Ohio Capital Finance Corporation · Neighborhood Transformation Loan ... ‐ Accounting Contact ‐...

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Ohio Capital Finance Corporation

Recovery Housing Lending Products

OCFC MISSION STATEMENT

Ohio Capital Finance Corporation provides flexible financing products andutilizes partnerships for the expansion and preservation of affordablehousing to advance community development while ensuring that allresidents regardless of income live satisfying lives and contribute to theircommunity.

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• Established in 2002

– $451M+ loan production

– 575 loans closed

– 23,500 units financed

• Community Development Financial Institution (CDFI)

• Member of the Federal Home Loan Bank of Cincinnati

OHIO CAPITAL FINANCE CORPORATION ‐ EXPERIENCE

OCFC FUNDERS

Federal FundingUS Department of the Treasury’s Community Development Finance Institution Fund(CDFI Fund)

• Technical Assistance • Financial Assistance • Capital Magnet Funds

OCFC is applying for a Financial Assistance grant which would specifically assist Recovery Housing projects…stay tuned in 2019!!!

Philanthropic Funding

• JP Morgan Chase‐ PRO Neighborhoods Competition • McArthur Foundation.

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OCFC offers the following loan products from its various loan funds to serve developers and sponsors of affordable housing in the region:

Predevelopment Loan*Acquisition Loan*Equity Bridge Loan*Permanent LoanYear 15 Bridge LoanNeighborhood Transformation Loan

*Products pertinent to Recovery Housing

OCFC PRODUCTS AND SERVICES

Technical Assistance:

• Available to all OCFC borrowers• Provided on as‐needed basis• No charge for services

Technical assistance may include the following:• Determining the financial feasibility of the project• Discussion of required steps to develop and finance the project• Reviewing market studies, appraisals, environmental studies and

other information to determine feasibility of the project• Reviewing financing applications and budgets to determine project

feasibility• Review of construction plans and contracts • Conducting site inspections

OCFC PRODUCTS AND SERVICES ‐ CONTINUED

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RECOVERY HOUSING LENDING GUIDELINES

• All projects must be multi‐family properties

• Projects must be located in OCFC’s geographic region (OH and KY)

• The borrowing entity is the LLC or LP– But may be nonprofit, public housing authority or for‐profit entities‐ cannot be individuals

• Minimum loan amount is $100,000• Maximum loan amount is $5,000,000• Interest rate is Prime Rate minus 0.5% or approximately 4%• Term‐ up to 24 months• There are no prepayment penalties with any loan• Loan fees can be included in loan amount• Developer Fees and Operating Costs are not eligible for

funding

• All Loans must have a likely and plausible payoff strategy (i.e. State and Local Funds, equity, or philanthropic dollars must already be committed)

• All projects must have at least 80% of the units affordable to and occupied by residents earning less than 60% of area median income

• Interest accrues and is due and payable upon repayment of the loan

• Borrower is responsible for all third‐party fees • All Loans are expected to close and fund within 90 days of

approval• Loan Extensions may be granted upon written request from

the borrower

RECOVERY HOUSING LENDING GUIDELINES

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COLLATERAL AND FEES

Collateral• Guarantee from individual, parent of borrower,

developer or another entity with net worth• First Mortgage during construction and until payoff‐

need to work with OMAS on subordination of their mortgage until project is completed

Fees Paid by Borrower• Origination Fee – greater of $1,000 or 1% • Servicing Fee – greater of $1,000 or 1% • Third party fees (including, but not limited to):

Lender legal feesTitle and Recording FeesAppraisal FeesOther

• All fees are paid at closing, but can be wrapped into loan amount

APPLICATION REQUIREMENTS

Application details:

‐ Anticipated Closing & Payoff Dates‐ Loan Type and Loan Amount (fees will

be automatically calculated)‐ Project Information ‐ Borrower Information ‐ Project Contact Information‐ Guarantor Information (if applicable)‐ Accounting Contact‐ Bank Account Information (for wiring

funds)‐ Title Company Information‐ Certification

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For an Application, Closing Checklist, Term Sheets, Rate Quotes or questions please contact:

Ohio Capital Finance Corporation

Millie Davis, Vice President

(614) 224‐8446 EXT 131

[email protected]

CONTACT US

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Recovery Housing Development Toolkit – BUDGETTOOL

This Excel Spread sheet will allow you to enter all of your accrued/expected

development and operating expenses as well as

calculate your debt service and track your sources of

funding.

