Transcript Document
The RAD Program Experience with Preservation Using Section III CHAPA Forum November 12, 2013 Thacher Tiffany, Director of Acquisitions Mary Corthell, VP of Compliance Beacon experience to date Type Properties Units Section III retro Rent supp, 236 1 100 Section III, complete Rent supp, 236 4 699 Section III, in process Rent supp, 236 1 72 Section I, in process HOPE VI 2 655 8 1,526 Total Case study using Section III of RAD Notice Expiring Rent Supplement Contract Expiring Section 236 Units Project Based Voucher (PBV) Contract Case study using Section III of RAD Notice Apply for RAD Prepay Section 236 Mortgage Plan preservation transaction RAD Conversion Recapitalization with 4% LIHTC and tax exempt bonds Case study using Section III of RAD Notice Project info - Built in 1973 190 units Rent supplement contract for 72 units expired February 2013 Section 236 mortgage maturing July 2014 - Investors with large negative capital accounts - Potential for market conversion in improving market area Case study using Section III of RAD Notice Objectives - Address extensive capital needs at the property - Make investors equal or better off than “going market” - Ensure long-term stability of property Case study using Section III of RAD Notice Rents Type Current 2013 60% AMI 2013 Rent Reasnbl Apr-13 110% FMR 2013 Underwritten Avg Size Count 400 500 700 26 74 49 775 980 1,180 1,095 1,173 1,407 983 1,225 1,490 1,078 1,311 1,615 983 1,225 1,490 Housing Choice Vouchers Efficiency 400 1 Bed 500 2 Bed 700 1 12 9 775 980 1,180 1,095 1,173 1,407 983 1,225 1,490 1,078 1,311 1,615 983 1,173 1,407 5 8 6 775 980 1,180 1,095 1,173 1,407 983 1,225 1,490 1,078 1,311 1,615 983 1,173 1,407 192,440 2,309,280 235,350 2,824,200 514,920 241,974 2,903,691 594,411 261,096 3,133,152 823,872 239,689 2,876,271 566,991 PBV Contract Efficiency 1 Bed 2 Bed Over Income Efficiency 1 Bed 2 Bed Monthly Gross Rent Annual Gross Rent Change from Current Total Units 400 500 700 190 Case study using Section III of RAD Notice Resident Services (required for PBV contract to exceed 50%) - Resident service coordinator staff Programing space (community room etc.) Contract with third parties both on and off site Lease rider - Typical program categories - Youth Enrichment - Workforce Training - Self-sufficiency - Health and wellness Revenue not sufficient to address needs using RAD alone Coupled with 4% LIHTC, resubordination, soft debt etc. Sources: $8 million max in new debt Sources: $8 million max in new debt $11 million in tax credit equity $4 million in subsidy Uses: $12 million in capital needs - 40 year old property $10 million in debt Transaction costs… Uses: $12 million in capital needs $2.5 million in exit taxes $8.5 million in trans. costs Subordination of most of existing debt Issues to consider when evaluating a RAD conversion 1. 2. 3. 4. 5. What are the capital needs? What are the market rents? FMRs, rent reasonableness? Can you provide resident services? What is the local PHA? What are the maturities? Is there a Rent Supp and Sec 236 mis-match? Is there other debt? 6. What share of resident will be eligible for PBVs? LIHTCs? 7. What’s the timing, can you meet the deadlines? 8. How do you work with uncertainty of program? Implementation of RAD Conversion - Advanced Planning and Coordination with PHA - Preliminary Meetings with PHA Interview Schedule for Income Certifications Resident Consent to Release Information Vital documents Solidify the process between Agent and PHA Designated Project Manager - Corporate - Initial resident meeting - HUD explains the RAD and EV Program - PHA is introduced to residents Implementation of RAD Conversion - Process started shortly after initial resident meeting Management circulated PIH paperwork to all households Worked with PIH to arrange HQS Inspections All residents returned PIH paperwork to management to review for completion - Management delivered completed paperwork to PHA for processing. - Tracking sheet – PHA and Management - Constant communication with PHA – weekly meetings Implementation of RAD Conversion • Update TSP to include PBV program • Leases need to be created/signed by all eligible household members • PIH provided management with PBV Addendum to be signed with lease • HAP Contract – 15 year term – 110% of FMR (subject to rent reasonableness) Implementation of RAD Conversion • Up to a 5 year phase in for household experiencing more than a 5% increase to 30% of adjusted income for rent. • PHA provided residents with TR and HAP • Management sent follow up letters to residents if 5% phase in was required. • Management tracks the phase-in for the 5 year period. Thacher Tiffany, Director of Acquisitions (617) 574-1105 [email protected] Mary Corthell, VP of Compliance (617) 574-1153 [email protected]