Nmtc, a case study fclf and miracle place
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Transcript of Nmtc, a case study fclf and miracle place
Florida Community Loan Fund, Inc.
And
Metropolitan Ministries
Florida Housing CoalitionAnnual Conference
September 2013
FCLF is a statewide federally certified Community Development Financial Institution (CDFI).
Founded in 1994 to provide a statewide source of flexible financing for non-profits working in community development.
Since it began lending in 1996, FCLF:
has closed 173 loans throughout Florida totaling over $51 million for projects totaling over $250 million.
has financed 93 facilities totaling 1.2 million square feet
projects have created or retained 5,608 jobs
projects have reached over 22,500 recipients of social services
has committed $112 million of its $151 million NMTC allocation in 12 NMTC projects in Florida and the Southeastern U.S. totaling over $358 million.
About FCLF
Florida Housing Coalition – September 2013
Community Development FundCommercial loans to non-profit or mission-focused for-profit
organizations The Transition House. Purchasing and Green standard rehabbing of homes and multi-unit buildings in Central Florida, used for supportive housing primarily to veterans
DuPuis Pointe, Miami. 27 affordable homes built using Green and hurricane-proof standards
Northwest Jacksonville CDC. LEED-certified 10,600-sf commercial building new LEED-certified construction project.
Florida Housing Coalition – September 2013
Florida Preservation FundCommercial real estate loans for preservation of multi-family affordable
housing Timber Ridge of Immokalee. 34 rental units of farmworker housing and a community center.
Royal Poinciana, West Palm Beach. 144 unit apartment complex, acquired and renovated.
Oasis of Hope, Miami. 32-unit apartments under renovation.
Florida Housing Coalition – September 2013
Florida Community New Markets Fund
Funding for community facilities, Green projects, and economic development
Metropolitan Ministries, Tampa. Human services campus of 93,000 sf, providing 52 apartments for at-risk individuals and family, child care, on-site public school, counseling. Total project $18.9 million. Funders include JPMorgan Chase, Whitney/Hancock Bank.
SolarSink, LLC, Tallahassee. Manufacturing innovative solar “sausages” heatsink energy, 1.0mw solar field and 70 jobs; total project $16.6 million. Funders include U.S. Bancorp CDC, Hunter & Harp Holdings.
KIPP School, Jacksonville. Charter school built from former greyhound racetrack for 170 students; total project $26.2 million. Funders U.S. Bancorp CDC, National Equity Fund.
Florida Housing Coalition – September 2013
FCLF New Markets Tax Credits Projects
Florida Housing Coalition – September 2013
FCNMF’s NMTC Focus is on Community Facilities, Green Projects, High-Impact Economic Development ProjectsFCNMF will not use NMTC for Museums, Hotels, Fast Food RestaurantsFCNMF NMTC projects total 12 projects, $358 million project cost, receiving $112 million in FCLF tax credit allocation
ASPIRA North Charter School expansion – North Miami
PACE Elder Care Center – Richmond, VA
UM Life Science Research Center – Miami (LEED certified)
KIPP Jacksonville Charter School – Jacksonville (adaptive re-use)
Solar Sink solar cell manufacturing facility and solar field – Tallahassee (Green)
BTH Quitman Torrefied wood manufacturing facility – Quitman, MS (Green)
Lake Point Restoration water treatment facility – Lake Okeechobee (Green)
ASPIRA Mid-Town Charter School purchase and expansion – Miami
New Camillus House Campus – Miami (LEED certified)
Metropolitan Ministries Miracle Place – Tampa (LEED certified)
Green Biofuels bio-diesel manufacturing facility – Miami (Green)
Hometown Markets – Hitchcock’s Grocery Store – Old Town
Uplift U ®
Unique on-site residential program
personalized for each client
to lead them to self-sufficiency
PromiseLand Day CarePartnership School
Outside of School Care On-site GED Program
Teen Program
Partnership School
Employment Lab
17,000+ homeless men, women, and children in Hillsborough County (Highest in Florida)• Only 1,500 emergency and
transitional beds to support them
15 Families coming daily to MM looking For Shelter
Existing Dining Facility at Capacity
Why Expand?
Fragmented and Antiquated Daycare
Near Capacity
Why Expand?
“Where hope grows,miracles blossom.”
