o:oo a.m. - mhdc.com · neil molloy, haslc mark stroker haslc liz huger-mace, dmh +rim person,...

MISSOURI HOUSING DEVELOPMENT COMMISSION

Matt Blunt Governor

Peter Kinder Lieutenant Governor

Sarah Steelman

State Treasurer Chairman

Jay Nixon Attorney General

Robert C. Fulp Vice Chairman I

Bill Luetkenhaus Secretary -Treasurer I

Richad F. BaaJmann Sr. Commissioner

Loren Cook II Commissioner

Claudia L. Oiiate Greim Commissioner

Pete Ramsel Acting Executive Director

Kansas City 3435 Broadway

Kansas City, Missouri

641 l 1

v. 8 16.759.6600

f. 8 16.759.6828

tty. 8 16.759.6839

OF THE

1 O:OO A.M.

s t Louis 4625 Lindell, Suite 300

s t Louis, Missouri

Please ALSO TAKE NOTICE THAT the Missouri Housing Development

Commission may, at any time during the public meeting of which notice 63 108

v. 3 14.877.1 350

f. 3 14.877.1 360

is HEREBY given, vote by affirmative public vote of a quorum of the

Commission, to close the public meeting, records and votes to the

tty. 3 14.877.1 303 extent they relate to any of the subject matter pursuant to V.A.M.S.,

Section 61 0.021 (3) as amended from time to time.

2. APPROVAL of MINUTES for the APRIL 20,2007 REGULAR MEETING

3. REPORT OF CHAIRMAN

(NEWLY ELECTED SECRETARY~REASURER-CHAIRMAN OF AUDIT COMMITTEE)

a) Financial Report

b) Tax Credit Study Update

c) Staff recommendations regarding Bond Underwriting Team Members

d) Staff recommendations regarding Memorandum of Understanding between MHDC and DED regarding the allocation of bond cap

e) Staff recommendations in regard to recommending certain 2007 Multifamily Rental Developments to DED for bond cap

f) Strategic Financial Plan

g) Planning Session Proposed Agenda

h) Legislative Report

i) MHDC Property Watch List

j) Such other matters as may properly come before the Commission

5. REPORT OF FINANCIAL ADVISOR AND BOND COUNSEL

If you wish to attend this meeting and you require specific aids or senices under the Americans with

Disabilities Act, please notify Diana Greener (8 16.759.6822) at least three workina davs ~r io r to the

rneetina.


TAB

Strength, D&. ..,, Qualiy oJLfe


Matt Blunt Governor


Sarah Steelrnan State Treasurer

Chairman


Robert C. Fulp Vice Chairman

Bill Luetkenhaus Secretary -Treasurer

Richard F. Baalrnann Sr. Commissioner


Claudia L. OZate Greim Commissioner


Kansas City

3435 Broadway


641 1 1

v. 8 16.759.6600

f. 8 1 6.759.6828

tty. 8 I 6.759.6839

S t Louis 4625 Lindell, Suite 300

S t Louis, Missouri

63 108 v. 3 14.877.1 350

f. 3 14.877.1 360

tty. 3 14.877.1 303

Matt Blunt Governor State Capitol Building Jefferson City, MO 65 102 573.75 1.3222 (Attention: Todd Smith)

Peter Kinder Lieutenant Governor State Capitol Building Jefferson City, MO 65 102 573.75 1.4727 (Attention: Jerry Dowell)

Sarah Steelman State Treasurer MHDC Chairman State Capitol Building Jefferson City, MO 65 102 573.75 1.241 1 (Attention: Doug Gaston)

Jay Nixon Attorney General Supreme Court Building Jefferson City, MO 65 102 573.75 1.3321 (Attention: Ted Ardini) Jeff Schaeperkoetter

Robert C. Fulp MHDC Vice Chairman The Signature Bank 4039 South Kansas Expressway Springfield, MO 65807 417.890.21 15

Bill Luetkenhaus, Commissioner MHDC Secretary-Treasurer 4 10 Crestview Drive O'Fallon, MO 63366 636.272.4200

Richard F. Baalmann, Sr., Commissioner 1 1743 Manchester Road St. Louis, MO 63 13 1-46 16 3 14.966.661 8

Loren Cook 11, Commissioner 20 15 E. Dale Street Springfield, MO 65 803 417.869.6474

Claudia L. Oiiate Greim, Commissioner Stinson Morrison Hecker 1201 Walnut, Suite 2900 Kansas City, MO 64 106 816.691.3224


TAB

Strength, DigniIy, Quoliy of l i /e MISSOURI HOUSING

DEVELOPMENT COMMISSION

Matt Blunt Governor


Sarah Steelman State Treasurer

Chairman




Richard F. Baalmann Sr. Commissioner






641 1 1 v. 8 16.759.6600

f. 8 16.759.6828 tty. 8 16.759.6839

St. Louis 4625 Lindell, Suite 300

S t Louis, Missouri

63 108 v. 3 14.877.1 350

f. 3 14.877.1 360 tty. 3 14.877.1303

Minutes of the Regular Meeting

of the

Missouri Housing Development Commission

The Regular Meeting of the Missouri Housing Development Commission was

held at 10:OO AM on Friday, April 20, 2007 in the Harry S. Truman Building, 301 W. High

Street, Room 493-494, Jefferson City, Missouri 65101

Commissioners present: State Treasurer Sarah Steelman, Chairman Robert Fulp, Commissioner, Vice Chairman (via telephone) Peter Kinder, Lieutenant Governor Richard Baalmann, Commissioner Bill Luetkenhaus, Secretary Treasurer Claudia OrTate Greim, Commissioner Loren Cook II, Commissioner (via telephone)

Commissioners absent: Matt Blunt, Governor Jay Nixon, Attorney General

Person present to vote for Ex-Officio Member: Jeff Schaeperkoetter, Assistant Attorney General

Staff and Consultants present: Pete Ramsel, Acting Executive Director Jim Torres, Legislative Liaison/Commission Secretary Janell Thome, Director of Rental Production Mary Helen Murphy, Director of Operations Marilyn Lappin, Director of Finance Ron Hill, Fiscal and Accounting Manager Sheila Beck, Accounting Manager Dave Bryan, Communications Manager Diana Greener, Administrative Assistant Susan Kornelis, Executive Assistant Bob Detjen, CSG Advisors (Financial Advisor) Dennis Lloyd, Columbia Capital (Financial Advisor) Dick Murray, AG Edwards Jen Sieve, AG Edwards Keith Tully, George K. Baum & Co. Doug Gaston, Deputy State Treasurer Todd Smith, Governor's Office Jerry Dowell, Lieutenant Governor's Office Kim Wells, Gilmore and Bell, PC Reginald Foster, Alpha Terrace Wayne Harvey, Alpha Terrace Hans Thomas, Hans Thomas & Assoc.

April 20,2007

Stephen Acree, RHCDA Carla Potts, NECAC Lynn Miller, NECAC Mark Gardner, Carlson Gardner Colleen Conrad, RubinBrown, LLP Matt Fulson, Missouri Housing Partners Douglas Veith, Chikercartim Enterprises Herb Hardwick, Hardwick Law Firm, LLC Joey Holmgren, Cornerstone Development and Consulting Jeff Winter, RubinBrown, LLP Kevin Cahill, Edward Jones George Kruntchev, National Tower Development John Deters, National Tower Development Bob Swanger, Stern Brothers Aaron Burnett, RHCDA Jack Hambene, McCormack Baron Donovan Mouton, City of KCMOfOne Economy Mike Harris, E. M. Harrjs Kevin Buchek, E. M. Harris Ken Nuernberger, ND Consulting Group Gregq Lee, Gundaker Commercial Group Sallie Hemenway, DED Dan Sanders, DRS Consulting Jennifer Kelly-Saeger, Bank of America Mike Hentrich, HASLC Neil Molloy, HASLC Mark Stroker HASLC Liz Huger-Mace, DMH +rim Person, Person & Associates David Sordem, MWRA Lynn Craghead, USB CDC Don Rosemann, Rosemann & Associates Cory Hoeppner, Citigroup Ryan Tully, Dalmark Group Phil Minden, Fannie Mae Jason Maddox, MAC0 Michael Napovanice, The Neighborhood Group David Feingold, The Neighborhood Group Jim Holtzman, St. Louis County Greg Young, Citizen

Chairman Sarah Steelman called the meeting to order and asked

Commission Secretary, Jim Torres, to call the roll. A quorum of eight was present, with

Commissioner Fulp and Commissioner Cook via conference call.

Last Date Modified: 51 1012007 1 1 :3 1 :00 A b h

April 20, 2007

Commission Secretary Jim Torres stated that there were two revisions to the

minutes of the March 16, 2007 meeting. Jerry Dowell from the Lieutenenant

Governor's office was not listed as present and the motion for approval of the

minutes should show Commissioner Cook making the motion for approval of the

minutes and Commissioner Fulp seconding the motion. Commissioner Baalmann

made a motion for approval of the amended minutes and Commissioner

Luetkenhaus seconded the motion. The motion was approved unanimously.