Formulas will be set so that you just enter your

information in yellow cells and the calculations are

done for you.

Recovery Housing Development Budget

Project Name:

Project Address:

Number of Units/Beds: 50

Use of Funds Total Per Unit

Soft Costs

Acquistion‐ Land (New Construction) $200,000 $4,000

Acquistion‐ Building (Renovation) $0 $0

Engineering $3,500 $70

Market Analysis $1,200 $24

Environmental Study‐ Phase I & II (if applicable) $3,000 $60

Survey (ALTA or Mortgage Location Survey) $3,500 $70

Physical Capital Needs Assessment (Renovation Only) $1,200 $24

Title and Recording $1,200 $24

Consulting Fees $5,000 $100

Real Estate Taxes/Impact Fees $1,500 $30

Additional Environmental (Soil Testing, Lead Testing, etc.) $0 $0

Additional civil engineering (if applicable) $0 $0

Architectural drawings & construction supervision $5,000 $100

Appraisal $500 $10

Legal Fees $2,200 $44

Lender Legal Fees $5,000 $100

Lender Loan Fees (Origination and Servicing) $3,000 $60

Construction Loan Interest $25,000 $500

Accounting $1,000 $20

Soft Cost Contingency $8,000 $160 2.30%

Marketing Costs $3,000 $60

Other $0 $0

Other $0 $0

Other $0 $0

Other $0 $0

Development Fee $75,000 $1,500 5.47%

Total Soft Costs $347,800 $6,956

ABC Development

Recovery Housing Development Toolkit – BUDGETSOFT COSTS

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Recovery Housing Development Toolkit – BUDGET HARD COSTS

Hard Cost ‐ Construction

Permits & Tap Fees $5,000 $100

Construction Insurance $300 $6

Bond (if required) $0 $0

Site Work $10,000 $200

Construction/Rehabilitation $1,000,000 $20,000

Appliances/Carpeting $4,000 $80

Building Permits / Tap Fees $2,000 $40

Contractor Fees ‐ General Requirements $15,000 $300 1% Max ‐ 6%

Contractor Fees ‐ Overhead $10,000 $200 1% Max ‐ 2%

Contractor Fees ‐ Profit $15,000 $300 1% Max ‐ 6%

Contingency‐ Hard Cost $50,000 $1,000 4.93% 5% for New Construction / 10% for Rehabilitation

Furniture, Fixtures & Equipment $3,000 $60

Other $400 $8

Total Hard Cost $1,114,700 $22,294

Capitalized Reserves

Operating Reserves $0 6 months‐operating expenses (Min 4 months of 1st year operating expenses )

Total Reserves $0 $0

Total Development Budget $1,462,500 $29,250

Sources of Funds Total Per Unit

Construction Sources of Funds 1,406,250 Construction period costs

Bank/Bridge Loan $500,000 1,000,000 Non‐bank sources

Foundation Funds/Donated $250,000 4.00% Construction Loan Interest Rate

City/County HOME or other $250,000 24 Term of Construction financing

County ADAMHS $0

OMHAS Capital $0 Max Award‐ $500,000

FHLBank AHP

OHFA HDGF

Other $500,000

Total Construction Sources of Funds $1,500,000

Permanent Sources of Funds

Bank $500,000 5.00% Permanent Loan Interest Rate

Foundation Funds/Donated $250,000 24 Term of Permanent financing

City/County HOME or other $250,000 03/01/19 Loan Closing Date

County ADAMHS $0

OMHAS Capital $500,000

FHLBank AHP $0

OHFA HDGF $0

Other $0

Deferred Developer Fee $0

Total Permanent Sources of Funds $1,500,000

Surplus/(Gap) $0

Recovery Housing Development Toolkit – BUDGET SOURCES OF FUNDS

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Recovery Housing Operating BudgetABC Development

