Florida Housing Finance Corporation Grove Park Apartments€¦ · 9800 Lennard Road Port St. Lucie...
Transcript of Florida Housing Finance Corporation Grove Park Apartments€¦ · 9800 Lennard Road Port St. Lucie...
Florida Housing Finance Corporation Credit Underwriting Report
Grove Park Apartments
Financing of Affordable Multifamily Developments with SAIL Funding to be used in
conjunction with Tax-Exempt Bond Financing and Non-Competitive Housing Credits
RFA 2014-103 (2014-301S)/2013-521C
Section A Report Summary
Section B Loan Conditions and HC Allocation Contingencies
Section B Supporting Information and Schedules
Prepared by
Seltzer Management Group, Inc.
Final Report
March 6, 2015
Exhibit B Page 1 of 44
SMG
_____________________________________________________________________________
MARCH 6, 2015
GROVE PARK APARTMENTS
TABLE OF CONTENTS
Page
Section A Report Summary
Recommendation A1-A7 Overview A8-A12 Uses of Funds A13-A19 Operating Pro Forma A20-A23
Section B
Loan Conditions and HC Allocation Contingencies B1-B6
Section C Supporting Schedules
Additional Development and Third Party Information C1-C9
Borrower Information C10-C13
Guarantor Information C14
Private Purchaser Information C15-C17
Syndicator Information C18-C19
General Contractor Information C20-C21
Property Manager Information C22
Exhibits 15 Year Pro Forma 1
Features/Amenities and Resident Programs 2 1-5
Completeness and Issues Checklist 3 1-2
HC Allocation Calculation 4 1-3
Exhibit B Page 2 of 44
SMG
_____________________________________________________________________________
MARCH 6, 2015
Section A
Report Summary
Exhibit B Page 3 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-1
MARCH 6, 2015
Recommendation
Seltzer Management Group, Inc. (“SMG” or “Seltzer”) recommends a State Apartment Incentive Loan (“SAIL”) in the amount of $4,200,000, an Extremely Low income (“ELI”) Loan in the amount of $1,575,000 and an annual Housing Credit allocation of $1,138,603 be awarded to Grove Park Apartments by Florida Housing Finance Corporation (“FHFC” or “Florida Housing”) for permanent and/or construction financing.
Address: City: Zip Code:
County: County Size:
Development Category: Development Type:
Construction Type:
Demographic Commitment: Elderly: Homeless: ELI: Units @ 40% AMIFarmworker or Commercial Fish Worker: Family: Link: Units
$861 $859 $206,1604 3 20 1506 60% $991 $132 $859 $861
$796
High HOME Rents
Low HOME Rents
4 3 3
$1,4004 3 6 1506 0%
$695
$574$900$439$695
$1,000$695
$75$75
$68$68
$690$1,000
9842 40% $592 $500
$796
1506 40% $661
2 2
1046 0%
2 112
3
1
$531$132
$888 $98$1,2003
3 2 91 1046 60% $8883 2 25
Net HC Rent
$362$576
$359$573
$438$694
2 1
219859210
2 1 1092 0%$790
$529
1092 60%$1,080
3
681849
2
84951
12 122
1
33
18
$796$1,200
$94$794$94$498
$87 $682
$769
$769
60%
Grove Park ApartmentsDevelopment Name:
9800 Lennard Road Port St. Lucie 34952
1111
1
$900$360
Bath Rooms
1
RD/HUD Cont Rents
Applicant Rents
$360$574
21NoNo
DEVELOPMENT & SET-ASIDES
Bed Rooms
1
849
$513$769
11
1
Utility Allow
$65$65
16118
Square Feet
681
Gross HC Rent
$427$641
$427$641
$79
$790
$796$1,080
$900$682$498$794
NoYes
644644644681
2013-521CProgram Numbers: 2014-301S
Medium
New Construction Garden Style Apartments
Wood Frame with Cementious Siding over Concrete Slab-on-Grade Foundation
St. Lucie
RFA 2014-103
Units
13 1046
0%60%
AMI%
40%
0%
60%0%
40%60%0%
40%60%
89511
895
$324,000
$10,800$8,184
$77,688$867,048
$9,480$1,080
$900$695$900$695$500
$900$690
$54,000$16,560
$12,960$19,044
$90,720
$2,006,160
$1,080$529
$1,260
$531
$1,260
$694
Appraiser Rents
$360$574$810$360$574$810$439$695
Annual Rental
Income
$4,320$41,328$9,720$4,308
$55,008$29,160$15,768
$149,904
CU Rents
$360$574$810$359$573$810$438
Exhibit B Page 4 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-2
MARCH 6, 2015
Buildings: Residential - Non-Residential - Parking: Parking Spaces - Accessible Spaces -
Set Asides:
60%
60%
Term (Years)
10
30
30
1560%% AMI
40% 30
# of Units% of Units40.0%Bonds 84
Program
10462
SAIL/ELI 10.0% 2170.0%
80.0%
1
147SAILLow Income Hous ing Tax Credits ("HC") 168
Absorption Rate units per month for months.
Occupancy Rate at Stabilization: Physical Occupancy Economic OccupancyOccupancy Comments
DDA?: QCT?:Site Acreage: Density: Flood Zone Designation:Zoning: Flood Insurance Required?:
XPUD -- Planned Unit Development
18.54 11.33No
25 8
86.1%96.0%
Yes No
Applicant/Borrower:General Partner 1:General Partner 2:General Partner 3:General Partner 4:General Partner 5:Limited Partner 1:Limited Partner 2:Limited Partner 3:Special Limited Partner:Construction CompletionGuarantor(s): Lennard Road Partners, Ltd. ("Applicant")
0.005%
Lennard Road Partners, Ltd.SAS Lennard Road Managers, L.L.C.
FL Capital Holdings Lennard Road, L.L.C.
FL Tax Lennard Road Managers, L.L.C.
