, we had to pivot to ensureDowntown got a grocery store,which was the main objective,"David Silverman said.The solution was to find an

affordable housing developer topartner with. The Silvermans

went to the New Mexico Mortgage Finance Authority and askedfor a list of developer recommendations. They started knocking on doors to see who would be interested.Baca of YES Housing had never met the Silvermans, but

knew of them. He said their pitch was intriguing, and one thatfit the nonprofit's mission."We knew this would be a banner project for Downtown

redevelopment," Baca said. "The fact it was a grocery store wassignificant because we had talked to the neighborhoods abouttheir needs, and they said they needed a place to buy food.We also liked that we could do a mixeduse commercial project and put affordability into it, so we could help bring morefamilies Downtown."

YES Housing agreed to partner, bringing nonprofit statusand the ability to qualify for lowincome housing tax creditsand other creative financing tools. YES Housing also securedmajor investment.

"There was some arm twisting, because this had never beendone in Albuquerque," Baca said. "But we proved to them therewas a market, and that we had strong enough financials tomake this happen."Ultimately, Geltmore and YES Housing became devel

opment and finance partners, with the city, county, Downtown ABQ Mainstreet and the New Mexico Mortgage FinanceAuthority, among others."The financial structure that ultimately became the solu

tion, involved a very extensive list of people and organizationsto bring the project to reality," Silverman said. "Navigating thatprocess, while challenging, was a rewarding experience gettingto work with many people who were interested in helping tosee this project be a success."

NM0082 Albuquerque Business FirstPage Number: A5Publication Date: 04/15/2016

PROJECT COALESCED WITH UNPRECEDENTED MIX OF STAKEHOLDERS

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368863-04-15_A5002.pdf

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MANY GROUPSINVOLVED INPROJECT

? Geltmore LLC

? Yes Housing Inc.? City of Albuquerqueprovided the site, whichwas a cityowned lot

? MetropolitanRedevelopment Agency

? Albuquerque's WorkforceHousing Trust Fundawarded the project a$2.8 million grant

? Bernalillo Countygranted the project an$11.3 million industrial

revenue bond (IRB)? New Mexico MortgageFinance Authorityawarded $11.5 million intax credits

? Bank of America

? Enterprise CommunityPartners Inc.

? Congresswoman Lujan

Grisham's Office

? Jaynes Corp., theproject's generalcontractor

? Dekker/Perich/Sabatini? Anderson|KimArchitecture & UrbanDesign

STEPHANIE GUZMAN IALBUQUERQUE BUSINESS FIRST

(Above) The team behindAlbuquerquebased YES HousingInc., which has a 1,207unitportfolio and is the owner of theImperial Building's apartment units.Chris Baca, the organization's CEOand president, stands in front.



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(Left) David Silverman of GeltmoreLLC. Geltmore is in charge of leasingthe Imperial Building's retail spaces.



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368863-04-15_A5002.pdf

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Real estate connection

Q1 home sales leap 13%REAL ESTATECONNECTIONGARY SANDLER

LAS CRUCES Low mortgagerates and morefirsttime home

buyers in the marketplace gaverise to additional Las Crucesarea home sales during the firstquarter of the year, according tostatistics from the Las CrucesAssociation of Realtors (LCAR)and the New Mexico MortgageFinance Authority (MFA).LCAR reported that local

Realtors sold a total of 326 newand existing homes, townhomesand condominiums betweenJan. 1 and March 31, an increaseof 38 units, or 13 percent, overthe 288 homes sold during Q1of2015. During the same period,

MFA reported a 110 percent increase in home loans, threequarters of which were made tofirsttime buyers. MFA was created by the New Mexico legislature in 1975 to provide downpayment assistance and lowinterest financing to low and moderateincome buyers.Sales production and prices

of existing homes posted thebiggest gains, rising by 34unitsand almost $8,300 respectivelyover last year's numbers. Newhome sales increased slightly to36units from 34 last year, whilethe average price declined byjust over $3,000.In a press release issued on

April 7, Freddie Mac reportedthat the 30year conventionalmortgage rate fell by 12 basispoints to 3.59 percent, downfrom 3.71 percent a week earli

er. The rate was the lowest reported so far this year. Last yearat this time the rate was 3.66percent. The 15year rate alsodeclined, falling to 2.88 percentfrom last year's rate of 2.90 percent. Governmentbackedloans, such as FHA and VA, typically carry slightly lower rates.So there you have it. Sales

and prices are on the increaseand mortgage rates are in decline. It seems to me that thetwo factors are the perfect formula for increased sales andprices in the months to come.