Rents # of Bedrooms # of Units Gross Rent

Utility

Allowance Net Rent Annual

Rent

Restriction

Occupancy

Restriction

0 20 275 75 200 48000

1 30 335 90 245 88200

2 0 0

3 0 0

0 0

0 0

0 0

0 0

Total 50 $136,200

Operating Proforma

REVENUE Growth % Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15

Rent 1.02 136,200 138,924 141,702 144,537 147,427 150,376 153,383 156,451 159,580 162,772 166,027 169,348 172,735 176,189 179,713

Less Vacancy & Non Collection 7% 9,534 9,725 9,919 10,118 10,320 10,526 10,737 10,952 11,171 11,394 11,622 11,854 12,091 12,333 12,580

Operating Subsidy

Gross Effective Rental Income 126,666 129,199 131,783 134,419 137,107 139,849 142,646 145,499 148,409 151,378 154,405 157,493 160,643 163,856 167,133

EXPENSES Per Unit Base Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

1.03

Management Fee (% Gross Rents) 8% 10,133 10,336 10,543 10,754 10,969 11,188 11,412 11,640 11,873 12,110 12,352 12,599 12,851 13,108 13,371

Utilities ‐ Common Areas 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Utilities ‐ Apartments 100 5000 5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 6,524 6,720 6,921 7,129 7,343 7,563 7,790

Water, Sewer, Storm Water 72 3600 3,708 3,819 3,934 4,052 4,173 4,299 4,428 4,560 4,697 4,838 4,983 5,133 5,287 5,445 5,609

Property Insurance 140 7000 7,210 7,426 7,649 7,879 8,115 8,358 8,609 8,867 9,133 9,407 9,690 9,980 10,280 10,588 10,906

Real Estate Taxes 160 8000 8,240 8,487 8,742 9,004 9,274 9,552 9,839 10,134 10,438 10,751 11,074 11,406 11,748 12,101 12,464

Maintenance 200 10000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439 13,842 14,258 14,685 15,126 15,580

Administrative 25 1250 1,288 1,326 1,366 1,407 1,449 1,493 1,537 1,583 1,631 1,680 1,730 1,782 1,836 1,891 1,947

Legal & Audit 40 2000 2,060 2,122 2,185 2,251 2,319 2,388 2,460 2,534 2,610 2,688 2,768 2,852 2,937 3,025 3,116

Property Marketing (1% GEI) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total Expenses 737 36,850 48,089 49,430 50,810 52,229 53,688 55,189 56,733 58,320 59,954 61,634 63,361 65,139 66,967 68,847 70,782

NET OPERATING INCOME 78,577 79,769 80,974 82,190 83,420 84,661 85,914 87,179 88,456 89,744 91,044 92,355 93,676 95,009 96,351

Recovery Housing Development Toolkit – BUDGETOPERATING BUDGET

Recovery Housing Development Toolkit – BUDGET DEBT SERVICE

DEBT SERVICE

1st Mortgage ‐ Permanent Financing

Amount 500,000 Beginning Balance 500,000 495,134 480,294 464,711 448,349 431,169 413,130 394,190 374,302 353,419 331,493 308,470 284,296 258,914 232,262

Interest Rate 5.00% Principal 4,866 14,841 15,583 16,362 17,180 18,039 18,941 19,888 20,882 21,926 23,023 24,174 25,383 26,652 27,984

Amortization (Years) 20 Interest 8,333 24,757 24,015 23,236 22,417 21,558 20,657 19,709 18,715 17,671 16,575 15,424 14,215 12,946 11,613

Term in Years 20 Ending Balance 495,134 480,294 464,711 448,349 431,169 413,130 394,190 374,302 353,419 331,493 308,470 284,296 258,914 232,262 204,278

Annual Payment $39,597 Payment 13,199 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597

Months in Service 1st year 4

Date of Loan Closing 03/01/19


Amount 0 Beginning Balance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Interest Rate 0.00% Principal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Amortization (Years) 0 Interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Term in Years 0 Ending Balance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Annual Payment $0 Payment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0




Amount 0 Beginning Balance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Interest Rate 0.00% Principal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Amortization (Years) 0 Interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Term in Years 0 Ending Balance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Annual Payment $0 Payment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0



TOTAL DEBT SERVICE 13,199 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597 39,597

