Building Stronger Communities 1 Governors Housing Conference October 7, 2015 Congressionally chartered in 1932, privately owned wholesale bank. Government Sponsored Enterprise (GSE) Not a government agency; no Federal appropriations Owned by Member Financial Institutions Cooperative Structure; Members are both owners and customers. General FHLB Profile 2 FHLB Mission Provide liquidity and term finance to our Members for housing and economic development through: 3 Housing and Community Investment (HCI) 4 Housing and Community Investment Programs Affordable Housing Program (AHP) Welcome Home Program (WHP) Carol M. Peterson Housing Fund (CMPHF) Disaster Reconstruction Program (DRP) Community Investment Program (CIP) Economic Development Program (EDP) Zero Interest Fund (ZIF) 5 Welcome Home Program (WHP) Available funding for 2015 was $10.5 million. Program opened on March 2, 2015 and closed on April 6. Provides funds for down payment and closing costs assistance. Maximum grants of $5,000 per household. Members limited to $200,000 annually. 6 Carol M. Peterson Housing Fund (CMPHF) Provides grants up to $7,500 per household for accessibility and emergency repairs. Opened and closed June 1, $1 million available. Member must partner with a Sponsor, who completes or supervises the work. 7 Disaster Reconstruction Program (DRP) Provides grants up to $20,000 to households adversely impacted by a natural disaster. Used for the acquisition, new construction, or rehabilitation of a single family home. Only for properties located in Kentucky, Ohio, or Tennessee. Must apply within 24 months of the disaster declaration. 8 Community Investment Program (CIP) Provides discount loans to promote financing of housing and economic development projects. Priced daily at FHLB cost of funds. Subject to normal underwriting and collateral policies (reference FHLB Credit Policy Manual) and Members available borrowing capacity. Member can mark-up the rate to their customer. May be used with other FHLB HCI products (i.e., AHP, Welcome Home, etc.). 9 CIP Eligible Uses Housing Purchase, construction, or rehab of housing Single-family homes, apartment buildings, manufactured housing, etc. Must benefit households with incomes at or below 115% of HUD Area Median Income (AMI). Economic Development Economic development projects benefiting households with incomes at or below 80% of AMI or small business concerns Other Mixed use projects are eligible. Flexible financing tool for construction or long-term lending. 10 Eligible CIP Advance Types Minimum term of one year required. 11 Balloon Payment Constant Monthly Payment Regular Fixed Rate Special Amortizing Callable Regular Mortgage Matched Select Payment Mortgage Matched CIP Rate Structure Normal Rate CIP RateSavings (bps) Regular Mortgage Matched Advance (10 years) Select Pay MMA 15 Year (15-0 % CPR) Balloon Payment Advance (30/10) Constant Monthly Payment Advance (5 years) year Bullet (Fixed Rate Advance) Rates as of September 10, 2015 and subject to change. Example - CIP for Housing New construction of 68 units for elderly and special needs households, of which 41 will have income at or below 50% of AMI and 27 will have income at or below 60% of AMI. Purpose:New Construction Amount:$675,000 Balloon Payment Advance:15 years CIP Rate:1.82% Normal Rate:2.12% Savings to Member:30 bps 13 Economic Development Program (EDP) Provides discount loans to promote financing of economic development and job creation/retention. Priced at FHLB cost of funds plus 3 bps. Subject to normal underwriting and collateral policies (reference FHLB Credit Policy Manual) and Members available borrowing capacity. Member can mark-up the rate to their customer. May be used with other FHLB HCI products (i.e., AHP) 14 EDP Eligible Uses Commercial, industrial, agricultural, small business, public facilities, and infrastructure projects. Mixed use projects are eligible. Purchase, construction, or rehab of real estate; working capital, inventory, or equipment. Must benefit households with annual income of 115% of AMI for Rural or 100% of AMI for Urban; OR, Provide benefits based on Neighborhood location, Job Creation/Retention, and/or, business size. 15 Eligible EDP Advance Types Minimum term of one year required 16 Balloon Payment Constant Monthly Payment Regular