Description
As Enterprise drifts in space, a Ferengi cruiser scans the ship, then docks with it. Two Ferengi, Muk and Grish, board wearing breathing filters. The Enterprise crew appear to have been knocked unconscious at their posts.
RESIDENTIAL DEVELOPMENT ACQUISITION LOAN PROGRAM:
FAIRWAY CROSSING APARTMENT LOAN
A Briefing To The
Housing and Neighborhood Development Committee
Housing Department February 22, 2005
Purpose
To consider a proposed loan to Fairway Townhomes, L.P. (“Applicant”) to acquire the Fairway Crossing Apartments located at 7229 Ferguson and 7207 Valley Glen Drive in Council District 7
? Residential Development Acquisition Loan Program amount - $310,310 ? Applicant will rehabilitate the property
2
Background
? Residential Development Acquisition Loan Program (RDALF) provides property acquisition financing for the development of affordable housing
? Flexible to meet a variety of acquisition needs including vacant lots for infill housing, multifamily properties for rehabilitation or replacement and land for new singlefamily subdivisions. ? The Program Statement allows for acquisition in support of rehabilitation of existing multifamily complexes
3
Applicant and Loan Request
? The Applicant, Fairway Townhomes, L.P., is a Texas Limited Partnership composed of Brian Potashnik, initial limited partner, and Fairway 05 Development LLC, General Partner ? The Applicant has requested a loan in the amount of $310,310 to assist with acquisition of the Fairway Crossing Apartments, a 310-unit multifamily development located at 7229 Ferguson Road
4
Loan Benefit
? The City’s participation at this funding level will enable the Applicant to receive 12 extra points on its TDHCA tax credit application in a very competitive process ? If the tax credits are approved, not only will a dilapidated structure and eyesore within the community be remedied, but 10% of the units will be set-aside to provide affordable homes for very low income families
5
Project Description
? The Applicant proposes to rehabilitate the 310-unit property
? The project is in a dilapidated condition with current occupancy of only 13%.
? Scored only 37 out of 100 on last City inspection
? The acquisition price is $4,760,000 ? The 2004 tax appraisal is $5,950,000
? The Applicant has submitted an application to the State for 9% tax credits financing for the project
? The Applicant has submitted a “back-up” application to the Dallas Housing Finance Corporation (DHFC) for tax-exempt bonds and 4% credits
6
7
Project Description (continued)
? Bedroom distribution
? 128 one-bedroom, 124 two-bedroom and 58 three-bedroom
? Proposed income distribution for tax credits
? 31 units for households at or below 30% area median family income (AMFI) ? 216 units for households at or below 60% AMFI ? 63 Market Rate Units
? Rents to be set at tax credit rents based on income levels ? Developer – Southwest Housing Development which is 100% owned by Brian and Cheryl Potashnik ? Property Manager – Housing Services of Texas, Inc.
8
9
Developer Experience
? Southwest Housing has developed/is developing the following apartment projects with City assistance:
? ? ? ? ? ? ? ? ? Melody Village Primrose Oaks (Senior Housing) Rosemont at Cedar Crest Oaks III (Senior Housing) Rosemont at Oak Hollow Parmer Villas, now known as Rosemont at Meadow Lane Rosemont at Scyene Rosemont at Laureland Cherrycrest Villas
10
Project Financing Costs
? Hard construction costs
? $9,254,440 ? $25.29 per square foot ? $29,853 per unit
? Total development costs
? $20,200,153 ? $55.21 per square foot ? $65,162 per unit
? First year expenses after lease-up
? $1,236,688 ? $3.38 per square foot ? $3,989.32 per unit
11
Project Sources and Uses
SOURCES Mortgage Loan RDALP Loan Tax Credit Equity Developer Note TOTAL SOURCES USES Acquisition Site Work Construction Costs Soft Costs Financing Costs Developer Fee Reserves TOTAL USES $ 8,880,000 310,310 10,438,956 570,887 $20,200,153
$ 4,760,000 1,550,000 9,254,440 1,138,000 1,105,078 1,812,989 579,646 $20,200,153
12
Proposed Loan Terms
? The loan will be at a one percent interest rate, which will accrue and will be due and payable along with the full principal amount upon the later of fifteen years from the closing of the loan or upon the refunding, redemption or payment of all outstanding tax-exempt bonds, if any, or upon the sale or refinancing of the Project ? The City will be in second or third lien position behind the interim construction loan and the subsequent permanent loan, and behind the tax-exempt bonds used to finance the project, if any ? The collateral will be the 13.7 acre, 310-unit project site, which will be deed restricted during the term to require 51% of the units for housing for low- to moderate-income households with incomes of 80% or less of the Dallas area median family income
13
Guarantee
? An unconditional payment guarantee in the amount of $310,310 will be provided by Brian and Cheryl Potashnik, in their individual capacity, for the completion of the rehabilitation of the property within 30 months from acquisition of the property by the Applicant ? Guarantee will be released upon issuance by the City of the final Certificate of Occupancy for all 310 units on the property within 30 months from acquisition of the property by the Applicant
14
Next Steps
? February 23, 2005 – City Council considers support of 9% tax credits for the financing of the acquisition and rehabilitation of the Fairway Crossing Apartments
? If the 9% tax credits are not approved, City Council will have an opportunity to approve DHFC tax-exempt bonds and 4% tax credits later in the year
? March 9, 2005 - City Council considers approval of the $310,310 Residential Development Acquisition Loan for the Fairway Crossing Apartments
15
16
doc_674305659.pdf
As Enterprise drifts in space, a Ferengi cruiser scans the ship, then docks with it. Two Ferengi, Muk and Grish, board wearing breathing filters. The Enterprise crew appear to have been knocked unconscious at their posts.