DEVELOPMENT TEAM
0.005%% Ownership
99.99%
SAS Lennard Road Managers, L.L.C. ("LRM")Southern Affordable Services, Inc. ("SAS")
Operating DeficitGuarantor(s):
SAS Lennard Road Managers, L.L.C. ("LRM")Southern Affordable Services, Inc. ("SAS")
Lennard Road Partners, Ltd. ("Applicant")
Pvt Placement Purchaser:Developer:
Principal 1Principal 2Principal 3Principal 4
Fairview Bond Holdings, L.L.C. ("Fairview")
Michael J. SciarrinoW. Scott CulpPaul M. MissigmanDean C. Price, II
Atlantic Housing Partners, L.L.L.P. ("Atlantic")
General Contractor 1:General Contractor 2:Management Company:Const. Credit Enhancer:Perm. Credit Enhancer:Syndicator:Bond Issuer:Architect:Market Study Provider:Appraiser:
Slocum Platts Architects, P.A.Meridian Appraisal Group, Inc. ("Meridian")
CPG Construction, L.L.L.P. ("CPG")
Concord Management, Ltd. ("Concord")
Meridian
Bank of America Merril l LynchHousing Finance Authority of St. Lucie County ("STLCHFA")
Exhibit B Page 5 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-3
MARCH 6, 2015
157.71%
Market Rate/Market Financing LTV
96.37% 127.50% 133.43%
1.39 1.28 1.27 1.27
$0
53.76%
Loan to Cost
Restricted Rate/Market Financing LTV
Operating/Deficit Service Reserve
35.74% 11.55% 51.62% 58.49%
Period of Operating Expenses/Deficit Reserve in Months
0
Debt Service Coverage
71.13% 77.65% 87.99%
BOA Subordinate
LoanLender/Grantor
Loan TermAmortization
Lien Position Fourth
Amount
Underwritten Interest Rate
All In Interest Rate 4.906%
First
35 35 35 1842 0 0 0
1.32% 0.00% 0.00%
Second ThirdOther5th Source4th Source3rd Source2nd Source1st Source
PERMANENT FINANCING INFORMATION
4.906% 1.32% 0.00% 0.00%
$13,000,000 $4,200,000 $1,575,000
FHFC ELI
$2,500,000
STLCHFA Fairview FHFC SAIL
Year 15 Pro Forma Income Escalation RateYear 15 Pro Forma Expense Escalation Rate
2.00%3.00%
Land ValueAs-Is Value (Rehabilitation)
$13,490,000
Projected Net Operating Income (NOI) - Year 1 $900,666
$1,138,603
Bond Structure
Housing Credit Annual Allocation$1.03
$3,150,000$0
Restricted Rent/Favorable Financing Stablized Value $17,480,000
Fixed-Rate Draw-Down Tax-Exempt Bonds
$1,000,465
$3,934,307
$24,180,000
Deferred Developer Fee
Market Rent/Market Financing Stabilized ValueRestricted Rent/Market Financing Stablized Value
Projected Net Operating Income (NOI) - 15 Year
Housing Credit Syndication Price
Exhibit B Page 6 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-4
MARCH 6, 2015
Fourth Mortgage
CPG$5,061,861
$0 $0
$61,905$20,000
MMRB First Mortgage Loan
$36,374,225
$13,000,000$4,200,000$1,575,000$2,500,000
$0$36,374,225
$0$2,500,000
$3,934,307$1,128,929
$18,000,000$0
$5,161
Deferred Developer Fee Atlantic $18,735Deferred GC Fee
ELI Third MortgageBANA
Atlantic
Bridge Loan BANA $8,561,782 $0 $0HC Equity BANA $1,116,492 $11,164,918 $53,166
$173,211
Perm Loan/UnitPermanentConstructionLenderSource
CONSTRUCTION/PERMANENT SOURCES:
TOTAL
STLCHFA/FairviewFHFCFHFC
SAIL Second Mortgage Loan
Additional Equity
$7,500$11,905
$0
Strengths
1. Experience:
The Principals, the Developer, the General Contractor and the Management Company are experienced in multifamily Affordable Housing.
2. Financial Resources:
The Principals have the financial resources to develop, construct and operate the Subject Development.
Does the Development Team have any FHFC-Financed Developments on the Past Due/Non-Compliance Report?
Florida Housing’s Past Due Report dated February 13, 2015, does not reflect any past due items for the development team.
The Asset Management Noncompliance Report dated December 31, 2014 reflects Lexington Club at Vero, a CED Companies property, to be in noncompliance for exceeding the rent limitation (fees charged for storage).
Seltzer’s recommendations are subject to satisfactory resolution (as determined by FHFC) of any outstanding Past Due or Noncompliance Issues prior to loan closing.
Changes from the Application
1. Change in Ownership Structure:
Per Applicant’s FHFC Application, the Limited Partner was originally designated as SAS. Applicant revised the ownership structure such that there is a new Limited Partner, FL Capital Holdings Lennard Road, L.L.C., the Sole and Managing Member of which is SAS.
2. Change of HC Set-Asides:
Applicant filed an October 13, 2014, Petition for Waiver from Florida Administrative Code Rule 67-21.003(8) to change the HC Set-Asides from 100% to 80%. The Waiver was approved at the December 31, 2014, FHFC Board Meeting.
Exhibit B Page 7 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-5
MARCH 6, 2015
3. Change to Financing Structure:
a. Soft Pay Subordinate Mortgage Loan -- A new Source of Funds required to balance the Sources and Uses of Funds will be an interest-free loan of $2,500,000 from Bank of America, N.A. (“BANA”) per a November 12, 2014, Term Sheet. It will be due at the earlier of its 18-year maturity, project sale or project refinance.
b. STLCHFA Bonds – Fairview Bond Holdings, L.L.C. (“Fairview”), Winter Park, Florida, replaces BankUnited, Orlando, Florida, as the Private Placement Bond Purchaser.
c. The STLCHFA Bonds closed January 22, 2015 with a revised and non-traditional structure. The Tax-Exempt Bonds will have a 35-year maturity. Interest will be fixed for 17 years, with a base interest rate of 4.75% followed by a reset to the greater of 4.75% or 200 Basis Points (“bp”) over the 10-Year U.S. Treasury Rate. There will be an Issuer Fee of 12.5 bp and a Trustee Fee of $4,000 per annum. Following a $5,000,000 principal reduction at or prior to Stabilization, payments will be made to amortize the remaining $13,000,000 over 42 years, which conforms to Florida Housing MMRB Rule. Level payments typically seen in MMRB Loans will not apply to the Subject Development. The payments will be principal plus interest and fees, with the principal portion calculated as if the Bonds bear a base interest rate of 12.00%. The result will be to delay principal amortization to the latter years of the Permanent Period; there will be a “balloon” of $9,121,616 due at the 35-year maturity.
d. HC Equity – The HC Equity Syndicator for Grove Park was Bank of America Merrill Lynch, which replaced FL Tax Holdings 2010, Ltd. (an Atlantic affiliate). A Second Amended and Restated Agreement of Limited Partnership dated as of January 1, 2015, reflects Applicant receiving $11,164,918 in HC Equity vs. the $13,035,600 committed in the April 2, 2014, FL Tax Holdings 2010, Ltd., Commitment.
