NCHMA Finding Profitable Opportunities and Financing Affordable - - PowerPoint PPT Presentation

NCHMA Finding Profitable Opportunities and Financing Affordable Housing Summit Mini Market Update: Transportation Oriented Development

March 30, 2017

2

• TOD is a neighborhood

(re)development which includes a mix of housing, office, retail, other employment-based land uses, and public buildings/amenities in a walkable, compact neighborhood within 0.5 miles

• f a high-quality transit station.

(Adapted from CTOD – Center for Transit Oriented Development)

• “Began” in late 1980s – although

StreetCar Suburbs dominant in 19th century

Transit-Oriented-Development

3

• Demand for housing near high-quality transit is growing but supply is not

keeping up. Prices are escalating (Reconnecting America)

• High-quality TOD development is difficult, time-consuming, and expensive
• Public agencies and investment require value-capture, ROI and hope to

leverage investments

• Transit ridership projections may require capturing “choice” commuters vs.

existing transit-dependent households

Market Realities

4

• 75 percent of HUD-subsidized affordable housing units near transit stations

have expiring subsidy contracts in next 5 years

• Only a small proportion of LIHTC developments built within

½ mile of high-quality transit station

• Nearly half of new transit stations are built in neighborhoods where affordable

housing already located

• Land costs not part of “eligible basis” for LIHTC. Therefore, higher-cost in

TODs = larger gap financing needed

Equitable TOD Challenges

5

Well-planned and implemented development near transit that accounts for the needs of low- and moderate- income people, largely through the creation or preservation of affordable housing*

Equitable Transit-Oriented-Development Can:

• Preserve and create affordable housing units near transit
• Prevent or reduce gentrification
• Preserve or develop access to transit for low- and moderate-income individuals
• Connect people to employment, health care, child care, education, stores, food, and

critical services

• Reduce cost of living, promoting economic mobility (low income families often spend > 75%
• f income on housing & transportation, with transportation their 2ndhighest expense)
• Improve transportation system performance, local and regional economies, municipal finance,

the environment and public health for all residents and rider regardless of income*

* Promoting Opportunity Through Equitable Transit Oriented Development (ETOD): Making the Case; Enterprise Community Partners; April 2015

Equitable Transit-Oriented-Development (ETOD)

6

• Goal: stable, affordable, diverse, mixed-income housing near high-quality transit

stations in high-opportunity areas.

• Strategies

– Preserve existing affordable housing near planned transit stations. – Fund pre-development and land acquisition for affordable housing providers in TOD areas. – Mandatory or incentive-based mixed-income housing for projects with public subsidy

• r discretionary land-use approvals

– State Housing Finance Agencies (HFAs) include transit-oriented policies and points in LIHTC QAP (Qualified Allocation Plan)

Equitable Transit-Oriented Development

The Denver TOD Model

8

Structure: A Blend of Risk/Return | The Denver Model

Urban Land Conservancy City & County of Denver - (0% Return, Non-Recourse) Enterprise Community Partners MacArthur Foundation Colorado Housing and Finance Authority Rose Community Foundation (<2% Return, Non-Recourse) Enterprise Community Loan Fund US Bank Wells Fargo First Bank

Non Profit Equity $1.5 Million First Tier Capital $2.5 Million Second/Third Tier Capital $5.5 Million Senior/CDFI Capital $5.5 Million

9

The Denver Results

Borrower Equity $1.5 Million First Tier Capital $2.5 Million Second/Third Tier Capital $5.5 Million Senior/CDFI Capital $5.5 Million

Acquisition Loans 3-5 Year Term 3.4% Interest Only 60% Non-Recourse Expedited Approval

10

New and Rehabilitated Subsidized Rental Apartments:

• 910 apartments
• $108.7 million in local income one year
• $10.9 million taxes and other revenue for local governments one year
• 1,469 local jobs one year

$598 million in local income and 7,345 local jobs cumulative

• ver 5 years

*Results from metro Denver study, conducted by Chief Economist Elliot Eisenberg, Ph.D.,

