1. Housing Credit Property Preservation June 15, 2016

2. National LIHTC Stock: 2.8+ million units
Urban, suburban and rural markets across the country
Housing for families, seniors, people with special needs
Deep affordability: 64% of residents are at or below 40% of AMI, according to HUD
Flexibility to meet diverse needs
Enterprise-financed LIHTC properties:
a “microcosm” of national stock:
2,200 projects, 135,000 units
49 states, DC and Puerto Rico
Similar project characteristics, with higher share of non-profit GPs

3. Who Lives in Housing Credit Properties?
Source: Furman Center, New York University

4. Enterprise Year 15 Pipeline

5. Enterprise Extended Use Pipeline (30 years assumed, varies by state)

6. Preservation Challenges

7. Preservation Challenges: Two Main “Buckets”
From Year 15 to beyond the Extended Use period
Ongoing physical and financial viability
Ongoing preservation of use as affordable housing

9. Findings
Nearly all properties remained affordable and are owned by the same general partner or sponsor
Overall, properties in good physical condition

10. Findings, continued
Majority are in good financial condition, but a significant share was showing some distress
Most likely need some recapitalization to address capital improvements and remain financially viable.

11. Successful Strategies for Physical and Financial Viability:
Refinance with a lower interest loan
Public debt restructure/forgiveness
Access to weatherization and other programs (with extended affordability)
Other state and local programs for preservation (with extended affordability)
Aggregate smaller properties for recapitalization (and/or resyndication)
Resyndication (4% or 9%)

12. Preservation Challenge: Ongoing use as affordable housing
Y15/Extended Use Period
Qualified contract: marketing
Owners bypassing compliance requirements
Self-reporting; limited HFA oversight
Requests to HFA to modify/lift LURA
“Planned Foreclosure”
Expiration of Extended Use Period
Properties at Risk for Market Conversion
Geography
Ownership
Deep Affordability

13. Recommendations to HFAs
Develop principles for preservation
Determine urgency for HFA
Potential priorities: deep affordability, supportive housing, seniors, Sec 8
Physical and financial viability
Ensure HFA staff trained on principles, practices, requirements
Develop a communication plan for the Extended Use period
Especially with new owners/GPs
Reiterate compliance requirements

14. Recommendations to HFAs (cont’d)
Identify at-risk properties
Geography
Ownership
Deep affordability
Carefully evaluate requests to modify/lift LURA
Beware of “planned foreclosures”
Develop a toolbox of policies and incentives (market-based solutions)
To extend affordability
To keep projects viable

15. The Housing Credit Portfolio: The Next Preservation “Battle”?
1970s: defaults in 221(d)(3) 236 stock
1980s, 1990s: “prepayments” crisis
1987: ELIHPA
1990: LIHPRHA
1997: Mark-to-Market
2000: Section 236 decoupling
HFA prioritization in QAPs for older assisted stock: Section 8, 202, 236, 221(d)(3), RD 515
In coming years, preservation of Housing Credit stock will become an additional preservation focus

16. Scott Hoekman shoekman@enterprisecommunity.com