annual report 15 - merrittcap.org · adeline lofts ** ashland village baywood apartments california...

ANNUAL REPORT ’15

Merritt Community Capital Corporation

Cover Profile

AMENITIES: Activity room, lounge area, wellness clinics, enrichment activities, green resident trainingand engagement, secure entries, secure parking, transportation services, close to retail services, medicalfacilities, public transportation, parks and services.

Eden Issei Terrace HAYWARD, CA

RESIDENTS: Senior ACCOMMODATIONS: 100 Units

DEVELOPER: Eden Housing Inc. FINANCING: $6.7 Million, Fund XV

TYPE: Rehabilitation

Access:

Opportunity

Cover Profile

Merritt Community Capital believes opportunity begins when people have asafe, healthy and affordable place to call home. Working as a team with our outstandingpartners Merritt develops projects that are financially and physically sustainable for thelong run. In so doing, we provide economic security and a stable foundation on whichindividuals and communities can thrive.

Collaborating with our experienced partners, we have been able to revitalize Californiacommunities and provide quality homes for families, seniors, and those with specialneeds. Relationships built on decades of reliability and expertise allow Merritt to developprojects that prosper during the 15-year Low Income Housing Tax Credit (LIHTC)Compliance Period. Our talented team of industry professionals is responsible forproperties from inception through asset and portfolio management.

Merritt Community Capital creates opportunity by opening doors to affordable housing.

Doors to Opportunity are Built through Partnerships

Woodbridge Village Apartments, St. Helena

O U R M I S S I O NMerritt Community Capital Corporation’s mission is to provide equity capital foraffordable housing throughout California and to revitalize neighborhoods through theconstruction, rehabilitation and long-term asset management of these properties.

2 MERRITT COMMUNITY CAPITAL CORPORATION

In 2015, the Low Income Housing Tax Credit (LIHTC) market produced anotherin a long line of outstanding performances. The market was characterized by an abundance of equity, as the demand for Low Income Housing Tax Creditinvestment opportunities increased to levels not seen since 2006. In spite of cuts in Redevelopment and otherfunding sources, we were able to secure a pipeline of outstanding project investments. While many yield-motivatedinvestors, including the insurance industry, have shown some reluctance to invest at returns below 5% and werenot as active in the 2014 market, banks seeking safe and sound investments and CRA Investment credit morethan offset the absence of yield-only motivated investors and we expect the current trend to continue as long asthe Federal Reserve keeps interest rates at historic low levels. As many large money center banks are movingto direct or propriety fund structures, we are increasing our focus on serving the tax and CRA needs of regionaland foreign banks that are new to the LIHTC program.

In Congress, the pending Presidential race will postpone any potential for major tax reform. Last year the HouseWays and Means Committee produced its first draft of tax reform that maintained the LIHTC, Speaker Ryandelayed any further consideration of the draft bill. As any action on a tax bill not likely in the near term, bills toenhance the Housing Credit are under active consideration and we need to be prepared to make our case forprogram improvements when and if Congress takes action on these proposals.

Merritt Community Capital continues to play an increasingly significant role in the California affordable housingmarketplace. Fund XVIII closed in early 2016 at $75.5 million. At the close of 2015, we reported Net Assets in excessof $9 million, an increase of over $1.6 million from 2014. Fund XVIII is fully invested in seven projects throughout thestate in a mix of new construction and acquisition with rehabilitation developments. The outlook for 2016 is for anincrease in the project pipeline that will support a higher level of investor interest in Merritt Funds as we continue toincrease our outreach to new investors, both in the financial markets and other sectors within the California economy.

LEADERSHIP MESSAGE FROM THE PRES IDENT AND CHAIRMAN OF THE BOARD

MERRITT COMMUNITY CAPITAL CORPORATION 3

JEFF BENNETTBoard Chairperson

The Merritt Capital Scholarship program with two Bay Area universities, California State University East Bay andSan Francisco State University, is now in its eight year and continues to provide financial support to qualified studentsseeking a career in Community Development and Affordable Housing. We have expanded the program to providescholarship support in the Graduate School of Urban Affairs at San Francisco State University. Needless to say, as thecost of tuition at our State Universities continues to rise, the Merritt Scholarship Program is providing real and tangiblesupport for students in need.

