Tenants in USDA-financed rentals – the majority of whom are elderly – depend on their affordable homes, but resources and policies regarding preservation of these developments are changing. Panelists will discuss USDA policies as well as strategies for preservation in the current economic climate.

1. Preserving Rental Housing in
Challenging Times
Presented By:
Tanya Eastwood
Greystone Affordable Housing Initiatives, LLC
Raleigh, NC 27607

2. WHO IS GREYSTONE?

3. What We Do
Preservation of multiple properties under one transaction.
How do we do it?
HENRY FORD MODEL

4. Portfolio vs. Single 9% LIHTC Transaction
Pros:
• Major impact to large class of real estate (rural) … 8 to 45 preservations per
year compared to 1 or 2
• Spread fixed transaction costs
• Remove properties from competitive round
• Creates jobs / public profile / local investment in small rural markets that
otherwise get very little attention
• Recapitalizes & resizes reserves based on actual need
• Allows sellers to exit and close out funds – stronger negotiating power

5. Portfolio vs. Single 9% LIHTC Transaction
Cons:
• Costly transaction
• Volume of work
• Requirements of multiple lenders and state agencies (sometimes with
competing agendas)
• Sufficient third party funding – sometimes difficult to find
• Tenants in place
• Lengthy process
• Not for everyone

6. Direct Benefit to Owners / Operators
 Rehabilitation and Preservation of Existing Asset
 Improved Marketability for Resident Retention and Attraction
 Portfolio Structure Allows for Volume Unavailable through 9% Cycle
 Reduced Operating Expenses and Improved Maintenance Efficiencies
 Reduced Liabilities and Potential for Capital Calls
 Increased Realization of Limited Dividend (“RTO”)
 Financial Benefit
$ Developer Fees
$ Potential for Sales Proceeds
$ Affiliated Businesses Such as Management Company, Construction Company, etc.

7. How does it all work?
• Pooled bond issue (but no cross)
• Take the good with the bad – strong with the weak even weaker markets
still needed housing
• “Back of the envelope” feasibility analysis – determine estimated proforma
rents (confirm with boots on the ground)
• Satisfy minimum thresholds – UW, Design, etc.
• Adjust within portfolio – fixed costs, equity, etc.
• Communicate with all parties – seek harmonization with all
• Validate assumptions with independent third party reports

8. How to Choose Properties
In no particular order …. Include good with the bad (do not “cherry pick”)
• Physical needs
• Cooperative sellers
• Strong markets (able to support some rent growth)
• Out of 15 year compliance period; considered “at risk”
• QCT / DDA (a plus, but not required)
• Rental Assistance (a plus, but not required)
• CRA Markets

9. North Carolina Housing Finance Agency Multifamily Housing Revenue Bonds
SOURCES OF FUNDS
Tax Exempt Bonds 13,901,000
RD 515 Debt (Assumed) 11,553,901
Owner Contribution 137,505
LIHTC Equity (4%) 3,133,794
Deferred Developer Fee 312,640
Total Sources of Funds $29,038,840
USES OF FUNDS
Acquisition Costs $12,644,501
Rehab Costs $10,972,125
A&E and Pre-Development Costs $675,643
Legal & Financing Costs $1,524,068
Soft Costs $2,691,906
Reserve and Escrow Costs $530,597
Total Uses of Funds $29,038,840
Total Properties 11
Total Units 368

10. Sample Renovation
Before & After Example
(Typical kitchen with all Energy-Star rated appliances, solid wood cabinets)

11. Sample Renovation
Before & After Example
(Typical ADA compliant bath)

12. Sample Renovation
New sinks ready to be installed

13. New HVAC systems
New HVAC ductwork where none previously existed
New water heater
Replace poly piping

14. Sample Renovation
Before, During & After Example
(Typical Roof and Siding Replacements)

15. Sample Renovation
Before & After Example
(Typical Exterior Upgrades)

16. Sample Renovation
Before & After Example
(Typical Exterior Upgrades)

17. Sample Renovation
Before & After Example
(Typical Exterior Updates)

18. Sample Renovation
Before & After Example
(Typical Section 504 Updates)

19. Sample Renovation
Before & After Example
(Typical Playground Upgrades)

20. Sample Renovation
Before & After Example
(Typical Playground Upgrades)

21. Sample Renovation
Before & After Example
(Typical Mail Facility Updates)

22. Sample Renovation
Before & After Example
(Replacement of Retaining Walls)

23. Words of Wisdom
• Pick your team wisely
• Communication, communication, communication
• Build in hedges
• Educate residents early
• Flexibility, realistic timelines
• Don’t just
RED BULL – lots and lots of Red Bull!

24. Contact Information
FOR MORE INFORMATION, CONTACT
Tanya Eastwood
Managing Director
Greystone Affordable Housing Initiatives, LLC
4025 Lake Boone Trail, Suite 209
Raleigh, NC 27607
(919) 573 -7502
teastwood@greystoneahi.com