4. Change to Number of Residential Buildings for SAIL and ELI Loans:
The Subject Development’s SAIL and ELI Loan Application reflects 7 Residential Buildings, whereas its HC Application reflects 10 Residential Buildings. Grove Park’s Site Plan reflects 10. Applicant notified FHFC of the discrepancy February 17, 2015, and requested approval to change the number of Residential Buildings to 10 for the SAIL and ELI Loans.
5. Change to Unit Mix:
On February 15, 2015, Applicant requested FHFC approval for a change to the Subject Development’s Unit Mix. Instead of 30 two-bedroom/two-bath units, there will be 29 two-bedroom/one-bath units and one (1) two-bedroom/two bath unit.
The above changes do not negatively affect Seltzer’s recommendations.
Issues and Concerns
1. Fairview as Private Placement Bond Purchaser:
Fairview will purchase the STLCHFA Tax-Exempt Bond Issue in the amount of $18,000,000. The Principals of Fairview assert that Fairview is either an “Accredited Investor” under Regulation D of the Securities Act of 1933 or a “Qualified Institutional Buyer” as defined in Rule 144A under the Act.
Exhibit B Page 8 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-6
MARCH 6, 2015
SMG recommended STLCHFA require a statement from Applicant’s Tax Lawyer or its Certified Accountant stating Fairview qualifies as an “Accredited Investor” or “Qualified Institutional Buyer”. Fairview, Atlantic and the Subject Development have common Principals. Applicant requests that consideration be given to the financial experience of FL Tax Holdings, 2010, Ltd., and affiliates, FL Tax Holdings I, Ltd., and FL Tax Holdings II, Ltd., in the HC Equity financing of Affordable Housing. The Michael J. Sciarrino Revocable Trust dated December 2, 1994, as Amended and Restated is the General Partners of these entities. Limited Partners are CIS Housing Advisors, L.P., and FCH Partners II, Ltd. The Principals are Michael J. Sciarrino, W. Scott Culp, and Paul M. Missigman.
FL Tax Holdings 2010, Ltd., FL Tax Holdings I, Ltd., and FL Tax Holdings II, Ltd., are privately-held, non-regulated entities that do not provide audited financial statements. To demonstrate the liquidity needed to purchase the STLCHFA Tax-Exempt Bonds in the amount of $18,000,000, Applicant submitted a set of combined financial statements for FL Tax Holdings, 2010, Ltd., FL Tax Holdings I, Ltd., and FL Tax Holdings II, Ltd., that reflect assets consisting primarily of Partnership Receivables related to the financing of HC transactions. SMG is unable to verify sufficient Liquidity for the Subject Development when combined with other recent HFA Bond and HC transactions. The Principals of Fairview state they have sufficient liquidity and available lines of credit to enable them to fund the Tax-Exempt Bond purchase.
Mitigating Factors
1. Fairview as Private Placement Bond Purchaser:
Applicant provided SMG with certified Financial Statements dated December 31, 2014 for Fairview reflecting Cash and Equivalents of $20,561,305 supported by a December 31, 2014, Merrill Lynch Wealth Management Account Statement in like amount. In addition, Applicant states in general that the Principals of Atlantic have sufficient liquidity and/or lines of credit to fund the purchase of $18,000,000 in STLCHFA Bonds. SMG has experience with Atlantic and its entities successfully financing and constructing Affordable Housing properties with Florida HFA and FHFC funding.
Additional Information
1. Building Design and Garage Rental:
Grove Park Apartments will contain 210 units, of which 202 units will be “Garden-Style”. There will be 8 two-story, one-bedroom/one-bath townhome units the Developer terms “Carriage-Style” units. Each of the townhome units will be above two single-car enclosed garages (total of 16). Rental of garages will be optional for the residents of the townhomes. If a resident of a townhome forgoes the option to rent the garages, access to one or both may be secured by locks and management may make the garages available for rent by other residents.
2. Ad Valorem Real Estate Taxes:
SAS is a Florida Non-Profit Corporation that may apply for an ad valorem real estate tax exemption for Grove Park Apartments. Seltzer, however, has conservatively included real estate tax expense in its Operating Pro Forma. Should the real estate tax exemption be granted, the resulting savings would inure to the benefit of the partnership.
Exhibit B Page 9 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-7
MARCH 6, 2015
3. Total Development Cost:
The Total Development Cost (“TDC”) for Grove Park Apartments meets the TDC Limitation for RFA 2014-103.
Recommendation
SMG recommends FHFC award SAIL Second Mortgage and ELI Third Mortgage permanent financing in the amounts of $4,200,000 and $1,575,000, respectively, plus an annual HC allocation of $1,138,603 for construction/permanent financing of Grove Park Apartments.
Seltzer’s recommendation is based upon the assumptions detailed in the Report Summary (Section A) and Supporting Information and Schedules (Section C) of this Credit Underwriting Report. The reader is cautioned to refer to these sections for complete information.