In California, we continue to push for a response to theelimination of Redevelopment Agencies by the Governor. Our efforts have focused on the creation of a permanentsource of State support based on a $75.00 fee on mostrecorded real estate transactions. While the bill hasbeen introduced for the third year in a row, the supermajority needed to secure passage is still not present inthe Legislature. Other measures, including an increasein the State Tax Credit and the allocation of Cap and Tradefunding, are moving ahead.

As Merritt Community Capital concludes its 26th yearas the only Tax Credit equity source devoted exclusivelyto meeting the affordable housing needs of Californians,we look forward to the addition of several outstandingproperties to our portfolio while successfully transitioningout of those properties and funds that have completedtheir 15 year compliance period.

BERNARD T. DEASYPresident


Merritt Capital Opens Doors to Opportunity

Merritt Community Capital was founded in 1989 by the City of Oakland.

In1995 Merritt separated from the City and hired an independent staff.

The combined funds have financed 7,926 affordable homes since 1989.

Since 1989 a total of $714.4 million has been invested.

In 2009 Merritt established business scholarship funds for bothSan Francisco State University and California State East Bay.

17 Merritt Scholars have attended San Francisco State University.

11 Merritt Scholars have attended California State East Bay.

Over $185,000 has been spent on the scholarship program to date.


“Merritt’s AssetManagement teamstrives to meetthe needs of ourresidents as wellas our investors.”Maria DuarteDirector of Asset ManagementMerritt Community Capital

Asset Management and Disposition MERRITT STAFF

CONTINUING EDUCATION: LIHTC operation and updates in California

RESPONSIBILITIES: Monitor properties to assure physical and financialcompliance with LIHTC. Perform regular health and safety inspections ofproperties, ensure accurate resident qualifications, monitor financial perform-ance of projects. Update proprietary database program to assist in analysisand quick response by investors. As property ends 15-year complianceperiod, Merritt transfers partnership interest to project general partner.

LIHTC COMPLIANCE PERIOD: 15 years UNITS MANAGED: 6,216

MERRITT TRAINING MODULES: LIHTC Introductory — Advanced

6 MERRITT COMMUNITY CAPITAL CORPORATION6 MERRITT COMMUNITY CAPITAL CORPORATION

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24

Number of MerrittProperties by County

Merritt Capital funds invest in affordable housingproperties throughout the state of California and addressa wide variety of housing needs. From San Diego toEureka, we have partnered in the creation of familyhousing, senior developments, single-room occupancyhotels, special needs housing and supportive housingprojects. In 2015, we entered into 9 project partnershipsadding 909 units to Merritt’s portfolio and to California’squality affordable housing.

Portfolio Profile

AlamedaAdeline Lofts**

Ashland VillageBaywood ApartmentsCalifornia Hotel**

Cathedral GardensDrasnin ManorEC MagnoliaEden HouseFargo Senior ApartmentsFuller LodgeHarris CourtHarrison Street Senior HousingHismen Hin-nu Terrace**

Issei TerraceJosephine Lum LodgeKent GardensLorenzo Creek ApartmentsMadison Park Apartments**

Marcus Garvey Commons**

Olive TreeRedwood LodgeSan Pablo Hotel**

Sequoia ManorShattuck Senior Homes

ButteParadise Community Village

Contra CostaGolden OaksRiverhouse Hotel**

The Oaks ApartmentsValley Vista Senior HousingWest Rivertown Apartments

El DoradoKelly Ridge Apartments

HumboldtEureka Family Housing

KernMadison Place Apartments**

Los AngelesColumbus ApartmentsCoronado PlacePanorama View ApartmentsPark PlazaSecond Avenue ApartmentsWadsworth Park Apartments

MarinBelvedere Place ApartmentsPoint Reyes Family HomesToussin Senior Apartments

NapaArroyo Grande VillasMagnolia Park ApartmentsOak Creek TerracePalisades ApartmentsStonebridgeWoodbridge Village

