FHLB Atlanta - AHP Competitive Program

FHLB Atlanta - AHP Competitive Program
Friday, November 13, 2015
Alabama Housing Works! 2015 Conference
Don Billingsley, Lending & Disbursement Analyst
Our Discussion Today
•
FHLBank Atlanta Overview
•
AHP Competitive Program
•
Overview
•
Value and Benefits
•
Scale and Impact of AHP
•
Scale and Impact of AHP in Supportive Housing
•
How To Apply for AHP Competitive Funding
•
Dispelling the Myths
•
Q&A
2
FHLBank Atlanta Overview
FHLBank System Overview
FHLBank Atlanta is one of 11 district banks
in the Federal Home Loan Bank System
The FHLBanks are government-sponsored
enterprises, or “GSEs,” created by the
Federal Home Loan Bank Act of 1932
FHLBank Atlanta’s district comprises Alabama, Florida,
Georgia, Maryland, North Carolina, South Carolina, Virginia,
and the District of Columbia
4
FHLBank System
5
Unique Offering to Shareholder and Community
10 percent
FHLBank
Products
=
Earnings
Community
Dividend
•
Like every “dividend,” predicated upon earnings
•
“Equity-like” capital for real estate transactions
•
Direct and indirect benefits to shareholders, developers,
homebuyers, tenants, and the community
6
Affordable Housing Program (AHP)
AHP Competitive – rental and ownership
• New construction/rehabilitation
• Single-family/multi-family
• Acquisition/owner-occupied
AHP Set-aside – ownership only
• First-time Homebuyer Product (FHP)
• Community Partners Homebuyer Product (CPP)
• Foreclosure Recovery Homebuyer Product (FRP)
• Veterans Product Suite (VPP, RVPP, VRP, RVRP)
• Structured Partnership Products (SPP)
Community Investment Program (CIP)/
Economic Development Program (EDP)
•
Discounted advance products for residential or economic
development projects
7
AHP Competitive Program
AHP Competitive Program (Rental)
•
Rental transactions
• Types
•
•
•
•
Reduces project debt service
•
•
•
•
•
Which thereby permits a reduction in
project rents to enable affordability
Acquisition
Rehabilitation
New Construction and/ or
Permanent funding
Supportive Housing transactions
•
La Joya Villages, Lake Worth, FL
Community & Southern Bank
$500,000 AHP Subsidy
55 rental units
Use of Funds
•
•
Low-Income Housing Tax Credit
(LIHTC)
Non-LIHTC multi-family
Mixed-Use
Social service residential facilities
AL Association of Habitat Affiliates
Hurricane Katrina Recovery
$250,000 AHP Subsidy
25 rental units
9
Rental Example:
Extend Credit and Reduce Loan Risk
Multi-family Rental, New Construction
Winter Haven, FL 84 units
Total Costs
Acquisition
Construction
AHP
Shareholder
$590,000
$9,160,282
Other
$590,000
$0
$134,988
$9,025,294
Soft Costs
$1,716,414
$65,000
$106,161
$2,063,862
Other Costs
$2,143,311
$547,815
$858,851
$3,014,288
$1,100,000
$11,897,192
Total Development Budget
Total Debt – First Mortgage
Member Loan-to-value (LTV/Cost)
AHP Competitive
Total Debt if AHP converted to Debt
Member LTV/Cost if AHP
converted to Debt
$13,610,007
$1,100,000
$612,815
8.1%
$612,815
$1,712,815
12.6%
DCR
1.36
DCR if AHP converted to Debt
(7% for 15 years)
0.71
10
FHLBank Atlanta AHP Scale and Impact
$672.9 Million
competitive funds awarded to create over
106,000 rental and homeownership
opportunities for moderate-, low- and very lowincome households since 1990.
AHP Competitive Leverage Ratio – 1:13
AHP
Competitive
Program
AHP
Set-aside
Program
Community
Investment
Program
$155.6 Million
funded through AHP Set-aside products and
supporting more than 22,890 units since 1997.
AHP Set-aside Leverage Ratio – 1:20
$7 Billion
low-cost CICA advances supporting
community economic initiatives and
affordable housing development.
