2017 nalhfa award submission · 3/20/2017 · low income households in germantown, md. there are...

2017 NALHFA Award Submission:

Multifamily Excellence

Stacy L. SpannExecutive Director

Multifamily Excellence: Pooled Financing of Multiple-Site Multifamily Developments

Innovation and Transferability Overthepastfouryears,theHousingOpportunitiesCommissionofMontgomeryCounty(HOC)workedatanacceleratedpacetobringabouttheredevelopment,modernizationandrecapitalizationofitsentirepublichousingportfolio.Servingasbothahousingauthorityandhousingfinanceagency,HOCownsapproximately7,000housingunitswithinthehighcostMontgomeryCounty,MDhousingmarket.Nearly,1,600ofthoseunitswereformerlyPublicHousing.Inaddition,HOCadministersnearly7,200HousingChoiceVouchersandcontrolsmanyfinancialtools,asaHousingFinanceAgency(HFA),allowingittoinnovate.

OnDecember18,2013andMarch26,2014, theU.S.DepartmentofHousingandUrbanDevelopment(HUD) awarded HOC a Commitment for Housing Assistance Payment Contracts for Seneca Ridge (71 units),ParkwayWoods(24units),KenGar (19units),SandySpringMeadow(55units),TowneCenterPlace(49units)andWashingtonSquare(50units).HUDsubsequentlyapprovedfinancingthesixproperties,knownastheRAD6,asoneproperty.Uponreceivingapprovaltoconvertsixmultifamilypublichousingcommunitiesintoasinglescattered site multifamily housing development for federal funding purposes, HOC began comprehensiverehabilitationifthesixpropertiesinDecember2014withtheworkcompletinginJuly2016.

The U.S. Department of Housing and Urban Development’s Rental Assistance Demonstration (RAD)programhas played a vital role inHOC’s efforts. RAD allowsHOC to leverage the value of the real estate byeliminatingdeedrestrictions,whichpreviouslyforeclosedtheuseofprivatecapitalanddebtservicewithintheproperties. Unleashing the potential of the assets allowedHOC to create a pooled finance transaction of sixsmaller,scatteredsitedevelopments,augmentingtheoveralldebtservicepotentialacrossitsRAD6properties.Asaresult,HOChaspreserved268low-density,affordableanddeeplyaffordable,multi-familyandsingle-familyunitsacrossa500squaremileareajustoutsideofWashingtonD.C.,reducingtheaverageageoftheseassetsfrom39.33yearsto1.5years.

As Montgomery County’s HFA, HOC offers bonds to finance development projects. For the RAD 6properties, HOC pooled individual properties and financed six distinct multifamily developments as onetransactionbyasingleborrower,RAD6DevelopmentCorporation.Criticaltocreatingthisstructurewastogenerateadditional revenuewithin theoverall transaction. Initially, everyunitwithin the six developmentswerePublicHousing,generatingnetrevenuethatinsomecaseswasinsufficienttofundsoperatingexpensesandcreatedabacklogofdeferredneeds.TheRADprogramallowedHOCtoreplace59subsidizedunitswithmarketrateunitswithinthedevelopmentbytransferringtheassistanceinthose59unitstounitsownedbyHOC.Intheend,therewas no net loss of extremely affordable units and povertywas deconcentrated across the county. Further, bytransferringassistanceoffsite,RAD6propertiesachievedaboostinitsrevenuesanditsnetoperatingincome,enabling it to raise sufficientcapital to fund its renovationbudget.Thevalueof combining theproperties intoonetransactioncreatedfuturerevenuestreamtosupportgreaterdebtservicethanwouldhaveotherwisebeenpossible.ThesupportableloanvalueincreasedbyaddingmarketrateunitsatRAD6properties,enhancingthevalueofthenetrentableareaof284,897squarefeet.Takenseparately,thenetrentableareaofthepropertiesranged from 22,525 square feet to 72,659 square feet. This financing strategy ultimately supported just over$60,000inperunitofhardcostinvestmentsacrossthe268units.

Thedevelopmentcost for theRAD6 redevelopmentwasfinanced through the issuanceof$24milliontax-exempt,governmentalbondswithmortgageinsurancebyFHApursuanttotisRiskShareAgreementwithHOC.ThemortgagewasunderwrittenbythestrengthoftheunderlyingrealestateandthebondswerepubliclysoldviaanegotiatedsaletoBankofAmericaMerrillLynch(BAML).

