Putting RAD to Work

Cambridge Housing Authority December 2015

RAD | Substantial Capital Needs v  2006 Capital Needs Study and Planning Process

$228M for 2469 federal units -- $93,940/unit (hard costs only) v  2009 ARRA Funding -- $28M

Revitalization of 292 units, or 12% of federal portfolio

RAD | Phasing Plan

PutnamGardens(LIHTC) 122 ScatteredFamiliesSites 123LBJApartments 177 TrumanApartments(LIHTC) 59JacksonGardens 45 RussellApartments(LIHTC) 51LincolnWay 53 Subtotal 233JFKApartments 44Subtotal 441

RooseveltTowers(LIHTC) 124CorcoranPark(LIHTC) 153

NewtowneCourt(LIHTC) 268 BurnsApartments(LIHTC) 198WashingtonElms(LIHTC) 175 Subtotal 475WoodrowWilson(LIHTC) 68Subtotal 511

JeffersonPark(LIHTC) 175SmallElderlyDevts 97

ManningApartments(LIHTC) 198 Subtotal 272Subtotal 198

TotalPhase1 1150 TotalPhase2 980

Phase1C-Feb2015

Phase2C-June2017

Phase1-1150Units

Phase1A-December2014

Phase2-980Units(tentative)

Phase2A-Oct2016

Phase1B-March2015

Phase2B-Jan2017

Phasing Considerations v  Use and availability of tax credits –

will likely need to spread over multiple years to accommodate tax credit rounds

v  Complexity of financing structure – tax credits and multiple funding sources and programs require significant time and due diligence.

v  Resident relocation – need to make

sure sufficient resources are available for relocation and wait list

v  Extent of renovations – if extensive and occurring at occupied sites then extended construction and disruptions could be factors

v  Capacity to complete due diligence and monitor construction work – need to make sure funds are spent wisely and the public and your resident’s interest are protected

CHA is phasing its RAD conversions as follows:

RAD + MTW WOODROWWILSONCOURT–68unitfamilysite

AnnualRADIncome $648,558

AnnualMTWSubsidy $79,000

AnnualIncome $727,558

AnnualExpense $538,324

NetOpera)ngIncome(NOI) $189,234

SupportableMortgagefromNOI $2,447,900

LIHTC4% $3,984,307

TotalSources $6,432,207

ConstrucQon $2,974,946

SoRCosts $2,747,261

Reserves/ConQngency $710,000

TotalUses $6,432,207

Surplus/(ShorEall) $0

For Woodrow Wilson Court, CHA was able to reduce the $602,330 shortfall that existed in the RAD 2012 model by adding $79,000 in annual income (or approximately $97 PUM) through the single fund flexibility afforded under MTW.

RAD + MTW

The CHA was able to reduce the $18,469,073 shortfall that existed in the RAD 2012 model by adding income through:

§ Rent bundling from four other CHA properties § A MTW subsidy equal to $334 PUM.

An additional loan of $5.35M using MTW funds from the acquisition proceeds from other sites was the final piece to meeting Manning needs.

MANNINGAPTS–198unitelderly/disabledsite

AnnualRADIncome $2,072,444

AnnualIncome–RentBundling $419,562

AnnualMTWSubsidy $794,651

AnnualIncome(=to110%FMR) $3,089,519

AnnualExpense $1,572,630

NetOpera)ngIncome(NOI) $1,516,889

SupportableMortgagefromNOI $19,622,800

LIHTC4% $23,915,965

CHAProgramLoan $5,335,073

TotalSources $48,873,838

ConstrucQon $32,975,000

SoRCosts $10,851,456

Reserves/ConQngency $5,047,382

TotalUses $48,873,838

Surplus/(ShorEall) $0

RAD| Resident Protections Protections for CHA and its Residents within RAD LIHTC Ownership Structure

v  Operating and Management Agreements for Limited Liability Company (LLC) •  CHA, through one of its non‐profits, will be responsible for the day‐to‐day operation of the LLC •  CHA will be the management agent for the property and will be responsible for the management and

maintenance of the property v  Right of First Refusal and Purchase Option Agreement •  Provides a first refusal/purchase option for the property to be purchased by CHA or one of

its affiliated non‐profits at the end of the LIHTC compliance period. v  Financial Support in the form of CHA Mortgages

v  Long-term Lease to LLC Entity •  CHA keeps long‐term control of the land and/or buildings through a long‐term lease to the

LLC Entity

v  Affordability Restrictions •  The RAD Use Agreement, ground lease and CHA mortgages includes provisions that the

property be operating as affordable housing in accordance to the RAD Program requirements and continue to serve low‐income individuals and families.

RAD| Ownership Structure

RAD| Final Thoughts SOME TAKE AWAYS

v  Engage your residents and the wider community early and often. Involve residents in the planning and implementation to integrate their concerns and issues into the plans and work where possible.

v  Whenever possible, fund pre-development activities so you have a solid, clear road map for your

portfolio/agency’s future. v  Look at your portfolio as a whole and identify opportunities to leverage or liberate the assets within

your mission. Be bold and creative. v  Streamline wherever possible – look for administrative efficiencies in your operation and

development activities.

v  Plan for the future – make sure the rehab work that you complete addresses any design deficiencies and marketability issues and uses durable finishes.