Transcript Building Partnerships by Investing your Community
Investing in Communities February/March 2013
www.fhlbi.com
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“Community Dividend” We Deliver
FHLBI annually reinvests at least 10 percent of our net earnings into affordable housing in partnership with our members
Like every “dividend,” this contribution is predicated on earnings
FHLB’s Affordable Housing Program (AHP) constitutes the largest single source of private “capital” for affordable housing in the country
No other provider of liquidity pays this dividend
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FHLBI Community Investment Programs
Affordable Housing Program (AHP)
– grant funding to create rental and homeownership opportunities for low- and moderate-income households
Homeownership Initiatives (HOP and NIP)
– grant funding for down payment, closing cost assistance and homeowner rehabilitation to income-eligible households
Community Investment Program (CIP) Advances and Letters of Credit
– discounted advances and letters of credit available to members to support targeted housing and economic development 3
2013 AHP Allocation to be determined 2012 AHP Contribution (based on 2011 results) Competitive AHP $9 million Homeownership Initiatives $4.8 million HOP NIP
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2012 Highlights
Single AHP round funded 27 projects with $10.5M in subsidy (649 affordable units)
Homeownership Initiatives Programs funding of $5.3 million assisted 743 households
Community Investment Program transactions totaled $109.4 million to 25 projects
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Implementation Plan
Reviewed by AHAC annually before approval by Board, or as amended
Establishes AHP scoring and set-aside program criteria in response to district needs and within regulations
Establishes competitive application round deadlines and set-aside holdback dates
Allocates required annual contributions
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2013 Implementation Plan
The roadmap by which community leaders are brought together to fulfill a common objective
Member institution
Has desire to invest in the community Foundations or philanthropy goals Community Reinvestment Act (CRA)
Sponsor/Owner/Developer
Has a desire to invest in the community Creates long-term, sustainable community housing assets Fulfills a need or mission Non –profit with housing as a core mission
FHLBI
Has a desire to invest in the community Leverages AHP with other stakeholders with common objectives Creates opportunity for new and existing relationships with members Creates jobs long term and short-term jobs 7
Affordable Housing Program (AHP)
Provides a direct subsidy (grant) for acquisition, rehabilitation or construction of affordable housing of various types
Only FHLBI members may apply for this grant funding
Project sponsors are non-profit or for-profit housing developers who partner with FHLBI member
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River Center Apartments, Mishawaka, IN
1st Source Bank partnered with Mishawaka Housing Authority & Community Development to obtain an AHP grant of $305,482 to redevelop the former Mishawaka High School into one- and two bedroom senior apartments. Community Investment Programs 9
Eligible AHP Uses
Land or building acquisition
Down payment and closing costs for homebuyers
Construction or rehabilitation costs
Owner-occupied rehabilitation
Some soft costs (developer fee, architectural, legal, survey, engineering)
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Ineligible AHP Uses
Operating or administrative costs of sponsor
Infrastructure costs
Processing fees charged to administer AHP
Replacement or operating reserves including investor service fees or investor reserves
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AHP 2012 Award Summary
2012 was a competitive round with a 2:1 ratio of applications to awarded projects
53 applications received and scored
Average score was 60.2
Lowest score = 52.7
Highest score = 68
Average total subsidy for rental projects = $417,400
Average subsidy per unit for rental projects = $38,900
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2013 AHP
A single funding round in 2013
Competitive application process
Maximum grant $500,000 per project
No limit on how many AHP projects a member can apply for or be awarded per round
Deliver funds to project through member’s deposit account at FHLBI
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Important 2013 AHP Dates
March - Round 2013A Opens
April 30 – Notifications of Intent Due
(soft deadline)
May 30 – Member Application Deadline
(required for technical review)
June 14 – Last day for questions
June 19 – Application Deadline
(5:00 PM EDT “in hand”)
September 27 – Award announcement
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Typical AHP Projects
Senior or family rental projects (not assisted living, hospice or nursing homes)
Scattered site single family homes for homeownership, lease purchase or rental
Emergency shelters
Transitional housing
Permanent supportive housing
Habitat for Humanity projects
Neighborhood revitalization projects
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AHP Key Thresholds:
Development team
Lender General contractor Consultant Architect Green specialist
Site control and zoning
Funding commitment
Funding gap
Demonstrated market need for housing type
Financially feasible
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Key 2013 Scoring Categories
Comprehensive community development
Aging in place for seniors and permanent supportive housing
Green building and rehabilitation standards continue to be a focus
Readiness to proceed
Economic diversity
Subsidy per unit increased to 15 points
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A $500,000 AHP grant from Mercantile Bank of Michigan helped to create or rehabilitate 92 beds and units of transitional housing for very low-income women and their children. The Mel Trotter Ministries project addresses a critical need in Grand Rapids by providing housing with supportive services, as well as solutions for homelessness.