• f the economic consulting firm GraphsandLaughs, LLC. For a copy of the full study,

please contact Christi Craine, Urban Land Conservancy, ccraine@urbanlandc.org

The Denver TOD Impacts (2009-2013)*

The Indianapolis ETOD Model

ADVANCING COMMUNITIES Reliable quality service for over 20 years

12

• $15 million Acquisition Fund to preserve or develop affordable housing near

planned transit stations before escalating property values put those sites

• ut of reach
• Utilize public resources to leverage private and philanthropic resources
• Gather and structure capital to make loans not traditionally available
• Finance the purchase and holding of properties until the sites are ready

for development or rehabilitation and permanent financing is secured

The Indianapolis ETOD Loan Fund: Goals

13 13

Structure: A Blend of Risk/Return ($15M Loan Fund)*

INHP Borrower ** City & State (0% or Low Interest/Non Recourse/Credit Enhancement) Philanthropic, Foundations, Government Agencies & Bank Grants (Low Interest/Non Recourse) Banks (EQ2)

Non Profit Equity $1.5 Million First Tier Capital $XX Million Second/Third Tier Capital $XX Million Senior/CDFI Capital $XX Million

*Structure keeps cost of capital low & reduces/shares risk **Source of funds: The Lilly Endowment transformative grant to INHP, December 2015

14 14

Loan Fund Terms

Borrower Equity $1.5 Million First Tier Capital $XX Million Second/Third Tier Capital $XX Million Senior/CDFI Capital $XX Million

For the Fund to maximize its impact, attractive terms are being pursued in order to

• ffer the following loan terms

to the Fund’s borrower:

15

Loan Parameters

Project Types

• Multifamily rental housing – mixed income, with an emphasis on

affordable housing

• Mixed-use projects that are complementary to community needs
• Vacant/underutilized land or properties that will be acquired for the purpose
• f producing either of the above
• Acquisition of affordable housing near transit, preserving it for that use

Development Parameters Located primarily within ¼ mile of a transit stop Loan Terms

• Acquisition loans
• Up to $3 million, higher with consent of a committee of investors
• Maximum of 5 years
• Loan-to-Value up to 90% of the lesser of the as-is appraised value
• r the purchase price
• Interest rate - fixed-rate; interest rate to be determined based upon

mix of investment in the Loan Fund, with a maximum expected interest rate of 3.50%

inhp.org l 317-610-HOME (4663)

Joe Hanson

Executive Vice President, Capital Development & Strategic Initiatives

Indianapolis Neighborhood Housing Partnership

INHP’s ROLE

inhp.org l 317-610-HOME (4663)

Comprehe hens nsive View

• Preserve/Develop affordable housing
• Economic opportunities through access to transit

and therefor jobs, education, healthcare, etc.

• Prevent gentrification

Buy/H /Hold/S d/Sell – INHP will not become a developer but will use site control to encourage equitable development

INHP’s INVESTMENT

inhp.org l 317-610-HOME (4663)

10% Equi uity ty Investme tment nt – First t Loss Pre-de developm pment Resour urces

• Interest Carry
• Site Assembly
• Re-zoning
• Brownfield Remediation

Research h for Strate tegic/Effi /Efficient Deployment

RISKS

inhp.org l 317-610-HOME (4663)

• No known

n take-out ut / could d take years

• Expectati

tation n for discoun unte ted price – not t susta taina nable

• Pre-de

developm pment costs ts may not be recoverable

• Inte

terest t carry may limit t utilizati zation

RESEARCH

inhp.org l 317-610-HOME (4663)

Suppl ply

• Possible preservation of expiring tax credit compliance
• Assessment of risk that property will convert to market rate
• Avoid concentrations of poverty

Demand nd

• Greater than supply
• LMI families want access to jobs, food, healthcare, education

RESEARCH (Continued)

inhp.org l 317-610-HOME (4663)

Best t Practice tices Policies affecti ting ng developm pment nt pote tenti ntial

• Zoning density and parking requirements

Take out t fina nanci ncing – availability ty impa pacts ts depl ployment nt optio tions ns and timing ng

• LIHTC Qualified Allocation Plan (QAP)
• FHLB
• Other

Resul ult: t: Scorecard d to guide de site te selectio tion

Contact Us

Mark McDaniel President and Chief Executive Officer Cinnaire 517.364.8900 | mmcdaniel@cinnaire.com Joe Hanson CFO and EVP Strategic Initiatives Indianapolis Neighborhood Housing Partnership 317.610.4680 | jhanson@inhp.org

Cinnaire – Fund Sponsor

(formerly GREAT LAKES CAPITAL FUND)

ADVANCING COMMUNITIES Reliable quality service for over 20 years

• Cinnaire is a 501(c)3 non profit, whose subsidiary Cinnaire Lending, is a

Community Development Financial Institution (CDFI).