Elna Rae
NMTC Program Summary
Florida Housing Coalition – September 2013
US Department of the Treasury CDFI Program
Purpose is to spur investments into businesses and real estate projects in low-income communities Pictured: ASPIRA Eugenio Maria de
Hostos School, Miami NMTC investors receive tax credits against their Federal income tax return in exchange for making equity investments in specialized financial institutions called Community Development Entities (CDEs)
Major federal economic development program - larger than CDBG
Construction or major renovation of real estate projects located in qualified low-income census tracts
NMTC Program Demand
Florida Housing Coalition – September 2013
$36.5 billion through 749 awards since inception
Competitive: Banks, developers, government, CDFIs
2012: 282 applications requesting $21.9 billion
Awarded 85 allocations totaling $3.5 billion (20 non-profit CDFIs)
FCLF: $151 million cumulative in tax credit allocations
New proposed program funding: 2013 & 2014: $8.5 billion combined
In Florida, over $530 million in projects done through NMTC
Pictured: U of Miami Life Science Research Park
Key NMTC Program Components
Tax credits only-not a grant
Not loan capital-must raise upper tier debt & tax credit equity
Equity investor receives all of return through tax credits
The investment in the CDE cannot be redeemed before the end of the 7-year period
Severe penalties for program & IRS violations – tax credit recapture 39% of investment
Borrower & Allocatee indemnifications
Florida Housing Coalition – September 2013
$6 million minimum project size.
Project must be located in a qualified distressed, low-income census tract:
30% poverty, 60% median income, or 1.5x national unemployment
Project must provide clear and substantial benefits to low-income populations.
Project should generate notable construction and permanent jobs.
Works best for near-bankable projects (e.g. strong borrower and project that can pencil out with the extra support of NMTC).
NMTC – Guidelines & Structures
Florida Housing Coalition – September 2013
LIHTC vs. NMTC
Florida Housing Coalition – September 2013
LIHTC…
Offers tax credits
Provides front-end subsidy for projects
Has significant restrictions on use
Distributed through state housing agencies
Each project competes for tax credits
Has very long compliance periods – longer than the benefit of the credits
NMTC… Offers tax credits
Provides shallow subsidy; additional subsidies may be needed
Provides equity that accrues at the back end of the project
Seldom used for housing, but many economic development uses
CDEs compete for tax credit allocations nationally and distribute as they decide
Compliance period and benefits are over a 7-year period
Typical LIHTC Diagram
Florida Housing Coalition – September 2013
Camillus House New Markets Diagram
Florida Housing Coalition – September 2013
NMTC Projects in Florida have included:
Shopping Centers
Manufacturing Facilities
Hotels
Museums
Office Complexes
Restaurants
Auto Retail
Boat Manufacturing
Affordable Home Ownership by Habitat for Humanity
There are other types; these are examples.
NMTC – Eligible Project Types
Florida Housing Coalition – September 2013
NMTC Projects that FCLF finds desirable:
Community facilities
• Community health centers or health care related projects serving low income clients
• Charter schools serving exclusively low-income students
Green-driven projects
• Solar
• Renewable energy
High impact economic development projects
• Job creation (substantially from within the community)
• Part of community redevelopment master plan
• LEED-certified
• Bringing new services to a low-income community a grocery store in a neighborhood that hasn't seen one in 20 years
a new or renovated building in a high distress CT that brings new business, services and jobs to the neighborhood.
