1. 2018 Midwestern Lender’s Conference 221(d)(4) Panel
Case Study: Fontaine Towers
Rochester, Minnesota

2. 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)

3. Fontaine Towers – Subject Photos
Downtown Rochester, MN

4. 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 Rent levels were increased through a mark up to market processing and will be effective August 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

5. Fontaine Towers – Sources & Uses
Downtown Rochester, MN

6. 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
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