Retention Requirement
Legal mechanism recorded to ensure property is used for affordable housing during retention period
15 years for rental, 5 years for homeownership
Generally a deed restriction, second mortgage ‘soft’ second
Specific language is required by Regulation to be included in the retention mechanism
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AHP Monitoring
Sponsor prepares reports and submits to member semi-annually during development phase; member submits reports to FHLBI
Initial monitoring at completion
Long-term monitoring for rental projects
Project is habitable Rents and incomes are in compliance with targeting commitments 20
AHP Technical Assistance
Training on Demand (TOD)
is available for applications being prepared for the 2013 AHP competitive round. A member may request a face to-face meeting, conference call or personalized webinar to discuss a potential AHP project.
Five Help Lines
between May 7-June 3 (1-2 hour time slots when applicants can call during scheduled times with questions and leave the call at any time)
HelpMail
– AHP application questions can be submitted electronically any time and answers will be received within one business day 21
AHP Webinars (Wednesdays 2:00-4:00 EDT)
April 3 - Scoring Overview and Getting Started
(tips and scoring requirements)
April 10 - Supportive Housing Rental
(development budget/funding sources, pro-forma)
April 17 - Homeownership
(development budget, Habitat gap calculation)
April 24 - Rental and Lease Purchase
(development budget/funding sources, pro-forma)
May 15 - Member Institutions ONLY
(member role and requirements – overview) 22
AHP Application Technical Reviews Technical Reviews
for complete AHP applications submitted to members by May 30 th will be provided in person subject to scheduling:
June 5 & June 6 9:00 am – 4:00 pm
Okemos Conference Center 2187 University Park Drive, Okemos, MI
June 10 & June 11 9:00 am – 4:00 pm
FHLBI 8250 Woodfield Crossing Blvd., Indianapolis, IN 23
The FHLBI’s homeownership initiative programs can help first-time homebuyers with down payments and closing costs or assist homeowners with repairs to individual homes or entire neighborhoods.
2013 Homeownership Initiatives Programs
HOP – Homeownership Opportunities Program
Down payment and closing cost assistance for eligible first-time homebuyers
NIP – Neighborhood Impact Program
Owner-occupied rehabilitation for eligible homeowners
DRP – Disaster Relief Program
Rehabilitation or down payment assistance for state or federally declared disaster areas in FHLBI’s district— requires board approval
Members may access up to $300,000 per program, per year
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2012 Disbursement Summary $3.7M
$1.6M
Program HOP/NSA NIP HOP/NSA NIP Households 244 499 Funds Disbursed $1.6M
$3.7M
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Who uses Homeownership Initiatives?
Member institutions - often used for their own mortgage business
Members often partner with non-profit or government sponsors
Non-profit partners providing required homeownership counseling or manage owner-occupied rehabilitation programs Municipalities or Land Banks with NSP/HOME/CDBG or other local funds 27
Member electives and program best-practices
Limit to existing customers or require customer to establish banking relationship
Limit to employees (great for staff recruitment/ retention!)
Limit scope of NIP to basics: windows/doors, siding/ insulation, roofing, etc.
Customize program to meet your institution’s objectives
Require partner organizations attend FHLBI training
Execute MOUs, agency contract or similar agreement with partnering organizations
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Homeownership Initiatives Participation Requirements
Member (primary or secondary contact) must complete workshop training or webinar training
Training is available and recommended for anyone planning to use Homeownership Initiative funding
Member institution must complete and submit Master Agreement and Registration Form (covers HOP and NIP)
Registered Members may have contact information posted on FHLBI website
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Homeownership Initiatives Requirements
Income limit of 80% or less of AMI
FHLBI provides $3 per $1 of matching funds
If counseling is required, it must be face-to-face with state or HUD-certified counselor
Member cap of $300,000 per program
5 year retention recorded to property title, prorated recapture over the 5 years
Funding on a first come – first served basis
Available balance posted on FHLBI Website and updated regularly
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HOP Recipient Requirements
First-time homebuyer
Up to $10,000 for member originated mortgages
Up to $5,000 for non-member mortgages with 3:1 eligible matching funds
$1,000 cash contribution from homebuyer
Approved homebuyer counseling (up to $150 of HOP funds allowed toward cost)
No more than $250 cash back to buyer at closing
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Lidbeck Family, Iron Mountain, MI – First National Bank & Trust of Iron Mountain has helped 149 area homeowners make improvements to their homes, such as new windows and siding.
NIP Recipient Requirements
Up to $10,000 with required 3:1 eligible matching funds or member first lien-holder
Up to $7,500 with no match
Funding must be used toward eligible repairs, i.e.:
roofing gutters siding windows doors HVAC
Own and occupy property for minimum of 6 months
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In partnership with 1 st Source Bank in South Bend, IN, Habitat for Humanity renovated an old Frank’s Nursery & Crafts building into a new ReStore that provides items generally needed for housing improvements at reduced prices. The project was financed with a $1.6 million loan funded with a Community Investment Program advance from the FHLBI, along with support from Mishawaka Tax Increment Financing funds.