Some of the projects that are qualified but FCLF will not do:
• museums;
• hotels;
• fast food restaurants
NMTC – FCLF Project Types
Florida Housing Coalition – September 2013
NMTC – Who is Involved
Florida Housing Coalition – September 2013
Above: KIPP School JacksonvilleBelow: Metropolitan Ministries MiraclePlace groundbreaking, Tampa
Borrower (QALICB)Significant benefits. Lower debt service coverage Higher LTVS Potential for equity
Allocatees (one or more Community Development Entities, or CDEs )Benefits: High Mission Impact Fee income
Investors (typically a bank)Benefits: > 39% federal tax credit > $10MM. $2.7MM investment yields
$3.9MM
NMTC – Who is Involved, continued
Upper Tier Lenders (borrower affiliates, banks, Community Development Financial Institutions, foundations, public entities)
Benefits:
most interest income flows to upper tier lenders
stronger LTV ratios
strong borrower repayment incentive
Attorneys (NMTC specialist, RE attorneys)
Accountant (Reznick or Novogradac accounting firms)
NMTC Consultant
Florida Housing Coalition – September 2013
Pictured: Camillus House, Miami
Miracle Place, before expansion
Florida Housing Coalition – September 2013
Pictured: MiraclePlace site, pre-construction
Housing Units Current Proposed Variance
Emergency 10 20 +10 100%
Transitional 34 79 +45 132%
Total 44 99 +55 125%
Current Proposed0
20
40
60
80
100
120
1020
34
79
44
99
Housing Units
EmergencyTransitionalTotal
MiraclePlace Proposed Expansion, Housing
Current Proposed0
100
200
300
400
500
600
700
800
98
211
26 48
218
467
342
726
Annual Residents
Families Single Women
Children Total
Current Proposed Variance
Families 98 211 +113 115%
Single Women 26 48 +22 85%
Children 218 467 +249 114%
Total Annual Residents 342 726 +384 112%
MiraclePlace Proposed Expansion, Annual Residents
View from Northeast (along N. Florida Avenue)
View from Northwest (E. Frances Avenue)
View from Southwest across campusand Reflection Garden
Before
NMTC
Closing
After
NMTC
Closing
Sources Available from Cash, Pledges, Grants, and Financing
$ 10,000,000 $10,000,000
New Net Equity from NMTC $ 3,600,000
Development Budget $ 13,214,992 $13,214,000
Funding Surplus / (Deficit) ($ 3,214,000) $ 386,000
Financial Impact of NMTC
Other Impacts of NMTC
Reduced construction interest costs due to significant project funding from cash rather than debt
Capital campaign focus shifted to future phases rather than focusing on completion of initial phase, building substantial momentum and community support
Broader exposure for our project
New partners in FCLF, Chase, Hancock Bank, and Enhanced Capital
Advantages of the NMTC Structure
Florida Housing Coalition – September 2013
Effective rates are typically below market for commercial loans of this type.
As a result of longer amortization or interest-only payments and typically lower rates, monthly payments are lower than for similar size conventional loans.
The “B” loan is often treated as up-front substitute for a portion of equity required by lenders, resulting in higher LTVs.
The equity conversion of the “B” loan means that most up-front equity becomes true equity at end of 7-year term.
The Good, The Bad, and The Ugly
Extremely valuable funding vehicle
Enormous time investment required to perform necessary due diligence, document production, and evaluation of documents
Very, very, complex process that requires multiple expert consultants to close transaction
Possible to handle in-house, but not recommended!
Challenges using the NMTC Structure
Florida Housing Coalition – September 2013
Whether longer amortization or interest-only payments, there is a balloon payment requirement at the end of 7 years; underwriting is for ability to refinance at that time.
Some inflexibility (e.g. project location restrictions, no prepayments, term is always 7 years, certain purposes not allowed, etc).
Program is very complicated and closings are time consuming; and there is a notable learning curve for first-time capital providers and borrowers.
High legal and accounting fees.
Project must be ready to go.
Generally, a new single purpose borrowing entity is required in order to reduce the significant reporting requirements during loan term.
In addition to loan guaranty, a Borrower or guarantor also provides indemnification for tax credit recapture events caused by borrower’s actions.
Is Closing Using NMTC Worth It?
Phase II – Next Steps K-5 Elementary School
Youth Enrichment Center for After-School Programs
Gymnasium and Assembly Hall to Enhance School and After School Programs
Florida Community Loan FundMetropolitan MinistriesContact InformationNelson Black, Director of Lending813.223.7400 Tampa
Cindy Ross, Community Development Loan Officer 813.223.7422 Tampa
Jim Walker, Community Development Loan Officer954.315.1746 Ft. Lauderdale
Valerie Williams, Community Development Loan Officer904.790.2785 Jacksonville
Susan Holtrey, Loan Portfolio Manager407.246.0846 Orlando
MAIN OFFICE: 501 NORTH MAGNOLIA AVENUE, SUITE 100
ORLANDO, FLORIDA 32801-1364PHONE 407.246.0846
www.fclf.org
Florida Housing Coalition – September 2013
Brian Evjen, VP, Strategic Planning and Analysis813.209.1227 Tampa
Tim Marks, President and Chief Operating Officer 813.209.1250 Tampa
Madelyn Cloninger, Director of Advancement 813.209.1235 Tampa
2301 NORTH TAMPA STREETTAMPA, FLORIDA 33602PHONE 813.209.1200
www.metromin.org