Board of Directors Meeting February 12, 2015

2015 Goals & Outputs

2015 Goals & Outputs Establishes what the organization wants to do/accomplish during the year. Board involvement, responsibility in a number of areas. Basis for staff performance bonus decisions a year from now

Board Development CHDOs & CBDOs

CHDO Community Housing Development Organization HUD designation re: HOME About the “what” Key requirements related to: Legal Status Purpose Service Area Community Representation

CHDO Not-for-profit “Provision of decent housing affordable to low/- mod-income persons” must be among purposes. Clearly defined service area But size doesn’t matter; as small as a single neighborhood or as large as an entire city. 1/3 of Board represents “low-income community” Residents of low-income neighborhoods the org serves Low-income residents of the greater community Elected representatives of low-income neighborhood organizations*

CHDO Additional Considerations Why Designation Matters Organizational capacity & experience Input from low-income community Limited public-sector representation on Board Why Designation Matters 15% HOME set-aside for CHDOs HOME funds can be provided for Operating Support CHDOs can retain Project Proceeds: “profits” from sales, net rental revenues, interest on HOME loans made, etc. Must re-use for low-income housing activities Use of Project Proceeds does not regenerate new Project Proceeds

CBDO Community Based Development Organization HUD designation re: CDBG About the “where” For-profit or Non-profit Engaged in community development activities…. Within a defined geographic area of operations. Intended to improve the physical, social, economic environment. With attention to the needs of low/mod-income persons.

CBDO Board must be drawn from the geographic area of operations….. 51% of Board must be: Low/mod-income residents Not just residents of low-income neighborhoods; individual income matters. Owners or senior officers of private establishments or institutions located in (and serving) the area Make the case for senior executives, but not simple employment. Elected representatives of low-income neighborhood organizations located in the area of operations* Also limit on # of public-sector Directors.

CBDO Why Designation Matters CBDO’s not considered “Sub-Recipients”; Program Income can be retained and re-used. “Program Delivery” costs to not fall under the 20% Administrative Costs cap. Allows use of funds for hard construction costs & allows CDBG funding for new construction projects. Exempts certain eligible activities from 15% Public Services cap.

Board Discussion Thoughts, implications, considerations in relation to: Board composition, operations, etc.? Notion of boundaries and “representation”? Organization’s activities, functions, role? Re-thinking of the structure of local community development system?

Reduction in Board Size

Reduction in Board Size Formal resolution by the Board to set the number of Directors at 19. NOT an amendment to bylaws. Considerations re: On-going vacancies Time & effort filling vacancies Constraints on filling current vacancies Priority on “quality” not “quantity” Guiding Governance Committee work identifying & recruiting Directors for upcoming year.

2015 Fundraising Target Major Donor Campaign

Major Donor Campaign Assessed 2010-2014 Contributors Donations, luncheon, program support “LAI” – Linkage, Ability, Interest Goal: Raise $20,000 Levels of “Investors” Integrating contributions, luncheon, recognition & benefits High level of activity now; March – May

Major Donor Campaign Fundraising is Joint Effort of President & Board Directors take active leadership in “relationship development” for 1-3 target donors. Open doors, communication/touch point, gather information, engage donor w/ NNDC, help make asks. Tools & Support Elevator speech, talking points, contribution levels Joint face-to-face outreach meetings w/ President, NNDC staff

Glenmoor Apartments

Background “Twin” to Oxmoor building next door Glenmoor NNDC co-developed Oxmoor in 2012-2013 Glenmoor California Owner Tried to structure a Glenmoor project in 2013 29 Units, including 5 in basement Very nearly full gut rehab; MEP, kitchens, baths, etc. except roof & windows Health & Hospital closed the property at Thanksgiving Property is For Sale; $325k is the “free & clear” transaction price (incl $265k owed to bank)

The Project $1.9 million project cost w/ $150k acquisition $1,000,000 HOME grant, $500,000 AHP grant $250,000 HOME loan; “waterfall-like” repayment Partially deferred developer fee & nominal equity investment 24 units, all one-bedroom, low & very-low income tenants, 15-year affordability period NNDC & Partners in Housing joint venture (LLC) NNDC & Partners would co-develop, split $85k fee Partners would be the property manager NNDC & Partners split $40k annual net cash flow

Issues, Challenges, Risks Acquisition Cost Site Control; price and timing Grant Funding HOME: apps due 3/18, announcement 4/1, AHP: apps due mid-March, announcement 7/1, less competitive Funding contingencies can lower competitiveness Construction Loan guarantees & ability to complete if things go wrong Division of Cash Flow HOME “Grant-to-Value” ratio; on-going compliance

Next NNDC: Is this a deal we want to do? A project we want to be in? Structure partnership with PIH Get site control at do-able price Lender, broker, Health& Hospital

To Complicate Things Serious interest from private-investor with cash Contingent on grant $$, partnership w/ NNDC Pros: Would remove AHP contingency, improve “project readiness” & chances at HOME award NNDC would still receive fee & receive it earlier Reduced liability once construction was completed. Cons: NNDC wouldn’t receive on-going cash-flow Investor inexperience; type & scale of construction, type of property, grant, tenants

Discussion