1 HOC has completed nine of eleven RAD transactions, effectively converting units out of the traditional Public Housing, into Section 8 project based assistance contracts. All units are expected to have completed conversion by April, 2018.

1

HOC’sfinancingandpreservationoftheRAD6propertiesreflectsinnovationinfinancingthatisreplicablewithinothercommunities,withtremendouspotentialtodeepenthelevelofredevelopmentthatcanbeaccomplished.

Meeting the Needs of Low- and Moderate-Income Households

WhileMontgomeryCounty,Marylandenjoysastrongeconomy,highAreaMedianIncome(AMI)andhighrateofhomeownership,thenearlysixpercent(6%)ofthepopulationlivingbelowthepovertylinestruggletofindqualityaffordablehousing.TheaffordablehousingneedintheCountyiswelldocumented.Asoneofthestate’slargesteconomicenginesandpopulationcenters,allsignspointtowardanincreasingneedforaffordablehousinginthecounty.MarylandDepartmentofCommercereportsthatMontgomeryCountyhasthelargestpopulation2

,largestlaborforce,scoreshighestonaQualityofLifeIndex,hada72.4%laborparticipationratein2014againamongthehighestinthestate,andhasseenitspopulationgrowbynearly200,000residentsoverthelast15years.Atthesametime,48.6%ofrentersinthecountyexperiencedhousingburdenorpaidmorethan30%oftheirincometowardsrent.Withonlya2.5%vacancyrateandincreasingrents,demandforaffordablehousingwillcontinuetoincrease.

AttheendofFiscalYear2013,asHOCwasformingitsredevelopmentstrategyfortheRAD6unitsandits other PublicHousing portfolio, data showed thatHOC’s programwas serving someof themost vulnerablehouseholds in the county.HOC’s residentswerepredominatelyminority (88%)households earningwell below30percentofAMI.Demographiccompositionbrokedowninthefollowingmanner:57percentBlack,16percentAsian,and15percentLatino,levelsfarbeyondtheirrepresentationinthebroaderpopulation.ThemedianincomeforfamiliesinHOC’sPublicHousingwasapproximately$22,000whiletheFY13AMIforMontgomeryCountywas$107,300.

AllofthefamiliesservedbytheRAD6unitspriortorenovationswereabletoremainintheirunitsoncerenovationswerecompleted–infact,oneofthehighestRADtenetsistoprotecttheRighttoReturnofcurrentparticipants.Theusefullifeofthisvaluableaffordablehousinginfrastructureremainsintactwithlong-termusecontractsinplacepreservingtheiravailabilityforthenext20years.Thisissignificantgiventhatnearly50%ofallrentersinthecountyarecost.However,theneedismostacuteamongthoseatthelowestendofincomespectrumwhere80%ofrentersbelow30%areamedianincome(AMI)experiencerentburden.Thecurrenthousingmarketundersuppliesunitsaffordabletohouseholdsearning50percentofAMIandbelow.While38%ofrentersearnbelow58percentAMIonly19%ofunitsareaffordableatthislevel.

Without taking advantageof the reinvestmentopportunity andHOC’s pooledfinancing strategy,manyof these units may have been lost to obsolescence. The average per unit investment of just over $60,000demonstratesthe levelofcapitalbacklogthatpreviouslyexisted.Beyondthe20yearsrequiredundertheRADprogram,HOC’smissionasanaffordablehousingproviderensuresthattheunitsremainaffordableinperpetuity.Thecurrentsubsidized, long-termvouchercontractpreservesthedeepaffordabilityofunitsforrentersearningwellbelow30%oftheAMI.Itshouldberepeated,thatwhilethenumberofdeeplyaffordableunitswithintheRAD6propertiesdecreasedonsite,thenumberofdeeplyaffordableunitswithinthecountyremainedconstantssoNOaffordableunitswerelosttothecommunity.

3 4 5

6

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•WashingtonSquare,builtin1968andrenovatedin2002,isatownhousecommunitylocatedinGaithersburg,MD.The50-unitcommunityidealforlargerhouseholdsconsistsoftentwo-bedroomunits,30three-bedroomunits,andtenfour-bedroomunits.