See you at closing.Gary Sandler is a fulltime

Realtor and owner of GarySandler Inc., Realtors in LasCruces. Gary can be reached at5756422292 or Gary@GarySandler.com

NM0082 Las Cruces SunNewsPage Number: 23Publication Date: 04/18/2016

Q1 home sales leap 13%REAL ESTATE CONNECTION GARY SANDLER21.08 square inch

Title:Author:Size:Las Cruces, NM Circulation: 28086

Page: 1

367297-04-18_23001.pdf

County: Dona Ana

1

ENMU-Ruidoso receives scholarship award

Ruidoso News reports12:38 p.m. MDT April 28, 2016

(Photo: Courtesy)

1CONNECTTWEETLINKEDINCOMMENTEMAILMORE

RUIDOSO - The New Mexico Land Title Association and the New Mexico Mortgage Finance

Authority (MFA) recently awarded $8,000 in scholarships to the Eastern New Mexico University-

Ruidoso Foundation.

The scholarships were awarded through the Land Title Trust Fund, which is financed with interest

that is earned on escrow deposits from participating members of the Land Title Association and

various real estate brokers throughout New Mexico. The fund is overseen by MFA, a quasi-

governmental agency whose mission is to provide affordable housing opportunities to New Mexico

residents.

Land Title Association members Mike Seelbach, president of GSV Title Services, Inc., and Lindsay

Findley of Land Titles of Ruidoso, LLC dba The Title Company attended the ceremony. MFA’s

Director of Homeownership, Erik Nore and Homeownership Representative Teri Baca were also

present.

“We are truly privileged to accept these funds to increase the endowment for the Land Title

scholarship,” said Rhonda Vincent, the foundation’s development director. “The endowment provides

a way for motivated students to better themselves and be successful. We are very grateful to all the

organizations who contribute to this important cause.”

The Land Title Trust Fund was created by the New Mexico State Legislature in 1997 to generate

funding for affordable housing development. However, 10 percent of the funds raised by the trust are

earmarked for scholarships to New Mexico colleges and universities and are used to supplement the

Chili Currier Scholarship Fund, which also raises scholarship money for the Land Title Trust Fund.

A total of $105,000 in Land Title Trust Fund scholarships will be distributed to eight institutions in

2016. CNM, Mesalands, New Mexico State University, Northern New Mexico College and ENMU-

Ruidoso have existing endowments; the University of New Mexico, Western New Mexico University

and ENMU’s main campus will receive scholarships for the first time this year. Since 1997,

$215,000 has been awarded in scholarships.

The Chili Currier fund began in the 1980s with a $100 donation from Mike Currier, who won the

money as a door prize at the Land Title Trust Fund’s annual convention. He decided to use the

money to start a scholarship in the name of his father, George "Chili" Currier.

Since it was created by the state in 1975, MFA has helped thousands of low-income New Mexicans

become homeowners. MFA also provides funding for affordable housing construction, rehabilitation,

energy efficiency upgrades, homelessness assistance and special needs housing. As trustee of the

Land Title Trust Fund, MFA has distributed more than $2.3 million to help finance affordable housing

projects in 22 cities in 13 New Mexico counties.

Real estate connectionLand Title Trust gives scholarships, grantsGARY SANDLER

Few people outside of our state'sbanking, real estate, and title insurance industries areaware that the New

Mexico Land Title Trust Fundeven exists, much less its purpose.