CASH FLOW 65378 40172 41376 42593 43822 45063 46317 47582 48858 50147 51446 52757 54079 55411 56754

Debt Service Coverage 1.56 1.58 1.59 1.61 1.63 1.64 1.66 1.67 1.69 1.71 1.72 1.74 1.75 1.76

Replacement Reserves Per Unit

17500 350 5,833 18,025 18,566 19,123 19,696 20,287 20,896 21,523 22,168 22,834 23,519 24,224 24,951 25,699 26,470

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Recovery Housing Development Toolkit – ARCHITECT AND CONTRACTOR SELECTION

Interview questions for architects

What to consider when selecting a contractor

When should you bid?

Various methods for contracting with general contractors

Construction Documents‐What to consider

Interview questions for contractors

Checking references

Negotiating a Contract

Recovery Housing Development Toolkit – ASSET MANAGEMENT TOOLS

Asset Management Tools can be found on OMHAS website under Housing Resources: http://mha.ohio.gov/Supports/Housing/Housing‐Resources#38872003‐resources

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OCCH Basic Financial Formulas: Future Value‐ Replacement Reserve Calculation Future Value‐ Lump Sum Deposit Future Value‐ Annual Deposits Loan Payment Calculation Loan Amortization Schedule

OCCH Basic Asset Management Formulas: Net Operating Income Debt Service Coverage Ratio Expense Ratio Maximum Supportable Debt Asset Valuation


Future Value (Replacement Reserve Calculation)

FV= (Interest Rate,Number of Periods, Annual Total Payment)

Example:

Interest Rate 1.25% Enter APR; formula will break down into monthly rate

Number of Years 15 180 Months

Yearly Payment 15,000$ Enter total amount of deposits; will be broken down into monthly deposits

Future Value $247,335

Returns the future value of an investment based on periodic, constant payments and a constant interest rate.

Net Operating Income (NOI)

Total Income ‐ Total Operating Expenses

Example:

Total Income: $290,000

Total Operating Expenses: $212,550

Asset Management Fee $6,396 (included in total operating expenses)

NOI $77,450

Replacement Reserves: $10,125

Adjusted NOI $67,325

‐‐ Some may include or exclude Asset Management Fees in Operating Expense numbers

‐‐ Some may include the required reserve deposits in NOI

OCCH Basic Property‐Level Formulas:Annual TurnoverDelinquency CalculationGross Potential RentEffective Gross IncomeEconomic Occupancy PercentagePhysical VacancyCost of Advertising per LeaseCost of Advertising per TrafficPer Unit Operating ExpensesBudget VarianceCollection RateBreakeven Occupancy


Effective Gross Income (EGI)

GPR ‐ (current month vacancy + concessions + bad debt + non revenue units)

Example:

GPR (per month): $23,750

Current month vacancy: $2,000

Concessions: $300

Bad debt: $500

Non revenue units: $0

Effective Gross Income: $20,950

‐‐ Bad debt may be considered an expense

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Loan amount 335,000.00$ Scheduled payment 1,667.67$ Annual interest rate 4.35 % Scheduled number of payments 360

Loan period in years 30 Actual number of payments 360Number of payments per year 12 Total early payments -$

Start date of loan 10/1/2011 Total interest 265,361.02$ Optional extra payments -$

Lender name:

PmtNo.