•SenecaRidgeisalsoatownhousecommunityperfectlysituatedforlargefamilies.With40of71unitsbeing threebedroomsandanadditional20four-bedroomunitsthecommunityhousesverylowincomeandextremelylowincomehouseholdsinGermantown,MD.Therearealsotwoone-bedroomunitsandninetwo-bedroomunitstocompletethemix.ThetownhousesatSenecaRidgewerebuiltin1970andrenovatedin2008.

•TowneCenterPlace,LocatedinOlney,Maryland,thetownhousecommunitywasbuiltin1986;the49unitsarebrokendowninto20two-bedroomunits,20three-bedroomunitsandnineone-bedroomunits.

•SandySpringMeadow,Builtin1980,itisacommunityof55unitsinSandySpring,Maryland.Thedevelopmentconsistsof25townhousesand30single-familyhomes;eachtownhousehastwobedroomsorlargeone-bedroomandden,whilethesingle-familyhomeshavethreeorfourbedrooms.

•ParkwayWoodsisa24unittownhomecommunityconsistingofninetwo-bedroomunits,ninethree-bedroomunitsandsixfour-bedroomunits.Onthepropertytherearetwosinglelevel,handicapped-accessible,homes.LocatedinRockville,Maryland,thecommunitywasconstructedin1980.

•KenGarTownhomescommunity,builtin1979,islocatedinKensington,Maryland.Theneighborhoodconsistsof14townhousesandfivedetachedsingle-familyhomes.Ofthe14townhousesthereareseventwo-bedroomunitsandseventhree-bedroomunits.Thedetachedsingle-familyhomesareallfour-bedroomunits.

Eachcommunityservesthediverseneedsofthecountyand inparticularthedemandfor larger, familyappropriateaffordableunits.Propertieswerebuilttoaccommodatelargerfamiliesinneedofthreeandfour-bed-room homes as well as the requirements of handicapped andwheelchair bound customers. After the RAD 6redevelopment,affordablehousingsuitablefor largefamilies isbeingpreservedforthe long-term. BasedonarecenthousingmarketstudyconductedbyMontgomeryCountyParkandPlanningCommission,only12%oflarger(3+bedroom)unitsareaffordablebelow80%oftheAMI.

Redevelopment and rehabilitation of the selected properties focused on in-kind upgrades based onmarketcomparablesthatwereamenityrich,energyefficientandcosteffectivefor long-termownership,givingparticularattentiontoimprovingenergyefficiencyofeachunit.Interiorworkconsistedofthefullscalereplacementofkitchen and bathroom appliances, cabinets, fixtures and finishes. Additionally, each unit received electricalmodificationsandnewHVACsystems.Manyunitswereretrofittedwithwalk-inclosets.(SeeExhibit2&Exhibit3)Extensiveexteriorupgradesincludedgradingandstormwatermanagementsystemsandreplacingwalkways,stoopsandwalls. Contractors also replaced vinyl siding, roofs, gutters andwindows.ModificationsundertakenduringRAD6rehabilitationwillresultinloweringannualoperatingexpensesfromtheupgradingofappliancestoenergyefficientsystemsandtheoverallcapitalinvestmentthatwilllowermaintenancecosts.GiventhestrongRight-to-Returnrequirement,HOChadanopportunitytoenhanceaccessibilityfeaturesparticularlyforcurrentresidentswithknownaccessibilityneeds.Further,theWashingtonSquarepropertywasenhancedwithacommunityclubhousetoaddanamenityforthebenefitofresidentswhileenhancingthemarketabilityoftheon-sitemarket-rateunits. After rehabilitation, the financial sustainability and competitiveness of the combined properties wassignificantly enhanced within the rental marketplace. However, HOC maintained the county’s affordablehousingstockbydesignating78%,or209,redevelopedunits,forhouseholdsintheExtremelyLowandtheVeryLowIncomecategories.Currently,these209unitsareleasedtodeeplysubsidizedhouseholdsatroughly30%AMI.Theremaining59unitswithinRAD6werereplacedwith“OpportunityHousing”forLowIncomehouseholdswithrentsaffordableat80percentofAMI–theFederaldefinitionoflow-income.Currently,the59unitsareleasedtofamiliesinthe50%to55%ofAMIrange.HOC’sRAD6conversionallowedtheAgencytoretainaffordablehousingwhileelevatingthequalityofhousingavailabletolow-incomehouseholdsinthecounty.

