Whittier Street Apartments Choice Neighborhoods Initiative Rodger - PowerPoint PPT Presentation

Whittier Street Apartments Choice Neighborhoods Initiative Rodger Brown, Managing Director of Real Estate Development, Preservation of Affordable Housing (POAH) NH&RA Annual Meeting

Whittier Street Apartments The Redevelopment • 200 unit demolition • 350+ unit new construction • Mixed-use & mixed- income • Transit Oriented Development NH&RA Annual Meeting

Whittier Street Apartments LIHTC Development Challenge • Fundamental Problem – Unused LIHTC Basis • Two key drivers of unused basis • High Construction and development costs • Finite nature of 9% LIHTC resource NH&RA Annual Meeting

Whittier Street Apartments 4% / 9% Structure • Largely avoids unused LIHTC basis • Can be used in fee simple or leasehold transactions • Requires two standalone real estate transactions NH&RA Annual Meeting

Whittier Street Apartments Development Phasing

Whittier Street Apartments Whittier Housing Program NH&RA Annual Meeting

Whittier Street Apartments Sources of Funds GP Equity $200 Deferred Developer Fee $2.6 M Includes $1.54 million Choice Neighborhoods Funds $4.1 M in annual (5 year) Maximizes the DHCD Soft Money $1.3 M Produces an Massachusetts State awarded 9% City of Boston Funds $2.6 M additional $1.11 LIHTC allocation allocation - $1.5 MHFA Workforce Funds $1.5 M million in annual 4% million annually MA State LIHTC Equity $5.8 M LIHTC allocation 9% LIHTC Equity $14.5 M 4% LIHTC Equity $12.2 M 1st Mortgage - Taxable $5.3 M 1st Mortgage - Tax Exempt $9.3 M 0 5 10 15 Millions NH&RA Annual Meeting

Whittier Street Apartments Uses of Funds Acquisition $1.5 M Contingency $2.1 M Soft Costs $5.8 M Reserves $950,000 Dev. Fee (Paid) $4.3 M Dev Fee (Deferred) $2.6 M Construction $42 M NH&RA Annual Meeting

Whittier Street Apartments LIHTC Unit Sizing • Select which buildings will have multiple owners (via condo agreement) • Identify which units belong to which condo • Calculate 9% LIHTC basis…if too high (or low) remove (or add) a unit… • Recalculate basis…if too high (or low) remove (or add) a unit…etc. NH&RA Annual Meeting

Whittier Street Apartments Challenges Most important: • Must avoid “subsidy taint” between transactions (specifically tax exempt bond proceeds) Less critical, but challenging: • Multiple sets of closing documents • Additional transaction costs • Added general complexity Unforeseen challenges: • Massachusetts condominium laws • “Shed condo” structure NH&RA Annual Meeting