lihtc and omh: navigating a housing dealjoseph lynch, managing partner, nyc office, nixon peabody...
TRANSCRIPT
Presented by:
Marian Zucker, President of the Office of Finance & Development, NYS Homes & Community Renewal
James Lupoli, Assistant Director/ Real Estate Officer, NYS Office of Mental Health
Ralph Fasano, Executive Director, Concern for Independent Living
Chris Betts, Principal, Betts Housing Partners
Moderated by: Joseph Lynch, Managing Partner, NYC Office, Nixon Peabody
LIHTC and OMH: Navigating a Housing Deal
Concern
•• 300+ Employees300+ Employees•• 240+ sites240+ sites•• Current Capacity Current Capacity –– over 850 residentsover 850 residents•• Approx. 450 Units in DevelopmentApprox. 450 Units in Development•• Over $150 million in capital raised inOver $150 million in capital raised in
past 5 yearspast 5 years•• OMH, HUD and OASAS contractsOMH, HUD and OASAS contracts•• Annual Budget Annual Budget –– Approx. $24 millionApprox. $24 million
Mission
To provide housing and services that To provide housing and services that enrich lives and strengthens enrich lives and strengthens communities.communities.
Key Values• Privacy• Safety• Dignity• Choice• Wellness/Recovery Oriented Attitude• Work is Important• A Healing Environment• A Home• An Asset to the Community
Supervised Community Supervised Community ResidencesResidences
•• Typically 8Typically 8--1212residents per residents per househouse
•• Staff supervision Staff supervision 24/724/7
•• TransitionalTransitionalhousinghousing
•• Funding through Funding through OMH & MedicaidOMH & Medicaid Shoreham West CR
OMH OVERVIEWOMH OVERVIEW
James Lupoli,
Assistant Director/ Real Estate Officer, NYS Office of Mental Health
SPSP--SRO and Mixed Use HousingSRO and Mixed Use Housing
• SP-SRO is considered long term or extended stay housing with individualized support services provided to residents
• Apartments are usually studio or one bedroom
• Providers must follow OMH Supported Housing Implementation Guidelines
• Must be integrated among other affordable housing units
SP SRO HousingSP SRO Housing
• SP SRO is unlicensed housing , however Housing Providers must provide person- centered, flexible services, and help individuals maintain linkages to other services in the community and follow OMH SH Guidelines
• SP SRO Application must be completed prior to operation of SP SRO units
Operating Funds for OMH HousingOperating Funds for OMH Housing
• OMH funds the operating costs of most OMH housing– Property operating, including rent stipends
and mortgage payments– Program/Services
• Sources of Funding– SSI– State aid
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Annual Operating FundingAnnual Operating Funding
NYC, Long Island and Lower Hudson River Region
On Site Services $10,118 Property Operating + 6,399 (Exluding debt service)Total Gross = $16,51730% SSI Living Alone Rate - 2,618 (90% collection
rate)
Total Net from OMH = $13,899 per bed/unit
Tax Credit Compliance Fee $15,000 per year
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Mixed Use HousingMixed Use Housing
• Affordable housing where OMH-funded units are targeted toward individuals with serious mental illness and are integrated among other affordable housing units
• The other units may be targeted to low- income individuals and families.
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Benefits of Mixed Use HousingBenefits of Mixed Use Housing
• Reduces stigma• Lessens community resistance • Provide opportunities for recovery and
rehabilitation• Housing is in normal/mixed neighborhoods • Funding for housing development is from
several different sources, reduces cost
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Housing Development/FinanceHousing Development/Finance• OMH works with private non-profit
agencies to develop housing in NYS for persons with serious mental illness.
• OMH provides capital and operating funding.
• OMH promotes integrated/mixed use housing, serving people with and without disabilities at the same location.
• Sponsors are encouraged to apply for other state and federal funding in addition to OMH funding.
Potential Other FundingPotential Other Funding• Tax Credit Syndicators – secures private
investors• DASNY – issues tax-exempt bonds• Commercial Lenders• OTDA – HHAP capital funding program• HCR – HTF capital and allocates 9% tax credits• HFA – issues tax-exempt bonds and allocates
4% tax credits• Federal Home Loan Bank• HUD
OMH & Low Income Housing Tax CreditsOMH & Low Income Housing Tax Credits
• NYS OMH has financing for its Supportive Housing programs that utilizes the 4% As-of- Right and 9% Competitive Low-Income Housing Tax Credits (LIHTC).