"The fund was created by thelegislature in 1997 to generatemonies to finance loans orgrants that will provide housingfor lowincome persons," according to Teri Baca of the NewMexico Mortgage Finance Authority (MFA). MFA is thefund's Trustee. In addition, thefund also provides scholarshipsfor New Mexico high schoolgraduates and GED recipientswho attend community collegesand universities around thestate.Funds for the program are

generated when interest accrues on money held in trust accounts of participating real estate brokers and title companies when they handle purchaseand sale transactions. "Trust account funds, which are moniesdeposited by buyers and sellers,normally do not earn interest",according to Kevin Davis,president of Southwestern Abstract and Title in Las Cruces.The legislature makes an exception to the provision in thelaw that prohibits banks from

paying interest on trust accountmonies as long as the funds areused solely to support the program's mission. The bankswhere the trust accounts areheld, in turn, deposit the accrued interest into the fund's account. Awards are made quarterly when funds are availableand are allotted on a competitive basis, according to Baca.Since the program began,

more than $1.9 million has beendistributed to finance affordable housing projects in 13counties and 22 cities across thestate. Projects in our area include apartments in Anthonyand singlefamily homes in LasCruces. Funds for down payment assistance were alsoawarded to disabled veteransand lowincome families incommunities such as Socorro,Tularosa, Lovington and Dexter,in addition to others.

On the academic side, a totalof $215,000 in scholarships havealso been awarded since 1997.Last month, grants were madeto three New Mexico collegesand universities; New MexicoState University in Las Cruces,Eastern New Mexico University in Ruidoso, and WesternNew Mexico University in Silver City. The schools receivedawards of $3,000, $8,000, and$20,000, respectively.

The remaining schools thatare slated to receive awards later this year are Central Community College in Albuquerque($6,000), Mesalands Community College in Tucumcari($15,000), Northern New Mexico College in Espanola ($8,000),University of New Mexico in Albuquerque ($25,000), and Eastern New Mexico University inPortales ($20,000).

The original statewide scholarship fund was created in the1980s by Mike Currier, who wona $100 door prize at one of theannual New Mexico Land TitleAssociation conventions. Currier decided to use his windfall tocreate the George "Chile" Currier scholarship in the name ofhis father. That fund continuesto grow and prosper today.To determine if you're eligi

ble for one of the educationalgrants, simply contact one ofthe schools on the list. Each institution administers is ownscholarship money. Real estategrants are typically awarded tononprofit housing agencies,who oversee the distribution ofthe awards. Unfortunately, noreal estate funds are currentlyavailable.Grant or no grant, scholar

ship or no scholarship, now's anexcellent time to purchase.

See you at closing.

NM0082 Silver City SunNewsPage Number: 23Publication Date: 05/02/2016

Land Title Trust gives scholarships, grantsGARY SANDLER35.65 square inch

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364811-05-02_23002.pdf

County: Grant

5/5/2016 YES Housing forms joint venture with firsttomarket New Yorkbased Community Development Trust REIT Albuquerque Business First

http://www.bizjournals.com/albuquerque/news/2016/05/04/whyanewyorkfirmisinvesting45minnm.html?s=print 1/3

FOR THE EXCLUSIVE USE OF [email protected]

From the Albuquerque Business First:

http://www.bizjournals.com/albuquerque/news/2016/05/04/why-a-new-

york-firm-is-investing-4-5m-in-nm.html

Why a New York firm is investing $4.5m in NM apartments for the first time

SUBSCRIBER CONTENT:

May 4, 2016, 2:11pm MDT

A New York-based REIT and local developers

YES Housing Inc. have partnered to retain

and improve three affording housing

complexes in New Mexico.

Community Development Trust, a real estate

investment trust that provides capital for

existing and new affordable housing

communities, said it will invest $4.5 million in

three complexes totaling 262 units in

Albuquerque, Las Cruces and Roswell.

Albuquerque-based YES Housing will retain

some ownership of the complexes and

continue to manage the properties.

This is Community Development Trust's first

investment in the state. The company does

business in 42 states and has 6,000 housing

units in its portfolio.

Brian Dowling, Community Development

Trust's senior vice president, said the

STEPHANIE GUZMAN | ALBUQUERQUE BUSINESS FIRST

Chris Baca, CEO of YES Housing.

http://www.bizjournals.com/albuquerque/news/2016/05/04/why

mailto:[email protected]



http://www.bizjournals.com/profiles/company/us/nm/albuquerque/yes_housing_inc/2353549

http://www.bizjournals.com/albuquerque/search/results?q=Brian%20Dowling

YES Housing forms joint venture with first-to-market New York-based Community Development Trust REIT- Albuquerque Business First 515/2016

http//www.bizjournals.com/albuquerque/news/2016/05104/why-a-ne.v-york-firm-is-investing-4-5m-in-nm.html?s=print 3/3

company was introduced to YES Housing through a Denver-based consultant in the affordable

housing industry.