This recommendation is only valid for six months from the date of the report. Prepared by: Reviewed by:
John A. Elsasser Cindy Highsmith Credit Underwriter Credit Underwriting Manager
Exhibit B Page 10 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-8
MARCH 6, 2015
Overview Construction Financing Sources
Source Lender ApplicantRevised
Applicant UnderwriterInterest
RateConstruction Debt Service
MMRB First Mortgage Loan STLCHFA/Fairview $18,000,000 $18,000,000 $18,000,000 4.897% $753,648SAIL Second Mortgage Loan FHFC $4,200,000 $0 $0 1.317% $0ELI Third Mortgage Loan FHFC $1,575,000 $0 $0 0.270% $0Soft-Pay Fourth Mortgage Loan BANA $0 $2,500,000 $2,500,000 0.000% $0Bridge Loan BANA $9,121,920 $8,569,199 $8,561,782 2.673% $195,672HC Equity BANA $2,607,120 $1,109,075 $1,116,492 N/A $0Deferred Developer Fee Atlantic $871,460 $5,068,297 $5,061,861 N/A $0Deferred General Contractor Fee CPG $0 $1,128,929 $1,128,929 N/A $0Additional Developer Equity Atlantic $0 $0 $5,161 N/A $0Total $36,375,500 $36,375,500 $36,374,225 $949,321 Tax Exempt Bonds
Fairview (a related entity) purchased the entire STLCHFA Tax-Exempt Bond Issue of $18,000,000 on January 22, 2015. The MMRB Issue features Fixed-Rate Draw-Down Tax-Exempt Bonds with a base interest rate of 4.75% plus an Issuer Fee of 12.5 bp and a Trustee Fee of $4,000 per annum (annualized to 2.2 bp). A $5,000,000 principal reduction will be made at Permanent Loan Conversion. The schedule above reflects the $18,000,000 MMRB Loan funded at an average of 57% during the Construction/Stabilization Phase.
Other Construction/Stabilization Phase Sources of Funds
Additional sources of funds proposed for Grove Park Apartments during the construction are a Soft Pay Subordinate Mortgage Loan of $2,500,000, a Bridge Loan in the amount of $8,561,782 and HC Equity funding of $1,116,492, all from BANA or its affiliates. To balance the Sources and Uses of Funds during the Construction/Stabilization Phase, Atlantic must defer all available Developer Fee in the amount of $5,061,861, CPG must defer 100% of the profit portion of the General Contractor Fee ($1,128,929) and Atlantic must inject Additional Developer Equity of $5,161.
The BANA Bridge Loan Promissory Note is dated January 22, 2015, in the amount of $8,561,782. Terms will be interest only for 24 months (maturing January 22, 2017), floating at the London InterBank Offered Rate (“LIBOR”) pus 250 bp. The schedule above reflects the Bridge Loan funded at an average of 57% utilizing a one-month LIBOR rate of 0.173% reported for February 13, 2015, by www.glogal-rates.com plus 250 bp.
Construction/Stabilization Period
An AIA Standard Form of Agreement between Owner and Contractor dated July 1, 2014, reflects CPG achieving Substantial Completion within 365 days (12 months). A CPG Production Schedule for the Construction Contract projects construction site work beginning in January 2015, with construction completion expected in November 2015. Delivery of the first residential building is scheduled for September 2015. Meridian’s October 3, 2014, Market Study reflects an Absorption Rate of 25 units per month following 25 pre-leased units based upon a coordinated pre-leasing effort. Stabilization at a 96%
Exhibit B Page 11 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-9
MARCH 6, 2015
Occupancy Rate should be reached in May 2016. SMG underwrites Grove Park Apartments assuming an 18-month Construction/Stabilization Phase.
Exhibit B Page 12 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-10
MARCH 6, 2015
Permanent Financing Sources
Source Lender ApplicantRevised
Applicant UnderwriterInterest
RateAmort.
Yrs.Term Yrs.
Annual Debt
MMRB First Mortgage Loan STLCHFA/Fairview $13,500,000 $13,000,000 $13,000,000 4.906% 42 35 $648,526SAIL Second Mortgage Loan FHFC $4,200,000 $4,200,000 $4,200,000 1.317% N/A 35 $55,330ELI Third Mortgage Loan FHFC $1,575,000 $1,575,000 $1,575,000 0.270% N/A 35 $4,253Soft-Pay Fourth Mortgage Loan BANA $0 $2,500,000 $2,500,000 0.000% N/A 18 $0HC Equity BANA $13,035,600 $11,090,751 $11,164,918 N/A N/A N/A $0Deferred Developer Fee Atlantic $4,064,900 $4,009,749 $3,934,307 N/A N/A N/A $0Total $36,375,500 $36,375,500 $36,374,225 $708,110 Tax Exempt Bonds
Per a November 17, 2014, Commitment and following a $5,000,000 principal reduction at or prior to Stabilization, Fairview will have $13,000,000 in STLCHFA Tax-Exempt Bonds to amortize. Nominal terms are a 35-year maturity with interest comprised of a 4.75% base rate plus Issuer Fees of 12.5 bp plus Trustee Fees of $4,000 per annum (annualized to 3.1 bp at Permanent Loan Conversion). An “all in” interest rate of 4.906% is represented in the above schedule at Permanent Loan Conversion, however the Trustee Fee component will grow slightly with each monthly payment. The base rate will be reset after 17 years to the greater of 4.75% or 200 bp over the 10-Year U.S. Treasury Rate.
Despite the nominal terms described above, Applicant’s monthly loan payments will amortize the remaining principal balance of $13,000,000 over 42 years. Level payments typically seen in MMRB Loans will not apply to the Subject Development. The payments will be principal plus interest and fees, with the principal portion calculated as if the Bonds bear a base interest rate of 12.00%. The result will be to delay principal amortization to the latter years of the Permanent Period. Annual Debt Service presented in the above schedule and in Exhibit 1 (the 15-Year Pro Forma) is from an Amortization Schedule provided by Applicant. There will be a “balloon” of $9,121,616 due at the 35-year maturity.
The MMRB First Mortgage Loan will be secured by a First Mortgage Loan on the Subject Development and a First Security Interest in all Personalty. Tax, Insurance and Replacement Reserve Escrow accounts will be required.
