Transcript Building Partnerships by Investing your Community

The Value of Membership -
Opportunities for Community Investment
February/March 2012
www.fhlbi.com
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“Community Dividend” We Deliver
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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
Community Investment Programs
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FHLBI Community Investment Programs
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Affordable Housing Program (AHP) – grant
funding to create rental and homeownership
opportunities for low- and moderate-income
households
Homeownership Initiatives – 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 to support
targeted housing and economic development
Community Investment Programs
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2012 AHP Allocation to be determined
2011 AHP Contribution (based on 2010 results)
HOP
Competitive AHP
$9 million
Homeownership
Initiatives
$4.8 million
NSA
NIP
Implementation Plan
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Reviewed by AHAC annually before approval by Board,
or as amended
Establishes scoring and set-aside criteria in response to
district needs and within regulations
Establishes competitive application round deadlines and
set-aside holdback dates
Allocates required annual contributions
Affordable Housing Program (AHP)
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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
Community Investment Programs
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Brotherhood Mutual Insurance Co. partnered with Ft. Wayne Rescue
Mission Ministries to obtain an AHP grant of $750,000 to help
Charis House build a larger facility for women and children suffering
from homelessness, mental illness, addictions, or trauma.
Affordable Housing Program (AHP)
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A single funding round in 2012
Competitive application process
Maximum grant $500,000 per project
Grants - direct subsidies
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 the FHLBI
Community Investment Programs
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Typical AHP Projects
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Senior or family rental projects (not
assisted living, hospice or nursing homes)
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Scattered site single family homes for
homeownership, lease purchase or rental
Emergency shelters
Transitional housing
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Permanent supportive housing
Habitat for Humanity projects
Neighborhood revitalization projects
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Post Secondary Transition House, a collaborative between SVRC Industries,
Inc. and the Saginaw Intermediate School District, provides transitional
housing for developmentally disabled persons aged 18 to 26. The school
district will provide education and training services to residents. An AHP
grant of $750,000 was awarded to Wanigas Credit Union in 2009.
AHP Definition of Affordable:
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80% of area median income for
homeowner projects
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50% of area median for rental projects
(at least 20% of units must be affordable
to households at 50% of area median income)
Mixed income rental projects are allowed
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AHP Affordability, continued
Rental:
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Rent does not exceed 30%
of household income
Homebuyer:
 Mortgage payments that do not
exceed 35% of borrower’s monthly
income. Borrower’s total debt must
be less than 45%
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Key 2012 Scoring Changes
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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
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AHP Monitoring
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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
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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.
The NSA program created in 2009 helps to
address the foreclosure crisis by
redeveloping foreclosed properties.
Homeownership Initiatives
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Homeownership Opportunities Program
(HOP) provides up to $7,500 in down payment
and closing cost assistance for first-time
homebuyers
Neighborhood Stabilization Assistance
(NSA) provides up to $10,000 in down payment
and closing cost assistance to buyers of NSPassisted homes
Neighborhood Impact Program (NIP) provides
up to $10,000 for rehabilitation of owneroccupied homes
Community Investment Programs
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Homeownership Initiatives Similarities
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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 required, prorated recapture
over the 5 years
Funding on a first come – first served basis
Available balance posted on FHLBI Website
and updated regularly
Community Investment Programs
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The Neighborhood Impact
Program (NIP) assists
homeowners with
renovations. These “before”
and “after” photos of a home
in Detroit, MI, show the
dramatic difference that
these dollars can make for
the homeowner and an
entire neighborhood.
What is CIP?
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Community Investment Program advances
for housing or community economic
development purposes
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CIP Letters of Credit to enhance bond
issuances funding affordable housing and
taxable non-housing municipal bonds
Community Investment Program
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Why is it important to FHLBI Members?
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Community Investment Program advances are
FHLBI’s lowest cost funding!
