Strength in Numbers: Organizing a Loan Consortium to Support Affordable Housing and Community Investment in Your Community

OUR MEMBER BANKS:

Belonging to Community Lenders… Benefits: Earn CRA Credit even if deal is not in bank’s footprint Participate in good quality loans and minimize bank’s risk Member Banks are recognized on all promotional materials Receive monthly and annual reporting documenting activity Meets Lending Test, Investment Test, Service Test Risks: Interest rate risk Long term nature of our loans

Creation of the Organization… Articles of Incorporation, By-Laws, 501 (c) (3) status, Corporate Resolution, Prospectus Start up expensesLeadership Committees

The Relationship… Majority vote for approvals Each member bank has one seat on the Board of Directors. Quarterly board meetings Community Lenders makes loans to CRA qualified borrowers, properties or projects and secures loan with a first lien mortgage Member banks make a commitment to a loan pool Community Lenders has an unsecured relationship with its member banks

Loan Products… Residential – 30 year fixed rate. Commercial – 25 year fixed rate. Mixed use – 25 or 30 year fixed rate.

Loan Application Received Loan Committee Funding From Member Banks Loan Closing Adding loan to portfolio Receipt of Loan Payments Monthly Remittances to Member Banks less service fee Loan Process...

Example of a typical project: Development of a 60 unit affordable senior housing project. Cost to construct: $12,000, Sources of Funds: PennHOMES Financing $1,500,000 Federal HOME Funds $1,200,000 Limited Partner Equity $8,500,000 Permanent Financing CLCDC $800,000 * * Typically the only hard debt. Secured by a 1 st lien on the real estate as well as an assignment of rents. Loan is made for a 30 year fixed-rate term.

Member Banks Roles and Responsibilities Pay annual membership fee Attend quarterly Board Meetings Volunteer for Committees Provide loan funding when called for Organize internal meetings for Executive Director to meet with bank’s lenders Refer loan prospects

Organizational Goals… Follow the footprint of our Member Banks. Grow the loan portfolio to a size where monthly service fees support all expenses. Be another lending tool for our Member Banks Make loans which provide our Member Banks with CRA Credit

15 What’s happening in Central PA? York Housing Advisory Commission - YHAC Affordable Housing Committee - AHC Community Lenders Task Force

Replication of Community Lenders? Why? Need for affordable housing Resources shrinking LIHTC projects are expiring Can address gap in financing Model already established Goal: To serve as a vehicle for community revitalization by financing and investing in housing and related activities designed to address the needs of low to moderate income persons and areas.

Next Steps Find a Champion – Lead bank to discuss with other banks. Define the Product- Create term sheets to describe loan products. Define Projects Parameters- Pre-development? Construction? Housing only? Economic Development too? LITC credits? Decide on geographic focus area – York County plus Adams? Dauphin? Franklin? Establish a structure – Who will house this?

Audrey McMichael, Executive Director Community Lenders 120 East Broad Street, Suite 2 Souderton, PA (215) Questions? Jane Conover Community Lenders Task Force (717)