Filling in the Gaps. Midwest Housing Development Fund. s c o m m u n i t y a e O b c h o u s i n g s h l l 4. d e v e l o p m e n t

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1 Midwest Housing Development Fund s u s c t c o m m u n i t y a e O b s c h o u s i n g s h l l 4. a i d e v e l o p m e n t l y a f l e x i b l e f i n n f n g v o a e e r n s d c t 10. s q u a l i t y m a b n e f l g 8. n e e d e d e t Filling in the Gaps

2 Midwest Housing Development Fund, Inc. ( MHDF ) is a nonprofit Community Development Financial Institution that was formed in 2000 for the purpose of filling financing gaps in the development of affordable housing through public and private resources. Our Mission: To promote sustainable community development and quality of life in the Midwest by providing resources for the development of affordable housing.

3 Filling in the Gaps Many organizations are interested in bringing affordable housing to their communities, but are unable to pay for the upfront costs needed to move their housing goals from the idea stage to reality. Traditional lenders and financing sources are not always able to help solve this problem. Meeting this need for predevelopment financing was the initial goal of MHDF. Since its inception, MHDF has added additional loan products and currently offers more than just the traditional predevelopment loans. MHDF raises investments of debt and equity which are placed into a loan pool that is available to help finance affordable housing. To date, MHDF has raised over $6,500,000 for its loan pool and has made 79 loans totaling $9,000,000. These loans have helped to create over 1,900 affordable rental housing units for individual and families was a good year for the company. During the year MHDF raised over $850,000 of new capital and lent almost $1,050,000 in new loans. MHDF looks forward to the future and continuing to meet the ever changing financing challenges in the development of affordable housing for our communities. 2

4 Not Your Traditional Lender! MHDF utilizes a loan pool that is capitalized by low cost, long term capital from various investors. Funds from this pool are loaned out to sponsors of affordable housing properties when they are unable to otherwise fill a financing need. We make loans that traditional lenders are unable to make. Our loans have: - A simple application process - Quick turnaround - Low origination fees - Below market interest rates - Flexible repayment terms based upon the specific property's needs In addition, MHDF staff will provide the sponsor with no cost technical assistance. This technical assistance focuses on financial structuring, feasibility and creating capacity in the local community. Loans are made to affordable housing properties that serve households at or below 60% of the area median income. When approving a loan, we consider market needs, how the property will satisfy these needs, community support and the borrower's ability to support the property. Our loans must be repaid, they are not grants. 3 Crown VII Limited Partnership - Omaha, Nebraska Predevelopment Loan

5 What can MHDF offer You? Predevelopment Loans are typically made to a sponsor who is in the planning and application stages of an affordable housing property. The loans are used to pay for market studies, architectural drawings and other items that are necessary to secure construction financing for the development. Providing predevelopment loans is considered to be a high risk for most lenders and, therefore, they are generally not available in the traditional financing markets. Construction Loans are made after the financing sources have been approved and construction is ready to begin. The loans are made on a short-term basis and are used to pay for construction related costs until the traditional construction loan is secured. In some cases, they are used to pay for construction related costs that are not covered by the primary construction lender. Construction loans are also provided if the loan to value ratio of the property is not high enough to allow the primary construction lender to provide 100% of the needed construction financing. Gap Financing Loans are made after the property has been constructed and placed in service. Gap financing loans are necessary when the total costs of the property exceed the available sources of financing. This most frequently occurs when permanent sources of funds are either delayed or not approved. It can also occur when a property's actual costs exceed budgeted costs or when unexpected costs arise such as additional construction requirements from local government agencies. Permanent Loans are made after construction is complete and the project is placed in service. Permanent loans will only be offered after conventional lenders have been given the opportunity to provide the financing. The need for these loans generally occurs with small projects in rural communities where the local lender is not able to provide the necessary permanent loan with a fixed interest rate. 4

6 Loans Made in 2009 Predevelopment Loans: Cornerstone Apartments, L.P. - Topeka, KS Crown VII Limited Partnership - Omaha, NE Liberty Estates LLC - Waverly, NE Dixie Gardens, L.P. - North Platte, NE Hatch Development Group, LLC - Des Moines, IA Construction Loans: Fontenelle Cottages Limited Partnership - Omaha, NE Land Loans: Pioneer Adams Townhomes II, L.P. - Topeka, KS 5 Fontenelle Cottages Limited Partnership - Omaha, Nebraska Construction Loan

7 Cornerstone Apartments, L.P. - Topeka, Kansas Predevelopment Loan Pioneer Adams Townhomes II, L.P. - Topeka, Kansas Land Loan 6

8 Why Invest in MHDF? MHDF is a tool to invest into your community and help provide: - leveraging of private and public resources - building capacity of nonprofit and community based organizations - development of much needed and frequently difficult to produce sustainable affordable housing - economic development by providing housing for local employees and by improving neighborhoods so that more people are nearby to work and shop - community stability In addition to all of the social benefits, an investment in MHDF can bring a return on your investment. Many of our investments are tenyear loans which we pay quarterly interest of 2-5%. The investor will get their capital back at year ten, or they can reinvest it with us for another term. We also have three-to-five year loans and have a five-year line of credit that we can draw on when needed. Many of our investors receive CRA credit for their investment and our ability to leverage their funds with others can provide additional CRA credit. Each year MHDF receives more applications for financing than it can fund given the amount of capital in the loan pool. The need for MHDF s financing products continues to grow as other sources of financing are becoming less available. Your investment in MHDF could make all the difference. MHDF has been in operation since 2000 and has had less than 0.1% loan losses. The success of our loan fund is due to the hands on involvement of MHDF in the development stages. We know the properties and the borrowers and are able to determine the potential success of each property. We will keep working with the borrower and the various financing sources until the property is a success. 7

9 Investors The results achieved this year and every year by MHDF are only made possible through the financial investments and support from the following partners: - Bank of Oklahoma - Bank of the West - CDFI Fund - Fannie Mae - Farmers and Merchants Investment, Inc. - Freddie Mac - Horizon Bank - Iowa Finance Authority - Kutak Rock - Nebraska Department of Economic Development - McAuley Fund - Midwest Housing Equity Group - U.S. Bancorp CDC - Wells Fargo CDC Join our great list of investors who have helped make us a success! 8

10 Board of Directors Front Row Left to Right: Mr. Richard Schenck, Wells Fargo Bank Dr. Valerie Thompson, Urban League of Greater Oklahoma City Ms. Vicki Lea, City Care, Inc. Sister Marilyn Ross, Holy Name Housing Corporation Back Row Left to Right: Mr. James Zimmerman, Capitol Federal Savings Bank Ms. Kim Kuhle, US Bank Ms. Danielle Hill, Nebraska Housing Developers Association Mr. James Rieker, Midwest Housing Equity Group, Inc. Not pictured: Ms. Christine Hensley, Bank of the West 9

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12 13520 California Street, Suite 250 Omaha, NE Phone: (402) Fax: (402) Contact: Becky Christoffersen