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<br /> <br /> <br />MWF Apartment Proposal <br />January 16, 2018 <br />Page 3 <br /> <br />8. First Mortgage – The analysis confirms that the Developer has maximized the <br />potential first mortgage. The proposed 4.6% interest rate and 40-year term are <br />competitive in the market and help minimize a funding gap. <br /> <br />9. Low-income Housing Tax Credits (“LIHTC”) – The project anticipates tax credit <br />pricing of $0.93 for every $1.00 of available tax credits, which generates <br />approximately $3.8 million of proceeds. Tax credit pricing declined at the end of <br />2016 and has remained lower than realized in the prior several years. Tax credit <br />pricing on many current projects is between $0.85 and $0.95. Smaller projects like <br />this one also tend to draw less attention from tax credit investors resulting in lower <br />pricing. Based on current conditions, the assumed tax credit equity is reasonable. <br /> <br />10. TIF Note – The proposed $546,000 of TIF assistance represents approximately 4% of <br />total project costs. Depending on the project type, TIF assistance is commonly in the <br />range of 4-10% of total project costs. <br /> <br />11. MWF GP Loan – The Developer currently anticipates including a $517,000 loan from <br />itself to resolve a remaining funding gap that is not covered by the TIF, mortgage, or <br />other public proceeds. This type of loan is referred to as a General Partner Loan or <br />GP Loan. This GP loan would be repaid through future cash flow or through <br />refinancing after the initial 15-year affordability compliance period. For projects <br />using LIHTC, it is somewhat uncommon for developers to provide GP Loan; <br />however, this suggests that MWF is working to minimize the funding request. MWF <br />may seek additional funding sources to reduce or eliminate the GP Loan; however, <br />that would not change the conclusion of this analysis unless MWF secures more <br />additional funding than the current GP Loan amount. <br /> <br />Based on the submitted project information, the Developer has maximized the potential private <br />mortgage and low-income housing tax credit proceeds. However, a demonstrated financial gap <br />remains. The proposed development will not reasonably be expected to occur solely through <br />private investment within the reasonably near future. Due to the costs associated with developing <br />the property and constructing housing with affordable rents, this project is feasible only through <br />assistance. If approved, the development is projected to generate the requested $546,000 of TIF <br />assistance over an estimated 15-year term. The TIF would be structured as a “pay as you go” <br />note. <br /> <br />Please reach out with any questions at 651-697-8552.