"We work throughout the country in all different markets large and small and identify leading

regional housing operators," said Dowling. "YES was clearly one of the top nonprofit housing

providers in the state of New Mexico."

YES Housing, developers and managers of affordable housing complexes across the state, has

more than 1,200 units in its portfolio, and it is also the housing developer behind Downtown's

Imperial Building.

Chris Baca, CEO of YES Housing, said talks of a joint venture partnership

started about three years ago with Community Development Trust. He said YES Housing went

through an extensive vetting process, but eventually the two entities became familiar with each

other's business and agreed to a

partnership.

"It took us a long time to craft a joint venture that everyone was happy with," Baca said. "But this is a

good thing. We don't have a whole lot of New York firms coming to New Mexico. It's really a way to

infuse cash and revitalize the complexes."

Dowling said Community Development Trust specializes in buying out tax credit investors and

recapitalizing properties.

"The incentive for us is two fold. One is the properties are well operated and maintained, and it's

part of our mission to preserve them and their affordability going forward. And two, we're a double

bottom line company in that we make investments partially because of cash flow," Dowling said.

The joint venture partnership will first invest $300,000 in a Roswell housing complex, the 60-unit

Wildewood Apartments. The two companies didn't disclose the locations of the Albuquerque and

Las Cruces complexes it plans to invest in.

Dowling said Community Development Trust also provides financing for new affordable housing

projects, and said "we look forward to future opportunities in New Mexico.

Stephanie Guzman

Reporter Albuquerque Business First

http://www.bizjournals.com/albuquerque/news/2016/05104/why-a-ne.v-york-firm-is-investing-4-5m-in-nm.html?s=print

http://www.bizjournals.com/albuquerque/news/2016/05104/why-a-ne.v-york-firm-is-investing-4-5m-in-nm.html?s=print

http://www.bizjournals.com/albuquerque/news/2016/04/11/understated-imperial-building-stakeholder-wields.html

http://www.bizjournals.com/albuquerque/news/2016/04/11/understated-imperial-building-stakeholder-wields.html

http://www.bizjournals.com/albuquerque/search/results?q=Chris%20Baca


FOR IMMEDIATE RELEASE CONTACT: Leann Kemp

April 29, 2016 w: 505 767-2254 c: 505-235-1994

[email protected]

WNMU RECEIVES SCHOLARSHIP AWARD

$20,000 Endowment Given by the Land Title Trust Fund

SILVER CITY: The New Mexico Land Title Association and the New Mexico Mortgage Finance

Authority (MFA) recently awarded $20,000 in scholarships to the Western New Mexico University

Foundation. The scholarships were awarded through the Land Title Trust Fund, which is financed with

interest that is earned on escrow deposits from participating members of the Land Title Association

and various real estate brokers throughout New Mexico. The fund is overseen by MFA, a quasi-


residents. Jodi Edens-Crocker, executive director of the WNMU Foundation and Dr. Joseph Shepard,

WMSU president accepted the award.

“It has been a rewarding experience to work with WNMU’s foundation director, local land title

professionals and Teri Baca and others at MFA to place these scholarship funds,” said Cliff Currier, co-

chairman of the Land Title Association scholarship fund. “New Mexico benefits when motivated

students are given a way to be successful and improve their lives.”

The Land Title Trust Fund was created by the New Mexico State Legislature in 1997 to generate funding

for affordable housing development. However, 10 percent of the funds raised by the trust are



A total of $105,000 in Land Title Trust Fund scholarships will be distributed to eight institutions in 2016.

CNM, Mesalands, New Mexico State University, Northern New Mexico College and Eastern New

Mexico University-Ruidoso have existing endowments; the University of New Mexico, ENMU’s main

campus and WNMU are receiving scholarships for the first time this year. Since 1997, $215,000 has

been awarded in scholarships.

