Building Partnerships by Investing your Community

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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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