SERC 2014

Judy Vandyke, CEO/Managing Partner, BGCjudy@thebennettgrp.net

Holly Knight, Vice President of Development, BGCholly@thebennettgrp.net

Operating Subsidy Funding

2014 2013 2012 2011 2010 2009 $-

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

$4,900,000,000 $4,921,341,060

$4,149,983,999 $4,594,294,060 $4,611,918,201

$5,031,106,183

OFND Annual Amount

OFND Annual Amount (U.S.) Proration

84??% 82% 94.968% 100% 103% 88.42%

Flat rent impact?

Capital Fund Capital Funding Trends

1 2 3 4 5 60

500000000

1000000000

1500000000

2000000000

2500000000

2009 2010 2011 2012 2013 2014

$2,341,258,000 $2,365,835,000

$1,910,035,000 $1,790,000,000

$1,696,372,000 $1,800,000,000

Typical PHA Revenue versus Expenses

2009 2010 2011 2012 2013$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Total Revenue over Total Expenses

Total RevenueTotal Expenses

Dolla

rs

Average Administrative Trends

Typical Expense Trends

FYE 2009 FYE 2010 FYE 2011 FYE 2012

Total Maintenance 594383 692426 711099 803869

$50,000

$150,000

$250,000

$350,000

$450,000

$550,000

$650,000

$750,000

$850,000

Total Maintenance

What is best plan for residents?

Diversify Borrow funds for improvements New cutting edge programs Partner Reposition RAD Mixed finance Compliance is not going away even if there is

temporary relief Need to over come funding and sequestration

TOWERS SENIOR PLACE LTD

PHA property

General Partner

Special Limited Partner (PHA)

Limited Partner99.98%

.01%

.01%

$$$

Tax CreditsTax Losses

Equity

State Allocating AgencyTAX CREDITS

Right of First RefusalOption to Purchase

Land Lease

Development Considerations

New Construction, Rehabilitation, or Acquisition Rehab

Degree of Difficulty in Obtaining 9% or 4% Tax Credits

If Rehab, Can’t Rely on old PNAs. RAD PCA is Critical First Step

If FHA Rehab Financing, Must Obtain 55 Year Maximum Useful Life

Relocation Options – Off-Site if New, On-Site if Rehab

Entire Portfolio or a Portion – Impact on COCC

The Development Partner Has a Fiduciary Responsibility to The Housing

Authority

Best and Highest Use

Seller take back finance –protection for the PHA

Structuring the Development Partnership

Understand the Balance Between Risks/Capabilities and Benefits

The Lender & Investor will Want Guarantees – Construction Completion, Operating Deficit, Ongoing Credit Delivery, With Assets at Risk

Who Takes on the Various Risks Determines Ownership Split, Fee Split, and Distributions

The Development Partner Will Want to Protect its Guarantees

Responsibility for Pre-Development Costs

Property Management by Experienced Tax Credit Manager is Essential If Credits Involved – Use Third Party Compliance (BGC Advantage)

Insurance/Property Taxes

If Authority is to Manage at Some Point, Must Strengthen Management Capabilities

Structure of Right of First Refusal at end of Tax Credit Compliance Period

Financing

Availability of FHA 223(f) & 221(d)(3) insurance, with priority processing

Access to FHA LIHTC Pilot processing Ability to tap 9% & 4% LIHTCs, including “short bond”

structures Ability to support transaction with public housing reserves

and capital funds, including Replacement Housing Factor funds

Access to HOME and CDBG for development budgets Available sales proceeds can support other affordable

housing purposes

Compare Projects

Sunny DellCOST BENEFIT ANALYSIS

158/debt 158/4% 206/debt 206/4% Per Unit Hard Cost 13,000 25,000 12,000 25,000 Gross Potential Income $ 887,220 $ 887,220 $ 1,240,020 $1,187,700 First Mortgage Amount 3,120,200 2,131,600 2,931,400 4,071,900 Developer Fee to PHA 150,000 530,400 150,000 665,600.0 Administrative Fee 154,000 113,000 201,000 140,000 Management Fee - 51,523 72,095 69,053 CASH FLOW $ 40,955 $ 55,895 $ 76,948 $ 53,446

Change

Take the first step in faith. You don’t have to see the whole staircase, just take the first step.

-Martin Luther King, Jr.