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The Institute for Professional and Executive Development, Inc.
Annual Affordable Housing & Development Update: Opportunities in a Changing Economy
Santa Monica, CAJune 4-5, 2009
Monica Hilton Sussman, Esq.401 9th Street, NW, Suite 900
Washington, DC 20004
(202) 585-8833
HUD UPDATE
• LIHTC Market on life support
• Investors Gone – FannieMae, FreddieMac, Bank of America (accounted for majority of equity market)
– Exchange Program
– TCAP
– State Equity funds
– Many deals stuck without an equity investor
• Renewed Interest in FHA
– Pros
• Long term
• fixed rate
• non recourse
• Construction and permanent loan all in one
– Cons• 2530
– Flags
– APPS process
• REAC
• MORS
• Audited Financial Statements
• Asset Management Fees
• TPA process for Limited Partners to remove General Partners
• Davis Bacon Wages
• LIHTC equity pay in addressed by HUD and Congress
• Back up of floating rate risk test with CAP or SWAP on mortgage rate
• Statutory limits in certain locations
• Processing time
• Prepayment penalties
• Lockouts
• Declining Markets
• PPCs
– Regulatory Agreement Issues
• Less for affordable transaction
• Bigger issue for “market rate” properties
– use of project funds
– timing of distributions
– use of replacement reserves
– Innovations
• Use of FHA with
– New Market Tax Credits
– Historic Tax Credits (pass through lease structure)
• New Opportunities in Stimulus and Omnibus Legislation – $4B Public Housing money
– $2B Neighborhood Stabilization Program
– “Green” funding
– 202 Prepay – Old 202s
• no savings needed if below 6% rate
• Tenants provided with enhanced vouchers
• EVs can become PBVs without regard to caps
– MF PD – Use Agreement and repairs taken into account for value of note
– 318/215/213