Indoingso,HOCwasalsoabletodiversifytheincomemixofcommunities,deconcentratepoverty,andincreaserevenuetoensurelong-termfinancialintegrity.

Thedeepredevelopmentofthispropertywasmadepossible,andgoalsachieved,throughtheinnovativefinancingstructure thatunderpinned theRAD6property.While thefinancingapproach is innovative, it isalsohighlytransferrableandmayserveasamodeltootherPublicHousingAuthorities(PHA).ThismethodwouldbeparticularlyusefultosmallerPHAsoranyownerofsmallerdevelopmentswhose individualpropertiesmaynotgeneratebroad interestamong investors.Bypoolingmultiple smallerassets,PHAs,mayhavegreaterability toattractprivateinvestmenttodevelopmentandredevelopmentprojects.

ThroughRAD,HOC is investing$230million in redevelopmentof its rentalhousingportfolio. HOCwillultimatelyexpandthesupplyofmixed-incomeaffordablehousinginMontgomeryCountybyleveragingtherealproperty.Insodoing,theAgencyisalsode-concentratingdeeplyaffordableunits.TheRAD6developmentallowedHOCtoleveragetherealpropertyassetsofitspublichousingstockandrecapitalizehousingasrealestateratherthanasubsidystream.Poolingthepropertiestogetherisasimplebutingeniousmethodthatacknowledgesthereisrealvalueintherealpropertyandhowwecanbestmaximizethatvalue.

Current Resident Demographics as of March 2017

DataPoint Value DataPoint ValueNon-ElderlyResidents 572 Non-ElderlyResidents 172ElderlyResidents 52 ElderlyResidents 39TotalResidents 624 TotalResidents 211%ElderlyResidents 8.3% %ElderlyResidents 18.5%

DataPoint Value DataPoint ValueNon-DisabledResidents 589 Non-DisabledResidents 211DisabledResidents 35 DisabledResidents 24%Disabled 5.9% %Disabled 11.4%

DataPoint Value1Person 412Person 383Person 514Person 405Person 166Person 107Person 48Person 29Person 010Person 1

DataPoint ValueAverageHouseholdSize 2.6

HOHandCo-HeadsAllHouseholdMembers

DataPoint ValueNon-ElderlyResidents 400ElderlyResidents 13TotalResidents 413%ElderlyResidents 3.1%

DataPoint ValueNon-DisabledResidents 413DisabledResidents 11%Disabled 2.7%

onHOHHouseholdMembers

MAP OF PROPERTIES

RAD 6 Development

RAD 6 Development CorporationSources and Uses

RAD 6 Development CorporationSources and Uses

LOW INCOME PORTION 78%TOTAL UNITS 268ACQUISITION PRICE $6,295,167

Current Plan Per Unit Percentage of Total

SOURCES:Maximum Mortgage $24,000,000 $89,552 89.79%CFP Allocations $0 $0 0.00%CIP (Capital Improvements Program) $2,729,845 $10,186 10.21%Existing Replacement Reserves As $0 $0 0.00%Deferred Developer's Fee $0 $0 0.00%Tax Credit Equity $0 $0 0.00%(Excess)/Gap $0 $0 0.00%

TOTAL SOURCES $26,729,845 $99,738 100.00%

USES:Acquisition Cost

Reimbursement to HOC (Prepay the Capital Fund Financing Program (CFFP) loans) $2,019,999 $7,537 7.56%Reimbursement to HOC (Prepay CFFP loans Accrued Interest - for 2/13/15 payoff) $15,591 $58 0.06%Equity $0 $0 0.00%Reimbursement of Capital Expenses $4,017,352 $14,990 15.03%Resident Relocation Costs (VPC I & II and Internal) $242,225 $904 0.91%Capitalized Interest $0 $0 0.00%

Total Acquisition Cost $6,295,167 $23,489 23.55%

Construction CostsHard Construction/Rehab - (GC Contract) - includes Davis Bacon $11,222,718 $41,876 41.99%Hard Cost Contingency (Without CIP) 10.25% $1,150,295 $4,292 4.30%Only CIP - Hard Cost $2,481,677 $9,260 9.28%Only CIP - Hard Cost Contingency $248,168 $926 0.93%Related to Construction/Rehab (fee, overhead, general conditions, GLI, P/P bond, etc) $1,020,973 $3,810 3.82%

