National Housing & Rehabilitation Association Summer Institute. Sponsors:

Transcription

1 National Housing & Rehabilitation Association Summer Institute July 18-21, 2018 Martha s Vineyard, MA Sponsors:

2 Development & Finance Team: Development: Developer/Sponsor- Nuestra Communidad CDC & Windale Developers Architect- Davis Square Architects Affordable Housing Consultant- Henry Joseph & Associates NMTC Consultant- Affirmative Investments, Inc. General Contractor- Bilt-Rite Construction, Inc. Accountant- Cohn Reznick Finance: NMTC & LIHTC Equity Investor- Bank of America Merrill Lynch LIHTC Syndicator- National Equity Fund, Inc. Construction Lender- Bank of America Merrill Lynch Leverage & Perm Lender- Eastern Bank NMTC CDE Allocation- Bank of America CDE & LISC (NMSC) Lender- MHIC Healthy Neighborhoods Equity Funds (HNEF) Public Sector: Massachusetts DHCD Affordable Housing Trust Fund City of Boston FHLB AHP NH&RA Summer Institute

3 NMTC Case Study: Bartlett Station Bldg. B, Roxbury, MA Project Summary: Phase one of 8.6 acre mixed-use, mixed income brownfield redevelopment of former MBTA Bartlett Yard bus depot in the Dudley Square neighborhood. Bldg. B is a new five-story 107M SF mixed-use residential building on a 1.72 acre parcel. Total development budget $32.3MM The project will consist of 12M SF ground floor retail space, 60 residential units, 15.5M SF public plaza and 17.9M SF two-story parking structure containing 46 spaces. 32 units are affordable LIHTC, 22 units are market rate, 6 units affordable. Good Food Markets, a fresh food market is leasing a portion of the ground floor retail space. Shared building amenities include community room, community kitchen, management office, fitness center, common laundry room, residential and bike storage. NH&RA Summer Institute

4

5

6

7 Bartlett Station Bldg. B Unit Mix NH&RA Summer Institute

8

9 NH&RA Summer Institute

10 NH&RA Summer Institute

11

12 Project Finance Summary: $16.5MM of NMTC allocation; $8MM BAML and $8.5MM LISC. BAML is the NMTC investor for both allocations contributing $6.2MM in equity. Eastern Bank provided $7.2MM mini-perm for the Leverage Loan. Nuestra provided sponsor leverage loan of $3.866MM compromised of $990M AHTF loan, $2,040MM HNEF loan and $836M Nuestra/Windale. Nuestra provided a direct sponsor loan of $185M, HNEF $860M direct loans to QALICB. $9.5MM BAML 9% Federal and State LIHTC equity invested through NEF Fund. $9.6MM BAML construction loan for the LIHTC residential units. Public sector support: $1.4MM Mass DHCD housing stabilization funds, $750M DHCD investment trust funds, $1MM City of Boston neighborhood Housing Trust funds, $1MM Boston Inclusionary Development funds, and $500M FHLB AHP Grant. Eastern Bank $1.75MM Perm loan. NH&RA Summer Institute

13 MHIC - CLF Healthy Neighborhoods Equity Fund (HNEF) provides patient capital for transformative mixeduse, mixed-income real estate projects that foster walkable neighborhoods and healthier living in transitional or unproven markets. HNEF designed as an equity investment capturing upside, typically from sale or refinancing after 10 years; 8% target return for Fund I Structuring challenge to combined HNEF with NMTC: 1. HNEF return depends on selling residential units as condos after year 7 2. NMTC true debt test depends on holding as rental and repaying debt over 30 years 3. NMTC 20% commercial revenue test on day 1 versus HNEF interest in community-serving retail uses that take longer to arrange 4. Debt forgiveness income to HNEF if an owner Solution: HNEF split between high-interest cash-flow note direct to QALICB and junior leverage loan behind Eastern with accruing interest to soak up up-side AND master lease of commercial space by CDC sponsor backed by large reserves from multiple sources

14 Legal & NMTC Challenges: Condominium ownership with separate LIHTC and NMTC condos Initial temporary structures to form Condo 80/20 Requirement 20% commercial revenue on the NMTC condo parcel. Master lease of the commercial space by Nuestra CDC Commercial space lease reserve for tenant improvement build out and balancing the NQFP test Declaration of Reciprocal Easements- shared areas and expenses Construction contract and allocating the development costs between the two condo ownership parcels- LIHTC cost certification NH&RA Summer Institute

15 Bartlett Station Building B- Floor Plans Condo Structure

16

17

18 Community Benefits: 38 Affordable Housing 30%, 60% and 80% AMI. Good Food Market providing local, natural and healthy food access to the low-income residents of Roxbury. Job creation estimated at 50 FTE from tenants of the commercial space. Transit-oriented development: Bartlett Station will be a dense, walkable urban neighborhood located 2 blocks from Dudley Station, a busy bus station in Boston. Densely developed master plan to ensure the projects nearby transit amenities are utilized. Energy sustainability using green technology. Bldg. B itself will be a minimum LEED silver. Public Plaza will feature installations by visual artists, ranging from street sculptures to murals; rotating visual art displays and diverse performance programming. NH&RA Summer Institute

19 NMTC Investment Exit Strategies NMTC Exit: Option 1: After year 7 (EOC)- conversion of 28 units to condos. For sale units and associated parking spaces Upon condo sellout year 10- refinance commercial space Use proceeds to payoff remaining debt/leverage loans (Eastern Bank, HNEF) Option 2: Residential units remain rental housing Refinance of both NMTC Leverage debt and LIHTC Perm loan (Eastern Bank) Option 3: Refinance of NMTC Leverage debt only Lender to accept NMTC condo as collateral? * LIHTC- 15 yr. compliance and affordable units in perpetuity NH&RA Summer Institute