Economic
Development
Program
*As of August 17, 2015
11
AHP Competitive Scale and Impact
Comparison By Project Type, Awarded 1990-2014
Key Takeaway:
Since AHP inception, 38%
of AHP Competitive projects
awarded are Rental LIHTC
Rental
LIHTC
Projects
38%
Ownership
Projects
37%
Rental
Non-LIHTC
Projects
25%
Project Type
# Projects
AHP
Dev. Costs
Leverage
Rental - LIHTC
822
$305 Mil
$5.9 Bil
1:20
Ownership
801
$177 Mil
$1.7 Bil
1:10
Rental Non-LIHTC
547
$194 Mil
$1.4 Bil
1:7
Rental LIHTC
projects have
a significantly
higher leverage
ratio than other
project types
12
FHLBank Atlanta LIHTC AHP Cumulative Scale and Impact
(1990-2014)
13
AHP Competitive Scale and Impact
Rental LIHTC vs. Rental Non-LIHTC, 1990-2014
Rental
Non-LIHTC
Projects
30%
Rental
LIHTC
Projects
60%
Key Takeaways:
Since AHP inception, 60%
of Atlanta’s AHP
Competitive rental projects
awarded are LIHTC
FHLBank Atlanta has
awarded $305 M to LIHTC
Project Type
# Projects
# Units
AHP
Rental - LIHTC
822
52,538
$305 Mil
Rental Non-LIHTC
547
28,785
$194 Mil
1,369
81,323
$499 Mil
Total
14
FHLB Atlanta Supportive Housing Defined
Housing projects that include low-to-moderate income units
reserved for individuals and families that are homeless, mentally
or physically disabled, recovering from physical or substance
abuse, or have HIV/AIDS.
Project: 1031 East Baltimore St.
Sponsor: Helping Up Mission, Inc.
$1 M AHP award for supportive housing for homeless residents
15
Supportive Housing
Rental LIHTC vs. Rental Non-LIHTC, 2010-2014
100%
Percentage of Projects
90%
80%
33%
70%
60%
84%
50%
40%
30%
67%
20%
10%
16%
0%
Other
Rental LIHTC
Rental Non-LIHTC
Supportive Housing
Over the last 5
years, 49.6% of all
rental projects
awarded include
supportive housing
units
Project Type
Total #
Projects
2010-2014
# Projects With
Supportive Housing
2010-2014
% Total Projects With
Supportive Housing
2010-2014
Rental - LIHTC
173
57
33%
Rental Non-LIHTC
85
71
84%
Total
258
128
49.6%
16
FHLBank Atlanta Supportive Housing Awards by State
1990-2014
17
How To Apply for AHP Competitive Funding
How to Apply for AHP Competitive Funding
All applications include a sponsor and a member
Members are the financial institutions that are part of the Federal Home
Loan Bank of Atlanta. Virginia Community Capital would be the
member.
Sponsors are housing developers, public entities, contractors, community
builders, and other organizations engaged in housing construction,
rehabilitation, and development of affordable rental or owner-occupied
housing.
19
How to Apply for AHP Competitive Funding
Getting Started
All applications include a FHLBank Atlanta Member and a Sponsor
Members are the financial institutions that are part of the Federal Home
Loan Bank of Atlanta
• Member list is on the FHLBank Atlanta website
• Call if you would like assistance on reaching the right person
Sponsors are housing developers, public entities, contractors, community
builders, and other organizations engaged in housing construction,
rehabilitation, and development of affordable rental or owner-occupied
housing
Sponsors drive the application process; members review and approve
applications
20
How to Apply for AHP Competitive Funding
Detailed webinars are offered to review the actual application content
Application is submitted through AHPOnline, accessed on the home
page of the FHLBank Atlanta website
Sponsor submits application to member for review and approval
FHLBank Atlanta member approves application and submits to FHLBank
Atlanta the supporting documents via electronic media by sponsor
21
How to Apply for AHP Competitive Funding
2016 Scoring
22
Intake
Application (input data & docs):
AHP
Online
• Threshold doc review
• Scoring initiated
Underwriting
April 7th Application Deadline
Approval
AHP Competitive
Intake, Processing, Underwriting and Approval
Assigned
to
Analyst
Top 150%
scores relative
to available
funding
CIS Director
Recommendation
Process data & documents:
Underwriting & Analysis:
Quality Control:
• Additional documentation
• Clarification
• Validation
• Financial feasibility
• Development feasibility
• Cash flow analysis
• UW Consistency
• Market viability
• Fraud mitigation
April 7th
–
June 20th
CIS Committee
Recommendation
July 12th
Affordable
Housing
Advisory
Council
Consultation
July 26th
Board of Directors
Approval
July 27th – 28th
23
Dispelling the Myths
Myth #1: The AHP Competitive schedule is consistently
adverse with my state’s LIHTC application schedule.