Fixed Rate Special Amortizing Callable Regular Mortgage Matched Select Payment Mortgage Matched EDP Pricing Normal Rate EDP Rate Savings (bps) Regular Mortgage Matched Advance (10 years) Select Payment Mortgage Matched Advance (15 years- 0% CPR) Balloon Payment Advance (30/10) Constant Monthly Payment Advance (5 years) year Bullet (Fixed Rate Advance) Rates as of September 10, 2015 and subject to change. Example-Economic Development New construction for street and road improvements in rural area. Project qualified based on neighborhood. Purpose:New construction Amount:$353,000 MMA:15 years EDP Rate:2.03% Normal Rate:2.70% Savings to Member:67 bps 18 CIP and EDP Application Processing 19 Step One Step Two Step Three CIP/EDP Zero Interest Fund Provides zero-interest loans to finance early-in/ predevelopment costs for housing and economic development projects located in Kentucky, Ohio, and Tennessee. $2 million interest-free, revolving loan fund. Available on a first-come, first-served basis. A Member may request up to $100,000 per project. Members are generally limited to one draw per year. 20 ZIF Terms and Conditions Member mark-up limited to reasonable and customary fees. Loan must be evidenced by a Note and/or loan document for a term not to exceed: Housing 18 months Economic Development 24 months Member must notify the FHLB of early repayment. 21 ZIF Eligible Uses Appraisals Architectural Drawings Consulting Fees Engineering Fees Environmental Testing Feasibility Analyses Legal Costs Licensing and Permit Fees Market Studies Infrastructure Land Acquisition 22 Application Guidelines Similar to CIP/EDP Process, except: Application must be submitted within 30 days of the Members loan to the customer closing. FHLB Funding Agreement must be received prior to disbursement. (Note: The Funding Agreement will beed to the Member with the approval letter.) 23 ZIF Example Purchase of undeveloped land for new construction of single-family homes for sale to moderate income households. Project qualifies as pre-development costs. Purpose:Land Acquisition/Infrastructure Amount:$100,000 Term:18 months Rate:0% Normal Rate: 4% 24 Affordable Housing Program Provides direct grants to support development of housing for households with income at or below 80% of the area median income (AMI). Federally Regulated AHP Implementation Plan sets forth policies for administering the federal regulations Competitive application process; projects are evaluated based on: Eligibility and Threshold Requirements Financial Feasibility Scoring Criteria 25 Source of AHP 10% of FHLB Net Earnings Private dollars 25 years of providing AHP Subsidy percent Creates AHP Subsidy Welcome Home Competitive AHP Participants Members are the applicants Commercial Banks, Savings Institutions, Thrifts Credit Unions Community Development Financial Institutions Insurance Companies Only a Member financial institution of the FHLB Cincinnati can submit an AHP application. Sponsors are housing providers & developers Non-profit organizations For-profit entities Government Agencies 27 AHP Eligible Uses Ownership or Rental Housing Costs directly related to housing development New Construction Rehabilitation Acquisition/Purchase of land or buildings Any of combination of the above 28 AHP Threshold Requirements Enough funds to cover all project costs. Demand for the housing at the income and occupancy targets, and rent or mortgage expected. Appropriate for the population being served. Marketed to the target population and comply with all Fair Housing and Accessibility Laws. Sponsor has experience/capacity to complete the project. Sponsor has site control. Development costs are reasonable. 29 AHP Threshold Requirements All units will be occupied by households with incomes at or below 80% AMI. Rental projects must have at least 20% of the units occupied by households with incomes at or below 50% AMI. Units will be affordable to targeted households. Rental projects: 20-30% of tenants monthly income. Ownership projects: no more than 31% of buyers monthly income. Project will begin incurring AHP eligible expenses within 12 months and be complete within 36 months. If project requires new permanent debt, the Member must provide the permanent loan. 30 31 AHP Feasibility Guidelines Total Project Cost (TPC) per unit