OrangeBel’Age Manor ApartmentsBonterra Apartments

PlacerMcAuley Meadows Senior Apartments

SacramentoArdenaire ApartmentsFoothill FarmsLand Park WoodsQuinn CottagesSierra Vista HousingWashington Plaza

* Through 12/31/15

Investments in 113 Properties in 26 California Counties*

** Merritt assigned partnership interests to project General Partner at the end of the LIHTC compliance period.

MERRITT COMMUNITY CAPITAL CORPORATION 7MERRITT COMMUNITY CAPITAL CORPORATION 7

Acquisition Highlights

Property Name City County Type Population #Units

Rotary Plaza South San Francisco San Mateo Acq/Rehab Senior 181

Mayberry Court San Diego San Diego Acq/Rehab Family 70

Bridge Ocean View Pacifica San Mateo Acq/Rehab Senior 100

Foothill Farms Sacramento Sacramento Acq/Rehab Family 98

Land Park Woods Sacramento Sacramento Acq/Rehab Family 75

Golden Oaks Oakley Contra Costa Acq/Rehab Senior 50

The Oaks Walnut Creek Contra Costa Acq/Rehab Family 36

Villa La Esperanza Goleta Santa Barbara Acq/Rehab Family 83Town Park Towers San Jose San Jose Acq/Rehab Senior 216

AlamedaAdeline Lofts**

Ashland VillageBaywood ApartmentsCalifornia Hotel**

Cathedral GardensDrasnin ManorEC MagnoliaEden HouseFargo Senior ApartmentsFuller LodgeHarris CourtHarrison Street Senior HousingHismen Hin-nu Terrace**

Issei TerraceJosephine Lum LodgeKent GardensLorenzo Creek ApartmentsMadison Park Apartments**

Marcus Garvey Commons**

Olive TreeRedwood LodgeSan Pablo Hotel**

Sequoia ManorShattuck Senior Homes

ButteParadise Community Village

Contra CostaGolden OaksRiverhouse Hotel**

The Oaks ApartmentsValley Vista Senior HousingWest Rivertown Apartments

El DoradoKelly Ridge Apartments

HumboldtEureka Family Housing

KernMadison Place Apartments**

Los AngelesColumbus ApartmentsCoronado PlacePanorama View ApartmentsPark PlazaSecond Avenue ApartmentsWadsworth Park Apartments

MarinBelvedere Place ApartmentsPoint Reyes Family HomesToussin Senior Apartments

NapaArroyo Grande VillasMagnolia Park ApartmentsOak Creek TerracePalisades ApartmentsStonebridgeWoodbridge Village

OrangeBel’Age Manor ApartmentsBonterra Apartments

PlacerMcAuley Meadows Senior Apartments

SacramentoArdenaire ApartmentsFoothill FarmsLand Park WoodsQuinn CottagesSierra Vista HousingWashington Plaza

San BernardinoCitrus Grove Apartments

San DiegoMayberry Townhomes

San FranciscoAntonia ManorArnett Watson ApartmentsCanon Barcus Community HouseKlimm ApartmentsLyric Hotel**

Maria ManorNamiki ApartmentsNotre Dame ApartmentsPlaza & Ramona Apartments**

Rich Sorro Commons**

Rosa Parks II

San JoaquinGrant Village Townhomes**

Union Court Apartments

San Louis ObispoPismo Creek BungalowsCourtland Street

San MateoGreenridge Apartments**

Light Tree Apartments**

Main Street Park**

Ocean ViewRedwood OaksRotary PlazaSchool House Station**

Santa BarbaraDahlia Court IISt. Vincent’s GardensVilla La Esperanza

Santa ClaraBella TerraHomeSafe Santa ClaraHomeSafe San JoseMonte Alban ApartmentsParkview FamilyParkview SeniorPensione EsperanzaSierra VistaTown Park TowersVilla Garcia

Santa CruzJardines Del Valle**

SolanoBurgess Point ApartmentsFairfield Senior ManorMarina Vista I**

Marina Vista II**

The Village ApartmentsUnion Square II

ShastaHotel ReddingLorenz Hotel

SonomaAcacia Lane Senior ApartmentsCasa Grande Senior ApartmentsKellgren Senior ApartmentsPapago Court**