Chairman Steelman moved to the next item on the agenda Report of the

Chairman. Chairman Steelman stated that new officers of the Commission would

be elected at the next meeting and this would cbe her last meeting as chairman.

Chairman Steelman thanked Mr. Ramsel and the staff for their hard work. Chairman

Steelman stated she would not be seeking the chairmanship again and would be

appointing a subcommittee to come up with a slate of officers. Commissioner

Luetkenhaus, Commissioner Fulp and Chairman Steelman would be the members of

the subcommittee.

Mr. Ramsel moved on to the next item on the agenda the Financial Report.

Mr. Hill reported that total assets as of February 28, 2007 were $2,021,000,000. Mr. Hill

stated that this was a significant. milestone for the Commission and that it was the first

time total assets have exceeded $2,000,000,000. For the month of February, net

operating results before the implementation of GASB 31 were $746,000. GASB 31

adjustments for February resulted in,an increase in the market value of investments

and mortgage-backed securities of $7,441,000. For the fiscal year, the overall fair

value of investments has increased $27.3 million. The mortgage portfolio has

increased by $213.8 million after repayments and GASB 31 adjustments.

Mr. Ramsel moved to the next item on the agenda the Blue Ribbon Panel

Report. Commissioner Baalmann asked if the Commission needed to respond to the

recommendations of the Blue Ribbon Panel. Mr. Smith stated that the

recommendations should be taken under consideration and could be discussed at

the June planning session. Assistant Attorney General Schaeperkoetter stated that

Mr. Young from Bolivar, Missouri made a Sunshine Law Request regarding some

expenditures made on a Springfield, Missouri project. Assistant Attorney General

Last Date Modified: 5/ 10/2007 1 1 :3 1 :00 A ~ Y - 3 99

April 20,2007

Schaeperkoetter asked if this was information staff would have access to and

asked Mr. Ramsel to provide Mr. Young the information he had requested on that

Springfield property.

Mr. Ramsel moved to the next item on the agenda, Staff recommendations to

select Bond Underwriting Team Members. Chairman Steelman requested that this be

postponed and put on the May meeting agenda to give the Commissioners time to

look over the proposals. Mr. Ramsel stated that all the information was on a disk and

staff would send each commissioner a copy.

Mr. Ramsel moved to the next item on the agenaa, Resolution No. 989 Draw

Down Series 2007A. Mr. Ramsel stated that this is a drawdown, the recycling of the

bond cap, which allows staff to do some bond issues without asking forhew money.

Lieutenant Governor Kinder made a motion for approval and Commissioner

Baalmann seconded the motion. Assistant Attorney General Schaepperkoetter

asked if this drawdown privilege also applied on issuance of multi-family private

activity bond cap allocation. Mr. Ramsel stated that it did not. A vote was taken

and the motion was passed unanimously.

Mr. Ramsel moved to the next item on the agenda, Memorandum of

Understanding between MHDC and DED. Mr. Ramsel stated that staff would like to

send the Memo andum of Understanding to DED and ask them to execute it.

Assistant Attorney General S~hae~perkoetter stated that he had seen some

applications that had not been responded to in 45 days and asked if the

requirement has always been to respond within 45 days. Mr. Ramsel stated that the

developer often applies through the local industrial development authority (IDA) and

the IDA makes an application to DED and we are not aware of the application until

DED sends us a request to do a review. When staff is reviewing an application for

DED we send out a letter asking for information and the 45 day time frame is after

receipt of that information. Commissioner Baalmann asked how staff can respond in

45 days including ranking with other applications. Mr. Ramsel stated that every

month, if there are new applications, the applications would be ranked in

relationship to all the applications that were previously ranked, which would be a

rolling priority list. Assistant Attorney General Schaeperkoetter stated that there may 4

-. I. ast Date Modified: 51 1012007 1 1 :31:00 A~v,?,&

April 20, 2007

be some discussion about the Commission not being able to respond in 45 days in

months when there is not a Commission meeting. Mr. Ramsel stated that he would

like time to research and talk to DED about whether the 45 days are prescribed by

law. Chairman Steelman stated that she could see potential problems with a system

that is rolling and changing every month and there should be a time limit on when

the applications would be submitted. Mr. Ramsel stated that it could be done

annually or semi-annually and that staff has discussed doing a NOFA twice a year.

Assistant Attorney General Schaeperkoetter suggested appointing a committee to

work this out. Mr. Ramsel stated that he would like to be included in the committee

and to also have someone from DED on the committee to get their feedback.

Assistant Attorney General Schaeperkoetter raised a concern about having a

representative from DED participate in the discussion. Chairman Steelman asked

who would be interested in being on the comm'itjee. Mr. Ramsel, Assistant Attorney

General Schaeperkoetter and Mr. Smith expressed an interest. It was determined

that DED would be contacted after the committee came to an agreement as to

how to proceed. Chairman Steelman stated that there needed to be agreement

among the commissioners on what they and MHDC are looking for and then it could

be presented to DED.

Mr. Ramsel moved to the next item on the agenda, the Multi-Family Rental

Developments to DED for bond cap. Chairman Steelman stated that the

recommendation from the C,~mmissioners last month was that 2006 funding be

approved for those projects unless b here were significant cost changes. In that case

those projects would go into the 2007 ranking. Chairman Steelman asked how much

funding DED had availableand Mr. Ramsel stated that he did not have an answer as

to an exact amo nt. Chairman Steelman asked what criteria staff used to rank the

projects and Mr. Ramsel stated that staff used the criteria approved by the

Commission at the previous meeting. Assistant Attorney General Schaeperkoetter

stated that it is important that the Commission be precise about the policy on 10%

cost increases and that the policy should be applied but not expanded to get

projects into a different category. There was discussion about how all this was going

to affect the 2007 projects and future projects. Chairman Steelman stated that the

problem is not knowing the amount of allocation that is available from DED for

5

Lasf Date Modified: 51 1012007 1 1 :31:00 Ab$&

April 20,2007

funding. Assistant Attorney General Schaeperkoetter stated that DED has been

picking the projects from staff's list and that the MOU now states that if the ranking list

is not followed DED needs to explain why. He stated that DED needs to give us a

bond allocation amount to allow us to know how many projects can actually receive

funding. Lieutenant Governor Kinder stated that the same points keep being

addressed and that Mr. Steinhoff from DED wrote a letter addressing these issues and

stated why DED could not do that. Chairman Steelman stated that right or wrong

the Commission has made the decision to honor the 2006 projects. Ms. Hemenway,

Director of Operations at DED, stated that DED cannot allocate funds unless they

receive the application. DED does not allocate funds to projects that are not ready

to close. The law provides that if DED allocqes to a project that does not close

within 60 days the allocation is lost. Ms. Hemenway stated that the Commission

keeps saying that DED is passing over projects but DED keeps getting projects that

are not ready to close. DED then moves to the projects on the list that are ready to

close and provides allocations so that the multi-family'business can keep moving

forward. Ms. Hemenway stated that DED has done what they have been asked to

do and when the Commission provides some quqlit,y projects DED is prepared to

provide allocation to them. DED is not able to give the Commission a flat number of

funding availability because they are competing with single family, utilities,

manufacturing, and student loans all of which are very important. Chairman

Steelman statedxthat the Co'mmission needed to place more emphasis on when and

how soon a project can cometogether. Commissioner Luetkenhaus made a motion

to approve the 2006 applications per staff recommendations with the individual

scores being noted as a ranking by the Commission. Commissioner Greim seconded

the motion. Assistant Attorney General Schaeperkoetter stated that there were two

categories on Page B: bond allocation requested and bond allocation

recommended. He asked why there were two separate categories. Mr. Ramsel

stated that this is letting the developer know that this is all the bond cap that is

needed to qualify for the 4 per cent credit and that this is the amount that would be

recommended to DED. A roll call vote was taken and the motion passed

unanimously 8 to 0. Chairman Steelman stated that there needed to be a vote on

whether the Commission was going to send the 2007 ranking list to DED.

Commissioner Luetkenhaus stated that he would like to take a closer look at the 2007 6

FA Last Date Modified: 51 10/2007 1 1 :3 1 :00 A ~ C . , I U

April 20,2007

list. Chairman Steelman stated that the vote for the 2007 list should be postponed

and put on the agenda for next month.

Mr. Ramsel moved to the next item on the agenda, the Planning Session

Update. Mr. Ramsel asked the Commissioners to fill out the sheet provided in the

Commission notebook and to check the topics that they would like included in the

Planning Session discussions. Mr. Smith, representative from the Governor's office,

stated that the suprime lending issue is something that should be discussed at the

planning session. Mr. Ramsel stated that he thought this was significant and that the

thought is to go to the market with a taxable bond and a taxable fixed rate to try

and help the citizens of Missouri. Commissioner Baalmann stated that there needs to

be strong participation from the Commissioners at the planning session.