Differences Between 9% and 4% Tax Credits with Differences Between 9% and 4% Tax Credits with OMH CapitalOMH Capital
• 4% Low Income Tax Credits:- “As of Right”- Tax Exempt Private Activity Bonds with DASNY or HFA- OMH makes debt service on behalf of Sponsor with a signed Assurance Agreement from Sponsor
• 9% Low Income Tax Credits:- Competitive- OMH includes the required debt service in annual operating contract with a signed Assurance Agreement
OMH PROJECT APPROVALOMH PROJECT APPROVAL
• Provider must be have bed authority from an RFP
• Locate Site• OMH assists with studies• Develop Budgets for both Capital and
Operating.• If acceptable, OMH will seek DOB
approval for Project
PROJECT VIABILITYPROJECT VIABILITY
• Location• Mixed Use and meets spirit of Olmstead• Amount of Funding from All Sources is
Reasonable• Cost per OMH Unit is a prorated
amount as compared to the total project cost per unit.
• Cost per Unit is reasonable and able to be approved by DOB
OMH + Tax Credits + Other OMH + Tax Credits + Other Funding Partners = Funding Partners =
�Mixed-Use�Integrated�Safe�Affordable�HOUSING
6/9/20146/9/2014
DEVELOPMENT HURDLESDEVELOPMENT HURDLES
• DEVELOPMENTTEAM
• SITE CONTROL• SECURE FUNDING• LOCAL COMMUNITY
AND GOVERNMENT SUPPORT
• MEET CLOSING DEADLINES
• BUILD AND OCCUPY
ASSEMBLING A DEVELOPMENT ASSEMBLING A DEVELOPMENT TEAMTEAM
•AGENCY STAFF
•ARCHITECT
•ATTORNEY
•CONSULTANT
•CONTRACTOR
•BROKERS
•APPRAISER
•ENVIRONMENTAL EXPERT
GETTING SITES GETTING SITES •FIND A (SEVERAL) COMPETENT, HONEST REAL ESTATE BROKER(S)
•SPREAD THE WORD - FAMILY, FRIENDS, STAFF, BOARD MEMBERS, COLLEAGUES, LAWYERS, ACCOUNTANTS
•MEET WITH PROPERTY OWNERS, LOOK FOR ONES WITH COMPLEMENTARY NEEDS
•BE PREPARED TO PAY FOR OPTION AGREEMENTS AND MORE THAN APPRAISED VALUE (with your own $)
SITES TO CONSIDER SITES TO CONSIDER AVOIDINGAVOIDING
SITES WHICH CANNOT BE RENOVATED OR BUILT WITH THE AMOUNT OF FUNDING AVAILABLE
SITES THAT REQUIRE ZONING CHANGES OR DO NOT PERMIT INTENDED USE
SITES TO CONSIDER SITES TO CONSIDER AVOIDINGAVOIDING
SITES LIKELY TO RAISE INTENSE COMMUNITY OPPOSITION
SITES TO CONSIDER SITES TO CONSIDER AVOIDINGAVOIDING
SITES WITH UNUSUAL FEATURES
Nike Missile Silo – Liberty Village
OMH and Tax CreditsOMH and Tax Credits
• Integrated Housing Model• Mixed Populations• Additional Financing Sources• More coordination, planning, challenges, timing• OMH more involved. Very supportive and
protective.• Nonprofit service provider integral part of
project: ownership role, favorable nonprofit buyout opportunity after LIHTC compliance
Financing: OMH and DASNYFinancing: OMH and DASNY• 4% LIHTC – as of right• DASNY provides tax exempt bond• Initial closing only with OMH• Close on LIHTC, DASNY bonds and other
sources during construction• Little or no interest cost• Limited Developer’s fee• Lower issuance costs• Bid Construction• Use OMH form of Architect and GC Agreements• Coordinate bond closing
Financing: OMH and HCR/HFAFinancing: OMH and HCR/HFA• 4% LIHTC – as of right• HFA provides tax exempt bond• Close with all sources prior to construction start• More Potential Developer Fee• Higher interest and bond issuance costs• Bring GC in early – no bidding required• Increased flexibility on bond closing• Possible Subsidy Source
Financing: OMH and HCR 9%Financing: OMH and HCR 9%• 9% LIHTC – very competitive• Once a year HCR funding rounds• Conventional construction and permanent loans• OMH provides debt service support for
permanent loan.• Close with all sources prior to construction start• More Potential Developer Fee• Higher interest than DASNY• Bring GC in early – no bidding required• Possible Subsidy Source through NYS Housing
Trust Fund
Middle Island, NYMiddle Island, NY Developed by Concern For Independent Living, Inc.Developed by Concern For Independent Living, Inc.
