Snapshot: Affordable Housing MarketFisher Center for Real Estate Conference

April 30, 2012

Cynthia Parker, President & CEOBRIDGE Housing Corporation

Snapshot: Affordable Housing Market

About BRIDGE Housing Corporation Demand for Affordable Housing Traditional Financing Tools Low Income Housing Tax Credit Program Redevelopment Agencies BRIDGE Project Examples

Mission• Quantity, Quality,

Affordability History

• Business Leadership• 27 Years of Success• Internationally

Recognized Leader and Innovator

BRIDGE Housing Corporation Background

Approximately 15,000 Homes and Apartments Developed

85 California Communities 37,000 Residents Development in Northern and

Southern California

BRIDGE Housing Corporation Track Record

BRIDGE Housing Corporation Types of Developments

Series10%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Rental

For Sale

New Construc-

tion

Acquisition

Inner City

Suburban/Small City

Family

Senior

Sole Developer

Or with Nonprofit Partner

Private Partner

BRIDGE in 2012

More than 2,000 units breaking ground, with a combined total value of more than $450 million

MIXED INCOME – Irvington Village, Fremont

Mixed Income Family Rental and Homeownership100 affordable units

Project Value: $31,800,000283 market-rate units

Project Value: $148,000,000

SUSTAINABILITY – Mission Walk, San FranciscoFamily Homeownership131 unitsProject Value: $63,500,000

SENIOR RENTAL – Foothill Farms, Sacramento

Senior RentalTotal Units: 138Project Value: $26,000,000

Income Limits

U.S. Median Family Income = $52,400* California Median Family Income = $71,400* Bay Area Median Family Income = $103,000*

Extremely Low-Income = 30% of AMI** Very Low-Income = 50% of AMI Low-Income = 80% of AMI

*based on household of four**Area Median Income = AMI

TRANSIT-ORIENTED REDEVELOPMENTNorth Beach Place, San Francisco

Mixed-use Family Rental341 unitsProject Value: $108,400,000Up to 60% AMI

AFFORDABLE HOMEOWNERSHIPArmstrong Townhomes

Family Homeownership124 unitsProject Value: $60,000,000

Condominiums were priced $175,000 to $345,000 and affordable to households earning 60 to 100% of AMI

Affordable Housing Demand: U.S.

Renter households represent 33% of all households in the U.S., of which nearly 70% are low-income

The Fair Market Rent (FMR) for a two-bedroom apartment in the U.S. is $949

A renter household needs an annual income of $37,960 in order to afford a two-bedroom apartment at FMR

A renter earning the federal minimum wage ($7.25 per hour) must work 101 hours per week to afford a two-bedroom apartment at FMR

Affordable Housing Demand: California

The Fair Market Rent (FMR) for a two-bedroom apartment in California is $1,353

A renter household needs an annual income of $54,127 in order to afford a two-bedroom apartment at FMR

A renter earning California minimum wage ($8.00 per hour) must work 130 hours per week to afford a two-bedroom apartment at FMR

Bay Area FMRs

In 2012, FMR for a 2-bedroom in San Francisco was $1,905, affordable to families earning at least $76,200 per year; this is a four percent increase from 2011.

Continued Demand

Traditional Financing Tools

For Non-Profit Affordable Housing Restriction Competition Lead Time

501(c)3 Financing Low No 6 months+

4% Low Income Housing Tax Credit (LIHTC) Equity + Bond Cap Financing

Some Some < 1 year

9% LIHTC Equity High High 2+ years

Federal e.g. HOME (cut by 1/3), McKinney (gone), 202 and 811 (on hold)

High High 2+ yearssevere reductions

Prop 1C High High N/A

MHP/RDA ---- GONE ----

Traditional financing tools are inadequate to meet increasing need in our region.

Federal Low Income Housing Tax Credit Program

Tax Reform Act of 1986 (IRS Section 42) Housing Finance Agencies (HFAs) in each state award

credits to developers, who sell them to investors in exchange for funding for the construction and rehabilitation of affordable housing (60% AMI and below)

Investors receive 10 year credit 4% and 9% programs Nearly 2 million affordable rentals have been created

with equity provided by the Low Income Housing Tax Credit Program

California Low Income Housing Tax Credit Program California Tax Credit Allocation Committee

• Over $3 billion in Annual Federal and State Credits awarded to date

• Over 265,000 units produced since 1987

Impact of Economic Downturn

Banking Crisis

Banking Crisis: Federal Aid for LIHTC Program

2008 Congress Program Changes• Provided additional Housing Credit authority• Exempted Housing Credits from the Alternative Minimum Tax (AMT)• Fixed the 70 percent present value Credit at 9 percent• Gave states flexibility to provide state-designated developments a

30 percent Housing Credit “basis boost” 2009 American Recovery and Reinvestment Act of 2009 –

Response to Economic Downturn• $2.25 billion in formula grants to states through the Tax Credit

Assistance Program (TCAP)• Allowed states to exchange some of their 2009 Credits for cash to

make up for equity gaps in Credit developments

Banking Crisis: Federal Aid for LIHTC Program

California Tax Credit Allocation Committee: 2011 Totals• Federal (9%) Credit Awards

• Annual Federal Credits Awarded: $83,682,515• Total State Credits Awarded: $86,979,826• Projects Awarded: 105• Total Number of Units: 6,150• Total Number of Low Income Units: 6,026

LIHTC Program

California Tax Credit Allocation Committee: 2011 Totals (cont’d)• Federal (4%) Plus State Credit Awards

• Annual Federal Credits Awarded: $7,419,382• Total State Credits Awarded: $23,833,168• Projects Awarded: 16• Total Number of Units: 1,175• Total Number of Low Income Units: 1,134

• Federal (4%) With Tax-Exempt Bond Financing Awards • Annual Federal Credits Awarded: $75,627,461 • Projects Awarded: 109• Total Number of Units: 10,073• Total Number of Low Income Units: 9,340

DEMAND SNAPSHOTThe Coronet, San Francisco

Senior Rental150 unitsProject Value: $55,000,000 15-40% AMIWait/Interest list of over 7,000

LIHTC Program: Equity Pricing Trend / Investor Yield Change

RDA Funding

Properties # of UnitsAmount of RDA

Funds Committed

TDC

Northern California16th Street Station474 Natoma Family ApartmentsSan Leandro CrossingsFoothill Farms Senior ApartmentsMacArthur Transit Village Affordable HousingSt. Joseph’s SeniorSt. Joseph’s FamilyRene Cazenave ApartmentsWest Sacramento

825 $89,886,656 $279,831,364

Southern California9th & BroadwayComm22 – FamilyCollege ParkSummerhouse Phase 2

575 $46,750,000 $174,856,211

TOTAL 1,400 $136,636,656 $454,687,575

MacArthur Transit Village, OaklandMixed-use, Mixed-income Family RentalAffordable Units / Total Units: 108 / 624

Project Value: $329,800,000

COMM22, San DiegoMixed-use Family RentalTotal Units: 200Project Value: $77,928,000

9th & Broadway, San DiegoMixed-Use RentalTotal Units: 250Project Value: $73,500,000