Mr. Ramsel moved to the next item on the agenda, the Legislative Report.

Mr. Torres stated there was nothigg new to report. Assistant Attorney General

Schaeperkoetter stated that the q u o r u ~ was lost at the last meeting before there

was time for discussion about the recording fee increase for the Housing Trust Fund

and he wondered if the Commission might want to tqke a position with the legislative

committees. Chairman Steelman stated that she did not think the Commission could

take a position on legislation. Mr. Torres stafed'that Mr. Ramsel had sent a letter to

Senator Ridgeway and Senator qaqp ion with detailed information on what the

Trust Fund is used for, what the demand is, and what some of the housing statistics

are and the needs that a e trying to be met with the Trust Fund.

Mr. R,amsel moved on to the next item on the agenda, the Watch List. Mr.

Ramsel stated there was .nothing new to report.

Mr. Ramsel moved on to the next item on the agenda, Other Matters. Mr.

Ramsel stated that he would like the Commissioners to schedule the August

Commission meeting for August 10, 2007.

Mr. Ramsel moved on to the next item on the agenda, Report of the Financial

Advisors and Bond Counsel. Mr. Detjen of CSG Financial Advisors reported that the

Commission did receive an allocation of $60 million of new money volume cap from

Last Dafs Modified: 5/10/M07 1 1 :31:00 Ah&

April 20,2007

DED for its single family program. This month this has been blended with $5 million

available in recycled volume cap bringing it to a $65 million tax-exempt bond

capacity. That has been blended with approximately $38 million of taxable bonds to

produce a $100 million bond issue, plus approximately $3 million of bond premium

that is used for down-payment assistance. The bonds are expected to be priced out

next Monday, Tuesday and Wednesday and bond rates hopefully will be a little lower

than first anticipated.

There being no further business the meeting was adjourned.

Sarah Steelman, Chairman

Bill Luetkenhaus, Secretary-Treasurer

8

Last Date Modified: 51 1012007 1 1 :3 1 :00 A k h


TAB

3. Report of Chairman a) Report of Nominating Committee

and Election of Commission Officers

b) Appointment of Audit Committee (Newly Elected SecretarylTreasurer- Chairman of Audit Committee)


TAB

FINANCIAL REPORT

FOR THE MONTH OF MARCH 2007

MISSOURI HOUSING DMLOPnENT COMrnSSION

Financial Reporting Package

for the month of March 2007 and the period then ended

Index

Page: 1 - 2

3 - 4

5

6

7

Executive Summary for the month

Key Financial Information

Balance Sheet

Chart 1 - Assets by Program

Chart 2 - Homeownership Bond-Financed Program Mortgage Assets and Total Assets

Summary of Net Assets: Restricted and Unrestricted

Budget for Use of Net Assets (Fund Balances) for Fiscal Year 2007

Mortgage Revenue Bond Activity

HUD Purchase Loan Program

Condensed Statement of Revenue and Expenses for the month including the effects of GASB Statement No. 3 1

Condensed Statement of Revenues and Expenses for the month, actual compared to budget (excluding the effects of GASB Statement No. 3 1)

Condensed Statement of Revenue and Expenses for the period July 1,2006 to March 3 1,2007, including the effects of GASB Statement No. 3 1

Condensed Statement of Revenue and Expenses for the period July 1,2006 to March 3 1,2007, actual compared to budget (excluding the effects of GASB Statement No. 3 1)

Loan Servicing Report

MISSOURI HOUSING DEVELOPMENT COMMISSION FINANCIAL REPORT - EXECUTIVE SUMMARY

March 2007

Assets

Total assets, as reported, were $1,968,542,000 as compared to $1,863,555,000 at the end of the previous year. Excluding the effects of GASB Statement No. 3 1, assets totaled $1,968,429,000 at March 3 1,2007 as compared to $1,889,123,000 at June 30,2006.

Mortgages and Mortgage-Backed Securities

New homeownership mortgage-backed securities purchased totaled $253.5 million in the first nine months of this fiscal year. Net of scheduled principal payments and loan prepayments, the Homeownership bond-financed mortgage-backed securities and loan portfolio has increased $168.5 million year-to-date. In the Rental bond-financed program, 8 rental project loans totaling $25.1 million have been fimded.

Principal pay-downs and prepayments in the Single Family Homeownership portfolio are 13% annualized (19% in 2006,26% in 2005 and 39% in 2004). In the Multifamily Rental portfolio, principal pay-downs and prepayments are 4% annualized (1 5% in 2006, 15% in 2005 and 20% in 2004).

Bond Issues

During the first nine months of this year, we have closed $160.0 million in Single Family Homeownership bonds and $25.1 million in Multifamily Rental Revenue Bonds (page 9). Bond pay downs have totaled $98.6 million.

Results of Operations: Month of March

For the month of March (see page lOa), net operating results amounted to a gain of $400,000 before including the effects of GASB Statement No. 31, (see additional information below). Operating Revenue over Expenses was $46,000 better than budget.

Results of Operations: Year-to-Date Fiscal Year 2007

Year-to-date for the first nine months of this fiscal year (see page 1 la), net operating results amounted to a gain of $14,990,000 before including the effects of GASB Statement No. 3 1, (see additional information below). Operating Revenue over Expenses is $6,784,000 better than budget.

Federal Programs

Year-to-date Federal Grant Revenues include $76.9 million in Project Based Section 8 Housing Assistance Payments and $13.0 million in HOME Investment Partnership Program funds. These federal programs provide important resources for achieving the objectives of the Commission. The Commission's efforts to preserve affordable housing, including preservation of the Housing Assistance Payment Contracts, are vital for continuing this economic resource for the state of Missouri.

Effects of GASB 31

Governmental Accounting Standards Board (GASB) Statement No. 3 1 "Accounting and Financial Reporting for Certain Investments and for External Investment Pools" was instituted in 1998 and established fair value accounting for investment securities, such as U.S. government and agency securities; and GNMA and Fannie Mae mortgage-backed securities. GASB Statement No. 31 requires that these investments be reported at fair value on the balance sheet and that changes in fair value be reported as revenue in the operating statement. During periods of rising market interest rates relative to the stated rates of our portfolio, the fair value of our investments and mortgage-backed securities will decline. Conversely, when market interest rates fall below those of the stated rates of our portfolio, the fair value of our investments and mortgage-backed securities will increase.

The required implementation of GASB Statement No. 31 has caused a decrease of $654,000 in the fair value of investments and our mortgage-backed security portfolio for the month of March (see page 10). During March, interest rates increased above the level of the previous month-end, resulting in a corresponding decrease in the fair value of mortgage-backed securities and other investments.

Overall, the required implementation of GASB Statement No. 31 has caused an increase of $26,669,000 in the fair value of investments and our mortgage-backed security portfolio during the first nine months of this fiscal year (see page 11). During these nine months, interest rates decreased below the level of the previous year-end, causing a corresponding increase in the fair value of mortgage-backed securities and other investments. Depending on future financial markets, we can expect interest rate fluctuations to have a continuing material effect on our financial statements.

Missouri Housing Development Commission Key Financial Information as of March 31,2007 ($ in thousands)

- --

I Trend Analysis

2001 2002 2003 2004 2005 2006 2007

Total assets 1,881,779 1,905,553 1,780,997 1,657,328 1,657,464 1,889,123 1,968,429 % change 2.70 1.26 (6.54) (6.94) 0% 13.98 4.20

Total debt 1,520,251 1,514,329 1,378,492 1,239,234 1,224,866 1,430,242 1,516,237 % change 2.24 (0.39) (8.97) (1 0.1 0) (1.16) 16.77 6.Ol.

Total equity 279,373 297,840 306,151 315,703 325,165 342,311 358,289 % change 4.89 6.61 2.79 3.12 3.00 5.27 4.67

Revenues 125,300 122,255 11 3,773 101,103 96,642 101,412 112,197 % change 4.24 (2.43) (6.94) (1 1.14) (4.41) 4.94 10.63

Net income 12,027 12,966 7,871 9,779 9,287 16,340 13,765 % change (29.45) 7.81 (39.30) 24.24 & O X - - 75:94 - - s-51761 Total loans and MBS 1,383,387 1,417,295 1,204,943 1,103,838 1,144,443 1,318,037 1,511,177 % change 4.04 2.45 (14.98) (8.39) 3.68 15.17 -- - - 14.65

FHA Risk-Share Loans 16,360 34,485 62,429 113,816 148,997 173,169 172,466

% change 46.49 1 10.79 81.03 82.31 30.91 16.22 (0.41)

Nonperforming assets 1,400 980 440 440 100 100 140 % change 509.08 (30.00) (55.10) (77- --- 40.00

Loan loss reserves 14,948 15,014 16,124 18,626 20,701 21,150 21,650 % change 25.75 0.44 7.39 15.52 11.14 2.17 2.36

NOTES: Asset values are adjusted to exclude the effects of market value accounting (GASB Statement No. 31).

