Agenda Packets - 2018/03/05 - Laserfiche WebLink

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MWF Apartment Proposal January 16, 2018 Page 3 8. First Mortgage — The analysis confirms that the Developer has maximized the potential first mortgage. The proposed 4.6% interest rate and 40 -year term are competitive in the market and help minimize a funding gap. Low-income Housing Tax Credits ("LIHTC") — The project anticipates tax credit pricing of $0.93 for every $1.00 of available tax credits, which generates approximately $3.8 million of proceeds. Tax credit pricing declined at the end of 2016 and has remained lower than realized in the prior several years. Tax credit pricing on many current projects is between $0.85 and $0.95. Smaller projects like this one also tend to draw less attention from tax credit investors resulting in lower pricing. Based on current conditions, the assumed tax credit equity is reasonable. 10. TIF Note — The proposed $546,000 of TIF assistance represents approximately 4% of total project costs. Depending on the project type, TIF assistance is commonly in the range of 4-10% of total project costs. 11. MWF GP Loan — The Developer currently anticipates including a $517,000 loan from itself to resolve a remaining funding gap that is not covered by the TIF, mortgage, or other public proceeds. This type of loan is referred to as a General Partner Loan or GP Loan. This GP loan would be repaid through future cash flow or through refinancing after the initial 15 -year affordability compliance period. For projects using LIHTC, it is somewhat uncommon for developers to provide GP Loan; however, this suggests that MWF is working to minimize the funding request. MWF may seek additional funding sources to reduce or eliminate the GP Loan; however, that would not change the conclusion of this analysis unless MWF secures more additional funding than the current GP Loan amount. Based on the submitted project information, the Developer has maximized the potential private mortgage and low-income housing tax credit proceeds. However, a demonstrated financial gap remains. The proposed development will not reasonably be expected to occur solely through private investment within the reasonably near future. Due to the costs associated with developing the property and constructing housing with affordable rents, this project is feasible only through assistance. If approved, the development is projected to generate the requested $546,000 of TIF assistance over an estimated 15 -year term. The TIF would be structured as a "pay as you go" note. Please reach out with any questions at 651-697-8552.