Paulin Creek Apartments**

Rowan CourtSonoma Creekside

VenturaLos Feliz II

YoloNew HarmonyWest Capitol Courtyard II

2015 LIHTC Syndications

Stonebridge Apartments ST. HELENA, NAPA COUNTY

RESIDENTS: Family ACCOMMODATIONS: 80 Units

AMENITIES: Community room with kitchen, television, library, piano, computer stations and Internet access.Beautiful community gardens, BBQ and picnic areas. Children’s play areas for toddlers and adolescents withlarge soccer field and basketball courts. Two laundry facilities and covered parking.

DEVELOPER: EAH FINANCING: $5.9 Million, Fund XVII




Woodbridge Village Apartments ST. HELENA, NAPA COUNTY


AMENITIES: Private entrances, balconies, and back yards. Easy access to highways, clubhouse, laundryfacilities, parking and picnic area. Woodbridge Village is a peaceful environment in a park-like setting,dominated by majestic trees, many lawns, shrubs and beautiful flowers.

DEVELOPER: TerraCorp Financial, Inc. FINANCING: $3.25 million, Fund XV



AMENITIES: Large community lounge, outdoor courtyard with fire pit, BBQ; support programs for servicecoordination and life-skills training; walkable midtown neighborhood. Energy efficient green appliances.Some parking on-site, with light rail a block away. Downtown and Capital Park views. Pet friendly.

Washington Plaza SACRAMENTO, SACRAMENTO COUNTY


DEVELOPER: BRIDGE Housing FINANCING: $9.3 Million, Fund XVI

TYPE: Rehabilitated


1989 Oakland HousingPartnership AssociatesBank of AmericaBank of the WestBramalea Pacific, Inc.Dreyer’s Grand Ice Cream, IncFirst Nationwide BankPG&E CorporationQuaker Oats

1991 Oakland HousingPartnership AssociatesBank of AmericaBank of the WestBay View Capital CorporationDreyer’s Grand Ice Cream, Inc.Fannie MaeFreddie MacUnion Bank

1992 Oakland RegionalHousing PartnershipAssociatesBank of AmericaBank of CaliforniaBank of the WestBay View Capital CorporationFannie MaeFirst Interstate BankFreddie MacPG&E CorporationSanwa Bank CaliforniaUnion Bank

1994 Oakland RegionalHousing PartnershipAssociatesBank of AmericaBank of CaliforniaBank of the WestFannie MaeFirst Interstate BankFreddie MacHome Savings of AmericaPG&E CorporationSanwa Bank CaliforniaUnion Bank

Merritt CommunityCapital Fund VBank of AmericaBank of the WestFannie MaeFreddie MacHome Savings of AmericaPG&E CorporationSanwa Bank CaliforniaUnion Bank of CaliforniaWells Fargo Bank

Merritt CommunityCapital Fund VIBank of AmericaBank of the WestComerica BankFannie MaeFreddie MacSanwa Bank CaliforniaUnion Bank of CaliforniaUnited Commercial BankWells Fargo Bank

Merritt CommunityCapital Fund VIIBank of AmericaBank of the WestComerica BankDowney Savings and LoanFannie MaeFreddie MacSanwa Bank CaliforniaSilicon Valley BankUnion Bank of CaliforniaWashington MutualWells Fargo BankWestAmerica Bank

Merritt CommunityCapital Fund VIIIBank of AmericaBank of the WestFannie MaeFreddie MacUnion Bank of CaliforniaWashington MutualWells Fargo Bank

Merritt CommunityCapital Fund IXBank of AmericaBank of the WestFannie MaeFreddie MacUnion Bank of CaliforniaWashington MutualWells Fargo Bank

Merritt CommunityCapital Fund XBank of AmericaBank of the WestFannie MaeFreddie MacWashington MutualWells Fargo Bank

Merritt CommunityCapital Fund XIBank of AmericaBank of the WestFannie MaeFreddie MacSilicon Valley BankWashington MutualWells Fargo Bank