Annualized growth rate of total assets is 5.60% at March 31, 2007, compared to 13.98% in FY06. Strategic Plan target is 5% annually.

Equity values are adjusted to exclude the effects of market value accounting (GASB Statement No. 31).

Revenue and net income values also exclude the effects of market value accounting (GASB Statement No. 31) and federal grants and assistance (pass-through revenues and disbursements). These values are projected for FY 2007.

Missouri Housing Development Commission Key Financial Information as of March 31,2007

- --

Financial Ratio Analysis

I FY 2007 5-year

SBP Profitability Measures FY 2007 Budget average 2006 2005

Return on Average Assets 11% Strategic Plan target) 0.71 0.51 0.63 0.92 0.54 Return on average assets, excluding subsidy programs 8 spec. initiatives 0.80 0.74 1.05 0.87 Return on Assets before Loan Loss Provision and Extraordinary item 0.74 0.61 0.74 0.98 0.69 Return on assets before loan loss provision and extraordinary item. excluding subsidy programs 8 special initiatives 0.83 0.84 1.11 1.01

Return on Average Equity 14% Stratenic Plan target) 3.93 2.69 3.50 4.90 2.90

Net interest margin 1.33, 1.2 1.02 1.25 1.04

and Non-Performing Assets

M 2007 5-year

Total Equity I Total Assets 18.20 18.85 18.58 18.12 19.62 Total Equity and Rese~eS I Total Loans and MBS 25.14 28.54 28.00 27.58, 30.2;:

LEVERAGE ('10) I All 'AAA' All HFAs

19.41 19.01

24.2 29.6 30.21 33.7 23.7

NOTES 1. MHDC's profitability ratios have historically been lower than other AA+ and AA rated housing finance agencies. Standard & Poor's has indicated this is not an area of concern due to the limited risk profile of MHDC's asset base.

Missouri Housing Development Commission BALANCE SHEET, unaudited (In Thousands) March 31, 2007

Rental Homeownership Operating Bond-Financed Bond-Financed Combined Totals

Funds Program Program March 31,2007 June 30,2006 (Audited)

ASSETS:

CASH AND TEMPORARY INVESTMENTS

INVESTMENTS: Investment Agreements Repurchase Agreements U.S. Government and Agency Securities

Total

LOANS RECEIVABLE, net of allowance for loan losses ($21,650)

OTHER ASSETS: Accrued lnterest Receivable Deferred Financing Charges Fixed Assets, net of accumulated depreciation ($1,419) Accounts Receivable, Other

Total

Total Assets

LIABILITIES AND NET ASSETS:

LIABILITIES Bonds and Notes Payable lnterest Payable Escrow Deposits Funds Due Others Accounts Payable Deferred Fees

Total Liabilities

NET ASSETS

Total Liabilities and Net Assets

Chart 1 Assets by Program

Mortgage Assets, Investments, Cash, and Other Excludes the Effects of GAS6 Statement No. 31

June 2003 to March 2007

+ Homeownership

+ Rental

+Operating Fund ,

Chart 2 Homeownership Bond-Financed Program

Mortgage Assets and Total Assets Excludes the Effects of GASB Statement No. 31

June 2003 to March 2007

-e Mortgage Assets +Total Assets

Missouri Housing Development Commission Net Assets, unaudited (In Thousands) March 31, 2007

Invested in Capital Assets

Restricted

Unrestricted

Total Net Assets

3/31/2007 6/30/2006 Rental Homeownership Total Total

Operating Bond-Financed Bond-Financed Net Net Funds Program Program Assets Assets


FY2007 Fund Balance Budget March 31.2007

BUDGET DISBURSED

Rental Housing Production and Preservation Program $ 6,900,000 $

Downtown Revitalization Plan 100,000 41,288

Single-Family MRB Program Equity Contribution (See below for detail) 4,400,000 2,526,000

Rental Assistance Program 921,000 316,229

Multifamily and Home Improvement Interest Subsidy Program 100,000 75,037

TOTAL FUND BALANCE PROGRAM BUDGET $ 12,421,000 $ 2,958,554

BOND ISSUES

Homeownership: 2006 Series D 2006 Series E 2007 Series A

At March 31,2007 2007 Series B closed 4-12-07

2007 Series C closed 5-17-07

At May 31,2007

Mortgage Revenue Bond Activity

AMOUNT AMOUNT AUTHORIZED ISSUED

Rental: Bonds Sold in FY06; Portion Issued in FY07:

2006 Series I (Bainbridge Apts.) closed 6-23-06 $ Bonds Sold and Issued in FY07: 2006 Series V (Lost Tree South Apts.) closed 7-7-06

2006 Series VI (Mill Pond Apts.) closed 10-5-06

2006 Series VII (Cedar Tree Apts.) closed 11-14-06

2006 Series Vlll (Elmwood Estates Apts.) closed 11-14-06

2006 Series IX (Catalpa Tree Apts.) closed 11-14-06

2006 Series X (Center Apts.) dosed 11-14-06

2007 Series 1 (Linden Campus Apts.) dosed 2-28-07

At March 31,2007 2007 Series I (Park Ridge Apts.) closed 4-5-07

2008 Series 11 (Mexico I Apts.) dosed 5-3-07

At May 31,2007

MHDC CONTRIBUTION

HUD Purchase Loan Program

Since the purchase of 26 loans from HUD during 1996, we have collected principal and interest payment funds, which are available for rehabilitation work and tenant initiatives. These are restricted funds.

Program Receipts, since 1996 Grants and Loans, since 1996 Available for Rehabrrenant Initiatives as of March 31,2007

Missouri Housing Development Commission CONDENSED STATEMENT OF REVENUE AND EXPENSES, unaudited (In Thousands) Includes the effects of GAS6 Statement No. 31 For the Month Ending March 31,2007

Rental Homeownership Operating Bond-Financed Bond-Financed

Funds Program Program Combined

Unaudited REVENUES: lnterest on Mortgage Loans lnterest on Investments Fair Market Value of Investments Administrative Fees Financing Fees and Other Housing Trust Fund Receipts Grants & Federal Assistance

Total Revenues

EXPENSES: Interest Expense on Bonds and Notes Miscellaneous Bond Debt Expense Compensation Administrative Expenses Provision for Loan Losses Housing Trust Fund Grants Grants & Federal Assistance

Total expenses

REVENUES OVER (UNDER) EXPENSES FROM OPERATIONS

Subsidy Programs and Special Initiatives

REVENUE FROM OPERATIONS AFTER SUBSIDY PROGRAMS & SPECIAL INITIATIVES

Missouri Housing Development Commission CONDENSED STATEMENT OF REVENUE AND EXPENSES, unaudited (In Thousands) Excludes the effects of GASB No. 31 For the Month Ending March 31,2007

Rental Bond-Financed

Homeownership Bond-Financed Operating

Funds Program Actual Budget Actual Budget

Program Actual Budget

Combined Actual Budget

Unaudited REVENUES: lnterest on Mortgage Loans Interest on Investments Administrative Fees Financing Fees and Other Housing Trust Fund Receipts Grants & Federal Assistance

Total Revenues

EXPENSES: lnterest Expense on Bonds and Notes Miscellaneous Bond Debt Expense Compensation Administrative Expenses Provision for Loan Losses Housing Trust Fund Grants Grants & Federal Assistance

Total expenses


Subsidy Programs and Special Initiatives 471 352 -------------- ----------------- ------------ -----------------

REVENUE FROM OPERATIONS AFTER SUBSIDY PROGRAMS & SPECIAL INITIATIVES $ (962) $ (416) $ 459 $ 447

-------- ---------- ------- ---------- -------- ---------- ------- ----------

Number of Employees: 116 Number of Employees at Prior Year End: 122 Compensation and administrative expenses as percentage of Total Revenue - actual 5.1 I%, budget 5.90%

Missouri Housing Development Commission CONDENSED STATEMENT OF REVENUE AND EXPENSES, unaudited (In Thousands) Includes the effects of GASB Statement No. 31 For the Nine Months Ending March 31, 2007

Rental Homeownership Operating Bond-Financed Bond-Financed

Funds Program Program Combined

Unaudited REVENUES: lnterest on Mortgage Loans lnterest on lnvestments Fair Market Value of lnvestments Administrative Fees Financing Fees and Other Housing Trust Fund Receipts Grants & Federal Assistance

Total Revenues


Total expenses


Subsidy Programs and Special Initiatives

REVENUE FROM OPERATIONS AFTER SUBSIDY PROGRAMS & SPECIAL INITIATIVES

Missouri Housing Development Commission CONDENSED STATEMENT OF REVENUE AND EXPENSES, unaudited (In Thousands) Excludes the effects of GASB No. 31 For the Nine Months Ending March 31,2007

Rental Operating Bond-Financed

Homeownership Bond-Financed

Funds Program Actual Budget Actual Budget

Program Actual Budget

Combined Actual Budget

Unaudited REVENUES: lnterest on Mortgage Loans lnterest on Investments Administrative Fees Financing Fees and Other Housing Trust Fund Receipts Grants & Federal Assistance

Total Revenues


Total expenses


Subsidy Programs and Special Initiatives 1,753 3,163

REVENUE FROM OPERATIONS AFTER SUBSIDY PROGRAMS & SPECIAL INITIATIVES $ 6,237 $ 1,265 $ 3,240 $ 4,035

-------- -------- -------- -------- - - - - - - - - - - -- - - - - - - - -- - - - - - - -- - - -

Compensation and administrative expenses as percentage of Total Revenue - actual 4.85%, budget 5.72%

LOAN SERVICING REPORT As of March 31,2007

Remarks Rental Proarams

FHA Insured

FNMA

US Bank

Uninsured

9,490 lncludes FHA Insured, Section 8, Market Rate & Risk Share.