123 Apartments123 ApartmentsNew ConstructionNew Construction
Construction Start: Fall 2014Construction Start: Fall 2014Financing Partners:Financing Partners:
NYS Homes and Community RenewalNYS Homes and Community RenewalNYS Office of Mental HealthNYS Office of Mental Health
NYS OTDA/HHAPNYS OTDA/HHAPSuffolk CountySuffolk County
Construction Sources % Funding AmountConstruction Period Bond/Letter of Credit 50.3% 23,750,000LIHTC Equity 4.0% 1,867,300OMH PDG 0.4% 200,000OMH Construction Financing 31.5% 14,877,400HCR/HFA Subsidy 1.1% 538,233Suffolk County 0% 0HHAP 3.2% 1,500,000Deferred Developer Fee 9.4% 4,439,414Total Sources of Funds: 100% $47,172,347
Construction Sources - DRAFT
Construction Sources % Funding AmountPermanent Mortgage 33.1% 15,607,400LIHTC Equity 39.6% 18,673,000OMH PDG 0.9% 420,000HFA Subsidy 6.3% 2,950,000Suffolk County 1.6% 750,000NYS HHAP 15.9% 7,500,000Developer Fee for Projected Costs 2.7% 1,271,948Total Sources of Funds 100% 47,172,348
Permanent Sources - DRAFT
Concern Bergen, 1552 Bergen Street, Brooklyn, NYConcern Bergen, 1552 Bergen Street, Brooklyn, NY Developed by Concern For Independent Living, Inc.Developed by Concern For Independent Living, Inc.
90 Apartments90 Apartments Construction Start: February 2014Construction Start: February 2014
Financing Partners:Financing Partners: NYS Homes & Community RenewalNYS Homes & Community Renewal
NYS Office of Mental Health NYS Office of Mental Health The Community Preservation Corporation The Community Preservation Corporation
National Equity FundNational Equity Fund
Construction Sources % Funding AmountConstruction Loan 9,177,151LIHTC 2,872,818NYS OMH 13,750,000Deferred Developer’s Fee 2,602,982Deferred Capital Reserve 376,883NYS OMH PDG 466,510Sponsor Funds 300,000Total Sources of Funds: 100% 29,546,344
Construction Sources - DRAFT
Construction Sources % Funding AmountCommunity Preservation Corporation/OMH 13,750,000LIHTC 14,364,087NYS OMH PDG 466,510Sponsor Contribution 966,747Total Sources of Funds: 100% 29,546,344
Permanent Sources - DRAFT
100 Apartments100 Apartments Construction Start: Summer 2014Construction Start: Summer 2014
Financing Partners:Financing Partners: NYS Office of Mental HealthNYS Office of Mental Health
Dormitory AuthorityDormitory Authority NYS Homes and Community RenewalNYS Homes and Community Renewal
RedStoneRedStone CapitalCapital
Ebenezer SquareEbenezer SquareDeveloped by DePaul of RochesterDeveloped by DePaul of Rochester
Construction Sources % Funding AmountOMH/DASNY Financing 17,612,100Tax Credit Equity 3,275,535OMH PDG 436,150Deferred Developer Fees 3,198,568Deferred Capitalized Reserves 420,000Total Sources of Funds: 100% 24,942,353
Construction Sources - DRAFT
Construction Sources % Funding AmountOMH/DASNY Financing 17,612,100Tax Credit Equity 5,785,896NYS OMH PDG 436,150Deferred Developer Fees 1,108,207Total Sources of Funds: 100% 24,942,353
Permanent Sources - DRAFT
90 Apartments90 Apartments Construction Completion: Fall 2014Construction Completion: Fall 2014
Financing Partners:Financing Partners: NYS Homes & Community Renewal NYS Homes & Community Renewal
NYS Office of Mental Health NYS Office of Mental Health City of RochesterCity of Rochester
The Community Preservation Corporation The Community Preservation Corporation First SterlingFirst Sterling