HC Equity
Applicant applied to FHFC for 4% HC. Based upon a Second Amended and Restated Agreement of Limited Partnership effective January 1, 2015, Bank of America Merrill Lynch syndicated HC for the Subject Development, with BANA as the Investor Limited Partner. BANA purchased a 99.99% interest in Lennard Road Group Partners, Ltd. (the Sole and Managing Member of FL Capital Holdings Lennard Road, L.L.C., the current Limited Partner), for the amount of $11,164,918, payable in accordance with the following schedule:
Exhibit B Page 13 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-11
MARCH 6, 2015
Capital Contributions AmountPercent of
Total When Due1st Insta l lment $1,116,492 10.0% Clos ing2nd Insta l lment $8,931,934 80.0% at temporary Certi ficates of Occupancy or March 1, 20163rd Insta l lment $558,246 5.0% Later of Lien-free construction Completion and receipt of 4th Insta l lment Form(s) 8609 or October 1, 20175th Insta l lment $558,246 5.0% Later of Permanent Loan Convers ion and Stabi l i zation6th Insta l lment (defined as 3 consecutive months at DSC of 1.15x) or October 1, 2017Total $11,164,918 100% Annual Tax Credits per Syndication Agreement: $1,084,189
Total HC Syndication: $10,840,806
* Syndication Percentage (Limited Partner interest in Applicant) 99.98%
Calculated HC Exchange Rate (per dollar): $1.030
HC Equity Proceeds Available During Construction: $1,116,492
*As stated above, the Investor Limited Partner purchased a 99.99% interest in Lennard Road Group Partners, Ltd., the Sole and Managing Member of the (existing) Limited Partner, FL Capital Holdings Lennard Road, L.L.C. (which, itself, had a 99.99% interest in Applicant). BANA, the Investor Limited Partner therefore ended up with a 99.98% interest in Applicant.
Banc of America CDC Special Holding Company, Inc., was made a new and second Special Limited Partner of Applicant; it has a 0.00% ownership interest.
SMG notes that the first HC Equity installment at 10.0% of total HC Equity does not meet Florida Housing’s minimum requirement of 15.0%. FHFC Rule, however, allows the 15.0% equity requirement to be met via an Equity Bridge Loan, said loan being provided by BANA in the amount of $8,561,782.
Other Permanent Sources of Funds
SAIL and ELI Loans:
Applicant applied for and received allocations from FHFC for a SAIL Loan in the amount of $4,200,000 and an ELI Loan in the amount of $1,575,000, both of which will be funded at Lien-Free Construction Completion. The SAIL Loan will be non-amortizing and will have an interest rate of 1.317% over the life of the loan, with payments based upon Available Cash Flow (“ACF”) as determined by FHFC. Annual payments of all applicable fees will be required. All accrued interest and principal will be due at maturity. The ELI Loan will be non-amortizing and have an interest rate of 0.270% over the life of the loan, with the principal forgivable at maturity provided the units for which the ELI Loan is awarded are targeted to ELI Households for the duration of the 30-year Compliance Period. After 15 years, however, all of the ELI Set-Aside Units may convert to serve residents at or below 60% of AMI and, if applicable, the Persons with a Developmental Disability Set-Aside Requirement will no longer apply. The SAIL and ELI Loans will have Second Mortgage and Third Mortgage Lien Positions, respectively. Both will have 35-year maturities and be co-terminus with the STLCHFA Tax-Exempt Bond Loan as requested by the Private Placement Bond Purchaser and permitted by the RFA and the Rule.
Exhibit B Page 14 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-12
MARCH 6, 2015
Soft Pay Subordinate Mortgage Loan:
Applicant executed a Soft Pay Subordinate Mortgage Loan to in the amount of $2,500,000. It will be interest-free, with the principal due at its 18-year maturity (April 1, 2033). The BANA Subordinate Mortgage Loan may be forgiven if the Subject Property has complied fully with the Affordable Housing Land Use Restriction and no event of default has occurred.
Deferred Developer Fee:
In order to balance the Sources and Uses of Funds during the Permanent Period, Atlantic will have to defer Developer Fee of $3,934,307 for payment from operations after all Loan Proceeds and HC Equity Capital Contributions have been received.
Exhibit B Page 15 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-13
MARCH 6, 2015
Uses of Funds
Applicant CostsRevised
Applicant CostsUnderwriters
Total Costs - CURCost Per
UnitHC Ineligible
Costs - CUR
Accessory BuildingsNew Rental Units $18,815,490 $18,815,490 $17,025,575 $81,074 $243,450Off-Site WorkRecreational Amenities $65,000 $310Site Work $1,529,915 $7,285Swimming PoolGeneral Conditions $1,128,929 $1,128,929 $1,128,929 $5,376Overhead $376,310 $376,310 $376,310 $1,792Profit $1,128,929 $1,128,929 $1,128,929 $5,376Furniture, Fixture, & Equipment $195,000 $929Total Construction Contract/Costs $21,449,658 $21,449,658 $21,449,658 $102,141Hard Cost Contingency $940,775 $940,775 $940,775 $4,480Other:
$22,390,433 $22,390,433 $22,390,433 $106,621 $243,450
CONSTRUCTION COSTS:
Total Construction Costs: Notes to the Actual Construction Costs:
1. SMG received and reviewed a copy of an AIA Standard Form of Agreement between Owner and Contractor with Applicant as “Owner” and CPG as “Contractor” dated July 1, 2014. The Construction Contract has a Guaranteed Maximum Price of $22,390,433. The General Contractor shall achieve Substantial Completion no later than 365 days from the date of commencement. The Construction Contract provides for Retainage of 10% until the Subject Development reaches 50% completion, at which time it will be reduced to 5%. Final payment will be made when the General Contractor has fully performed the Construction Contract (except for corrections and other requirements, if any, beyond final payment), the General Contractor has submitted a final accounting and the Architect has issued a Final Certificate for Payment.
2. Ineligible Construction Costs represents income producing assets:
a. 16 Enclosed Garages $ 90,000
b. 132 Washer Dryer Sets $ 72,600
c. Washer Dryer Hookups $ 80,850
d. Total $243,450
3. The General Contractor Fee includes General Conditions of $1,128,929, Overhead of $376,310 and Profit of $1,128,929, which collectively total 14.00% of the Construction Contract Amount less a Hard Cost Contingency of $940,775 within the Construction Contract and the General Contractor Fee, itself.
Exhibit B Page 16 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-14
MARCH 6, 2015
4. The Hard Cost Contingency of $940,775 represents 5.00% of Construction Hard Costs plus Furniture, Fixtures and Equipment to be purchased within the Construction Contract.
5. SMG received and reviewed a December 1, 2014, Plan and Cost Review (“PCR”) by ConstruVision, Inc. (“CVI”), Land O’Lakes, Florida, that was last revised on January 16, 2015. For a full discussion, see Plan and Cost Review within Section B of this Credit Underwriting Report for further information.