1,591 lncludes FNMA Participation Loans

576 lncludes US Bank Participation Loans

9,822 lncludes AcquisitionlConstructionlPermanent Financing for Special Needs, Elderly & Family housing using MHDC fund balances.

1,605 lncludes HUD Purchased Loans, special financing relating to the HUD Purchased Loan Program. HUD Purchased Loans

HOME Funds 7,554 Federal HOME Funds Construction Preservation non-profit and for profit and Federal HOME Funds Emergency Relief.

Subdivision Loans

Rural Initiative Loans

40 Subdivision Loans units are based on lots.

32 Rural lnitiative Loan units are based on lots.

30,710 Rental Program Totals

Homeownshi~ Proarams

10,351 Sewiced by Master Servicer, MHDC funded through MRB. GNMA Master Sewicer

FNMA Master Servicer 2,344 Serviced by Master Servicer, MHDC funded through MRB.

MRB Issues 241 Serviced by ParticipantlServicers. MHDC reconciles bank accounts, audits foreclosures and processes assumptions.

GNMA MRB Issues 1,282 Serviced by GNMA Contract Servicers. MHDC processes assumptions, servicing fees and audits foreclosures.

Rural Growth Master Servicer 15 Resolution 853 Serviced by Master Sewicer, MHDC funded through MRB.

HOME FundsIOther 1,735 1,735 Includes MHDC DPNMRB IssuesIFlood Program Funds and Federal HOME FundslFmHA, Weatherization and Home Improvement, Habitat for Humanity. MHDC performs all servicing functions.

Homeownership Program Totals 15,968 15,968

TOTALS


TAB

Strength, DigniIy. Qualiy of Lfe


Matt Blunt Governor

Peter Kinder ~ieutenant Governor

Sarah Steelrnan

State Treasurer Chairman




Richard F. Baalrnann Sr. Commissioner



Pete Ramsel Acring Executiw Director



6411 1

v. 8 16.759.6600

f. 8 16.759.6828

tcy. 8 16.759.6839


S t Louis, Missouri

63 108 v. 3 14.877.1350

f. 3 14.877.1 360

tty. 3 14.877.1 303

May 18,2007

TO:

FROM:

Commissioners


SUBJECT: Tax Credit Study Update

We have had ongoing conversations with BKD, the national accounting firm performing the study. We have agreed to the following schedule.

May 14

May 25

June 6

June 7

June 8

June 14

August 28

Conference Call between MHDC staff and BKD to discuss the draft report

Draft copy to be provided to MHDC staff

Final report to staff

Final Report sent to Commissioners in mail out

Final Report posted to MHDC website and copies provided to the press and the state auditor

BKDMissouri State to make presentation at the planning session; copies released to those in attendance

BKDMissouri State to make presentation at the Governor's Conference

May 8,2007

Mr. Pete Ramsel Acting Executive Director Missouri Housing Development Commission 3435 Broadway Kansas City, MO 641 1 1

RE: CostiBenefit Analysis of the Missouri Low Income Housing Tax Credit Program

Dear Pete:

We would like to provide you with a brief update on the progress of the CostIBenefit Analysis and provide you with a timeline for completion of the project. As we recently discussed, we are currently in the final stages of the research and data analysis phase of the project and are currently working on preparation of the report. Set out below is a timeline summarizing the key dates in moving to completion.

May 14,2007 - BKD staff will hold a conference call with MHDC staff to discuss various matters related to the CostIBenefit Analysis.

May 25,2007 - A draft of the report will be provided to MHDC staff for review, comment and discussion.

June 6,2007 - The final report will be provided to MHDC.

June 14,2007 - BKD will present the report to MHDC at their Planning Session and Regular Commission Meeting to be held in Branson, Missouri. It is our understanding that the report will be made available to the public at this time.

We appreciate the opportunity to work with you and your staff on this project and look forward to presenting the report to the Missouri Housing Development Commission at the meeting in June.

If you have any questions regarding the information outlined above or if we can be of any other assistance, please let me know.

Sincerely,

9,~~r .u /

John R. Cook

bas

Harnrnons Tower 901 E. St. Louis Street, Suite 1000 P.O. Box I 190 Springfield, MO 65801 -1 190 417 865-8701 Fax 417 865-0682

3230 Harnmons Boulevard P.O. Box 1824 Joplin, MO 64802-1 824 417 624-1 065 Fax 417 624-1431

Beyond Your Numbers

1034 W. Main Street P.O. Box 1277 Branson, MO 65615-1277 417 334-5165 Fax 417 334-4823

An independent mdmrd Mmsr RoMxdlnlamaboMI mrf 3

Strength, Digni&, Qualiy of Li/e


Matt Blunt Governor



Chairman




Richad F. Baalmann Sr. Commissioner



Pete Ramsel Acting Execuwe Director



641 1 1 v. 8 16.759.6600

f. 8 16.759.6828

tty. 8 16.759.6839


S t Louis, Missouri

63 108

v. 3 14.877.1350

f. 3 14.877.1 360

tty. 3 14.877.1 303

May 18,2007

To:

From:

Re:

Commissioners Missouri Housing Development Commission

Pete Ramsel, Acting Executive Director and Marilyn Lappin, Director of Finance

Recommendation to Select Underwriters and Selling Group Members

We have completed the process to select the Underwriting Team for the MHDC bond programs. We received a total of 21 proposals, ten of which were for senior manager. We reviewed and evaluated the proposals taking into consideration qualifications and experience, particularly housing finance experience, sales and distribution capabilities, state Housing Finance Agencies served, and presence in the state of Missouri. We also considered sales performance for the last thirteen issues of MHDC Single Family Mortgage Revenue Bonds. These MHDC bonds were sold over the time period of July 2004 through March 2007, reflecting the single family bond issues completed since the Commission's selection of its underwriting team in 2004. A summary of the orders and allotments by firm is attached (Exhibit 1).

We have completed our review of the proposals for the Senior Managers, Co- Senior Managers, Co-Managing Underwriters and Selling Group Members and make the following recommendations for your consideration.

Staff Recommendations for the Underwriting Team: Senior Managers, Co- Seniors, and Co-Managers

We recommend the following firms serve as rotating Book-Running Senior Managers, rotating Co-Seniors, and Co-Managers, as listed below.

Rotating Book-Runners and Co-Senior Group A.G. Edwards & Sons

George K. Baum

Rotating Co-Senior and Co-Manager Group Co-Manager Group

Edward Jones Bank of America Stifel Nicolaus

UMB Citigroup

UBS Securities

Rotating Book-Runners and Co-Senior Group

For the Book-Running Co-Senior Managers, we recommend that the book running responsibility be rotated beginning with A.G. Edwards & Sons for Single Family bond issues. George K. Baum is the book-runner for the Single Family 2007 Series C bond issue currently underway. For Multifamily bond issues we recommend working with the developer to use a book runner acceptable to MHDC staff.

These firms are both Missouri firms and each have significant housing experience. In addition, each of these firms provides significant on-going data and information regarding MHDC single family bond programs, including mortgage prepayment statistics, to our investors. These firms complement each other very successfully with retail and institutional focus.

Rotating Co-Seniors and Co-Manager Groups

These firms consist of Missouri firms and firms with a significant number of Missouri accounts that provide additional access to Missouri retail markets, as well as national firms, providing expanded access to national retail sales.

We recommend that Co-Senior Underwriters consist of the non-book running senior manager and one of the Missouri firms among the Co-Managers, on a rotational basis for each of our Single Family bond issues, beginning with Edwards Jones, then Stifel Nicolaus and UMB. This will provide opportunity for Missouri firms who have served us well to have an opportunity to serve in the capacity as Co-Senior, further their participation in our bond issues and develop their housing experience. Exhibit 2 attached outlines the proposed rotation plan.

Staff Recommendations for the Selling Group

We recommend the following firms as Selling Group members.

