National Equity Fund Advisory Services. n Program Design Services. n Pre-Closing Services. n Closing Services. n Subaward Disbursement

Transcription

1 n Program Design Services n Pre-Closing Services n Closing Services n Subaward Disbursement n Post-Construction Asset Management National Equity Fund Advisory Services

2 National Equity Fund (NEF) is putting its 22 years of LIHTC experience to work on behalf of housing finance agencies, helping maximize the impact of new LIHTC exchange and gap financing opportunities. T he strength of the LIHTC program has always rested on a strong public-private partnership that ensures projects respond to local needs, with the kind of underwriting attention and asset management oversight that drives long-term performance. Preserving that partnership is in the best interest of projects, residents, developers and allocating agencies. The challenge for HFAs is how to do that if there is no direct investor or syndicator in the deal. National Equity Fund is now offering a range of advisory services that help keep that public-private partnership in balance. NEF has more than two decades of experience syndicating LIHTC deals, with a current portfolio that includes 1,600 developments, 100,000 units and $6.9 billion in investments. We have 115 multi-investor and single-investor funds under management. With the passage of the American Recovery and Reinvestment Act, NEF is now collaborating with allocating agencies to manage implementation of the credit exchange and HOME gap financing programs. In effect, we represent HFAs as if they were investors in LIHTC deals. We are bringing the same underwriting, asset management, legal and investment management skill sets to this new funding approach that we have long utilized in our traditional LIHTC syndication business. And we reinforce the expertise of our people with the most comprehensive, transparent, web-based data system for LIHTC management in the industry. It is all designed to help safeguard the performance of properties so that they meet their compliance obligations under Section 42 and remain long-term assets to the communities in which they are built. That s true whether we are syndicating a project s credits or overseeing an HFA s exchange grants. NEF s services can be purchased individually to fill gaps in HFAs current resources or can be contracted for as a group, with NEF managing an entire program.

3 n $6.9 billion LIHTC portfolio n 1,600 projects n 100,000 units n 115 funds under management

4 Schedule of services Contact an NEF representative for details regarding fees for individual services. I. Program Design (provided at no charge) 1. Confirm scope of administrative duties imposed by Exchange Program: n To ensure compliance with Section 42 requirements n To ensure long-term viability of buildings funded by subaward 2. Recommend program design to meet administrative requirements: n Identify functions most efficiently performed by internal agency staff n Identify functions that may be performed more efficiently by outside contractors 3. Review options for targeting assistance to projects: n Projects with tax credit investors in need of gap financing n Projects with allocation awards that have not attracted investors n Projects that have not received allocation awards 4. Review options for structuring the subaward: n Loan vs. grant n Capturing cash flow to recycle funds n Identifying recapture conditions and restrictions 5. Discuss use of syndication fund model for establishing reserves and funding project workouts and program expenses 6. Demonstrate use of Syndication Management Tool (SMT) for online access to all underwriting, approval, closing, disbursement and asset management data and documentation used in the subaward process II. Pre-Closing Services 1. Starting point: Project information provided in tax credit application 2. Initial economic underwriting: n Technical review: Identify Section 42 compliance issues and confirm amount of eligible basis n Check projected operating information against NEF database n Check projected rents against Section 42 rent limitations n Assess reasonableness of development costs/fees n Review debt service requirement of identified financing sources n Prepare initial financial projections n Identify financing gap n Report on preliminary underwriting analysis n Provide agency online access to underwriting data, reports and spreadsheets

5 3. Full underwriting analysis and recommendation: n Perform market analysis n Perform construction review and site visits n Review insurance and environmental reports n Review developer experience/financial condition n Review contractor experience/financial condition n Review property manager experience/ financial condition n Review guarantor financial condition n Identify primary operating risks and mitigants: i. Identify reserve requirements ii. Identify required guarantees n Update financial projections n Prepare complete underwriting report with recommendations concerning: i. Size of subaward ii. Payment terms iii. Disbursement conditions iv. Collateral securing repayment/compliance v. Special conditions n Present underwriting findings to agency s credit committee n Environmental Phase I and (if needed) Phase II n Title and survey n Insurance n Organizational documents, resolutions and legal opinion n HUD documents (e.g., AHAP/HAP) 2. Prepare, negotiate and coordinate execution of subaward documentation, including: n Subaward commitment letter n Subaward Agreement n Security Agreement(s)/mortgage documents n Development Fee Agreement, Guaranty Agreement, Reserve Agreement 3. Obtain attorney opinion letter confirming that project meets Section 42 eligibility requirements and project documentation complies with Section 42 requirements (e.g., Extended Use Agreement) 4. Provide agency online access to all closing documentation, including executed Subaward Agreement and related documents * Closing services will be performed by experienced Section 42 attorneys engaged by NEF. n Provide agency online access to underwriting data, reports, spreadsheets and documentation III. Closing Services* 1. Prepare closing checklist and review and approve closing checklist/due diligence documentation, including: n All project financing documentation (other than subaward documents) n Construction contracts and completion guarantees n Payment and performance bonds, letters of credit and building permits

6 Schedule of services (continued) IV. Subaward Disbursement Services 1. Perform construction loan escrow services:* n Review sworn statements, lien waivers, architect s certificate and other construction draw documentation n Review date down title endorsements n Confirm payment conditions in subaward documents have been met n Requisition funds and approve disbursements 2. Perform on-site construction inspections for each draw* 3. Project lease-up/permanent loan conversion: n Review final permanent loan documentation n Perform on-site construction completion inspection n Review project rent roll and operating statements to confirm lease-up and debt service coverage levels n Provide agency with project lease-up/permanent loan conversion report 4. Provide agency online access to all disbursement documentation and records * Specific tasks may be performed by NEF utilizing the services of a title company construction escrow, construction inspection service or outside counsel. V. Post-Construction Asset Management Services 1. Base services: n Monitor initial marketing and lease-up efforts n Perform initial tenant file review and upload initial tenant file documentation for online access n Perform stabilized occupancy analysis n Conduct annual on-site inspections and tenant file reviews n Analyze quarterly reports on project operations, including unaudited financial information, rent rolls, sponsor certifications and annual operating budget; prepare quarterly risk ratings n Obtain and review annual project audited financial statements n Obtain and review annual project owner compliance certification for agency n Provide agency online access to all asset management data and documentation (no charge) 2. Perform asset stabilization and workout activities for troubled projects

7 Key Contacts: Joe Hagan President and CEO Judy Schneider Senior VP/Chief Credit Officer Greg Schuler Senior VP/General Counsel Design: Namaro Graphic Designs, Inc. Photography: Richard Drury (Orange Door)/Stone/Getty Images

8 National Equity Fund, Inc. 120 S. Riverside Plaza, 15th Floor Chicago, IL