Merritt CommunityCapital Fund XIIBank of AmericaBank of the WestSilicon Valley BankWells Fargo BankWestamerica Bank

Merritt CommunityCapital Fund XIIIBank of AmericaCity National BankComerica BankFirst Republic BankSilicon Valley BankWells Fargo BankWestAmerica Bank

Merritt CommunityCapital Fund XIVBank of AmericaBank of the WestCity National BankComerica BankFirst Republic BankSilicon Valley BankWells Fargo Bank

Merritt CommunityCapital Fund XVBank of AmericaBank of MarinBank of the WestBoston Private BankCity National BankComerica BankFarmers & MerchantsFirst Republic BankRedding Bank of CommerceSilicon Valley BankWells Fargo Bank

Merritt CommunityCapital Fund XVIBank of America Merrill LynchBank of MarinBank of the WestBoston Private BankCalifornia BankCity National Bank Comerica BankFirst Republic BankPacific Western BankSilicon Valley BankUmpqua Bank Wells Fargo Bank

Merritt CommunityCapital Fund XVIIBank of America Merrill LynchBank of the WestBank of the Internet Federal BankBoston Private BankCity National BankComerica BankFarmers and MerchantsFirst Republic BankPacific Western BankSilicon Valley BankTriCounties BankUmpqua Bank

Fund Investors

Merritt Capital has opened doors to over 7,926

2,265

$234.4

Seniors

31 PROPERTIES

MILLION FINANCEDBY MERRITT FUNDS

16 COUNTIES

UNITS

3,834

$334.6

Family

62 PROPERTIES


20 COUNTIES

UNITS


Merritt Capital has opened doors to over 7,926

1,110

$111.4

14 PROPERTIES


7 COUNTIES

UNITS

717

$34

SRO

6 PROPERTIES


3 COUNTIES

UNITSSingle RoomOccupancy

Special Needs



Between 2012-2104 Merritt closed three successive record funds in a row with Merritt Community Capital FundsXIV at $73 million, XV at $72 million and XVI at $80.5. In 2015 Merritt closed Fund XVII at $61 million; significantlymore equity funding could have been raised but Merritt was limited by the size of the pipeline. The pipeline wassmaller for Fund XVII because, although several strong lower tier proposals were made by Merritt, bank directinvestors bid the projects more aggressively. Merritt currently expects to secure $60 to $70 million in tax creditequity in support of outstanding affordable housing developments and to close its newest fund by the first quarterof 2016. Merritt has successfully completed the 15-year compliance period and transferred its interest in 24properties. Subsequently, the investor partnerships were terminated.

* PG&EHF is a single investor fund and invested in projects from 1997-2002.

** Investor partnerships were dissolved.

38.5

20.5 20.5

2729.8

44 43 42

28.5

48

42.7

80.5

73

61

$10,000

0

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

1989-94* V VI VII PG&EHF* VIII IX X XI XII XIII XIV XV XVI XVII

FUNDS

Equity InvestmentsTotal Capital Raised (EQUITy IN MILLIONS $000’s)

Current Assets 2015 2014

Cash $ 1,193,315 $ 866,308Accounts Receivable 277,884 1,807Notes Receivable 0 4,514,168Due from Affiliates – Current Portion 16,989,638 10,819,641Prepaid Expenses 17,880 16,230

Total Current Assets $ 18,478,717 $ 16,218,154

Other AssetsInvestment in Upper Tier Limited Partnerships (975,973) (356,463)Due from Affiliates – Net of Current Portion 3,557,393 374,526Property and Equipment 13,965 13,259

Total Other Assets $ 2,595,385 $ 31,322

Total Assets $ 21,074,102 $ 16,249,476

Current Liabilities 2015 2014

Accounts Payable and Accrued Expenses $ 0 $ 8,898Due to Affiliates – Current Portion 4,981,322 5,637,043Deferred Revenue – Current Portion 45,063 45,063Notes Payable – Current Portion 0 0Line of Credit Payable 7,000,000 3,000,000