Alta Capital Group Oppenheimer Backstrom McCarley Berry & Co. Piper Jaffray Butler Wick & Co., Inc. Raymond James First Bankers' Banc Securities RBC Capital Markets JPMorgan Siebert Brandford Shank & Co. Morgan Keegan Stern Brothers & Co. Morgan Stanley

These firms consist of firms with a significant number of Missouri accounts that provide additional access to Missouri retail markets, as well as national and minority and women-owned firms, providing expanded access to national retail sales. A large selling group is proposed to provide an opportunity to firms and to enhance the distribution of MHDC bonds. Based on evaluation of sales performance, staff may terminate non-performing members of the selling group on future bond transactions, if warranted. Minority and women-owed selling group members, who provide meaningful retail orders to the syndicate, may be elevated to the position of co-manager.

Staff Recommendation regarding Order Priorities, Management Fees, and Term of Service

We recommend that the agreement among underwriters, which governs each bond sale, include the following bond order priority:

Missouri Retail Orders National Retail Orders Net Designated Orders Member Orders

The management fee, as bid, is recommended at $0.75 per $1,000 bond to be paid to the rotating book-running senior firms.

For the term of service, we recommend that the proposed Underwriting Team and Selling Group members serve beginning with the 2007 Series D Single Family Mortgage Revenue Bonds and serve for a period of three years. As noted above, staff will terminate non-performing members of the selling group on future bond transactions if warranted. As stated in the Request for Proposals, MHDC reserves the right to end the term of service or change the status and role of any firm selected pursuant to this RFP at any time prior to the expiration of the stated term of service.

Exhibit 1 Summary of Sales .Cinrrla F3rnilw Cariac 7nflAP-3nn7R

PERCENTAGE I ORDFRS A l I OTMFNTS OF A1 I OTMFNT9 1 A.G. Edwards $ 754,952.000 5 354.685.000 47.1%

George K. Baum

Banc of America Citigroup Inc.

Edward D. Jones Siebert Brandford 8 Shank

Stifel, Nicolaus UMB Bank

Loop Capital Merrill Lynch

Country Club Bank 665.000 100,000 0.0% J.P. Morgan 600.000 200.000 0.1% Merrill Lynch 1,485,000 650.000 0.1%

Morgan Keegan 2.145.000 1,025,000 0.1% NatCity Investments 1,025,000 25,000 0.0%

Oppenheimer 420,000 270,000 0.0% Piper Jaffray 2,945.000 2,595.000 0.3%

Raymond James 25,955.000 1,720,000 0.2% RBC Capital Markets 4,815,000 575.000 0.1%

Stem Brothers 910,000 690.000 0.1% Stifel Nicolaus 3.260.000 2,255,000 0.3%

UMB Bank 11,130,000 6,075.000 0.8% UBS Securities 0.0%

WH Mell 500.000 0.0% Wachovia 3,210,000 1,825,000 0.2%

TOTALS $ 2,038,682,000 $ 752,680,000 100%

A.G. Edwards $ 754,952.000 $ 354.685.000 47.1% George K. Baum 1.040.140,OOO 332.01 5.000 44.1% Edward D. Jones 23,390.000 16,535.000 2.2%

Citigroup Inc. 28,000.000 1 1,505,000 1.5% Banc of America 79,080,000 10,450,000 1.4%

UMB Bank 19,190,000 9.41 0,000 1.3% Stifel Nicolaus 5,570,000 4,060,000 0.5%

Merrill Lynch 18,605,000 3,335.000 0.4% Piper Jaffray 2,945,000 2,595.000 0.3%

Oppenheimer 3,605.000 1,900,000 0.3% Wachovia 3,210,000 1,825,000 0.2%

Raymond James 25,955,000 1,720,000 0.2% Morgan Keegan 2,145,000 1,025,000 0.1%

Stern Brothers 91 0,000 690.000 0.1% RBC Capital Markets 4,815,000 575,000 0.1%

J.P. Morgan 600.000 200,000 0.0% Country Club Bank 665.000 100,000 0.0%

Commerce Bank 280,000 30,000 0.0% NatCity Investments 1,025,000 25.000 0.0%

Loop Capital 10,200,000 0.0% Siebert Brandford 8 Shank 12,900,000 0.0%

UBS Securities 0.0% WH Mell 500.000 0.0%

TOTALS $ 2,038,682.000 $ 752,680,000 100.0%

Orders and Allotments as shown include both 1nst;tutlonal and retail activity.

Underwriting Team - Proposed Rotations

Co-Seniors I .G. Edwards & Sons George K. Baum A.G. Edwards & Sons

A.G. Edwards & Sons George K. Baum Stifel Nicolaus UMB

Bank of America Bank of America Bank of America Citigroup Citigroup Edward Jones Edward Jones UMB Stifel Nicolaus

UBS Securities UBS Securities UBS Securities

Alta Capital Group Alta Capital Group Alta Capital Group Backstrom McCarley Berry & Co. Backstrom McCarley Berry & Co. Backstrom McCarley Berry & Co. Butler Wick & Co., Inc. Butler Wick & Co., Inc. Butler Wick & Co., Inc. First Bankers' Banc Securities First Bankers' Banc Securities First Bankers' Banc Securities

JPMorgan JPMorgan Morgan Keegan Morgan Keegan Morgan Stanley Morgan Stanley Oppenheimer Oppenheimer Piper Jaffray Piper Jaffray Raymond James Raymond James

RBC Capital Markets RBC Capital Markets RBC Capital Markets Siebert Brandford Shank & Co. Siebert Brandford Shank & Co. Siebert Brandford Shank & Co. Stem Brothers & Co. Stem Brothers & Co. Stern Brothers & Co.


TAB

Strength, Dignity, Qualily of life MISSOURI HOUSING

DEVELOPMENT COMMISSION

Matt Blunt Governor

Peter Kinder Lieutehant Governor


Chairman



Bill Luetkenhaus Secrxary -Treasurer

Richard F. Baalmann Sr.

Commissioner

Loren Cook I I Commissioner





641 l l

v. 8 16.759.6600

f. 8 1 6.759.6828

tty. 8 1 6.759.6839


S t Louis, Missouri

63 108

v. 3 14.877.1 350

f. 3 14.877.1 360

tty. 3 14.877.1 303

May 18,2007

TO:

FROM:

Commissioners


SUBJECT: Memorandum of Understanding between MHDC and DED

As directed by the Commission, a meeting was held to determine the recommendation for changes to the MOU between MHDC and DED. In attendance were Jeff Schaeperkoetter, Todd Smith, Pete Rarnsel and Mary Helen Murphy. After considerable conversation it was decided to take no action on preparing and offering a revised MOU. This decision revolved around the recent approval of the 2006 projects, an anticipated approval of a 2007 list, and anticipated discussions at the planning session in reference to the potential NOFA for the Tax Exempt Bond/4% credit applications for next year.

All parties agreed that changes to the MOU prior to the above referenced events/discussions/approvals would be premature.


TAB

Strength, DigniN Qualily oJLi/e


Matt Blunt

- Govemor

Peter Kinder Lieutenant Govemor

Sarah Steelman S ~ t e Treasurer

Chairman




Richard F. Baalmann Sr. Commissioner

Loren Cook II

Commissioner


Pete Ramsel Acting Execurive Director



64111

v. 8 16.759.6600

f. 8 16.759.6828

tty. 8 1 6.759.6839


S t Louis, Missouri

63 108

v. 3 14.877.1 350

f. 3 14.877.1 360

w. 3 1 4 . 8 1 303

May 18,2007

TO:

FROM:

Commissioners


SUBJECT: Staff recommendations in regard to recommending certain 2007 Multifamily Rental Developments to DED

At the April Commission meeting, staff was instructed to submit the best of 2006 projects to DED for allocation of bond cap and to bring back the list of 2007 projects for discussion and approval. To that end, staff has enclosed the following information for your review.

1. Letter dated April 26,2007, to DED based upon the Commission approval of the 2006 list;

2. A list of the 2007 projects for your consideration; 3. An abbreviated list of 2007 projects that staff is recommending for

Commission approval and submission to DED.

The abbreviated list is important for a couple of reasons. Staff does not want to recommend a long list that has no chance of being funded. More importantly, we do not want to cause the same issues in 2008 as we have been dealing with in 2007. We do not want a list of 2007 projects being carried over into 2008. Staff recommends that the Commission submit the abbreviated list for the above-stated reason.

Staff further believes that a NOFA process which will be introduced at the planning session should be implemented for the 2008 tax exempt bonds/4% credit developments.

We believe that all unfunded developments and all new applications for funding should compete under this NOFA process with a recommended list being provided to the Commission at the December meeting. This would allow a fresh, newly rated and ranked list to be delivered to DED at the beginning of the year (2008) when DED has a new allocation of bond cap.

This means that all developments not funded by September of 2007 should compete under the NOFA.

As a reminder, as DED approves 2007 developments, they will need to come back to the Commission for tax credit approval. It is true that developments receiving bond cap are entitled to the 4% credit, but remember you are approving federal and state credits. And without the state credits none of these proposals are feasible.

