GOVERNOR’S HOUSING CONFERENCE 2013Creative Financing Sources/Structures to Produce Affordable Housing

Limited Financing Tools for “Traditional” Affordable Housing

Low Income Housing Tax Credits (LIHTC)

Community Development Block Grant (CDBG)

HOME Investment Partnerships (HOME)

HOPE VI Redevelopment Program

Public Housing and Annual Contribution Contract (ACC)

Local Subsidy

Tax Exempt Bond Financing

Federal Housing Administration (FHA) Loans

PHAs & Affordable Housing Providers Have Limited Universe of Tools

Past Successes

At the Inception of the LIHTC Program HOC Financed 8 Partnerships Utilizing 9% Credits. 316 Units Preserved

Robust Funding Allocation for Housing Choice Voucher Program and Capital Fund Program.

Local Subsidy

Historically Today

6500+ Vouchers Budget Cuts Have Lowered Payment Standards

Capital Fund Program Break-Even Subsidy

Historically Today

Reliable Funding Pool Required Subsidy Has Skyrocketed to 2x/3x. Greater Need, Less Resources!

Paradigm Shift: Blend/Shake/Mix

Our Challenge is to Creatively Leverage Traditional Tools with Market Driven Debt and Equity

1. Who do we serve?Paradigm: Everyone, with a heavy focus on at risk and underserved populations. Shift: How Can Blending in Market Rate Units Advance the Mission?

2. What’s our product?Paradigm: Mixed Income, Mixed Use, Amenity Rich Communities in Transit Oriented Locations Shift: Build a product that communities ask for regardless of end-users!

3. How do we identify creative solutions and bring other products and/or uses to the site?

Partnerships = Risk Mitigation / LeverageLeverage Private Capital = Mixed Income TODMonetize Land Basis in Portfolio = RAD / Legacy AssetsIncrease Density and Sell off Portion to Complementary Use; Create a Sense of Place and Push Demand = Create Equity for Hard to Build, Deeply Affordable Projects

Case Study: Partnership at Chevy Chase Lakes

68 Units on 11 Acres

Montgomery County 500 Square Miles

High Land Costs

Median Household Income = $95,660

Shrinking Green Space

Opportunity Rehabilitate Existing (Low Leverage/Low

Impact)

Redevelop Existing (High Impact/High Risk)

Balance Risk + Return = Partner + Redevelop

70 Luxury Townhomes (For Sale)

+/-200 Apartments (Rental)

Serving 0 – 120% AMI Across Site Deep Long Term Affordability on Rentals

Affordable / Workforce Options on For Sale

Expect Significant Equity from Land Sale = Internal Subsidy for New Building + Other Opportunities

Chevy Chase Lakes Chevy Chase Lakes 2.0

# Units AMI Level

47 120%

21 50%

Case Study: RAD at Elizabeth House

165 Units of Age Restricted Public Housing

1960s Infrastructure

¼ mile from

Next Door to Alexander House (312 Units of Mixed Income)

Adjacent to 1 Acre of Mid-Century Low Rise Commercial (Private Owner)

Partner with Commercial Property Owner

Build Replacement Housing On Site

Redevelop Commercial Site and former Public Housing Site

Re-Calibrate Income Diversity

Revitalize Commercial Uses w/New Tenants

Develop Robust Offer of New Amenities for both Residents & Community

Elizabeth HouseAssemble the Entire

Block (375K Sqft of FAR)

Case Study: Acquisition Platform

Tax Exempt Bonds Advantages: Historically Lower Rates,

Long Term Hold Challenges: Timing, Restrictions

Local Financing Advantages: Cash Flow Contingent, Low

Rates, Deferred Until Sale or Refinance Challenges: Limited Resources,

Increased Needs

Low Income Housing Tax Credits Advantages: Long Term Equity Source,

Mission – Centric, Long Term Hold Challenges: Timing, Uncertainty of

Award (9%), Market Rate Perception

Institutional Equity Advantages: Speed, Perception of

Sellers, Shared Risk, Certainty of Execution, Mitigate Deal/Opportunity Loss

Challenges: Market Driven Returns, Forced Return of Capital (Sale or Refinance)

Partner w/Long-Term Holders Advantages: Alignment of Interests,

Long Term Investment Horizon Challenges: Different Objectives, Risk

of Needs Changing During Hold Period

Conventional Debt Advantages: Speed, Availability,

Perception Challenges: Incongruent with Long

Term Hold, Interest Rate Risk

Traditional Public Financing Tools

Access Capital Markets & Private Investors