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

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

Nov 21, 2023 113 likes •315 views

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

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NH&RA Spring Developers Forum

Historic Building 9 Redevelopment Bridging the Gap with 4%/9% LIHTC/HTC Structure

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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
  • Project organizational elements
  • Structuring considerations
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NH&RA Spring Developers Forum

Opportunity:

Redevelop large, dilapidated, historic former naval barracks

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NH&RA Spring Developers Forum

Problem:

Redevelop large, dilapidated, historic former naval barracks

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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
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NH&RA Spring Developers Forum

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NH&RA Spring Developers Forum

Development Objectives & Requirements

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

  • Limited 9% LIHTC allocation available
  • Competed well for 4% LIHTC and TE Debt
  • Public funders motivated by scale & affordability
  • Non-profit tenants provided access to non-housing

public resources

  • Historic tax credits covered portion of rehab costs

Financing Limitations/Opportunities

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NH&RA Spring Developers Forum

  • Tax counsel
  • Tax accountant
  • Potential lenders & investors
  • Financial analyst

Key Resources

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NH&RA Spring Developers Forum

  • 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 allocate common costs and provide access to all users?
  • How to address lenders’ real estate security requirements?

Key Structuring Considerations

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NH&RA Spring Developers Forum

  • Establish condominium with separate 4% and 9% owners/borrowers
  • Establish separate condo units for each tax credit BIN & use
  • Establish consistent development and operating cost allocation

(totally separate or proportionate)

  • Establish separate construction contracts for each condo unit

Key Structuring Elements

  • No cross collateralization allowed between 4% and 9% projects
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NH&RA Spring Developers Forum

  • 108 4%-LIHTC units
  • 60% AMI set-aside
  • Studio, one- and two- bedroom units
  • 2,000 sf resident services resources center & classroom
  • 1,500 sf community room

Real Estate Components - 4% LIHTC Project

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NH&RA Spring Developers Forum

  • 40 9%-LIHTC units
  • 30% to 50% AMI set-aside
  • 55% two- and three-bedroom units
  • 1,500 sf non-profit owned/operated health clinic
  • 20,000 sf non-profit owned/operated child care center

Real Estate Components - 9% LIHTC Project

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

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NH&RA Spring Developers Forum

Enterprise/Capital One Capital One City of Seattle State of Washington State & City Child Care & Health Care Grants Private Philanthropy

Building 9 Ownership, Financing & GC Contracts

Building 9 Condominium Association

Enterprise /Capital One JPMorgan Chase Bellwether/FMAC WSHFC State of Washington City of Seattle

MHNW 13 Building 9 South LP MHNW 14 Building 9 North LP Condominium Unit 1

91 - 4% Units South Building

Condominium Unit 3

17 - 4% Units North Building

Condominium Unit 2

Child Care & Health Clinic Center Building

Condominium Unit 4

40- 9% Units North Building

GC Contract #1 GC Contract #3 GC Contract #2 GC Contract #4 GC Contract #5

Site Work

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NH&RA Spring Developers Forum