Matt Blunt Gwernor


Sarah Steelman Sate Treasurer

Chairman

Jay N h n Attorney General


W a r d F. Baalmann Sr. Commissioner

Loren Cook ll Commissioner

Claudia L Oiiate Greim Commissioner

Pete Ramsel Acting ticcaaivc Direcmr


Kansas City, Missouri 641 1 1

v. 8 16.759.6600 f. 8 16.759.6828 tty. 8 16.759.6839

st. Louis 4625 Lindell, S u k 300

S t Louis, Missouri 63108

v. 3 14.877.1 350 f. 3 1 4.877.1 360 tty. 3 14.877.1303

April 26,2007

Sallie Hemenway Director of Operations Department of Economic Development Business and Community Services 301 W High St PO Box 118 Jefferson City, MO 65 1 02

Re: Commission Recommendations

Dear Sallie:

At the April 20 meeting, the Commissioners approved a list of proposals to forward to DED with a recommendation for bond cap allocation. MHDC has reviewed the applications and determined the recommended bond allocation through our underwriting process. We are presenting to you the list below ranked in the order of priority as approved by the Commissioners:

Proiect Name Messenger Towers Pevely Pointe Irving School Alpha Terrace Whispering Lakes Somerset Village Beaumont Lofts Whispering Cove Nottingham Pointe

Location Joplin Pevely St. Louis City St. Louis City St. Louis County Raytown St. Louis City Kansas City Liberty

Recommended Bond Allocation $ 4,842,484

13,900,000 10,000,000 7,850,000

12,375,000 5,400,000

10,500,000 7,335,000 9,900,000

Please note that these are the last of the applications that have been previously approved by the Commission for low-income housing tax credits. All future proposals will be reviewed by the Commission for rating and ranking, approved for recommendation to DED, but none will receive tax credit approval by the Commission until it has received an allocation of bonds fiom DED.

Please me know if you need any further information. We thank you for your partnership.

Sincerely,

&ete Ramsel Acting Executive Director


TAB

Strength, Digniy, Qualily of Dye


Matt Blunt Governor



Chairman




Richard F. Baalmann Sr.

Commissioner

Lomn Cook II

Commissioner

Claudia I.. Oiiate Greim Commissioner


Kansas City

3435 Broadway


641 1 1 v. 8 16.759.6600

f. 8 16.759.6828 tey. 8 1 6.759.6839


S t Louis, Missouri 63 108

v. 3 14.877.1350

f. 3 14.877.1 360

q. 3 1 4 . 8 1 303

May 18,2007

TO:

FROM:

Commissioners


SUBJECT: Strategic Financial Plan

The information contained in the Strategic Financial Plan is a vital tool necessary for the success of the planning session in June. This plan is important to you, our Commissioners, but equally important to our financial partners, Fannie Mae, Freddie Mac, HUD, Rural Development, Federal Home Loan Bank, and is perhaps most significant to Standard & Poor's and our financial rating. The projections contained in the plan are crucial in planning for 2008 and beyond.

One of the most important points to be taken from these projections is the tremendous value of our largest, most significant program, our First Place Homebuyer program. This program is the key to our financial structure and our financial well-being. Historically, it has allowed MHDC to accumulate $2.0 billion dollars in assets. This asset base has become the source of our earnings. Our earnings not only fund our operations but, more importantly, our programs. Our earnings (fund balance) fund rental production, rental assistance, home repair, and they supplement trust fund, continuum of care, homeless studies, homeless counts, DREAM, rural initiatives, Habitat, matching funds for HOME, support for an affordable housing database, and many other housing-related services.

These numbers reflect the significance of our Homeownership program on our bottom line. It is especially important at this point in time as Commissioners question how the tax-exempt bond cap should be used and what the Commissioners priorities should be. These determinations are absolutely essential to our planning, our budget and our ability to fund the many good programs that are in such great demand.

CSG I advisors Atlanta Dallas Sun Francisco New York

11720 AmberPark Drive, Suite 435 Alpharetta, Georgia 30004 Telephone: (678) 319-1906 Facsimile: (678) 319-1901

E-mail: bdetien@csg;advisors.com -

MEMORANDUM

Missouri Housing Development Commission Board of Commissioners

Bob Detjen / Kathy Li

SUBJECT: Summary Comments / Observations

MHDC Strategic Financial Plan (FY 2007-2011)

This memorandum is intended to (a) outline the process whereby a new proposed Strategic Financial Plan was developed for the five year period from June 30, 2006 to June 30, 201 1, and (b) summarize certain key observations and recommendations arising from the Plan. The proposed Plan, which resulted from a collaborative effort among MHDC senior staff and CSG Advisors, is intended to update the prior 5-year plan which dates from June 30, 2005. The Plan incorporates staffs best estimate of tax exempt volume cap that will be available to the Commission over the next five years, and also incorporates the assumption that market conditions will continue to make it possible to leverage lendable proceeds with taxable bonds. The Plan will be described in detail during the May 18th Commission Meeting. The presentation will include a forecast of changes in certain key financial factors that can be expected if actual lendable resources are less than are estimated in the Plan.

Basis for the Plan. The starting point for all of the financial projections underlying the Plan is the Commission's most recent audited financial statements at June 30, 2006. The audited data were adjusted from accrual-basis to cash-basis by eliminating: > Non-financial assets (e.g., leasehold improvements), 9 Intangible assets (e.g., unamortized bond issuance costs), > Intangible liabilities (e.g., unamortized fee income from loan origination activity), and > GASB 3 1 adjustments to the face value of investments and mortgage backed securities.

We then put the adjusted June 30, 2006 financial data in historical perspective by summarizing annual operating results during the preceding five fiscal years.

Next, staff provided Planned Production targets for FY 2007-201 1 for both the single family and multifamily MRB programs, as well as for all non-bond programs. The assets, bond liabilities, up-front cash funding requirements and program revenues associated with this Planned Production were added to the computer model along with annual budgeted operating expenses. These key assumptions drive the five-year financial projections which comprise the Plan.

Finally, key financial ratios and other indicators of financial strength were derived from the forecasted operating results to generate trend lines whereby the past five years of operations could be compared with the Plan for the next five years.

Market Perspective. Economic conditions in four of the last five years were the most difficult and challenging ever experienced by state HFAs. However, the trend for state HFAs has taken a dramatic reversal in the past 12 months: 9 Loan portfolio asset erosion tempered as prepayments from loan re-financings declined to

more normal levels; 9 Loan origination volumes spiked as first time homebuyers sought alternatives to private

market loans, including adjustable rate mortgages (ARMs) and hybrid ARMs, and as other more exotic options once available in the sub-prime market dried up;

9 Operating margins improved as the difference between tax-exempt bond interest rates and taxable interest rates available in the private market widened;

9 Lower transaction costs as higher short term interest rates no longer resulted in record level loan origination period negative arbitrage costs;

9 Demand for multifamilv HFA bonds has remained strong in most markets, in spite of rising costs and slow growth in median incomes, and

9 Restoration of more normal market conditions have worked in concert to restore HFA assets consequently improving the forecasted financial health and stability of state HFAs.

In the past year, the more normal operating environment for state HFAs is largely attributable to the Federal Reserve Board's continued monetary policy designed to foster price stability and promote sustainable growth in output. Many state HFAs are now struggling to create sufficient lending resources to meet the rapidly increasing demand for new MRB loans. The reintroduction of taxable bonds blended with tax exempt bonds has created new challenges for state HFAs.

Key Observations from the Strategic Financial Plan.

9 Financial Assets (basis for MHDC revenue generation) o Total financial assets declined by 0.3% per year during FY 2001-2006 due to very

high loan prepayments under the singe family MRB program for four of the five years

o Forecast 'turn-around' beginning in FY 2007 with total financial assets growing at 6.0% annually through FY 20 1 1

9 Fund Balances (Net Worth or Equity) o MHDC successfully 'weathered the storm' during the past five years o Total Fund Balances grew at 2.6% annual rate during FY 2001-2006 o Growth under the Multifamily MRB Program and the Operating Fund more than

offset a 3.2% annual decline under the single family MRB Program o Forecast 2.9% annual growth of Total Fund Balances during FY 2007-201 1

9 Return on Assets (ROA) o Declined steadily during FY 2001-2006 to about 0.5% o Forecast a resurgence with annual ROA stabilizing at 0.8% each year during FY

2007-20 1 1 9 Return on Eauity (ROE)

o Declined steadily during FY 2001-2006 to about 2.6% annually o Forecast a resurgence with annual ROE stabilizing at 3.3% each year during FY

2007-20 1 1 9 Operating Fund Liauidity

o Continued to increase during past five years while making low rate Operating Fund loans and grants to support special initiatives

o Operating Fund liquidity (net of rating agency 'stress test reserves' for the HUD Risk Sharing Program) was about 3.66% of Total Liabilities at June 30,2006

o Forecast Net Operating Fund liquidity to be 7.01% of Total Liabilities at June 30, 201 1, growing at almost 4.6% annually based on planned production.

