FY 2017 Multifamily Preservation and Revitalization (MPR) Notice of Solicitation of Applications (NOSA)

MPR Background A demonstration program authorized by the Consolidated Appropriations Act Goal - to ensure existing RD rental properties will continue to deliver decent, safe and sanitary housing for 20 years or the remaining term of any currently outstanding RD loan The MPR is a Demonstration program that officially started in 2006 and is authorized by the Consolidated & Further Continuing Appropriations Act. The goal for projects participating in this program is to extend their affordable use without displacing tenants because of increased rents.

Things You Should Know… NOSA published September 5, 2017, Federal Register Vol. 82, No. 170 2017 MPR NOSA and MPR Pre-application posted on public website and SharePoint website

Things You Should Know… Federal Register NOSA link - https://www.gpo.gov/fdsys/pkg/FR-2017-09-05/pdf/2017-18753.pdf Public Website NOSA link - https://mfh.usda.net/MPR2017/default.aspx MPR Pre-application form link - https://www.rd.usda.gov/programs-services/housing-preservation-revitalization-demonstration-loans-grants

Things You Should Know… Two application deadlines for FY 2017: Debt deferral plus other MPR funding tools open from 9/5/2017 to 12/1/2017 (5:00 pm Eastern Time) Debt deferral only open from 9/5/2017 to 9/28/2018 (5:00 pm Eastern Time) The deadline for receipt of MPR pre-applications is December 1, 2017 unless the request is for deferral only. The deadline for deferral only requests is September 28, 2018. These dates are firm. Any pre-applications along with any supporting documentation as outlined in the NOSA not received electronically by these dates will not be accepted. Problems with transmitting is not an acceptable reason for not meeting the deadline.

2017 NOSA Changes What’s Changing???

2017 NOSA Changes Removed limitation for number of properties in a Portfolio transaction For Stay-in-owner proposals - Projects with a “C” classification for 24 months or longer with Open Findings that were within the owner’s ability/control to cure at the time the MPR pre-application is filed will not be eligible to participate in the MPR demonstration program In the last NOSA, Portfolio transactions were limited to 15 properties. There is no limit under this NOSA. For a Stay-in-Owner proposal, if the property has had a “C” classification for 2 years or more with open findings that were within the owner’s ability to cure at the time the MPR pre-application was filed, will not be eligible to participate.

2017 NOSA Changes MPR Grant funds (to non-profit applicants only) may include accessibility and fair housing mandates identified by a CNA accepted by the Agency and no longer limited to correcting health and safety violations. Minor revisions to the scoring outlined in Section V of the NOSA Grants are no longer limited to the cost of correcting health and safety violations of a project. Accessibility and fair housing mandates identified by a CNA accepted by the Agency may also be included.

2017 NOSA Changes MPR funds may be used to add new units, and/or reconfigure the present units, within the existing footprint of a project’s current or previously resident-occupied structure(s). So long as the need is documented in a market study or another information source acceptable to the Agency (e.g., converting the non-residential portion of mixed-used space into residential units).

2017 NOSA Changes Allow transfer transaction applicants to include, at their own risk, MPR Zero Percent and/or MPR Soft Second loans in their transfer proposals. Must be submitted as a second feasibility scenario in addition to their primary proposal with MPR Deferral. May not exceed $15,000/per unit for the MPR Zero Percent loan and $15,000/per unit for MPR Soft Second loan for a combined maximum of $30,000/per unit for Zero Percent and Soft Second loans combined.

2017 NOSA Changes Second feasibility scenario (continued) If MPR funds are not available or the transfer is not feasible without those funds, the applicant may choose to wait for MPR funds to become available. If the applicant must move forward without MPR funds, it’s the applicant’s responsibility, not the Agency’s, to secure additional funding comparable to the rates and terms of the MPR loan funds from other non-Agency sources to replace the MPR tools. Must formally acknowledge that they understand inclusion of those funds in the underwriting constitutes neither an approval nor a commitment of any MPR funds by the Agency The PAT has been upgraded from 6.0 to 6.1 to allow for the Second Scenario proposal.

2017 NOSA Changes MPR Tools

Funding Opportunities RD may offer one or more of the following MPR tools (excluding Exiting Project deferral only transactions): Debt Deferral (Restructuring P&I) Up to 20 years for all 515 or 514 loan(s) – pre and post credit reform existing loans MPR Grant Available only to 515 nonprofit applicants only Limited to curing health and safety violations and accessibility and fair housing mandates identified by a CNA Generally, no more than $5,000/unit

Funding Opportunities Zero Percent loan – not deferred: payments required 515 Projects max 30 yr. term/50 yr. amortization 514/516 Projects - max term/amortization 33 yrs. MPR Soft Second (aka “Bullet” loan) Loan with a one percent interest rate Accrued interest & principal deferred to a balloon payment Balloon payment due at same time latest maturity of Section 515 or 514 loan already in place is due or the modified maturity date of any current loan being reamortized.

Other Funding Resources RD Section 515 Rehabilitation loan funds RD Sections 514/516 Off-Farm rehabilitation loan/grant funds RD Section 538 Guaranteed RRH RD MFH Preservation Revolving Loan Funds Third-party loans, grants, tax credits and tax-exempt financing Owner-provided capital contributions Excess funds

Uses of MPR Funds Repair/replace existing physical components of a property MPR Funds may NOT be used to fund: New building for community rooms, additional parking areas, playgrounds or laundry rooms New units may be needed to meet the 5% fully accessible requirement defined by Uniform Federal Accessibility Standards (UFAS) & Fair Housing requirements on case by case basis

Restructuring Transaction Categories Four (4) Categories of Transactions – Exiting Project Deferral, Simple, Complex and Portfolio Exiting Project Deferral - where all Agency mortgages on the property are maturing on or before December 31, 2023 no change in ownership CNA not required will be reamortized or restructured to the maximum term allowed prior to debt deferral do not require review by the MPR Loan Review Committee

Restructuring Transaction Categories Simple stay in owner, typically 1 project but may include the consolidation of project phases owned by the same entity into one project – submit 1 pre-application Complex Transfer of 1 or more projects or a Transaction requiring agency subordination as a result of 3rd party funding requirement. If more than 1 property - must be in the same market area and must be consolidated Submit 1 pre-application form listing all projects - At closing only one project remains

Restructuring Transaction Categories Portfolio 2 or more projects with a stay in owner; or 2 or more projects with multiple project sales to a common purchaser all located in one state Each project included in the portfolio will be submitted on a separate pre-application unless some projects being consolidated and must have the same portfolio name Projects being consolidated must be listed on one pre-application form One or more projects may be removed & the portfolio still eligible if at least 2 projects remain At closing at least 2 projects remain

MPR Process – General Steps Pre-application submission Eligible Projects Scoring and Ranking Formal Applications Financial Feasibility MPR Agreements There are 6 general steps of the MPR application process.

Pre-application Submission Applicants submit MPR pre-application form and any required documentation Exiting Project Deferral Only (pre-application only required) Electronic Submissions Only Accepted Applicant receives instant notification pre-application received electronically Recording time of receipt: Electronic pre-applications receive actual date & time received in MPR mail box

Questions Any Questions?