Total Construction Costs $16,123,831 $60,164 60.32%

Construction Period Interest & Negative Arbitrage Soft Costs (Architecture, Construction Mgmt, etc) $474,999 $1,772 1.78%Operating Reserve for 6 months $618,750 $2,309 2.31%Construction Period Interest (Month) 15 $872,005 $3,254 3.26%Negative Arbitrage $365,495 $1,364 1.37%

Total Construction Period Interest & Negative Arbitrage Costs $2,331,249 $8,699 8.72%

Consultants-Preacquisition & SyndicationAppraisal $42,000 $157 0.16%Engineering (PNA) -Actual $35,140 $131 0.13%Environmental Phase 1 $16,546 $62 0.06%Environmental Phase II $9,567 $36 0.04%Survey $100,300 $374 0.38%RAD Consultant $211,556 $789 0.79%Legal/Cost Certification $42,000 $157 0.16%

Total Consultants-Preacquisition & Syndication $457,109 $1,706 1.71%

Financing ExpenseCost of Issuance (Based on Caine Mitter ) $353,627 $1,320 1.32%Lag (30 Days) $82,500 $308 0.31%MIP Payment Up Front (Two Years) 1.00% $240,000 $896 0.90%

Total Financing Expense $676,127 $2,523 2.53%

Settlement CostsTitle Insurance $39,528 $147 0.15%Transfer tax - State $37,245 $139 0.14%Transfer tax - County (Exempt) $0 $0 0.00%Recording Tax - Tax $72,940 $272 0.27%Settlement Agent Costs $50,000 $187 0.19%Title Report $32,327 $121 0.12%Legal - HOC $130,000 $485 0.49%Misc. Costs $4,358 $16 0.02%

Total Settlement Costs $366,398 $1,367 1.37%

Misc. Development Costs & Soft Cost ContingencyInitial Deposit to Replacement Reserve $1,119.40 $300,000 $1,119 1.12%Soft Cost Contingencies 10% 10.00% $179,963 $672 0.67%

Total Misc. Dev. Costs & Soft Cost Contingency $479,963 $1,791 1.80%

TOTAL USES $26,729,845 $99,738 100.00%

RAD 6_Unit Mix

Proposed Unit Mix # of Units PercentageAffordable 209 78%

Opportunity Housing Units 59 22%Total 268 100%

Rent Detail information

Unit Type Size (sf) # Total SF Per Unit Per SF GRP/moAffordable (55% of AMI)Studio 2 1,000 $1,3101 BR 14 9,571 $10,1922 BR 75 71,066 $60,6753 BR 90 114,413 $92,4304 BR 28 42,186 $29,680

Total/Average 209 238,236 $930 0.82 $194,287

Opportunity Housing Unit (80% of AMI)1 BR 0 0 02 BR 5 4,420 $7,5153 BR 36 43,785 $63,7714 BR 18 25,964 $37,565

Total/Average 59 74,169 $1,845 $1.47 $108,851

Total/Average 268 312,405 $1,131 0.97 $303,138

Annual GRP $3,637,656Per Unit/mo $13,573

Variance

Proposed Unit Mix Summary

Underwriting Rents

C:\Users\jay.shepherd\Desktop\NALHFA RAD 6 Financials 3/20/2017

RAD 6_Unit Mix

AssumptionProposed Unit Mix # of Units Percentage

Affordable 55 77% Affordable 2.00% 1.0200Opportunity Housing Units 16 23% Opportunity 3.00% 1.0300

Total 71 100%


Unit Type Size (sf) # Total SF Per Unit Per SF GRP/mo Per Unit Per SF GRP/moAffordable (55% of AMI)

Studio / 1BA (Town House) 500 2 1,000 $693 $1.39 $1,386 $655 $1.31 $1,3102 BR / 1BA (Town House) 800 8 6,400 $811 $1.01 $6,488 $809 $1.01 $6,4723 BR / 1BA (Town House) 1,230 32 39,360 $1,021 $0.83 $32,672 $1,027 $0.83 $32,8643 BR / 1BA (Town House) 1,033 2 2,066 $1,021 $0.99 $2,042 $1,027 $0.99 $2,0544 BR / 2BA (Town House) 1,530 11 16,830 $1,264 $0.83 $13,904 $1,060 $0.69 $11,660