The above forecast will differ i f planned production is lower as a result of volume cap constraints anct/or if leveraging with taxable bonds becomes less feasible.

Proposed Agenda-Planning Session June 14-15,2007

Branson, MO

Thursdav, June 14,2007

8:OO-8:30 Commission Meeting Schedule

8:30-9:30 Blue Ribbon Recommendations

9:30-9145 Break

9:45-11:OO Construction CostsManufactured Housing

11:OO-12:OO Tax Credit Study/Needed Legislation

12:OO-1:30 Lunch

1 :30-2:30 Foreclosures Related to Subprime Lending (Challenges and possible MHDC involvement)

2:30-2:45 Break

2:45-4:00 Workforce Housing (Perspectives of city and county officials, directors of economic development, chambers of commerce)

4:OO-6:00 Tour of area development and workforce housing

Friday, June isth

7:30-8:00 Audit Committee Meeting

8:OO-8:30 Bond Cap/4% Credit Allocation

8:30-1O:OO Qualified Allocation PlanITrust Fund Allocation Plan

1O:OO-10:15 Break

10:15 to 11:30 Budget for 2008

11:30-1:00 Lunch

1:OO-3:00 June Commission Meeting


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Legislative Report

HCS for SCS for SB 86 Sponsored by Sen. Norma Champion of Springfield

This bill modifies provisions related to all state tax credit programs. This bill makes all state tax credits subject to the Sunset Provisions of Section 23.253, RSMo. After December 31, 2011, no state tax credits may be authorized unless the General Assembly adopts a concurrent resolution authorizing the approval of such tax credits thereby reauthorizing such tax credit program. SB 86 bill was third read and passed by the House on 5/9/2007 and is currently on the Senate Calendar for Senate Bills with House Amendments.

Senate Bill 344 Sponsored by Sen. Jolie Justus of Kansas City

This bill would increase the recording fee collected by Recorder of Deeds and deposited into the Missouri Housing Trust Fund. Currently $3 of the recording fee per mortgage document filed in the state is deposited into the Mo. Housing Trust Fund. This generates approx. $5 million annually for the Mo. Housing Trust Fund. This bill would increase this fee to $10. Staff assumes that the impact to MHDC would be approx. $1 1.6 million in additional recording fees deposited into the Trust Fund annually. SB 344 has one co-sponsor and was second read and referred to the Senate Ways and Means Committee on 1/25/2007.

House Bill 635 Sponsored by Rep. Charles R. Portwood of Ballwin, Mo.

This bill would provide an income tax deduction for taxpayers that make a contribution to the Missouri Housing Trust Fund. The amount of the deduction is equal to the amount of the contribution and is to be deducted from the taxpayers' Missouri adjusted gross income. Staff assumes the impact to MHDC would be increased private contributions to the Mo. Housing Trust Fund but we are unable to provide an estimate of the amount of contributions generated. This bill has seven co-sponsors and was second read in the House on 1/30/2007.

Senate Bill 447 Sponsored by Sen. Jack Goodman of Lawrence Co.

SB 447 repeals Section 215.050 RSMo. that established the "Housing Development Fund" to be administered by MHDC with funds appropriated by the state. Since no state funds have ever been appropriated for the "Housing Development Fund", staff assumes there is no impact on MHDC or our other affordable housing programs. SB 447 had a hearing in the Senate Small Business, Insurance & Industrial Relations Committee on 2/27/2007.

Senate Bill 222 Sponsored by Sen. Charles Gross of St. Charles Co.

This bill requires the balance of all state funds, including the Missouri Housing Trust Fund, to be transferred to the state general revenue fund, if state revenue does not increase by more than 2% in the preceding fiscal year. In the event state revenue does not increase by more than 2%, staff assumes the impact to MHDC would be that the approx. $5 million deposited annually into the Mo. Housing Trust Fund would be transferred to general revenue and would not be available for programmatic needs. This bill had a hearing in the Senate Ways and Means Committee on 211 912007.

House Bill 809 Sponsored by Rep. Stanley Cox of Sedalia, Mo.

This bill would repeal Section 215.033 and 215.050 in MHDC's statutes. Section 215.030 established the Missouri Equity Support Corporation, a/k/a Housing Missouri, a statewide equity fund to invest in LlHTC projects in Mo. This equity fund is a non-profit corporation that was created with seed money from MHDC. The governor appoints members of this non-profit corporation. Housing Missouri has not made any new investments in projects since 1998. MHDC staff has been informed by staff of Housing Missouri that the repeal of this statute would not have any impact on the developments funded through Housing Missouri. The repeal of Section 275.050 which established the "Housing Development Fund" in state statutes is not expected to have any impact on MHDC since no state funds were ever appropriated for this fund. HB 809 was read for the second time in the House on 2/12/2007.

House Bill 1068 Sponsored by Rep. Brian David Yates of Lee's Summit, Mo.

This bill repeals laws which have expired, sunset, terminated or become ineffective as identified by the Joint Committee on Legislative Research, including Section 215.050 RSMo. that established the "Housing Development Fund" to be administered by MHDC with funds appropriated by the state. Since no state funds have ever been appropriated for the "Housing Development Fund", staff assumes there is no impact on MHDC or our other affordable housing programs. HB 1068 was read for the second time in the House on 3/7/2007.

Asset Quality Ratings May 2007

Asset Management Portfolio

MHDC Financed Portfolio Federally Funded Portfolio TOTAL

. .

176,128,142.05 Loan & R e s e ~ e Balances as of 413012007 625,554,186.71

Cameron Estates Good Shepherd Village Lamar Plaza Noland Towers Quality Heights Take Part Ill-Courtyard Apts. Take Part KCNA Wellston Townhomes

Webb City Concordia Lamar Independence Kansas City Kansas City Kansas City St. Louis

Occupancy Occupancy Occupancy Occupancy Occupancy

OccupancylPhysical OccupancylPhysical PhysicaVFinancial

HUD-insured HUD-insured

Federal - Uninsured HUD-insured Uninsured Uninsured Uninsured

HUD-insured

7,446.414.00 1.200.137.98

ICONCERNS: (Substandard, Doubtful, Loss) l C i I Weakness I Loan Balance 1 0.02% 1 Available Rese~eS 1 Adverse Classification ]Months on List 1 Old Northeast TP II Kansas City Occupancy/PhysicaVFinancial 98.039.00 41.382.00 Loss 23

Special Mention: An asset with potential weaknesses that deserve management's close attention. Special mention assets are not adversely classified and do not expose the Commission to sufficient risk.

Adverse Classifications: (Substandard, Doubtful, Loss)

Substandard: An asset that has a well-defined weakness and is inadequately protected by the current net worth and paying capacity of the obligor. These assets are characterized by the distinct possibility that the Commission will sustain some loss if the deficiencies are not corrected.

Doubtful: An asset that has the weaknesses of those classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable.

Loss: An asset that is considered uncollectibe and of such little value that continuance as an asset is not warranted. This classification does not necessarily mean that an asset has absolutely no recovery value; but rather, it is not practical or desirable to defer writing off a basically worthless asset even though partial recovery may be effected in the future.

Program Descriptions: Risk Share: HUD insures 50% of the loan balance and MHDC assumes the risk on the other 50%. In addition, MHDC collects 50% of the annual mortgage insurance premium to off-set potential claims.

HUD-insured: 100% of the loan balance is guaranteed by HUD in the event of default.

Uninsured: Fund Balance loans in which MHDC is responsible for 100% of the losses incurred.

Federal-uninsured: Funds issued by the federal government for which MHDC administers. Once the affordability period has expired, MHDC no longer has a responsibility to repay the federal funds. Participation: A portion of the loan is sold to a partcipating lender and MHDC is only liable for the remaining balance.

Watch List - Loss

PROPERTY

Old Northeast Take Part II

CITY

Kansas City

LOAN DATE 1991

TYPE

Family

TOTAL .UNITS .

18

OCCUPANCY ... .

16%

DEVELOPER

Old Northeast. Inc.

MANAGEMENT AGENT

Old Northeast. Inc

COMMENTS . ---

The KC Landmarks D~vis~on subm~lted the completed historical review package to the State H~storic Prese~at~on (SHP) Dept on January 29 Both the City and the SHP office have released the site for demolition. The owner awaits confirmation of a demolition date.


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4. j) Such other matters as may properly come before the Commission


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5. Report of Financial Advisor and Bond Counsel

Robert Detjen, CSG Advisors, Incorporated Dennis Lloyd, Columbia Capital Management, L.L.C. Kim Wells, Gilmore & Bell Herbert Hardwick, Hardwick Law Firm

o:oo a.m. - mhdc.com · neil molloy, haslc mark stroker haslc liz huger-mace, dmh +rim person,...

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