Payment Date

Beginning Balance

Scheduled Payment

Extra Payment Total Payment Principal Interest

Ending Balance

Cumulative Interest

1 11/1/2011 335,000.00$ 1,667.67$ -$ 1,667.67$ 453.29$ 1,214.38$ 334,546.71$ 1,214.38$ 2 12/1/2011 334,546.71 1,667.67 - 1,667.67 454.94 1,212.73 334,091.77 2,427.113 1/1/2012 334,091.77 1,667.67 - 1,667.67 456.59 1,211.08 333,635.18 3,638.194 2/1/2012 333,635.18 1,667.67 - 1,667.67 458.24 1,209.43 333,176.94 4,847.625 3/1/2012 333,176.94 1,667.67 - 1,667.67 459.90 1,207.77 332,717.04 6,055.386 4/1/2012 332,717.04 1,667.67 - 1,667.67 461.57 1,206.10 332,255.47 7,261.487 5/1/2012 332,255.47 1,667.67 - 1,667.67 463.24 1,204.43 331,792.22 8,465.918 6/1/2012 331,792.22 1,667.67 - 1,667.67 464.92 1,202.75 331,327.30 9,668.669 7/1/2012 331,327.30 1,667.67 - 1,667.67 466.61 1,201.06 330,860.69 10,869.7210 8/1/2012 330,860.69 1,667.67 - 1,667.67 468.30 1,199.37 330,392.39 12,069.0911 9/1/2012 330,392.39 1,667.67 - 1,667.67 470.00 1,197.67 329,922.39 13,266.7612 10/1/2012 329,922.39 1,667.67 - 1,667.67 471.70 1,195.97 329,450.69 14,462.7313 11/1/2012 329,450.69 1,667.67 - 1,667.67 473.41 1,194.26 328,977.28 15,656.9914 12/1/2012 328,977.28 1,667.67 - 1,667.67 475.13 1,192.54 328,502.16 16,849.5315 1/1/2013 328,502.16 1,667.67 - 1,667.67 476.85 1,190.82 328,025.31 18,040.3516 2/1/2013 328,025.31 1,667.67 - 1,667.67 478.58 1,189.09 327,546.73 19,229.4417 3/1/2013 327,546.73 1,667.67 - 1,667.67 480.31 1,187.36 327,066.42 20,416.8018 4/1/2013 327,066.42 1,667.67 - 1,667.67 482.05 1,185.62 326,584.36 21,602.4119 5/1/2013 326,584.36 1,667.67 - 1,667.67 483.80 1,183.87 326,100.56 22,786.2820 6/1/2013 326,100.56 1,667.67 - 1,667.67 485.55 1,182.11 325,615.01 23,968.4021 7/1/2013 325,615.01 1,667.67 - 1,667.67 487.32 1,180.35 325,127.69 25,148.7522 8/1/2013 325,127.69 1,667.67 - 1,667.67 489.08 1,178.59 324,638.61 26,327.3423 9/1/2013 324,638.61 1,667.67 - 1,667.67 490.85 1,176.81 324,147.76 27,504.1524 10/1/2013 324,147.76 1,667.67 - 1,667.67 492.63 1,175.04 323,655.12 28,679.1925 11/1/2013 323,655.12 1,667.67 - 1,667.67 494.42 1,173.25 323,160.70 29,852.4426 12/1/2013 323,160.70 1,667.67 - 1,667.67 496.21 1,171.46 322,664.49 31,023.9027 1/1/2014 322,664.49 1,667.67 - 1,667.67 498.01 1,169.66 322,166.48 32,193.5628 2/1/2014 322,166.48 1,667.67 - 1,667.67 499.82 1,167.85 321,666.66 33,361.4129 3/1/2014 321,666.66 1,667.67 - 1,667.67 501.63 1,166.04 321,165.04 34,527.4530 4/1/2014 321,165.04 1,667.67 - 1,667.67 503.45 1,164.22 320,661.59 35,691.67

Enter values Loan summary

Loan Amortization Schedule

Recovery Housing Development Toolkit – GREEN BUILDING STANDARDS

Although not a requirement of ODMHAS funding green building practices will help reduce the following:

Environmental Impact

Health Issues

Operating Expenses • Water• Gas • Electric• Taxes‐ possibly through local incentive programs

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Programs to Consider:

2015 Enterprise Green Communities Standardshttps://www.enterprisecommunity.org/solutions‐and‐innovation/green‐communities/criteria

LEED v4https://new.usgbc.org/leed

ICC 700 2012 National Green Building Standardshttps://www.nahb.org/en/research/nahb‐priorities/green‐building‐remodeling‐and‐development/icc‐700‐national‐green‐building‐standard.aspx

Recovery Housing Development Toolkit – GREEN BUILDING STANDARDS

If you should have questions or comments please contact:

Millie DavisOhio Capital Corporation for HousingOhio Capital Finance Corporation(614) 224‐8446 EXT [email protected]

Ohio Capital Finance Corporation · Neighborhood Transformation Loan ... ‐ Accounting Contact ‐...

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