•
FHLBank Atlanta’s district includes eight LIHTC-administrating HFAs with
varying application schedules.
•
To ensure that there is fair access to AHP Competitive funds:
 3 year rotational, AHP Competitive schedule
 Amended scoring criteria
• Proposed LIHTC projects can get 5 points for having an eligible
submission of their project application to their state’s LIHTC
administrator.
•
Projects that were awarded LIHTC after the AHP Competitive application
deadline the previous year are in a position to get Readiness points in a
2016 AHP application.
2016
Application
deadline is in
April!
25
Myth #3: Projects from rural markets are at a
disadvantage in the AHP Competitive application.
•
Rural projects awarded at a rate equivalent to the rate of rural
applications submitted. For example, over the past five years:
•
•
31% (264 of 845) of all applications submitted were for rural projects
31 % (93 of 301) of applications awarded were for rural projects
•
Beginning with the 2015 AHP awarded projects, the Bank will use
the greater of several household income calculation methodologies.
Under this new methodology, for example using an average fourperson household, 91% of counties within FHLBank Atlanta’s district
are positively impacted.
•
Using the state median family income will expand availability of AHP
to areas where the county-level limit is lower than the state limit.
26
Expanding Your Eligible Customer Base
New! FHLBank Atlanta AHP Income Limit Methodology & Calculator
•
Selects the greatest of four calculation
methodologies
•
Point-and-click Calculator automatically
provides the highest income limit
•
548 of 599 counties in the Bank’s district
(91%) now have a higher income limit!
FHLBank Atlanta Income Calculator Tool
https://cis.fhlbatl.com/ahp/utilities.portal
Clarke County, AL – Example, 4 person household
Old Methodology (80%)
Highest of New Methodology (80%)
% Higher than Old Methodology
$38,800
$44,400
14%
27
Myth #4: AHP Competitive cannot be used to pay for
project costs overruns
•
A project in construction at the time of AHP Competitive application
submission is eligible to apply
•
The project must still demonstrate the need for subsidy and the
costs must still be reasonable.
•
These projects are more likely to receive Readiness points, which
would increase their competitiveness.
28
Myth #5: Certain member institutions that have experience
and expertise in the AHP application process have an
inherent competitive advantage.
•
There are absolutely no scoring, underwriting, or award
determination factors related to the experience, expertise, or identity
of the member.
•
In fact, in two of the last five years, new members* actually had a
higher winning success rate than experienced members.
*Note: Experienced members are defined as having submitted an AHP
Competitive application within the prior two years; new members are
defined as having not submitted an AHP Competitive application within
the prior two years.
29
Myth #8: You need to have an AHP application consultant
to be successful.
•
If you have experience with real estate finance or development
and/or if you have experience with applying for other debt and equity
affordable housing financing, then an application consultant does
not convey an additional benefit in completing the AHP application.
•
For example, in 2014, 75% of the winning applications did not report
using an application consultant.
•
FHLBank Atlanta provides educational webinars and other
resources to help sponsors be successful.
30
Myth #9: Only LIHTC applications can be competitive in
AHP
•
Since 1990, the Bank has awarded more than $672.8 million to 2,170 AHP projects.
•
37% of the projects awarded were Ownership
•
63% of the projects awarded were Rental
• 60% of the rental projects awarded were LIHTC
• 40% of the rental projects awarded were Non-LIHTC
•
Additionally, since 1990, 61% of rental projects awarded include supportive housing
•
Of the total 258 rental projects awarded over the past five years, 50% include supportive
housing
•
LIHTC:
• 33% of 173 projects awarded over the past five years include supportive housing
•
Non-LIHTC:
• 84% of 85 projects awarded over the past five years include supportive housing
31
Myth #10: AHP Competitive funds are not disbursed in a
timely manner
•
Over the last seven years, FHLBank Atlanta has adopted a metric-driven culture
in its pipeline management
• Speed and responsiveness of staff in managing developer funding request.
