2018 Midwestern Lender’s Conference 221(d)(4) Panel Case Study: Fontaine Towers Rochester, Minnesota

Fontaine Towers – Overview Downtown Rochester, MN Key Facts Deal Type 221(d)(4) – Substantial Rehabilitation Project Type Section 8 – Elderly Restricted (62+) Total Size 151 units (100% restricted) Year Built 1983 Class B Mortgage Amount $ 20,000,000 Term 40 years Rate Sponsor / Developer Amenities (building) Amenities (Unit)  

Fontaine Towers – Subject Photos Downtown Rochester, MN  

Fontaine Towers – Summary The Project is a substantial rehabilitation of an existing elderly restricted Section 8 high rise project developed in 1983 located in downtown Rochester, Minnesota. It consists of 150 one bedroom and 1 two bedroom units on 17 floors with an on-site leasing office, two elevators, a community room with serving kitchen, billiards room, activity room, sitting lounges, library/solarium, tub room, laundry room, and a common area balcony. A renewed 20-year Section 8 contract has been approved by HUD in February 2017. Rent levels were increased through a mark up to market processing and will be effective August 2017. The proposed loan is to provide tax exempt bond credit enhancement for the acquisition and substantial improvements to the Project totaling approximately $45,000 per unit. In addition to the first mortgage loan, the Project will benefit from the issuance of approximately $900,000 in annual low income housing tax credits which will generate +/- $8,080,000 in equity. The general partner and operator of the Project originally developed the Project in 1983 and is therefore quite familiar with every aspect of the real estate. An affiliate of CREA will be the limited partner and contribute the equity through the sale of the low income tax credits. Month 00, 2014

Fontaine Towers – Sources & Uses Downtown Rochester, MN  

Fontaine Towers – Underwriting Issues Downtown Rochester, MN Section 504 UFAS Compliance: Cost of UFAS compliance could pose a financial burden to the project. UFAS remedies could cause a tenant inconvenience or even potential for injury. Bond - LIHTC: Cash Collateralized Bond Structure LIHTC Underwriting Process Operational Cash Flow Month 00, 2014