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RAD Basics PANELISTS
Rich LarsenNovogradac & Company LLP
Holly KnightBGC Advantage
Jessie CassellaNational Housing Law Project
Matthew RooneyMDG Design + Construction
RAD Basics:Benefits of RAD for PHA’s
Matthew RooneyChief Executive Officer, MDG Design + Construction
Key RAD Benefits
1. Allows PHA’s to leverage private financing to provide repairs
2. Safeguards rental housing assistance for current and future residents within the PHA
3. Stabilizes PHA properties for the long-term with stable financials
4. Allows PHA’s to reassess their maintenance operations
5. Maintains the public housing rights of residents
#1 Private Financing
•Lenders are comfortable lending on the consistent income from Section 8
•Every dollar of net income allows the PHA to leverage hundreds of dollars of debt
•Financing allows the project to receive much needed repairs
•PHA’s can leverage financing from a variety of sources
#1 Private Financing at Ocean Bay
•$210 million in NYS Tax Exempt Bonds
•$170 million in Tax Credit Equity Funding
•$560 million total in development uses
#2 Future Security for Residents
•Residents still pay 30% of their income
•Residents receive assistance from a program with heavy support in government
•Residents receive more options under RAD
#2 Future Security for Residents at Ocean Bay
•Residents are protected by the provisions of RAD
•Long-term affordability with new and beautiful housing
•NYCHA still in ownership long-term
#3 Future Security for the PHA
•The PHA has a renovated asset that has a longer life
•The Section 8 income provides a set contract for income as opposed to yearly budget fluctuations
•Excess financing can be used to subsidize other PHA properties
#3 Future Security for the PHA at Ocean Bay
•$43 million in acquisition funds paid to NYCHA
•$23 million in developer’s fee
•$235 million in hard costs (including over $100 million in resiliency work)
•Option to buy back property from development partner for $1 following compliance period
#4 Reassess Maintenance
•PHA’s who choose to partner with a private managing agent may be able to find substantial M&O savings
•Less repairs on a yearly basis thanks to the rehabilitation of the property
•Outdated building systems can be upgraded with new boilers, solar panels, etc.
#4 Reassess Maintenance at Ocean Bay
•Over $1.25 million in projected energy savings
•Substantial savings from private management efficiencies
•NYCHA maintains an administrative fee out of first cash flow after debt service to maintain certain back office PHA functions
#5 Maintain the Rights of the Residents
•Residents are automatically grandfathered into Section 8
•Residents continue to pay 30% of their income
•Long-term affordability is locked-in
•Succession rights, TPA rights, right to form a resident organization, grievance procedures, etc. remain
#5 Maintain the Rights of the Residents at Ocean Bay
•Tenant Association has received a new, better space to operate
•All residents have retained their public housing rights
Sample Transaction – Ocean Bay
•1,395 Units across 24 buildings
•$590mm in total development costs
•$43mm paid to NYCHA at closing
•$71mm projected over 30 years
•Over $6mm in site specific social service funding
Ocean Bay – Timeline
Project Awarded to Development Team
July 2016
Submission of Financing plan to HUD
August 2016
HUD Issuance of RAD Conversion Commitment
October 2016
Submit Draft Documents to HUD
Mid-October 2016
Construction Loan Closing
December 2016
Ocean Bay – Key Timeline Items
•One year to close from date of CHAP award without extension
•Timely submission of a financing plan that won’t have any material changes
•Timely submission of final closing documents that won’t have any material changes within 90 days of closing
Ocean Bay – Determine PHA Goals
•Complete all necessary repairs from deferred maintenance and disaster damage
•Recapitalize NYCHA with project proceeds
•Establish resiliency measures to ensure long-term site health
•Lower operating costs to establish supportable permanent affordability
Ocean Bay – Scope of Work
•Full rehabilitation of all apartments including new kitchens, baths, and flooring
•New energy efficient systems including hydronic boilers, LED lighting, solar panels, and windows
•Resiliency measures including flood wall around the site, independent electric service buildings, relocated boiler system to the roof, and flood retention swales
•General beautification of site and public areas
Ocean Bay – Accomplishments So Far
74 NYCHA Hires$23 Million in M/WBE Work
Contracted
374 On-Site Queens
Employees
78 On-SiteFar Rockaway
Employees
64.6% Decrease in
Crime
All Apartment Work Completed in Nine Months
Matthew Rooney
Chief Executive Officer
MDG Design + Construction