• Outcomes are tracked on a daily basis and internally reported monthly
•
For example, in 2014, 89.5% of the requests for funding by developers in AHP
Competitive were funded within the established six-day metric, with an overall
average of 4.3 days
•
Additionally, FHLBank Atlanta established a metric defining the reasonable
disposition of awarded funds within a certain time period
• In 2014, 101% of this fund disposition metric was met
32
Myth #11: Developers/Sponsors only have 12 months to
receive a disbursement of AHP Competitive funds
•
18 months disbursement time deadline (not including a possible six month
extension) for:
• rental projects
• ownership projects that are using AHP for “development” uses (prior to
homebuyer closing)
•
36 months disbursement time deadline for:
• ownership projects in which AHP funds are disbursed at homebuyer closing
33
Myth #13: The AHP Competitive application is too
paperwork intensive
•
•
Application generally requires the same information as other debt or equity
providers in the affordable housing
Shifted timing of the request for information to the application stage to
facilitate the timely disbursement of funds after award. This is commensurate
with having a more ready project
34
Myth #17: AHP requires that some units are reserved for
households with income at or below 30% of AMI
•
AHP guidelines do not require that any units are reserved for households at or
below 30% of AMI
•
The question in the application about households at or below 30% AMI is for
data collection purposes only
35
Myth #18: You cannot use AHP from different FHLBanks in
the same project
•
Funding from FHLBank Atlanta and another FHLBank is allowed, subject to
demonstrating the need for both funding sources
36
Myth #20: FHLBank Atlanta knows the minimum score
that is needed to win an AHP award in each round
•
AHP Competitive application is comparatively scored in parts
•
The minimum winning score is unknown until the completion of the application
underwriting process
•
Changes from year to year such as the total amount of AHP funds available
for that round make it impossible to predict the score an application must earn
to win an AHP award
37
Myth #21: FHLBank Atlanta’s AHP
Competitive dictate a lower developer
fee than most HFAs permit
•
FHLBank Atlanta’s AHP Competitive guidelines state
that we may defer to published guidelines from the
HFA if the project is utilizing funding from the HFA
The Landings at Winmore
Carrboro, NC
AHP Investment
$ 250,000
Total Development Cost $8,127,117
38
Letter of Credit Products
Letters of Credit
Confirming Letter of Credit
A Confirming LOC –
sometimes called a ‘wrap’
– can help secure
improved credit terms for
community-focused bonds,
enhancing the bond’s
credit rating, reducing
borrowing costs, and
improving marketability
Confirming LOC
FHLBank
Atlanta
Shareholder provides
agreement,
application, and LOC
fee
Shareholder’s
Customer
Beneficiary
Shareholder
Original Letter
of Credit
Credit
Relationship
Underlying Transaction
40
Using Letters of Credit to Enhance Housing and
Economic Development
•
The debt is structured as taxable (non-residential projects) or
tax-exempt or taxable (residential)
•
Eligible bond activities include:










General
Education
Transportation
Housing
Development
Utilities
Electric Power
Public
Healthcare
Environmental
41
FHLBank Atlanta
Shareholder Testimonial – Letter of Credit
Shareholder: THE BANK OF TUSCALOOSA, A DIVISION OF SYNOVUS BANK
Letter of Credit: CONFIRMING
FHLBank Atlanta issued a confirming letter of credit on behalf of The Bank of
Tuscaloosa (a division of Synovus Bank) to provide credit support for construction of a
$31 million LEED-certified building that houses the offices of The Bank of Tuscaloosa.
The building is part of the Tuscaloosa Riverfront Development, which connects
downtown Tuscaloosa with its scenic riverwalk area.
“From an interest rate standpoint, FHLBank Atlanta’s letter of credit was extremely
important to the financial viability of the project. It allowed us to finance the building
favorably for the long term.”
MARK SULLIVAN, DIVISION PRESIDENT OF THE BANK OF TUSCALOOSA
42
Contact Us For More Information
(800) 536-9650, Option 3, Option 1, Option 3
Visit our website at www.fhlbatl.com
RENTAL TEAM
Joel Brockmann – Rental Production Manager
Don Billingsley
James Monaghan
Richard Mauney
Glenn Stewart
Clarissa Weaver
OWNERSHIP TEAM
Maxima Sims – Ownership Production Manager
Michael Thimsen
Pearlie Jackson
Cassandra Madden
PUBLIC FINANCE
Patrick Rutledge – Public Finance Relationship Manager