Tax Exempt Bond OptionsIn North Carolina

Two Tax Exempt Bond Programs

– Acquisition/Mod-Rehab Deals• FHA 223(f) LIHTC Pilot

– New Construction/Substantial Rehabilitation• Freddie Mac Tax Exempt Loan Program

FHA 223(f) LIHTC Pilot- Structure

• Short Term Tax Exempt Bonds– Issued by qualified agency.– Private Placement or Sale through Bond Underwriter.– Must Meet 50% Test.– Cash Collateralized.

• Taxable 223(f) Closed and Funded Immediately– Proceeds are collateral for Tax Exempt Bonds.

FHA 223(f) LIHTC Pilot- Benefits

• Allows Higher Rehab ($40,000 per unit) without needing to use 221(d)(4) program.

• No Davis Bacon Wages Required

• Quicker Execution

• Lower Interest Rate

• Lower Costs/Escrows

FHA 223(f) LIHTC Pilot- Underwriting

• Term: 35 Years

• Amortization: 35 years

• Maximum Loan to Value: 85% (87% with Section 8)

• Minimum Debt Coverage: 1.176 (1.15 with Section 8)

• Interest Rate: Note Rate Plus Mortgage Insurance Premium.

FHA 223(f) LIHTC Pilot- Process

• Concept Meeting with HUD• Application Preparation and Submission• HUD Review of Application and Issue of Commitment• Closing

Freddie Mac TEL- Structure

• Qualified Agency Issue Tax Exempt Notes.• Short Term Tax Exempt Notes purchased separately.• Lender/Freddie Mac Provide Forward Commitment to

Purchase Long Term Notes at stabilization.• Freddie Mac Locks Rate at Construction closing for

Commitment period (24 to 30 months).

Freddie Mac TEL- Benefits

• Early Rate Lock• Flexibility for Bridging Equity• Competitive Interest Rate• Strong Loan Leverage• No Davis Bacon Wages

Freddie Mac TEL - Underwriting

• Term: 15 to 18 Years

• Amortization: 35 years

• Maximum Loan to Value: 90%

• Minimum Debt Coverage: 1.15

• Interest Rate: Spread over the 10 year Treasury. Add Issuer Fee.

Freddie Mac TEL - Process

• Pre-screen Package to Freddie Mac• Issue Application• Final Underwriting• Issue Firm Commitment• Closing Process at Stabilization

– Construction Completion– Minimum 90 Days at 90% Occupancy– Review three months of certified operating statements and rent rolls