RESIDENTIAL DEVELOPMENT ACQUISITION LOAN PROGRAM:
FAIRWAY CROSSING APARTMENT LOAN
A Briefing To The
Housing and Neighborhood Development Committee
Housing Department February 22, 2005
Purpose
To consider a proposed loan to Fairway Townhomes, L.P. (“Applicant”) to acquire the Fairway Crossing Apartments located at 7229 Ferguson and 7207 Valley Glen Drive in Council District 7
? Residential Development Acquisition Loan Program amount - $310,310 ? Applicant will rehabilitate the property
2
Background
? Residential Development Acquisition Loan Program (RDALF) provides property acquisition financing for the development of affordable housing
? Flexible to meet a variety of acquisition needs including vacant lots for infill housing, multifamily properties for rehabilitation or replacement and land for new singlefamily subdivisions. ? The Program Statement allows for acquisition in support of rehabilitation of existing multifamily complexes
3
Applicant and Loan Request
? The Applicant, Fairway Townhomes, L.P., is a Texas Limited Partnership composed of Brian Potashnik, initial limited partner, and Fairway 05 Development LLC, General Partner ? The Applicant has requested a loan in the amount of $310,310 to assist with acquisition of the Fairway Crossing Apartments, a 310-unit multifamily development located at 7229 Ferguson Road
4
Loan Benefit
? The City’s participation at this funding level will enable the Applicant to receive 12 extra points on its TDHCA tax credit application in a very competitive process ? If the tax credits are approved, not only will a dilapidated structure and eyesore within the community be remedied, but 10% of the units will be set-aside to provide affordable homes for very low income families
5
Project Description
? The Applicant proposes to rehabilitate the 310-unit property
? The project is in a dilapidated condition with current occupancy of only 13%.
? Scored only 37 out of 100 on last City inspection
? The acquisition price is $4,760,000 ? The 2004 tax appraisal is $5,950,000
? The Applicant has submitted an application to the State for 9% tax credits financing for the project
? The Applicant has submitted a “back-up” application to the Dallas Housing Finance Corporation (DHFC) for tax-exempt bonds and 4% credits
6
7
Project Description (continued)
? Bedroom distribution
? 128 one-bedroom, 124 two-bedroom and 58 three-bedroom
? Proposed income distribution for tax credits
? 31 units for households at or below 30% area median family income (AMFI) ? 216 units for households at or below 60% AMFI ? 63 Market Rate Units
? Rents to be set at tax credit rents based on income levels ? Developer – Southwest Housing Development which is 100% owned by Brian and Cheryl Potashnik ? Property Manager – Housing Services of Texas, Inc.
8
9
Developer Experience
? Southwest Housing has developed/is developing the following apartment projects with City assistance:
? ? ? ? ? ? ? ? ? Melody Village Primrose Oaks (Senior Housing) Rosemont at Cedar Crest Oaks III (Senior Housing) Rosemont at Oak Hollow Parmer Villas, now known as Rosemont at Meadow Lane Rosemont at Scyene Rosemont at Laureland Cherrycrest Villas
10
Project Financing Costs
? Hard construction costs
? $9,254,440 ? $25.29 per square foot ? $29,853 per unit
? Total development costs
? $20,200,153 ? $55.21 per square foot ? $65,162 per unit
? First year expenses after lease-up
? $1,236,688 ? $3.38 per square foot ? $3,989.32 per unit
11
Project Sources and Uses
SOURCES Mortgage Loan RDALP Loan Tax Credit Equity Developer Note TOTAL SOURCES USES Acquisition Site Work Construction Costs Soft Costs Financing Costs Developer Fee Reserves TOTAL USES $ 8,880,000 310,310 10,438,956 570,887 $20,200,153
$ 4,760,000 1,550,000 9,254,440 1,138,000 1,105,078 1,812,989 579,646 $20,200,153
12
Proposed Loan Terms
? The loan will be at a one percent interest rate, which will accrue and will be due and payable along with the full principal amount upon the later of fifteen years from the closing of the loan or upon the refunding, redemption or payment of all outstanding tax-exempt bonds, if any, or upon the sale or refinancing of the Project ? The City will be in second or third lien position behind the interim construction loan and the subsequent permanent loan, and behind the tax-exempt bonds used to finance the project, if any ? The collateral will be the 13.7 acre, 310-unit project site, which will be deed restricted during the term to require 51% of the units for housing for low- to moderate-income households with incomes of 80% or less of the Dallas area median family income
13
Guarantee
? An unconditional payment guarantee in the amount of $310,310 will be provided by Brian and Cheryl Potashnik, in their individual capacity, for the completion of the rehabilitation of the property within 30 months from acquisition of the property by the Applicant ? Guarantee will be released upon issuance by the City of the final Certificate of Occupancy for all 310 units on the property within 30 months from acquisition of the property by the Applicant
14
Next Steps
? February 23, 2005 – City Council considers support of 9% tax credits for the financing of the acquisition and rehabilitation of the Fairway Crossing Apartments
? If the 9% tax credits are not approved, City Council will have an opportunity to approve DHFC tax-exempt bonds and 4% tax credits later in the year
? March 9, 2005 - City Council considers approval of the $310,310 Residential Development Acquisition Loan for the Fairway Crossing Apartments
15
16
doc_674305659.pdf