Carriage Factory, Rochester, NYCarriage Factory, Rochester, NYDeveloped by DePaul of RochesterDeveloped by DePaul of Rochester
Construction Sources % Funding AmountCommunity Preservation Corporation 10,350,000Tax Credit Equity 6,396,218Historic Credits 1,535,572State Historic Tax Credits 568,767Deferred Developer Fees 794,141Deferred Capitalized Reserves 263,578City of Rochester 600,000DePaul Equity 1,723,062Deferred Environmental REM 110,000Deferred SONYMA and Legal 30,776Total Sources of Funds: 100% 22,372,114
Construction Sources - DRAFT
Construction Sources % Funding AmountCommunity Preservation Corporation 1,989,412Tax Credit Equity 11,629,489Historic Credits 2,791,947State Historic Tax Credits 1,034,122Deferred Developer Fee 579,082HTFC 2,025,000City of Rochester 600,000DePaul Equity 1,723,062Total Sources of Funds: 100% 29,546,344
Permanent Sources - DRAFT
Norwood Terrace, 3349 Webster Avenue, Bronx, NYNorwood Terrace, 3349 Webster Avenue, Bronx, NY Joint Venture between Concern for Independent Living and B&B SupJoint Venture between Concern for Independent Living and B&B Supportive LLC. portive LLC.
MixedMixed--Use Facility featuring 115 apartmentsUse Facility featuring 115 apartmentsFinancing Partners:Financing Partners:
NYS Homes and Community RenewalNYS Homes and Community RenewalNYS Office of Mental HealthNYS Office of Mental Health
NYS OTDA/HHAPNYS OTDA/HHAPBank of AmericaBank of America
Richman Housing ResourcesRichman Housing ResourcesNYC HPD & FHLB of NYNYC HPD & FHLB of NY
Construction Sources % Funding AmountHFA Construction Loan 48.3% 17,500,000HFA 2nd Mortgage 1.6% 576,000NYS HCR MRT Loan 8.4% 3,042,198NYS HHAC Loan 15.7% 5,684,000HPD SHLP Loan 5.5% 2,000,000FHLB AHP Loan 2.8% 1,000,000Brownfield Mortgage Loan 2.1% 752,915OMH PDG Mortgage Loan 1.0% 344,555Accrued Loan Interest During Construction 2.8% 1,009,464CFIL Equity 0.6% 210,000Deferred Developer Fee Loan 11.3% 4,100,881Total Sources of Funds: 100% 36,220,013
Construction Sources - DRAFT
Construction Sources % Funding AmountTax Credit Equity 38.2% 13,837,804Solar Credit Equity 0.2% 86,135HFA Permanent Loan 6.5% 2,340,000HFA 2nd Mortgage 1.8% 640,000HCR MRT Loan 20.0% 7,250,000NYS HHAC Loan 15.7% 5,684,000HPD SHLP Loan 5.5% 2,000,000FHLB AHP Loan 2.8% 1,000,000Brownfield Mortgage Loan 2.1% 752,915NYSERDA Mortgage Loan 0.4% 138,000OMH PDG Mortgage Loan 1.0% 344,555Accrued Loan Interest During Construction 2.8% 1,009,464CFIL Equity 0.6% 210,000Deferred Developer Fee Loan 2.6% 927,140Total Sources of Funds: 100% 36,220,013
Permanent Sources - DRAFT
WORKING WITH THE COMMUNITYWORKING WITH THE COMMUNITY
• Meet with individuals before you meet in larger meetings
• Look for supporters and encourage them to speak out
• Identify community interests and work in to presentations – jobs, elimination of blight, security, business opportunities
Strategies used to overcome oppositionStrategies used to overcome opposition
• Develop relationship with media• Correct misconceptions and get accurate
information out• Use visual presentations to show what is
planned and address all concerns• Show how program fits in with community plans
capital investment, jobs and good will• Convince locality that they will not prevail and
that Federal laws are on your side