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Flexible terms/structure
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Variable and fixed to 20 year
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Up to 30 year amortization
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Same collateral, prepayment terms, and activitybased stock requirements as traditional
advances
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Available at FHLBI’s cost of funds, plus a
nominal administrative fee (non-competitive)
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How else does a FHLBI member benefit?
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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
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Use CIP to provide financing for
predevelopment, purchase, construction,
rehabilitation, or refinance:
Housing (residential)… AHP projects qualify
automatically!
o Economic development (nonresidential)
o Mixed use (combination of residential & nonresidential)
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Or to fund:
Future originations
o Originations up to 3 months prior
o Loan refinancing
o Communities or entities financing eligible housing
or economic development initiatives (even fire trucks,
hospitals or libraries!)
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Eligible CIP Types of Financing
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Many mortgages made by members are likely to
be CIP-eligible
Members can purchase a participation interest or
participate in a CIP eligible loan consortium
Make loans to a community or other entities
financing CIP eligible projects, like fire stations or
a library
Use CIP to purchase mortgage revenue bonds,
mortgage-backed securities or Low Income
Housing Tax Credits
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The application process is easy!
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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!
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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
Community Investment Program
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CIP Housing Project Qualification
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Ownership Residential
 Individual owner-occupied units owned or purchased
 All household incomes <=115% of Area Median Income (AMI)
Documentation requirement: List of originated mortgages
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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 requirement: Rent roll, FHLBI Rent Schedule or
Income Roll
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The former Hekman Biscuit Company in Grand Rapids, MI, was renovated into Roosevelt
Park Lofts. The building offers 21 affordable studio, two- and three-bedroom apartments
with loft-style features. It also offers 2,400 square feet of commercial space. Lighthouse
Community Development received an AHP grant
of $147,000
through Programs
Fifth Third Bank to
Community
Investment
assist with the renovations.
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CIP Commercial and Economic Development
Types of Projects:
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Small Business Administration (SBA) Concern
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Job creation/retention at qualified wage levels
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Services and benefits to a qualified area
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CIP Commercial and Economic Development
Project Qualification:
Small Business Concern
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Small Business Administration revenue/size standards
(North American Industry Classification System Codes
(NAICS))
Documentation Requirement: Proof of revenue
Job creation/retention at qualified wage levels
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At least 51% of job salaries <=115% AMI
Documentation Requirement: FHLBI Job Information Form
Community Investment Program
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Accident Fund Insurance Co. combined the renovation of a vacant power
plant built in 1938 with new construction to create its headquarters in
downtown Lansing, MI. The FHLBI provided a $50 million CIP advance
for the construction/renovation and a $31.3 million CIP letter of credit
to support the construction of the parking deck.
CIP Commercial and Economic Development
Services and benefits to a qualified area
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Project provides services/benefits to urban or rural area
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<=100% AMI for urban areas
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<=115% AMI for rural areas
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Project location in targeted area (income exemption)
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Rural/urban Champion Community/Empowerment Zone or Enterprise Community
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Native American area
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Federal Brownfield Tax Credit
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Area affected by a federal military base closing or realignment
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State of Michigan Renaissance Zone
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Federally declared disaster area
Documentation Requirement: Verification of AMI or Targeted Area
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CIP Mixed Use Project Qualification
Combination of housing project and economic
development
Project only required to qualify as economic
development
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Small Business Concern
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Job creation/retention at qualified wage levels
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Services and benefits to income targeted location or targeted area
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Common CIP Uses
Industrial and
manufacturing initiatives
Commercial initiatives
• Factories
• Bakeries
• Warehouses
• Assembly Plant
• Shopping Centers
• Office Buildings
• Hotels
• Retail Stores
• Member Branches
Public-facility initiatives
Social-service initiatives
• Buildings / vehicles for police
and fire departments
• Office space for nonprofits
• Day-care Centers
• Hospitals
• Nursing Homes
Infrastructure projects
• Roads
• Sidewalks
• Utilities
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