Exhibit B Page 17 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-15
MARCH 6, 2015
GENERAL DEVELOPMENT COSTS: Applicant CostsRevised
Applicant CostsUnderwriters
Total Costs - CURCost Per
UnitHC Ineligible
Costs - CUR
Accounting Fees $5,000 $5,000 $5,000 $24Appraisal $10,000 $10,000 $10,000 $48Architect's and Planning Fees $263,774 $219,604 $219,604 $1,046Architect's Fee - Green InitiativeArchitect's Fee - Landscape $33,350 $33,350 $159Architect's Fee - Site/Building DesignArchitect's Fee - Supervision $8,400 $8,400 $40Building Permits $50,000 $50,000 $50,000 $238Builder's Risk Insurance $52,540 $52,540 $52,540 $250Engineering Fees $200,000 $171,383 $171,383 $816Environmental Report $50,000 $36,153 $36,153 $172FF&E paid outside Construction ContractFHFC Administrative Fees $109,779 $109,779 $91,088 $434 $91,088FHFC Application Fee $3,000 $3,000 $3,000 $14 $3,000FHFC Credit Underwriting Fee $16,886 $16,886 $16,886 $80FHFC HC Compliance Fee (HC) $125,351 $125,351 $127,012 $605 $127,012FHFC Other Processing Fee(s)Impact Fee $2,349,480 $2,349,404 $2,349,404 $11,188Lender Inspection Fees / Const Admin $44,420 $54,125 $54,125 $258Green Building Cert. (LEED, FGBC, NAHB) $91,350 $107,100 $107,100 $510Home Energy Rating System (HERS)InsuranceLegal Fees $100,000 $85,000 $85,000 $405 $35,000Market Study $9,000 $9,000 $6,300 $30Marketing and Advertising $45,908 $5,000 $5,000 $24 $5,000Plan and Cost Review Analysis $1,800 $1,800 $9Property Taxes $50,000 $50,000 $50,000 $238Soil Test $15,000 $11,727 $11,727 $56Start-Up/Lease-up Expenses $40,908 $40,908 $195 $40,908Survey $45,000 $67,565 $67,565 $322Tenant Relocation CostsTitle Insurance and Recording Fees $30,000 $30,000 $30,000 $143 $15,000Traffic StudyUtility Connection Fees $974,610 $840,210 $840,210 $4,001Soft Cost Contingency $151,577 $110,063 $96,314 $459 $96,314Other: STLCHFA Underwriting Fee $13,749 $65Other:
$4,792,675 $4,603,348 $4,583,618 $21,827 $413,322Total General Development Costs:
Exhibit B Page 18 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-16
MARCH 6, 2015
Notes to the General Development Costs:
1. SMG engaged Meridian for the Appraisal at a cost of $6,000. The additional $4,000 is Developer’s allowance for Bank of America review fees.
2. Property and Liability Insurance is included in the Builders Risk policy.
3. FHFC Administrative Fee of $91,088 is based upon 8% of Seltzer’s $1,138,603 estimate of the Annual HC Allocation.
4. FHFC Application Fee of $3,000 is reflective of the Florida Housing’s 2014 HC Application Fee.
5. FHFC Underwriting Fees of $16,886 represent $12,790 for 4% HC plus $4,096 for SAIL and ELI Loan Underwriting.
6. FHFC Compliance Fee of $127,012 is based upon Florida Housing’s schedule for 2014 based upon 168 Rent-Restricted Units set aside for 30 years.
7. Applicant provided detailed schedules of Impact Fees totaling $2,349,404 and Utility Connection Fees totaling $840,210.
8. SMG Meridian performed a separate Market Study of Grove Park Apartments at cost of $6,000. In addition, Applicant paid $300 to Gardner Consulting Services, Inc., Orlando, Florida, for a St. Lucie County Rental Housing Study.
9. SMG engaged CVI for a PCR at a cost of $1,800.
10. Soft Cost Contingency budgeted at $96,314 is 2.15% of General Development Costs excluding the Soft Cost Contingency, itself.
11. The SMG Underwriting Fee for STLCHFA Bonds is $13,749.
12. Other General Development Costs are based upon Applicant’s estimates, which appear reasonable at this time.
Exhibit B Page 19 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-17
MARCH 6, 2015
Applicant Costs Revised Applicant Costs
Underwriters Total Costs - CUR
Cost Per Unit
HC Ineligible Costs - CUR
Bridge Loan Origination Fee $135,000 $85,727 $85,618 $408Bridge Loan Commitment FeeBridge Loan Closing CostsBridge Loan Interest $80,009 $286,560 $286,560 $1,365Bridge Loan Servicing FeeLocal HFA Bond Application FeeLocal HFA Bond Underwriting FeeLocal HFA Bond Subsidy Layering ReviewLocal HFA Bond Origination Fee $45,000 $45,000 $45,000 $214 $45,000Local HFA Bond Commitment FeeLocal HFA Bond Trustee Fee $7,500 $7,500 $7,500 $36 $7,500Local HFA Bond Credit Enhancement FeeLocal HFA Bond Rating/Structuring Fee $7,500 $7,500 $7,500 $36 $7,500Local HFA Bond Closing Costs $225,701 $175,000 $200,000 $952 $200,000Local HFA Bond Interest $473,385 $473,385 $473,385 $2,254Local HFA Bond Servicing FeeSAIL Application FeeSAIL Underwriting FeeSAIL Origination FeeSAIL Commitment Fee $57,750 $57,750 $275 $57,750SAIL Closing Costs $25,000 $25,000 $119 $25,000SAIL InterestSAIL Servicing Fee
$974,095 $1,163,422 $1,188,313 $5,659 $342,750
FINANCIAL COSTS:
Total Financial Costs:
Notes to the Financial Costs:
1. BANA’s Bridge Loan Origination Fee will be 1.00% of the $8,561,782 Bridge Loan.
2. Bridge Loan Interest of $286,560 was negotiated with BANA and placed in an Interest Reserve Account at MMRB Loan Closing. It is based upon Atlantic’s calculation of the Bridge Loan outstanding at an average rate of 73% for a period of 15 months at an interest rate of 3.65%.
3. STLCHFA has a Bond Issuer/Application Fee of $45,000.
4. Local HFA Bond Closing Costs (Costs of Issuance) represents Legal Fees relating to the STLCHFA Bond Issue (Bond Counsel, Issuer Counsel, Trustee Counsel Syndicator Counsel, Borrower Counsel and Bond Purchaser Counsel).