The Chili Currier fund began in the 1980s with a $100 donation from Mike Currier, who won the money

as a door prize at the Land Title Trust Fund’s annual convention. He decided to use the money to start

a scholarship in the name of his father, George "Chili" Currier.



energy efficiency upgrades, homelessness assistance and special needs housing. As trustee of the Land

Title Trust Fund, MFA has distributed more than $2.3 million to help finance affordable housing


###



April 29, 2016 w: 505 767-2254 c: 505-235-1994

[email protected]

ENMU-RUIDOSO RECEIVES SCHOLARSHIP AWARD


RUIDOSO: The New Mexico Land Title Association and the New Mexico Mortgage Finance Authority

(MFA) recently awarded $8,000 in scholarships to the Eastern New Mexico University-Ruidoso

Foundation. The scholarships were awarded through the Land Title Trust Fund, which is financed with

interest that is earned on escrow deposits from participating members of the Land Title Association

and various real estate brokers throughout New Mexico. The fund is overseen by MFA, a quasi-


residents.

Land Title Association members Mike Seelbach, president of GSV Title Services, Inc., and Lindsay

Findley of Land Titles of Ruidoso, LLC dba The Title Company attended the ceremony. MFA’s Director of

Homeownership, Erik Nore and Homeownership Representative Teri Baca were also present.

“We are truly privileged to accept these funds to increase the endowment for the Land Title

scholarship,” said Rhonda Vincent, the foundation’s development director. “The endowment provides

a way for motivated students to better themselves and be successful. We are very grateful to all the

organizations who contribute to this important cause.”






CNM, Mesalands, New Mexico State University, Northern New Mexico College and ENMU-Ruidoso

have existing endowments; the University of New Mexico, Western New Mexico University and

ENMU’s main campus will receive scholarships for the first time this year. Since 1997, $215,000 has

been awarded in scholarships.









###

May 6, 2016 Albuquerque Mean Temperature Rising

NM Tribal Homeownership Coalition Meeting

Thursday May 19, 2016

May 19, 2016

1 PM to 3 PM

San Felipe Pueblo Housing Authority

San Felipe Pueblo NM

Agenda

Welcome

Isaac Perez

Reporting Housing Payments to Credit Bureau

- Carmina Lass, Credit Builders Alliance

Update on Designing a Homeownership Program

- Edward Rosenthal, Enterprise Community Partners

ICDBG Updates

-SWONAP

Announcements/Next Meeting



May 9, 2016 w: 505 767-2254 c: 505-235-1994

[email protected]

NORTHERN NM COLLEGE RECEIVES SCHOLARSHIP AWARD


ESPANOLA: The New Mexico Land Title Association and the New Mexico Mortgage Finance Authority

(MFA) recently awarded $8,000 in scholarships to the Northern New Mexico College Foundation. The

scholarships were awarded through the Land Title Trust Fund, which is financed with interest that is

earned on escrow deposits from participating members of the Land Title Association and various real

estate brokers throughout New Mexico. The fund is overseen by MFA, a quasi-governmental agency

whose mission is to provide affordable housing opportunities to New Mexico residents.

"On behalf of the Northern Foundation Board of Directors and everyone at Northern New Mexico

College, we thank the New Mexico Land and Title Association for its ongoing support of our students

here in the heart of northern New Mexico," said Terry Mulert, executive director of the Northern

Foundation. “For years now, the New Mexico Land Title Association has provided endowment funds so

that Northern students can pursue their dreams of a college degree here in Española.”






Northern, CNM, Mesalands Community College, New Mexico State University and Eastern New Mexico

University-Ruidoso have existing endowments; the University of New Mexico, Western New Mexico

University and Eastern New Mexico University’s main campus will receive scholarships for the first time

this year. Since 1997, $215,000 has been awarded in scholarships.

The Northern Foundation began without a benefactor but with a lofty goal to build an endowment to

serve as a permanent investment in the Española Valley’s future. Over the last 20 years, the

foundation’s small staff and board of directors have grown the endowment to more than $3 million.









