Rental Assistance Demonstration Program GOING BIG IN EL PASO

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Jane York
6 years ago
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1 Rental Assistance Demonstration Program GOING BIG IN EL PASO

6 WHAT WERE WE THINKING?

7 Full Portfolio Conversion Aging housing stock - majority of portfolio was over 40 years old - would have taken 20 years to update using capital funds Declining capital fund allocations Preserve affordable housing in El Paso for 20+ years Asbestos laden construction

8 Changing Business Models Section 9 Section 8 Public Housing vs. PBRA or PBV Co-Development vs. Self-Development

9 HACEP PROPERTY MAP El Paso, TX Ciudad Juarez, MX

RAD Tranche Highlights TRANCHE I 13 communities 1,590 units Both substantial rehabilitation and total

residents Bundling properties into one project saved $31MM in fees TRANCHE II 5 communities 2,100 units

3,480 units Using predominately 4% tax credits Building two new developments on far East side to replace

10 RAD Tranche Highlights TRANCHE I 13 communities 1,590 units Both substantial rehabilitation and total reconstruction Mixed financing 24 months to complete first phase Temporarily Relocation of 6,000 residents Bundling properties into one project saved $31MM in fees TRANCHE II 5 communities 2,100 units built after 2010 Paper Transaction Mixed financing No relocation of residents TRANCHE III 29 communities 3,480 units Using predominately 4% tax credits Building two new developments on far East side to replace existing communities located in Lower Valley and Central district 195 scattered sites financed with traditional debt

11 RAD PROJECT SUMMARY Portfolio-wide conversion 6,102 units Five year timeframe to complete project Six new constructions (using 9% tax credits; 900 units) Substantial rehabilitation of remaining communities Created a dedicated RAD Implementation Team Relocation of 20,000 residents Total Estimated Cost -- $1.2 Billion Creation of 1,000 new jobs in El Paso = A historic, unprecedented transition for El Paso

9% tax credits are used for complete demolitions Competitive Rebuilding 6

12 4% vs. 9% TAX CREDITS 4% tax credits rehabs taken down to the studs Non-competitive 9% tax credits are used for complete demolitions Competitive Rebuilding 6 communities Krupp, Tays, Sherman, Westfall, Salazar/Gonzales/Cisneros* Reconstructed communities using 9%s represent 15 % of portfolio *application pending

13 RAD IMPLEMENTATION PLANNING

14 FINANCING SOURCES Bonds 4% and 9% Tax Credits Capital Funds PH Operating Funds Federal Reserve Grant Freddie Mac (Tel/Forward) HOME FUNDS Historic Tax Credits GAP Loan EL PASO Financing Corp Conventional Mortgage Developer Fees NOI Reinvestment $1.2 BIL

Mac/Fannie Mae HOME funds, GAP Financing Public Private Partnerships State Rules Exit Strategy Governance Financing Operations Construction & Development Need Vacancy Strategy Right to Return HUD

15 Strategic Planning Considerations Cost-Benefit Analysis PBRA vs. PBV In-house vs. Outsourced Adopting Private Sector Model Assessment of impact on local economy Implications on End State of Agency Using Municipal Financing vehicles Capital Funds Tax Credits HUD FHA/Freddie Mac/Fannie Mae HOME funds, GAP Financing Public Private Partnerships State Rules Exit Strategy Governance Financing Operations Construction & Development Need Vacancy Strategy Right to Return HUD Timing (e.g. filing deadlines, response time) Fulfilling Accessibility Requirements Historical Preservation Issues Select Development Team Early One-stop Partners Rehab vs. Rebuild 1-for-1 replacement of units Rethink Demographic Composition Co-Develop vs. Self Develop Developer fees Costs: Fee Structures, Guarantees, Acquisition Costs

Project Planning Considerations Dedicated RAD team Staffing resources in each area IT to build or buy proprietary

, resident care) Need a Mobile Tech strategy Resident communication and participation Enlist support of city

oups Community partner communication and planning

16 Project Planning Considerations Dedicated RAD team Staffing resources in each area IT to build or buy proprietary software (i.e. vacancy mgmt., resident care) Need a Mobile Tech strategy Resident communication and participation Enlist support of city officials and civic groups Community partner communication and planning (e.g. utilities, schools, transportation) Don t forget employee buy-in Resources Community Engagement Logistics Resident Relocation Vendor management Specialized training Daily capacity to move residents Survey resident needs and reasonable accommodations for temporary housing Understand the URA and implications of extended displacement of resident Over Income Residents Solution

17 Communications HACEP Leadership MEDIA HUD Vendors HACEP Commissioners Syndicators Employees Community Partners City Council Civic Groups Resident Council Residents

18 HUD Consideration for full conversion PHAs Unrealistic milestones for portfolio awards Fair housing issues - DON T MOVE RESIDENTS EARLY! Based on FHA financing - No consideration for tax credits, extended closing timelines Engage local HUD field office Assistance with Environmental Reviews Issues related to changing from Section 8 to Section 9 Expeditious process of request waivers HUD s flexibility in facilitating timely closings: Assigning multiple transaction Managers Review of due diligence prior to receiving tax credit awards Assigning specialists on staff at regional HUD office -- Environmental Reviews, Multi-Family, etc. Weekly due diligence calls

19 Divergent Issues Public Housing AMI Requirements LIHTC AMI Requirements Effect of over income households TDHCA abridged timelines TDHCA additional ADA Requirements No early relocations!!! Mind Uniform Relocation Act HUD State Originally one 4% tax credit/yr. TDHCA abridged timelines TDHCA additional ADA Requirements Risk = 25% PH units Reserve for Replacement Freddie vs. HUD RAD Requirements Investor Requirements Guarantees Effective Management Co. Freddie Mac TEL Program No flexibility Right-sizing Right to Return to Community Right to Return to Unit

20 TITLE COPY RAD EXECUTION

21 EXECUTION ROADBLOCKS Legislative Change: Championed filing unlimited 4% tax credit applications per year Vacancies: Used portfolio inventory to address vacancy needs and assessed private market availabilities as a back-up plan Tax Credits: At-Risk 9% Tax Credit application required 25% Public Housing set aside Addressed Challenges: HUD and Freddie Mac required control on Operating Reserves Required to set up escrow to settle on-going issues Creation of vacancies; will impact PHAS High Performer designation and HUD performance reporting Relocation of 20,000 residents

22 DO-OVER? HAVE A VACANCY STRATEGY! Think about your agency s End State RAD impacts the funding of central office Lease Enforcement: Address breaches of lease agreements prior to project launch Infrastructure: Dedicate more time for discovery for non-visible legacy issues bad news impacts timelines Right-Sizing: Meet the current needs/demographics of your families HUD s Lesson: Develop a plan for 100% portfolio conversion/rehabs Development Timeline: Front-load the BIG developments Systems: Have the right project-management tools/software in place It s not about moving too slow, it s about meeting the conservative deadlines.

CONTACTS Gerald Cichon Chief Executive Officer asaenz@hacep.

23 CONTACTS Gerald Cichon Chief Executive Officer Satish Bhaskar Chief Financial Officer Megan Glasheen Attorney At Law, Reno Cavanaugh (202)

Reviewing and Selecting PHA Properties for RAD Conversion

Reviewing and Selecting PHA Properties for RAD Conversion PANELISTS Nick Hoehn Novogradac & Company LLP nick.hoehn@novoco.com Satish Bhaskar Housing Authority of the City of El Paso, Texas (HACEP) sbhaskar@hacep.org