Total/Average 1,194 55 65,656 $1,027 $0.86 $56,492 $988 $0.83 $54,360

Opportunity Housing Unit (80% of AMI)Studio / 1BA (Town House) 500 0 0 $0 $0.00 $0 $0 $0.00 $02 BR / 1BA (Town House) 980 1 980 $0 $0.00 $0 $1,470 $1.50 $1,4703 BR / 1BA (Town House) 1,367 6 8,202 $0 $0.00 $0 $1,840 $1.35 $11,0404 BR / 2BA (Town House) 1,530 9 13,770 $0 $0.00 $0 $2,100 $1.37 $18,900

Total/Average 1,435 16 22,952 $0 $0.00 $0 $1,963 $1.37 $31,410

Total/Average 1,248 71 88,608 $88,608 $0.64 $56,492 $88,608 $0.97 $85,770

Annual GRP $677,904 Annual GRP $1,029,240Per Unit/mo $9,548 Per Unit/mo $14,496

Rent Limits Maximum Rent Per Bedroom 0-BR 2-BR 3-BR 4-BR Utility Allowance 0-BR 2-BR 3-BR 4-BR

$689 $882 $1,114 $1,161 Town House $34 $73 $87 $101

Seneca Ridge

Proposed Unit Mix SummaryUnerwriting Rents

Average Current Rents Underwriting Rents


a

a

a 55% of AMI was used to project rents for units subsidized Section 8 Project Based Assistance. Tenant rents for these units are income

based, consistent with program reguirements.

RAD 6_Unit Mix



Total 50 100%



2 BR / 1BA (Town House) 806 7 5,642 $771 $0.96 $5,397 $809 $1.00 $5,6633 BR / 1BA (Town House) 1,091 7 7,637 $934 $0.86 $6,538 $1,027 $0.94 $7,1893 BR / 1BA (Town House) 1,091 2 2,182 $934 $0.86 $1,868 $1,027 $0.94 $2,0544 BR / 2BA (Town House) 1,218 4 4,872 $1,174 $0.96 $4,696 $1,060 $0.87 $4,240

Total/Average 1,017 20 20,333 $925 $0.91 $18,499 $957 $0.94 $19,146

Opportunity Housing Units (80% of AMI)2 BR / 1BA (Town House) 806 3 2,418 $0 $0.00 $0 $1,515 $1.88 $4,5453 BR / 1BA (Town House) 1,091 21 22,911 $0 $0.00 $0 $1,745 $1.60 $36,6454 BR / 2BA (Town House) 1,218 6 7,308 $0 $0.00 $0 $2,080 $1.71 $12,480

Total/Average 1,088 30 32,637 $0 $0.00 $0 $1,789 $1.64 $53,670

Total/Average 1,059 50 52,970 $52,970 $0.35 $18,499 $52,970 $1.37 $72,816

Annual GRP $221,988 Annual GRP $873,792Per Unit/mo $4,440 Per Unit/mo $17,476

Rent LimitsMaximum Rent Per Bedroom 1-BR 2-BR 3-BR 4-BR Utility Allowance 1-BR 2-BR 3-BR 4-BR

$939 $1,189 $1,250 Town House $130 $162 $190

Washington Square




RAD 6_Unit Mix



Total 24 100%



2 BR / 1BA (Town House) 979 2 1,958 $699 $0.71 $1,398 $809 $0.83 $1,6182 BR / 1BA (Town House) 1,173 7 8,211 $699 $0.60 $4,893 $809 $0.69 $5,6633 BR / 1BA (Town House) 1,415 7 9,905 $901 $0.64 $6,307 $1,027 $0.73 $7,189

3 BR / 1.5BA (Town House) 1,415 1 1,415 $901 $0.64 $901 $1,027 $0.73 $1,0274 BR / 2BA (Town House) 1,714 5 8,570 $1,179 $0.69 $5,895 $1,060 $0.62 $5,300

Total/Average 1,366 22 30,059 $882 $0.65 $19,394 $945 $0.69 $20,797

Opportunity Housing Units(80% of AMI)2 BR / 1BA (Town House) 979 0 0 $0 $0.00 $0 $0 $0.00 $02 BR / 1BA (Town House) 1,173 0 0 $0 $0.00 $0 $0 $0.00 $03 BR / 1BA (Town House) 1,415 0 0 $0 $0.00 $0 $0 $0.00 $0

