Multifamily Transitional Housing Loan Guarantee Program

U.S. DEPARTMENT OF VETERANS AFFAIRS

PROGRAM OVERVIEW
Presented by Claude B. Hutchison, Jr.
July 2007

Presentation Overview

1. Program Description
2. Success Story: St. Leo Campus for Veterans
3. Applicant Eligibility
4. Application Process & Timeline
5. Questions and Answers

1. Program Description

General Authority (Public Law 107-95):

• 15 Loans up to $100M total
• This is a Loan, Not a Grant

Objectives:

• To develop 5,000 units of transitional housing for homeless veterans.
• To help homeless veterans transition to permanent housing by providing supportive services and requiring residents to remain sober and employed.
• To determine whether a federal loan guarantee program is an effective tool for facilitating the development of transitional housing for homeless veterans.

Program Concept:

• Multifamily transitional housing with on-site support services
• Acquisition, new construction, and/or rehabilitation
• Sobriety and employment requirements
• Charge reasonable rents
• Large projects (~100+ units)
• May include commercial space
• Include state or local government funding

Financing Information:

• Up to 80% loan to cost ratio
• Non-recourse Combination Construction/Permanent or Permanent Loan
• 30-40 year loan term
• Below market interest rate
• 20 year use restriction
• Minimum 5% equity contribution
• Maximum 12% developer fee
• Federal Financing Bank (FFB) disburses funds



2. Success Story: St. Leo Campus
• Received $4,900,000 from VA Loan Guarantee Program
• Sponsored by Catholic Charities of the Archdioceses of Chicago
• 141 Studio Units
• New Construction
• 15,000 sq. ft. VA Outpatient Clinic & Resource Center
• Total Project Cost: approximately $19.9M

Capital Funding Sources: The funding sources are displayed in a pie chart. 47% came from Tax Credit Equity, 24% came from the VA Loan Guarantee, 4% came from Grants, 4% came from Federal Home Loan Bank, 2% from Subordinate Debt, 4% from Deferred Developer Fees, 10% from Donations and 5% from Equity Contributions.

Operating Income Sources: (excluding support services)
The income sources are displayed in a pie chart. 36% came from Subsidized Rents (50 Project-Based Section 8 Vouchers), 31% came from Unsubsidized Rents and 33% came from Commercial Space.


3. Applicant Eligibility
• Demonstrated expertise in developing, owning, and operating multifamily real estate, including supportive and/or affordable housing
• Expertise in the provision of supportive services
• Strong working relationship with local housing and social service agencies
• Creditworthy
• No prior legal or regulatory infractions
• Single purpose entity


4. Application Process

Stage 1

• Applications accepted on a rolling basis
• Conditional commitment issued to qualified applicants at the end of the Stage 1 process
• Requirements include:
• Project Summary
• Site & Market Information
• Preliminary Development & Operating Budgets
• Preliminary Sources & Uses
• Team Information
• Initial Services Plan

Stage 2

• Applications accepted by invitation only
• Firm commitment issued to approved applicants at the end of the Stage 2 process
• Requirements include:
• Updated Stage 1 application materials
• Property Appraisal
• Third party reports

Application Timeline

The applicant submits their application, and the VA begins their stage 1 review. After approximately 2 months, the VA will notify the applicant of any questions or comments. The applicant makes any necessary revisions, and with those, the VA will complete their Stage 1 review after about 5 months. At this point, they either reject the application or will issue a conditional commitment and request that the Applicant submit a Stage 2 application. The applicant prepares and submits their stage 2 application, and the VA begins their stage 2 view, which can take another four or five months. During this review, the VA will notify the applicant of any questions or comments. Once they have received any revisions, they complete their review. When finished, and if the application is approved, the Loan Committee recommends funding action to the secretary.

 




5. Questions and Answers
FOR MORE INFORMATION PLEASE CONTACT US AT:
202-273-7462
http://www1.va.gov/homeless/page.cfm?pg=8