Housing Assistance Council Building Rural Communities since 1971 Southeast Regional Mutual Self-Help Housing Conference “Other Funding Sources” Wednesday, June 19, 2013

HAC’s Mission “Improve housing conditions for the rural poor with an emphasis on the poorest of the poor in the most rural places.” Loan Fund Objective Help establish and strengthen a housing delivery system that will provide, on a continual basis, additional decent, safe, and affordable houses in rural areas for low-income people.

Housing Assistance Council Established in 1971 National nonprofit organization AAA+2 CARs rated CDFI Provide services to local, state, and national nonprofit organizations and developers High needs areas: Indian County, Southwest Border Colonias, Mississippi Delta, and Appalachia High needs groups: farm- workers and minorities

Housing Assistance Council HAC emphasizes:  Local Solutions  Empowerment of the poor  Reduced dependence  Self-Help strategies  Homeownership  Safe and Sustainable communities

Services Offered  Technical Assistance & Training  Loan Funds  Research, Publications & Information

HAC Loan Funds

HAC Loan Funds (from inception to March 31, 2013)  Loan Fund Capitalization  $62.0 million (includes SHOP & other loans)  67% equity; 33% debt investments  Approved Commitments  $300 million  2,244 loans  68,301 housing units and water/sewer connections  Current Loan Portfolio  165 loans = $36.5 million  80 borrowers = 37 states

Rural Housing Loan Fund Uses predevelopment land acquisition site development construction up to $750,000 gap/interim Land banking Loan fund investment Structure: Up to five years Interest rate 5% nonprofits; 8% for-profits Quarterly interest payments 1% service fee Maximum 100% LTV Adequate security/collateral Committed take-out source

Pre-Development  Standard 3 year term or less  1% HAC service fee  No maximum loan amount  Maximum 100% LTV  Security of lien position on real property and/or assignments and UCC-1 filings on unrestricted net assets of borrower.  Repayment typically upon sale of developed lots or closing of construction/permanent financing

Construction Loans  $750,000 cap per loan and borrower  Standard 2 year term with option to extend for 1 year. A 1% extension fee applies.  1% HAC service fee  Maximum 100% LTV as supported by current appraisal  Security of lien position on the project property  Repayment upon sale of developed lots or closing permanent financing  Permanent, take-out financing committed prior to disbursement.

Preservation Revolving Loan Fund Uses predevelopment land acquisition rehab Equity by USDA approval only Structure: Up to 15 years amortized over 30 years Interest rate 5% nonprofits Quarterly interest payments 1% service fee Maximum 100% LTV Adequate security/collateral Repayment structure: operating income of project, permanent financing. Focus Preservation of at risk USDA-financed multifamily, elderly or farm-labor rental complexes.

Site Acquisition  Standard 5 year term  1% HAC service fee  Maximum 100% LTV as supported by current appraisal  Security of lien position on the project property  Repayment upon sale of developed lots or closing of construction/permanent financing

Eligible Borrowers  Community-based nonprofit organizations  Housing development corporations  Farm worker organizations  Housing cooperatives and condo associations  Native American tribes  Public agencies and units of local government  Public utility districts

Eligible Projects  Located in areas, which are rural in character (preference for projects located in towns with populations of less than 25,000)  Serve low- to very- low income persons, which includes persons earning less than 80% AMI  Minimum of 51% of the resulting housing units must be affordable to low- or very-low income people

Loan Uses & Structure Uses predevelopment land acquisition site development construction preservation gap/interim Structure loans guarantees compensating deposits letters of credit lines of credit

Sample Projects  Acquisition and infrastructure development of a subdivision for affordable housing units.  Acquisition and site development of scattered site lots for self-help unit construction.  Acquisition and rehab of existing apartment complex serving farm-workers or other workforce group.  Acquisition loan to tenants of manufactured housing community seeking to cooperatively purchase the park.  Loan to another nonprofit lender to capitalize their rural lending initiatives ( water/sewer, rehab loan program).

 The SHOP program is authorized under Section 11 of the Housing Opportunity Program Extension Act of 1996  Funded through the U.S. Department of Housing & Urban Development (HUD)  Provides grant monies for land acquisition and infrastructure improvement costs associated with the development of self-help units Self-Help Homeownership Opportunity Program (SHOP)

Land Acquisition Purchase of real property pursuant to a deed or minimum 25 year lease Financing and closing costs associated with the land acquisition transaction Infrastructure Improvements Water & sewer lines (or wells & septic) Roads, curbs and gutters, sidewalks Utilities, gas, electric Environmental testing & remediation Soft costs (legal, closing, etc.) SHOP Eligible Activities

HUD requirements Public or private nonprofit organization under federal or state law hours of family sweat equity labor $15,000 per unit maximum Rural or urban areas HAC requirements Competitive review Security required Ongoing reporting required 0% interest 90% forgivable upon unit completion and other loan agreement condition SHOP Program Design

Subsidize lot costs (keep $$ in project) Loans/Grants to families 5-year, 30-year loans soft seconds Capitalize internal development fund SHOP-eligible uses ONLY SHOP Grant Conversion Funds

Loan Process 1.Inquiry/Pre-screening. 2.Submission of loan application. 3.Comprehensive underwriting process. 4.Internal management review. 5.Loan committee review. 6.If accepted, loan commitment issued. 7.Pre-closing conditions satisfied before disbursement of funds. 8.Loan closing and disbursement. 9.Servicing/monitoring loan throughout the term of the loan. 10.Full repayment of loan.

HAC Loan Fund at a Glance

Contact Information Housing Assistance Council (202) (202) Fax