PRESERVATION CASE STUDY Marketing/transformationRelocation Credit Delivery Investor issues.
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Transcript of PRESERVATION CASE STUDY Marketing/transformationRelocation Credit Delivery Investor issues.
PRESERVATION CASE STUDYPRESERVATION CASE STUDY
Marketing/transformationMarketing/transformation
RelocationRelocation
Credit DeliveryCredit Delivery
Investor issuesInvestor issues
Union Square Apartments Windsor
MARKETING/TRANSFORMATIONMARKETING/TRANSFORMATION
Armory Square to Union Square, WindsorArmory Square to Union Square, WindsorYear rehabbed: 2009Year rehabbed: 2009
Creek View Housing, VergennesCreek View Housing, VergennesYear rehabbed: 2004Year rehabbed: 2004
ARMORY SQUARE APARTMENTS ARMORY SQUARE APARTMENTS PROFILE AT TIME OF PROFILE AT TIME OF PURCHASEPURCHASE
Downtown historic building in poor conditionDowntown historic building in poor condition
74 Units Mod Rehab Section 8 with expired Tax 74 Units Mod Rehab Section 8 with expired Tax Credits (2004)Credits (2004)
50 of the 74 units occupied50 of the 74 units occupied
Local reputation as housing of last resortLocal reputation as housing of last resort
UNION SQUARE - UNION SQUARE - TRANSFORMATIONTRANSFORMATION
Reduce number of units from 74 to 58Reduce number of units from 74 to 58Reducing PB section from 74 to 25 Reducing PB section from 74 to 25 Change unit mixChange unit mix
Three bedroom units size increasedThree bedroom units size increasedTwo bedroom units size increased Two bedroom units size increased One bedrooms weren’t availableOne bedrooms weren’t available
New Tenant Amenities: community room, on-site management, laundry room, and New Tenant Amenities: community room, on-site management, laundry room, and elevatorelevator
UNION SQUARE - UNION SQUARE - TRANSFORMATIONTRANSFORMATION
Management and marketing to re-brand the buildingManagement and marketing to re-brand the building
New nameNew name
New tenant profile – part of marketingNew tenant profile – part of marketing
CREEKVIEW ATCREEKVIEW ATTIME OF PURCHASETIME OF PURCHASE
Rural Development subsidy for 20 of 36 unitsRural Development subsidy for 20 of 36 units
Management not local and didn’t have a big Management not local and didn’t have a big presencepresence
Risk of Conversion to Market Rate HousingRisk of Conversion to Market Rate Housing
CREEK VIEW CREEK VIEW TRANSFORMATIONTRANSFORMATION
Preserved affordabilityPreserved affordability
Local management and ownershipLocal management and ownership
Tenant amenities: laundry, porches, storage, accessibilityTenant amenities: laundry, porches, storage, accessibility
Creekview Apartments – Vergennes
EXISTING TENANT PROFILEEXISTING TENANT PROFILE
Critical to know existing tenant incomesCritical to know existing tenant incomes
Income mix informs financing optionsIncome mix informs financing options
Cost of permanent relocation can be highCost of permanent relocation can be high
RELOCATIONRELOCATION
Occupied rehabOccupied rehab
Contractor selection is keyContractor selection is key
Temporary moves require a lot of owner coordinationTemporary moves require a lot of owner coordination
Involvement of management is criticalInvolvement of management is critical
Benefit of occupied rehab is quicker credit deliveryBenefit of occupied rehab is quicker credit delivery
CREDIT DELIVERYCREDIT DELIVERY
Claim the credit back to January 1Claim the credit back to January 1stst or acquisition date or acquisition date
Construction completed before end of yearConstruction completed before end of year
Improves return – investor must be admitted to Improves return – investor must be admitted to partnershippartnership
RETURN CALCULATIONRETURN CALCULATION
IRR Annual IRR Annual10.74% 8.76%
Capital LIHTC Losses @ Tax Capital LIHTC Losses @ Tax
Year Quarter Payments Credits Losses 35% Savings Year Quarter Payments Credits Losses 35% Savings
2009 3/31/2009 0 0 0 2009 3/31/2009 0 0 0
6/30/2009 0 0 0 6/30/2009 100
9/30/2009 100 0 0 0 0 9/30/2009
Start Construction 12/31/2009 0 0 0 0 12/31/2009
2010 3/31/2010 10,511 (7,446) 2,606 13,117 2010 3/31/2010
6/30/2010 10,511 (7,446) 2,606 13,117 6/30/2010 0 0
9/30/2010 - 10,511 (7,446) 2,606 18,531 9/30/2010 0 0
Complete Construction 12/31/2010 412,776 15,925 (7,446) 2,606 18,531 12/31/2010 412,776 0 0
2011 3/31/2011 103,194 15,925 (7,417) 2,596 18,521 2011 3/31/2011 103,194 15,925 (7,417) 2,596 18,521
6/30/2011 - 15,925 (7,417) 2,596 18,521 6/30/2011 15,925 (7,417) 2,596 18,521
9/30/2011 15,925 (7,417) 2,596 18,521 9/30/2011 15,925 (7,417) 2,596 18,521
8609 12/31/2011 15,925 (7,417) 2,596 18,521 12/31/2011 15,925 (7,397) 2,589 18,514
2012 3/31/2012 15,925 (7,397) 2,589 18,514 2012 3/31/2012 15,925 (7,397) 2,589 18,514
6/30/2012 15,925 (7,397) 2,589 18,514 6/30/2012 15,925 (7,397) 2,589 18,514
9/30/2012 15,925 (7,397) 2,589 18,514 9/30/2012 15,925 (7,397) 2,589 18,514
12/31/2012 15,925 (7,397) 2,589 18,514 12/31/2012 15,925 (7,397) 2,589 18,514
RELOCATIONRELOCATION
Vacate building and substantial rehab:Vacate building and substantial rehab:
Critical to have a plan and a budgetCritical to have a plan and a budget
Decision about when to begin leaving vacancies unfilled Decision about when to begin leaving vacancies unfilled
Who will be returning?Who will be returning?
INVESTOR ISSUESINVESTOR ISSUES
Timing of admission – take care to deliver the best returnTiming of admission – take care to deliver the best return
Bank financial participation is limited if it’s a bond Bank financial participation is limited if it’s a bond deal – no construction loandeal – no construction loan
Good historical data with regard to market, income and Good historical data with regard to market, income and expensesexpenses