• Cinnaire provides solutions and support to partners through a dedicated

full‐service approach. Through a consistent focus on the mission we share with our partners, our loyal, experienced and knowledgeable team members create opportunities and provide access to funding and resources that advance community and economic development efforts. Our responsible financial investment strategies, lending options and value‐added services enable investors to advance business and community endeavors.

• Cinnaire Lending’s services include financing affordable housing properties,

directly financing community developers, and financing commercial real estate located in low or moderate income census tracts. Cinnaire Lending’s service area is nation-wide, with an emphasis on the Midwest and Mid-Atlantic.

Cinnaire

25

• Over twenty years of operations
• Over $3.5 billion in community impact
• Over $336 million in Loan Funds
• $8 million New Markets Tax Credits (NMTC) investment in Detroit M-1 Rail

($130 million total development cost)

• Over 650 housing developments under asset management (over 39,000

units)

• 25 NMTC developments under asset management
• Consistent on-time reporting
• No foreclosures
• Never called additional capital from investors above the original

commitment amount

• Consistently met or exceeded the IRR target for each Fund since inception

Cinnaire Fund Management Experience

26

States Served

CORE FOOTPRINT

• Michigan
• Indiana
• Wisconsin
• Illinois
• Minnesota
• Delaware
• New Jersey
• Maryland
• Eastern Pennsylvania

EXTENDED FOOTPRINT

• Louisiana
• Mississippi
• Upstate New York

27

Our History | 1992 – 2007

1992/1993 1994/1995 1996/1997 1998/1999 2000/2001 2002/2003 2004/2005 2006/2007

MCFH founded in conjunction with Fund I Fund 2 & 3 Fund 4 & 5 Fund 6 & 7 Fund 8 & 10 Fund 11 & 12 Fund 14 & 15 & 16 (Guaranteed Fund) state housing authority $14M $14.4M & $20M $23M & $38.5M $50.2M & $66.12M $230.98M $255M $275M in 3,230 Units of Housing 5 Developments 17 Developments 19 Developments 67 Developments 98 Developments 200th Development Expansion to Illinois Detroit Office Opened Indianapolis Office Established CFIC Formed Title Company Formed ICFH I Wisconsin Office Opened $1Billion Economic Impact $26M GLCF serves as Fund Manager CDFI Certification CFS Formed for $60M NMTC Award 100th Development MCFH becomes GLCF $14 Million $66 Million $147 Million $295 Million $598 Million $890 Million Note: Chart is cumulative

28

Our History | 2008 – 2015

2008

2009 2010 2011 2012 2013 2014 2015

Fund 17 & Single Investor Funds 450+ Developments 18 Years of Operations 19 Years of Operations 20 Years of Operations Raised $186.4M in LIHTC Equity Raised $220M in LIHTC Equity Changed

• rganization name

to “Cinnaire“ $81M Total Expansion into Upstate New York Approved by Fannie Mae as a seller/servicer of affordable loans 500th Development Fund 26 Raised $45M in Equity for Develop Michigan Real Estate Fund Closed DCIC Capital Fund I Record Breaking Year of Equity Raised of $254M 33 Developments GLCF serves as fund manager For $88M NMTC Award Fund 25 Closed 2nd MI & IN Community Funds Closed 3rd MI & IN Community Funds 400th Development Received $4M Capital Magnet Fund Award $50M Launched DMI Initiative GLCF partners with Delaware Community Investment Corporation (DCIC), expanding footprint into Delaware and

• ther states

Became a member

• f the Federal

Home Loan Bank

• f Chicago

Closed largest multi-investor equity fund at $185M 25,000 + homes supported to date Formed partnership with Hope Enterprise Corporation 5 Fannie Mae loans closed Formed partnership with Greater Minnesota Housing Fund Opened Chicago office $35M NMTC Allocation Awarded Closed DCIC Capital Fund 2 GLCF fund manages $238M total of NMTC allocation $46M NMTC Allocation Awarded Closed $17M in loans CFS received CDFI recertification Closed $28.4M in loans Originated 13 NSP loans totaling