###

Tab 14

Quarterly Report to the MFA Board of Directors

Q2 FY2016

Production Statistics Current

Quarter

Same

Quarter

Last Year

Year to

Date

1,077 618Number of loans reserved

Amount of loans reserved

396

$145,976,340 $85,519,551 $50,675,995

Number of loans purchased

Number of lenders/REALTORS contacted

Amount of loans purchased

Number of homebuyers counseled

Homeownership

Amount of MF loans/grants

Housing Development

Number of SF units

Number of MF units

Amount of SF loans/grants

Housing Rehab & Weatherization

Amount of rehab expenditures

Number of units weatherized

Amount of NM Energy$mart expenditures

Number of units rehabilitated

Homeless Programs

Number of households assisted

Amount of rental assistance

Number of persons housed

Amount of shelter service expenditures

$140,148,386

1,061

$67,982,875

506

$30,834,410

244

596 321 1,249

1,738 1,615 3,544

The need for MFA

morgage products:

MFA borrowers have an average

annual income of $46,631 and

purchase homes with an average

price of $133,809. 53 percent are

single-parent households; 52

percent are minorities.

MFA targets below market mortgage

rates, and all first-time homebuyers

receive pre-purchase counseling.

MFA provides down payment

assistance to 97 percent of its

borrowers. Without these programs,

The need for

housing

development:

Only 3.8 percent of New Mexico’s

housing units are located in

apartment complexes of 20 units or

more. Many of these are old and in

poor condition.

51 percent of renters are

cost-burdened, about half pay

between 30 percent and 49 percent

of their income on rent; the other

half pay more than 50 percent.

New Mexico has aging housing stock. 48

percent of its homes were built before

1980; only 17 percent were built after 2000.

Many low-income homeowners are at risk

because of health and safety hazards in

their homes and pay high utility bills

because they cannot afford to make

energy-efficiency improvements.

The need for housing

rehabilitation and

weatherization:

The need for

homeless programs:

The New Mexico Coalition to End

Homelessness estimates that 17,000

New Mexicans experience

homelessness in a year. In 2015, 9,068

homeless New Mexicans sought

assistance at HUD-funded agencies.

Emergency assistance with rent and

utilities can help people at risk of

homelessness stay in their homes.

$1,200,000

112

$1,700,000

735

$0

1

$530,000

21

577 453 822

$1,540,221 $1,260,585 $2,870,443

12 19 12

$875,204 $1,150,503 $1,200,209

$202,326

1,218

$339,509

1,375

$504,554

2,439

$631,216

318

$455,218

283

$1,276,781

608

Amount of TC: LIHTC (MF) & State (MF & SF) $15,000 $7,755,559 $0

$2,786,842

30

$85,994

6

Page 1 of 2

Quarterly Report to the MFA Board of Directors

Q2 FY2016

ServicingCurrent

Quarter

Same

Quarter

Last Year Target Rate

First Mortgage delinquency rate

Partners Program delinquency rate

DPA loan delinquency rate

Default rate (writeoffs/foreclosure losses)*

Multifamily loan delinquency rate

Combined delinquency rate*

Asset Management

Master Servicing MBS delinquency rate

Monitoring

Fiscal Year

Monitoring

Required

Year to

Date

Current

Quarter

Number of properties monitored

Number of PBCA activities

Number of units inspected

Community Development

Number of contracts monitored

1.39 3.91

9.28 12.18

14.24 15.24

9.88 6.17

12.61 13.22 9.00

0.80 0.67 3.90

4.62 4.78

25 76 197

345 931 N/A

277 555 N/A

25 51 81

Provides servicing for

approximately 9,000 loans with a

principal balance of almost $360

million.

Many of the loans MFA services

are for internal programs that

target higher risk borrowers. MFA’s

Mortgage-Backed Securities (MBS)

portfolio is serviced by master

servicers. Delinquency rates in this

portfolio can be benchmarked to

Mortgage Banker Association FHA

averages-4.69 percent in New

Mexico and 8.91 percent in the U.S.

for Quarter 3 2015.

MFA's Servicing

Department:

MFA's Asset

Management

Department:

MFA's Community

Development

Department:

Manages nine programs with 14

different funding sources and

approximately 80 partners across the

state. Our partners deliver housing

to more than 10,000 individuals and

receive approximately $10 million in

funding. Monitoring is performed on

a regular basis to ensure program

compliance.

Monitors 262 properties and 17,097

units of housing financed by MFA,

providing unit inspections and review

of records and finances on a regular

basis. Asset Management also

supports 88 properties and 5,257 units

under MFA’s HUD Project Based

Contract Administrator (PBCA) contract.

*MFA's Servicing portfolio only

Page 2 of 2

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