| Loan Amounts: |
$5,000,000 - $30,000,000 smaller amounts permitted
on a case by case basis |
| Local Government approval: |
All projects must have local governmental council approval. A minimum
of 50% of total bonding authority must be provided by local government.
Rural communities with less than 50% private activity bond CAP available
per year reviewed on a case by case basis. |
| Credit Enhancement: |
Minimum long term rating of credit enhancer must be
AA/Aa even for
floating rate transactions. Form of credit enhancement may be bond or FHA
insurance, MBS or Letter of Credit. Credit enhancement must cover the full
amount of the bonds for the life of the bonds. Mandatory put in the event
of non-renewal. |
| Loan Term: |
All loans (fixed and floating) must be fully amortizing. A 25-30 year
length maximum, FHA insured exceptions allowed. |
| Prepayment: |
Pursuant to the bond documents. Yield maintenance on issuer and trustee
fees for first 10 years. |
| Recourse: |
Non-recourse, except for standard lender and issuer carve-outs . |
| Borrower: |
All properties must be owned by single asset or single purpose entity.
No cross collateralization from properties not part of original financing. |
| Debt Service Coverage: |
Minimum of 115:100 on new construction; 125:100 on acquisition rehabilitation |
| Loan to Value: |
85% maximum; for projects with 4% tax credits, 90% allowed if market
justified |
| Subordinate Financing: |
Soft secondary financing allowed up to 98% of appraised value but must
be serviced by no more than 75% of available cash flow |
| Occupancy: |
Must be 90% occupied for 90 consecutive days prior to permanent loan
financing |
| Assumability: |
Yes, but subject to Housing Division approval with payment of processing
fee and 1% assumption fee. |
| Reserves: |
Tax and insurance escrows are required as are repair and replacement
reserves |
| Application Fee: |
$1,250 plus $75,000 down payment toward costs of issuance upon approval
of loan application. Balance of bond costs of issuance due at closing. |
| Financing Fees: |
Typically, 2-3% of total bond amount, with maximum of 2% payable from
tax-exempt bond proceeds. |
| Land Costs: |
A copy of the land sale contract is required documentation. High
percentage markups of land costs, without documented value added improvements
will be carefully scrutinized and may be disallowed. Related party sales
receive careful review. |
| Timing: |
Typically 60-75 days from loan approval |
| Developer Profits & overhead: |
Limited to 15% maximum. No more than 10% of total taken on a % of completion
of improvements; 10% more allowed at permanent loan conversion; balance
allowed from cash flows after senior debt service & funded reserves;
interest rate on deferred note limited to amount needed to maintain present
value on unpaid developer fee. |
| Contractor Profit & overhead: |
Limited to 14% maximum on improvements taken on a % of completion basis. |
| Regulatory Agreement: |
Per IRS Code for bonds not less than 20% @ 50%AMI or 40% @ 60% AMI;
4% tax credits are a separate regulatory obligation and add onto the tax
exempt bond minimums. NOTE: Local governments may require higher set aside
levels in addition to federal minimums. |
| Signage: |
All bond & 4% tax credit projects must allow for Housing Division
signage during construction. |
| Third party reports: |
See list of underwriting documents required |
| Energy Savings Requirement |
The Division requires several energy efficiency standards be achieved in
bond financed projects. (Multifamily Bond Program
Energy and Weatherization Requirements) |
