Historic Building 9 Redevelopment Bridging the Gap with 4%/9% - PowerPoint PPT Presentation

Historic Building 9 Redevelopment Bridging the Gap with 4%/9% LIHTC/HTC Structure NH&RA Spring Developers Forum

Case Study of 4%/9% LIHTC Structure Project context & development objectives • Financing limitations and opportunities • Real estate project components & capital stacks • Structuring considerations • Project organizational elements • NH&RA Spring Developers Forum

Opportunity: Redevelop large, dilapidated, historic former naval barracks NH&RA Spring Developers Forum

Problem: Redevelop large, dilapidated, historic former naval barracks NH&RA Spring Developers Forum

Project Background 240,000 sf, 90-year old former naval barracks • Historically designated & protected • Vacant; structurally damaged; environmentally contaminated • Non-profit commercial use in 10% of building • NH&RA Spring Developers Forum

NH&RA Spring Developers Forum

Development Objectives & Requirements Optimize number of affordable units • Optimize affordability • Fully fund development costs & reserves • Establish stable cash flow • Maintain historic structure and site character • NH&RA Spring Developers Forum

Financing Limitations/Opportunities Limited 9% LIHTC allocation available • Competed well for 4% LIHTC and TE Debt • Public funders motivated by scale & affordability • Historic tax credits covered portion of rehab costs • Non-profit tenants provided access to non-housing • public resources NH&RA Spring Developers Forum

Key Resources Tax counsel • Tax accountant • Potential lenders & investors • Financial analyst • NH&RA Spring Developers Forum

Key Structuring Considerations How to combine 4% and 9% in same project/building? • How to protect 9% LIHTC from 4% LIHTC “taint”? • How to bring in non-housing resources? • How to address lenders’ real estate security requirements? • How to allocate common costs and provide access to all users? • NH&RA Spring Developers Forum

Key Structuring Elements Establish condominium with separate 4% and 9% owners/borrowers • Establish separate condo units for each tax credit BIN & use • No cross collateralization allowed between 4% and 9% projects • Establish separate construction contracts for each condo unit • Establish consistent development and operating cost allocation • (totally separate or proportionate) NH&RA Spring Developers Forum

Real Estate Components - 4% LIHTC Project 108 4%-LIHTC units • 60% AMI set-aside • Studio, one- and two- bedroom units • 1,500 sf community room • 2,000 sf resident services resources center & classroom • NH&RA Spring Developers Forum

Real Estate Components - 9% LIHTC Project 40 9%-LIHTC units • 30% to 50% AMI set-aside • 55% two- and three-bedroom units • 20,000 sf non-profit owned/operated child care center • 1,500 sf non-profit owned/operated health clinic • NH&RA Spring Developers Forum

Capital Stack - 4% LIHTC Project • 4% LIHTC & HTC LP Investor (Enterprise/Capital One) • Tax Exempt Construction Loan (JPMorgan Chase) • Tax Exempt Permanent Loan (Bellwether FMAC) • Historic Tax Credits (Enterprise/Capital One) • Washington State Housing Finance Commission Loan • City of Seattle Loan • State of Washington Loan NH&RA Spring Developers Forum

Capital Stack - 9% LIHTC Project • 9% LIHTC & HTC LP Investor (Enterprise/Capital One) • Taxable Construction Loan (Capital One) • Historic Tax Credits (Enterprise/Capital One) • Private Philanthropy • City of Seattle Loan • State of Washington Loan • City Child Care Grant/Loan • State Health Clinic Grant/Loan NH&RA Spring Developers Forum

Unit Unit Unit Unit 2 4 3 1 NH&RA Spring Developers Forum

Building 9 Enterprise/Capital One Ownership, Financing & GC Contracts Capital One Enterprise /Capital One City of Seattle JPMorgan Chase State of Washington Bellwether/FMAC Building 9 Condominium State & City Child Care & Health WSHFC Care Grants Association State of Washington Private Philanthropy City of Seattle GC Contract #5 MHNW 13 Building 9 South LP MHNW 14 Building 9 North LP Site Work Condominium Unit 1 Condominium Unit 4 Condominium Unit 3 Condominium Unit 2 40- 9% Units 91 - 4% Units 17 - 4% Units Child Care & Health Clinic North Building South Building North Building Center Building GC Contract #1 GC Contract #2 GC Contract #4 GC Contract #3 NH&RA Spring Developers Forum

NH&RA Spring Developers Forum