5. Bond Interest of $473,385 was negotiated with BANA and placed in an Interest Reserve Account at MMRB Loan Closing. It is Atlantic’s calculation of interest on the $18,000,000 of STLCHFA Draw-Down Bonds over a 13-month Construction/Stabilization Phase at an “all in” interest rate of 4.915% per a schedule provided to SMG.
6. SAIL Commitment Fee represents 1.00% of the SAIL Loan of $4,200,000 plus 1.00% of the ELI Loan of $1,575,000.
7. SAIL Closing Costs represent legal and other costs related to the SAIL and ELI Loans.
Exhibit B Page 20 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-18
MARCH 6, 2015
Applicant CostsRevised
Applicant CostsUnderwriters
Total Costs - CURCost Per
UnitHC Ineligible Costs - CUR
Brokerage Fees - BuildingBuilding Acquisition CostOther: Acquired InfrastructureOther:Other:
$0 $0 $0 $0 $0Total Non-Land Acquisition Costs:
NON-LAND ACQUISITION COSTS
Notes to the Non-Land Acquisition Costs:
None
Applicant CostsRevised
Applicant CostsUnderwriters
Total Costs - CURCost Per
UnitHC Ineligible
Costs - CUR
$28,157,203 $28,157,203 $28,162,364 $134,106 $999,522
Developer Fee $5,068,297 $5,068,297 $5,061,861 $24,104
Other: Brokerage Fees - LandConsultant FeesExcess Acquisition CostsExcess Land ValueGuaranty Fees
Other:$5,068,297 $5,068,297 $5,061,861 $24,104 $0
Developer Fee on Acquisition of Buildings
OTHER DEVELOPMENT COSTS
Development Cost Before Developer Fee and Land Costs
Developer Fee to fund Operating Debt Reserve
Total Other Development Costs:
Notes to the Other Development Costs:
1. SMG limits Developer Fee to $5,061,861, which does not exceed 18.00% of Development Costs, exclusive of Land Acquisition Costs and Reserves, if any.
Exhibit B Page 21 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-19
MARCH 6, 2015
Applicant CostsRevised
Applicant CostsUnderwriters
Total Costs - CURCost Per
UnitHC Ineligible Costs - CUR
Brokerage Fees - LandLand Acquisition CostsLand $3,150,000 $3,150,000 $3,150,000 $15,000 $3,150,000Land Lease PaymentLand Carrying CostsOther: Land Improvement CostsOther:Other:
$3,150,000 $3,150,000 $3,150,000 $15,000 $3,150,000Total Acquisition Costs:
LAND ACQUISITION COSTS
Notes to the Land Acquisition Costs:
1. Applicant provided SMG copies of:
a. An April 2, 2014, Purchase Agreement in the amount of $3,150,000 between Lennard Road Investment Partners, L.L.C. (Seller), and Applicant (Buyer), which are related entities.
b. November 6, 2014, Buyers’ and Sellers Closing Statements in the amount of the Purchase Price, $3,150,000.
c. A Special Warranty Deed dated November 6, 2014, reflecting the purchase that was recorded in the Official Records of St. Lucie County on November 12, 2014, at Book 3689, Page 1296.
2. The October 6, 2014, Meridian Appraisal concluded an “as is” land value of $3,150,000 for the Grove Park Apartments Development Site, which supports the Purchase Price.
3. Applicant provided SMG with a copy of First American Title Insurance Company Commitment for Title Insurance No. 5011612-2037-3267010 dated November 10, 2014, proposing to insure STLCHFA under a Loan Policy in the amount of $18,000,000 plus Applicant under an Owners Policy and BANA under a Loan Policy in amounts yet to be determined.
$36,375,500 $36,375,500 $36,374,225 $173,211 $4,149,522TOTAL DEVELOPMENT COSTS:
Exhibit B Page 22 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-20
MARCH 6, 2015
Operating Pro forma
ANNUAL PER UNIT$2,006,160 $9,553
$0 $0
$0 $0$42,840 $204$63,000 $300$34,020 $162$19,200 $91
$0 $0$2,165,220 $10,311
Economic Loss - Percentage: $0Phys ica l Vacancy Loss - Percentage: 4.0% ($86,609) ($412)Col lection Loss - Percentage: 1.0% ($21,652) ($103)
$2,056,959 $9,795
Ground Lease $0 $0Sub-Ground Lease $0 $0
$241,375 $1,149$52,500 $250
Other $0 $0
Management Fee - Percentage: 5.0% $102,848 $490$73,500 $350
$252,000 $1,200$215,670 $1,027
$39,900 $190$73,500 $350$42,000 $200
$0 $0$0 $0$0 $0$0 $0
$63,000 $300$1,156,293 $5,506
$900,666 $4,289
$648,526 $3,088Second Mortgage SAIL Loan $55,330 $263Third Mortgage ELI Loan $4,253 $20Soft-Pay Fourth Mortgage Loan $0 $0Fi fth Mortgage $0 $0
$0 $0$0 $0$0 $0
$708,110 $3,372$192,556 $917
OPERATING PRO FORMAGross Potentia l Renta l Income
Less :Gross Potentia l Income
Other Income:
Washer/Dryer Renta lsCable/Satel l i te IncomeAnci l lary Income-GaragesAlarm Income
INCO
ME
Rent Subs idy (ODR)
Anci l lary Income-Surface ParkingMiscel laneous
Payrol l Expenses
Real Estate Taxes
Res ident Programs
Net Operating Income
Contract Services
Debt Service PaymentsMMRB Firs t Mortgage Loan
Total Effective Gross RevenueFixed:
Securi tyOther-Pest Control
Reserve for ReplacementsTotal Expenses
EXPE
NSES
Uti l i tiesMarketing and Advertis ingMaintenance and RepairsGrounds Maintenance and Landscaping
Insurance
Variable:
Genera l and Adminis trative
Total Debt Service PaymentsCash Flow After Debt Service
DEBT
SER
VICE
Other Fees - Agency/Trustee/ServicerOther Fees Other Fees
Exhibit B Page 23 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-21
MARCH 6, 2015
1.391.281.271.271.27
DSC - MMRB First Mortgage Loan DSC - MMRB First + SAIL Second Mortgage Loans
DSC - Al l MortgagesDSC - Al l Mortgages and Fees
DSC - MMRB First + SAIL and ELI Mortgage Loans
Debt Service Coverage Ratios
56.2%86.1%Break-Even Ratio
Financial RatiosOperating Expense Ratio
Notes to the Operating Pro Forma and Ratios:
1. Applicant committed to a Set-Aside of 40% of Grove Park Apartments units (84 units) at 60% or less of AMI for the STLCHFA Bond Program. It has applied to FHFC for 4% HC, which will have an 80% Set-Aside at 60% or less of AMI. 20% of the Subject’s units will be designated Market Rent Units.
