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Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely 504-708-4370 [email protected] For NCAHMA Spring Underwriting Forum April 8, 2010

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Page 1: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

Case Study in 1602 Exchange and TCAP Funding:

The Groves at Mile Branch Creek,

a Mixed-Income CommunityAmber Seely504-708-4370

[email protected]

For NCAHMA Spring Underwriting Forum

April 8, 2010

Page 2: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

The History of Renaissance Neighborhood Development Corporation

• was created in 2006

• by Volunteers of America National Services and the local affiliate, Volunteers of America Greater New Orleans

• and is charged with the creation of 1,000 units of housing in Post-Katrina New Orleans.

Page 3: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

RNDC is working to provide housing in many New Orleans Neighborhoods

1770Tchoupitoulas

Terraces on Tulane

Mid-City

The Groves AtMile Branch Creek(Covington, LA)

Chateau Carre

Gentilly

Page 4: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

The Groves is in Covington, LA on “The North Shore” from New Orleans

Page 5: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

The Market on “The North Shore” is one of the strongest in the area

• Population:– Influx of residents post-Katrina (evacuees who are

now staying)– Lots of commuters to work in New Orleans– Nearly the highest average income in the MSA

• Recent Development:– Rapid suburbanization of a formerly agricultural area– Proliferation of retail and commercial services

• Housing:– Few rental housing options, even fewer “affordable”

rental options• Political Climate:

– Political support for more affordable housing

Page 6: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

US 190

US 190 / 21 stAve

27 thSt.

US 25 /

437

Columbia St

W 29 thSt.

Polders

Lane

Barkley Parc

Subdivision Sewer Treatment

Facility

Sheriff's

Facilit

y Aveda Institute

Covington Recreational

Facility

TheGroves

Pine ViewMiddleSchool

St. Tammany Parish Court House Covington

Police Dept.

Boston St.

Commercial Corridor

Winn Dixie

Commercial Strip Mall

Parks

St. TammanyParish

Fairgrounds

US Post Office

St. Tammany Parish Sheriff's Office

Lyon Elementary

School

Ball Feilds

St. Tammany ParishSchool Board Headquarters

City Hall

Harrison Curriculum

Center (Adult Education)

WEST 30s

NEIGHBORHOOD

DOWNTOWN COVINGTON

The Groves (Residential Developments)

Education Facilities

Public Facilities

Commercial Amenities

Employment Opportunities

Recreational Facilities

Map of the Area surrounding The Groves

St. Tammany ParishLibrary

CovingtonBranch

Electrical Substation

Page 7: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

Multi-Family Rental Housing

Building Type

# of buildings

1 bedroom

2 bedroom

3 bedroom

Duplex 8 16

Townhomes 4 24

4-plex 7 28

8-plex 3 24

Totals 22 24 46 24

Housing Units

Single FamilyFor-Sale

35

Multi-FamilyRental

94

Page 8: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

The Groves Income Mix & Rental Rates

One Bed Two Bed Three Bed % of all Units

Permanent Supportive Housing

$130 5%

40% AMI $355 $434 $506 15%

60% AMI $523 $623 $739 48%

Market Rate $700 $800 $900 31%

100%

# of Units 24 46 24 94

Page 9: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

Tax Credit Challenges

We needed the investor that was just right,

the one:- Who was willing to invest in

subdivision development- For whom the investment

was neither too big, nor too small, nor too close to something else they’d invested in

Page 10: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

The Groves Financing

Infrastructure Rental HousingUses Uses

Acquisition $900,000 Acquisition $ 1,375,000

Hard Costs 2,050,000 Hard Costs 13,700,000Soft Costs 900,000 Soft Costs 5,200,000

Sources Sources

CDBG (Parish) $1,400,000 Tax Credit Equity $ 5,695,000

Multi-Family Lot Sales 1,350,000 TCAP 1,000,000

Single Family Lot Sales 850,000 1602 Exchange 3,330,000

Foundation Support 250,000 CDBG (State) 8,730,000

Perm Debt 1,005,000

Deferred Fee 515,000

Total $3,850,000 Total $20,275,000

Page 11: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

Challenges with TCAP & 1602

Determining Pay-In Schedule of TCAP &

1602 Funds, especially in relationship to the other

sources of funding- Should agency funds be

used first?- Should Pari Passu funding

model be used?

Page 12: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

Challenges with TCAP & 1602

Dealing with an “inexperienced”

investor (the housing finance agency)

- Why are there contingencies in the budget at closing?

- What is the agency’s risk?

Page 13: Case Study in 1602 Exchange and TCAP Funding: The Groves ... · Case Study in 1602 Exchange and TCAP Funding: The Groves at Mile Branch Creek, a Mixed-Income Community Amber Seely

Challenges with TCAP & 1602

Logistics when you have both an investor and a

housing finance agency “investing” in the deal

(with 1602 funds)- Who holds the replacement

reserve?- What is the process for

approving change orders?