• ver $500K

$1.8 Billion $2.3 Billion $2.5 Billion $2.7 Billion $2.95 Billion $1.6 Billion

29

Our Investors

1st Source Bank Advanta Corporation AIG Federal Savings Bank Allstate Insurance Company Ally Bank Ally Financial Ameren AON Archer Daniels Artisans’ Bank Auto-Owners Insurance Company Banc One CDC Bank of America Bank of America, N.A. Bank of Ann Arbor BankPlus Barclays Bank Blair LLC BMO Harris Bank, N.A. BNY Mellon Trust of DE Centier Bank Central State Bancorp Charter One Bank F.S.B. Chemical Bank ChoiceOne Bank Chrysler Corporation Cipsco Investment Company Citibank Citicorp Citizens Bank Citizens Bank of Pennsylvania/RBS Citizens Comerica Bank Commerce Bank Commercial Bank Community Bank Delaware County Bank Crossroads Bank CS Bancorp Deutsche Bank Trust Company Discover Bank Eaton Federal Savings Bank Farmers State Bank (LaGrange) Farmers State Bank (Mentone) FCN Bank, N.A. FDIC Fannie Mae Fifth Third Bank First Bank Financial Centre First Commercial Bank First Federal Bank of the Midwest First Federal Savings Bank (Huntington) First Federal Savings Bank (Rochester) First Financial Bank, N.A. FirstMerit First Midwest Bank First National Bank of Michigan First National Bank of Wyoming First Niagara Bank, N.A. First Savings Bank FNBC Leasing Corp. Forethought Life Insurance Company Founders Bank and Trust Franklin Life Insurance Freddie Mac Fulton Bank/Delaware National Bank German American Bank Grabill Bank Hillsdale County National Bank Home Bank SB Horizon Bank, N.A HSBC Bank, USA NA Huntington Bank IAB Financial Bank Irwin Union Bank and Trust Company Isabella Bank JP Morgan Chase Bank N.A. Key CDC Lake City Bank Lake-Osceola State Bank LaSalle CDC Level One Bank M&T Bank / Wilmington Trust Company Macatawa Bank MainSource Bank MarkleBank mBank Mellon Bank Mercantile Bank MidCoast Community Bank Midland States Bank Monroe Bank & Trust Morgan Stanley National City CDC NBT Bank Northwestern Mutual Life Insurance Company Old National Bank Our Community Bank Penske Realty Corporation Peoples Federal Savings Bank

• f Dekalb County

PNC Provident Bank RBS Citizens Regions Bank River Valley Financial Bank Southern Farm Bureau Southern Michigan Bank & Trust Sovereign Bank Spencer County Bank Spring Valley Bank & Trust Star Financial State Farm Mutual Automobile Insurance Co. State Savings Bank Sterling National Bank Sturgis Bank and Trust Company Summit Community Bank Sun National Bank, DE Talmer Bank and Trust TD Bank, N.A Tendercare Nursing Homes Inc. Terre Haute Savings Bank The Bryn Mawr Trust Company/First Bank of Delaware The First National Bank of Monterey The National Bank of Indianapolis The Peninsula Bank of Ishpeming The Private Bank & Trust Tower Bank & Trust Company Trustmark National Bank United Bank of Michigan University Insurance & Investment Services Inc. U.S. Bank Wells Fargo Bank, N.A. Wells Fargo CDC West Shore Bank Wilmington Savings Fund Society Wolverine Bank Your Community Bank

30

Our Business Lines

Tax Credit Investing (Low Income Housing, New Markets, Historic) Lending: Affordable Housing through CDFI & Commercial Real Estate Development: Affordable & Veterans Housing; Advice, Planning and Consulting Title Services

Cinnaire will support and enhance community stabilization and economic development by providing

• ur partners with creative financial resources,

expertise and best-in-class services. cinnaire.com | 844-4CINNAIRE

inhp.org l 317-610-HOME (4663)

Mission—The The mission n of the Indi diana napo polis Neighb hborho hood d Housing ng Partne tnershi hip p (INHP) P) is to increase affo forda dable and sustai taina nable hous using ng

• ppo

portuni tunitie ties for indi dividua duals and families and serve as a catalyst t for the developm pment nt and d revital talizati zation n of neighb hborho hoods. ds. Vision—INHP’s vision is that every person in Indianapolis has the

• ppo

portuni tunity ty to live in a safe fe, decent nt and d affo fordab dable home in a vibrant nt neighb hborho hood.

inhp.org l 317-610-HOME (4663)

Mission & Vision

$40 million n investe ted d in neighb hborho hood d developm pment nt ini nitia tiati tives $373 million n in mortg tgages have been fina nance nced d for low-and mode derate te- income families in partne tnershi hip with h the commun unity ty $26.6 .6 million n trans nsfo formative tive grant nt from the Lilly Endowment nt - December 2015

inhp.org l 317-610-HOME (4663)

Community Impact