Total Current Liabilities $ 12,026,385 $ 8,691,004

Long-term LiabilitiesDeferred Revenue – Net of Current Portion $ 45,066 $ 90,129

Total Long-term Liabilities

Total Liabilities $ 12,071,451 $ 8,781,133

Total Net Assets – Unrestricted $ 9,002,651 $ 7,468,343

Total Liabilities and Net Assets $ 21,074,102 $ 16,249,476

Merritt Community Capital CorporationUnconsolidated Balance SheetDECEMBER 31, 2015


F I N A N C I A L H I G H L I G H T S

Statements of Activities 2015 2014

IncomePartnership Fees $ 4,451,080 $ 3,242,826Direct Investment Services Fees 667,005 161,155Interest Income 3,577 2,065Other Income 41,127 41,656Write off of Investment in Project Limited Partnership 0 43,537

Total Income $ 5,162,789 $ 3,491,239

ExpensesSalaries and Benefits $ 1,854,204 $ 1,694,894Office Rent and Parking 114,691 121,293Office Expense 72,943 65,199Dues and Subscriptions 21,686 31,370Travel and Conferences 121,585 112,022Marketing 131,235 139,973Insurance and Taxes 18,281 8,597Professional Fees 565,168 528,637Bad Debt 109,178 0

Total Operating Expenses $ 3,008,971 $ 2,701,985

Change in Net Assets Before Share of Upper Tier Limited Partnership's Losses 2,153,818 789,254Share of Upper Tier Limited Partnership Losses 619,510 91,611

Change in Net Assets 1,534,308 697,643

Net Assets – Beginning of Year 7,468,343 $ 6,770,700

Net Assets – End of Year $ 9,002,651 $ 7,468,343

Merritt Community Capital CorporationUnconsolidated Statement of Income and ExpenseDECEMBER 31, 2015

62% 4%

7%

4%4%

19%

SALARIES

PROFESSIONAL FEES

MARKETING

OFFICE RENT AND PARKING

OFFICE EXPENSES/OTHER

TRAVEL AND CONFERENCES

Total Expenses

86%

1%

13%

PARTNERSHIP FEES

SERVICE FEES

INTEREST AND OTHER INCOME

Total Revenue


Jeff Bennett, ChairpersonVice PresidentCommunity Lending DivisionWells Fargo Bank

Christine Carr, Vice ChairpersonCommunity Development Finance ManagerSilicon Valley Bank

Richard Power, TreasurerPartnerCarle, Mackie, Power & Ross LLP

Jacquelynne M. Jennings, SecretaryAttorney at LawSchiff Hardin LLP

John DentonDirector, Community Development FinanceBank of the West

Nick GriffinDirector of Asset ManagementResources for Community Development

Wendy JacqueminVice President, Community ReinvestmentCity National Bank

Emily MartinPrincipalE Martin Consulting

Jim MatherChief Lending OfficerHousing Trust Silicon Valley

Andrea UrsilloPortfolio Manager Team LeadBank of America Merrill Lynch

Merritt Staff

Board of Directors2015

WRITER/EDITOR: SABRINA MORENO-DOLAN DESIGN: LISA EDSON DESIGNPHOTOGRAPHY: ETHAN PINES PHOTOGRAPHy

Top row, L to R:

Nedrah Elm, Asset ManagerSabrina Moreno-Dolan, Director of OperationsBarney Deasy, PresidentDenise Wright, Administrative AssistantKaren Smyda, Director of AcquisitionsDan Kiernan, CFO

Bottom row, L to R:

Suzanne Vice, Aquisition OfficerBirute Skurdenis, Asset ManagerMatthew Haas, Director of Investor Relations& Fund ManagementKristy Ball, Asset ManagerMaria Duarte, Director of Asset Management

NOTE: 8024 print coordinates: Pantone Orange 021 48.0 Pantone Red 032 12.0 Pantone 874 20.0 Pantone 877 20.0

COMMUNITY CAPITAL CORPORATION

COMMUNITY CAPITAL CORPORATION

1970 Broadway, Suite 250Oakland, CA 94612(510) 444-7870(510) 444-7874 (fax)www.merrittcap.org

annual report 15 - merrittcap.org · adeline lofts ** ashland village baywood apartments california...

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