3 BR / 1.5BA (Town House) 1,415 1 1,415 $1,620 $1.14 $1,620 $1,640 $1.16 $1,6404 BR / 2BA (Town House) 1,714 1 1,714 $1,809 $1.06 $1,809 $1,985 $1.16 $1,985

Total/Average 1,565 2 3,129 $1,715 $1.10 $3,429 $1,813 $1.16 $3,625

Total/Average 1,383 24 33,188 $33,188 $0.69 $22,823 $33,188 $0.74 $24,422



$1,034 $1,304 $1,385 $225 $277 $325

Proposed Unit Mix SummaryUnderwriting Rents


Parkway Woods


a

a



RAD 6_Unit Mix


Affordable Units 17 89% Affordable 2.00% 1.0200Opportunity Housing Units 2 11% Opportunity 3.00% 1.0300

Total 19 100%



2 BR / 1BA (Town House) 917 7 6,421 $700 $0.76 $4,900 $809 $0.88 $5,6633 BR / 1.5BA (Town House) 1,188 5 5,942 $770 $0.65 $3,850 $1,027 $0.86 $5,1354 BR / 2BA (Town House) 1,452 2 2,904 $950 $0.65 $1,900 $1,060 $0.73 $2,1204 BR / 2BA (Single Family) 1,439 3 4,317 $950 $0.66 $2,850 $1,060 $0.74 $3,180

Total/Average 1,152 17 19,584 $794 $0.69 $13,500 $947 $0.82 $16,098

Opportunity Housing Units (80% of AMI)2 BR / 1BA (Town House) 917 0 0 $1,402 $1.53 $0 $0 $0.00 $0

3 BR / 1.5BA (Town House) 1,188 0 0 $1,620 $1.36 $0 $0 $0.00 $04 BR / 2BA (Town House) 1,452 0 0 $1,809 $1.25 $0 $0 $0.00 $04 BR / 2BA (Single Family) 1,586 2 3,172 $1,809 $1.14 $3,618 $2,100 $1.32 $4,200

Total/Average 1,586 2 3,172 $1,809 $1.14 $3,618 $2,100 $1.32 $4,200

Total/Average 1,198 19 22,756 $22,756 $0.75 $17,118 $22,756 $0.89 $20,298



$1,036 $1,311 $1,396 Townhouse $227 $284 $336$1,461 Single-Family $401

Underwriting Rents


KenGar

Proposed Unit Mix Summary


RAD 6_Unit Mix


Affordable 48 87% Affordable 2.00% 1.0200Opportunity Housing Unit 7 13% Opportunity 3.00% 1.0300

Total 55 100%



1 BR / 1BA (Town House) 727 5 3,636 $680 $0.94 $3,400 $728 $1.00 $3,6402 BR / 1BA (Town House) 1,022 24 24,533 $705 $0.69 $16,920 $809 $0.79 $19,416

3 BR / 1.5BA (Single Family) 1,458 15 21,867 $785 $0.54 $11,775 $1,027 $0.70 $15,4053 BR / 1.5BA (Single Family) 1,458 1 1,458 $769 $0.53 $769 $1,027 $0.70 $1,0274 BR / 2BA (Single Family) 1,564 3 4,693 $1,026 $0.66 $3,078 $1,060 $0.68 $3,180

Total/Average 1,171 48 56,187 $749 $0.64 $35,942 $889 $0.76 $42,668

Opportunity Housing Unit (80% of AMI)1 BR / 1BA (Town House) 727 0 0 $0 $0.00 $0 $0 $0.00 $02 BR / 1BA (Town House) 1,022 1 1,022 $0 $0.00 $0 $1,500 $1.47 $1,500

3 BR / 1.5BA (Single Family) 1,458 6 8,747 $0 $0.00 $0 $1,820 $1.25 $10,9204 BR / 2BA (Single Family) 1,564 0 0 $0 $0.00 $0 $0 $0.00 $0

Total/Average 1,396 7 9,769 $0 $0.00 $0 $1,774 $1.27 $12,420

Total/Average 1,199 55 65,956 $65,956 $0.54 $35,942 $65,956 $0.84 $55,088



$901 $1,036 $1,367 $1,461 Town House $173 $227$1,367 $1,461 Single Family $340 $401