Community Investment Program (CIP) Help improve a member’s bottom line…
Community Investment Program advances are FHLBI’s lowest cost funding!
Flexible terms/structure
Variable and fixed to 20 year Up to 30 year amortization
Same collateral, prepayment terms, and activity based stock requirements as traditional advances
Available at FHLBI’s cost of funds, plus a nominal administrative fee (non-competitive)
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Other CIP member benefits
Provide low cost funding for many investment and loan opportunities, including AHP projects
Offer potentially lower rates than competitors
Enhance community relations by meeting the credit needs of your community
Match funding to mitigate interest rate risk
Fulfill Community Reinvestment Act (CRA) lending and/or investment tests*
* This does not constitute CRA advice. Please consult appropriate advisors.
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Eligible CIP Uses
Use CIP to provide financing for predevelopment, purchase, construction, rehabilitation, or refinance:
Housing (residential)… AHP projects qualify automatically!
Economic development (nonresidential) Mixed use (combination of residential & nonresidential)
Or to fund:
Future originations Originations up to 3 months prior Loan refinancing Communities or entities financing eligible housing or economic development initiatives (even fire trucks, hospitals or libraries!) 37
The application process is easy!
Complete the short application (available year-round)
Multiple ways to qualify a project…
FHLBI staff can help find the easiest way to qualify your project
FHLBI review time less than 10 business days
Minimum typical CIP advance is $100,000
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The rest is easier!
Documentation required at project qualification only
No penalty for not taking down a commitment
No ongoing monitoring or reporting
Project must be closed and funds fully disbursed or construction draws funded within 3 months prior to the CIP funding date and/or ending 6 months after the funding date
Past Project Funding Future Project Funding CIP Funding 39
CIP Housing Project Qualification
Ownership Residential
Individual owner-occupied units owned or purchased All household incomes <=115% of Area Median Income (AMI) Documentation Required: List of originated mortgages
Rental Residential
Financing of rental units and cooperatives At least 51% of resident incomes <=115% of AMI or Rents affordable to at least 51% residents whose incomes are <=115% AMI Documentation Required: Rent roll, FHLBI Rent Schedule or Income Roll 40
CIP Commercial and Economic Development
Project Qualification :
Small Business Concern
Small Business Administration revenue/size standards (North American Industry Classification System Codes (NAICS)) Documentation Required: Proof of revenue
Job creation/retention at qualified wage levels
At least 51% of job salaries <=115% AMI for rural At least 51% of job salaries <=100% AMI for urban Documentation Required: FHLBI Job Information Form 41
Consumers Credit Union used CIP funds to build its new branch located in Portage, MI. Since opening, the branch has averaged 70 new members per month and increased staff to accommodate the growth.
CIP Commercial and Economic Development
Services and benefits to a qualified area
Project provides services/benefits to urban or rural area
<=100% AMI for urban areas
<=115% AMI for rural areas
Project location in targeted area (income exemption)
Rural/urban Champion Community/Empowerment Zone or Enterprise Community
Native American area
Federal Brownfield Tax Credit
Area affected by a federal military base closing or realignment
State of Michigan Renaissance Zone
Federally declared disaster area
Documentation Requirement: Verification of AMI or Targeted Area 43
CIP Mixed Use Project Qualification
Combination of housing project and economic development
Project only required to qualify as economic development
Small Business Concern Job creation/retention at qualified wage levels Services and benefits to income targeted location or targeted area 44
Common CIP Uses
Industrial and manufacturing initiatives • Factories • Bakeries • Warehouses • Assembly Plant Public-facility initiatives • Buildings /vehicles for police and fire departments Commercial initiatives • Shopping Centers • Office Buildings • Hotels • Retail Stores • Member Branches Social-service initiatives • Office space for nonprofits • Day-care Centers • Hospitals • Nursing Homes Infrastructure projects • Roads • Sidewalks • Utilities 45
Q & A / Contact Information
MaryBeth Wott, Community Investment Officer [email protected]
317-465-0368 Marjorie Green, Development Manager [email protected]
517-230-2361 www.fhlbi.com
800-688-6697 46
Contact Information – Homeownership Initiatives
Shannon Fountain, Community Lending Manager [email protected]
317-465-0428 Ronna Edwards, Compliance Analyst [email protected]
317-465-0369 www.fhlbi.com
800-688-6697 47
Contact Information – Competitive AHP
Trish Lewis, AHP Portfolio Manager [email protected]
317-465-0379 Becky Hyink, Compliance Analyst [email protected]
317-465-0362 Rose Marie Roberts, Compliance Analyst [email protected]
317-465-0377 www.fhlbi.com
800-688-6697 48
www.fhlbi.com
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