Sandy Spring Medow



a

a



RAD 6_Unit Mix



Total 49 100%



1 BR / 1BA (Town House) 660 9 5,936 $685 $1.04 $6,165 $728 $1.10 $6,5522 BR / 1BA (Town House) 895 20 17,900 $707 $0.79 $14,140 $809 $0.90 $16,180

3 BR / 1.5BA (Town House) 1,255 1 1,255 $832 $0.66 $832 $1,027 $0.82 $1,0273 BR / 1.5BA (Town House) 1,255 17 21,327 $832 $0.66 $14,144 $1,027 $0.82 $17,459

Total/Average 988 47 46,417 $751 $0.76 $35,281 $877 $0.89 $41,218

Opportunity Housing Units (80% of AMI)1 BR / 1BA (Town House) 660 0 0 $0 $0.00 $0 $0 $0.00 $02 BR / 1BA (Town House) 895 0 0 $0 $0.00 $0 $0 $0.00 $0

3 BR / 1.5BA (Town House) 1,255 2 2,510 $0 $0.00 $0 $1,763 $1.40 $3,526Total/Average 1,255 2 2,510 $0 $0.00 $0 $1,763 $1.40 $3,526

Total/Average 999 49 48,927 $48,927 $0.72 $35,281 $48,927 $0.91 $44,744



$903 $1,034 $1,304 Town House $175 $225 $277

Towne Centre Place




a



StabilizedOperating Budget

Stabilized Operations_RAD 6

RAD 6 Development Corporation

Stabilized Operating Projection Max Mortgage Amount $24,000,000Term 30

Forecast (Vacancy, Concessions & Bad Debt Rate) 7.00% Interest Rate ** 4.125%Total Units 268 Debt Service Constant 5.82%Income Growth Rate 2.00% MIP 0.50%OCAF 3.14% "All-In Constant" Rate 6.32%Management Fee 3.00% Debt Coverage Ratio Target (FY 2017) 1.26 Other Income Growth Rate 2.00% NOI $1,903,420Expense Growth Rate 3.00% Debt Service $1,514,678

Current Vacancy, Concessions & Bad Debt RateANNUAL MONTHLY

Total Per Unit Total Per UnitINCOMEAssisted Units $2,404,651 $8,973 $200,388 $748Opportunity Housing $1,332,336 $4,971 $111,028 $414 Less: Vacancy & Concessions, Bad Debt ($261,589) ($976) ($21,799) ($81)Net Rental/Tenant INCOME $3,475,398 $12,968 $289,617 $1,081

Other Income Grants $0 $0 $0 $0 Other Revenue $202,507 $756 $16,876 $63EFFECTIVE GROSS INCOME $3,677,905 $13,724 $306,492 $1,144

OPERATING EXPENSESAdministrative $92,964 $347 $7,747 $29Utilities $179,831 $671 $14,986 $56Management Fee $264,463 $987 $22,039 $82Payroll & Benefits (Included Tenant Services) $588,442 $2,196 $49,037 $183R&M / Contract Services $421,337 $1,572 $35,111 $131Misc License, Insurance & Taxes $101,274 $378 $8,439 $31

TOTAL OPERATING EXPENSES $1,648,310 $6,150 $137,359 $513Replacement Reserve $126,175 $471 $10,515 $39

TOTAL EXPENSES $1,774,485 $6,621 $147,874 $552Capital Expenditures

NET OPERATING INCOME (Excludes C.E.) $1,903,420 $7,102 $158,618 $592Expense Ratio 48.25%

DEBT SERVICEDebt Service-New Mortgage $1,395,791 $5,208 $116,316 $434MIP $118,541 $442 $9,878 $37Asset Management Fee $0 $0 $0 $0

Total Debt Service & Capital Expenditures $1,514,332 $5,650 $126,194 $471

Net Cash Flow after D.S. Distributions $389,089 $1,452 $32,424 $121

Debt Coverage Ratio 1.26

**Interest Rate include Loan Management Fee and Trust FeeLoan Management Fee will be $60,000

STABILIZED - FY 2017


RAD Program Summary of Standard Finishes

Property Progress Photos

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10400DetrickAvenue,Kensington,MD20895(240)627-9400(Phone)|(301)949-4690(Fax)

MarylandRelayNumber:711(TTY)

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