2. SMG underwrites rents for the Subject Development at the lesser of Maximum HC Rents published by FHFC less Utility Allowances as required by the HC Program, the Appraiser’s projections or Management expectations. Utility Allowances are derived from a December 1, 2014, Utility Provider Letter from Florida Power and Light (“FP&L) based upon unit sizes. Management of Grove Park Apartments will pay water/sewer for all residents as well trash disposal and pest control.
The Rent Roll is shown below:
Exhibit B Page 24 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-22
MARCH 6, 2015
MSA/County: Port St. Lucie / St. Lucie
Annual Rental
Income
$4,320$41,328$9,720$4,308
$55,008$29,160$15,768
$149,904
CU Rents
$360$574$810$359$573$810$438$694
Appraiser Rents
$360$574$810$360$574$810$439$695
$54,000$16,560
$12,960$19,044
$90,720
$2,006,160
$1,080$529
$1,260
$531
$1,260
$900$695$900$695$500
$900$690
$10,800$8,184
$77,688$867,048
$9,480$1,080 $324,000
Units
13 1046
0%60%
AMI%
40%
0%
60%0%
40%60%0%
40%60%
89511
895
644644644681
$641
$79
$790
$796$1,080
$900$682$498$794
1
Utility Allow
$65$65
16118
Square Feet
681
Gross HC Rent
$427$641
$427
Bed Rooms
1
849
$513$769
11
1111
1
$900$360
Bath Rooms
1
RD/HUD Cont Rents
Applicant Rents
$360$574
$769
$769
60%
$682
$796$1,200
$94$794$94$498
$87
$1,080
3
681849
2
84951
12 122
1
33
18
$790
$529
1092 60%2 1
219859210
2 1 1092 0%
Net HC Rent
$362$576
$359$573
$438$694
1
$531$132
$888 $98$1,2003
3 2 91 1046 60% $8883 2 25
$796
1506 40% $661
2 2
1046 0%
2 112
3
$1,000984
2 40% $592 $500
$574$900$439$695
$1,000$695
$75$75
$68$68
$690
$796
High HOME Rents
Low HOME Rents
4 3 3
$1,4004 3 6 1506 0%
$695
$861 $859 $206,1604 3 20 1506 60% $991 $132 $859 $861
Based upon analysis reflected in its October 6, 2014, Appraisal of the Subject Development, Meridian concluded Grove Park Apartments’ potential Gross Income as an exclusively Market-Rate Property (excluding rent premiums/miscellaneous income) would be $2,949,600, which is 147% of Potential Gross Rental Income for the Subject Development operating with a mixed Market-Rent/Affordable tenant base, which meets the 110% minimum required by FHFC Rule.
3. Premium Income:
a. Income from renting the 16 enclosed garages is projected at $19,200, which represents $100 per-month per-unit with a 100% penetration rate, a projection that is supported by Market Comparables and the Meridian Appraisal.
b. Washer/Dryer Rental Income is projected to be $63,000, based upon renting washers/dryers at $50 per month with a 50% penetration rate. This projection was supported by the Meridian Appraisal. Applicant indicated plans to charge residents who own or rent their appliances elsewhere for washer/dryer hook-ups, however Meridian excludes Washer/Dryer Hook-Up Income in its analysis as not supported by the market. SMG concurs with Meridian.
c. Gross Income from Cable TV is based upon a net monthly income of $18 per unit with a market penetration rate of 75%, a projection supported by Market Comparables and the Meridian Appraisal.
Exhibit B Page 25 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE A-23
MARCH 6, 2015
4. SMG projects Miscellaneous Income (i.e., Application Fees, Cancellation Fees, Late Fees, Forfeitures, Vending and Other Income) at slightly over $200 per unit per year, which is consistent with Market Comparables and the Meridian Appraisal.
5. A projected Vacancy Loss of 4.0% is supported by the Meridian Appraisal, with a Collection Loss Allowance at 1.0%.
6. As a Florida Not-For-Profit Corporation, SAS may apply for an exemption from Ad Valorem Real Estate Taxes. SMG has conservatively included Real Estate Tax Expense in the Operating Pro Forma). Should the exemption be granted by St. Lucie County, Applicant’s NOI will improve and Debt Service Coverage (“DSC”) will increase for all Mortgage Debt.
7. On July 1, 2014, Applicant entered into a Management Agreement with Concord, a related entity, as the on-site Property Manager and Leasing Agent for Grove Park Apartments. The Concord agreement reflects a Management Fee of 4.5% of Gross Income plus miscellaneous fees for tax preparation, credit application processing and collections. SMG underwrites the Subject Development at a More conservative and more typical 5.0%.
8. The de minimis cost of Resident Programs is included in General and Administrative costs.
9. SMG underwrites Replacement Reserves at $300 per-unit per-year, which amount is required by BANA and meets FHFC Rule.
10. Other Operating Expense projections are based upon Market Comparables, which are supported by the Meridian Appraisal.
11. A 15-year Income and Expense Projection reflecting income line items increasing at 2.00% per year and operating expense line items increasing at 3.00% per year is attached to this Credit Underwriting Report as Exhibit 1.
Exhibit B Page 26 of 44
SMG
MARCH 6, 2015
Section B
Loan Conditions
HC Allocation Recommendation and Contingencies
Exhibit B Page 27 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE B-1
MARCH 6, 2015
Special Loan Conditions
Seltzer Management Group, Inc. (“SMG” or “Seltzer”) SAIL recommendations are contingent upon review and approval of the following items by SMG and Florida Housing Finance Corporation (“FHFC”, “Florida Housing” or “Corporation”) at least 30 days prior to loan closing. Failure to receive approval of these items within this time frame may result in postponement of the closing date.
None
General Loan Conditions
Seltzer’s SAIL recommendations are contingent upon review and approval of the following items by SMG and FHFC at least 30 days prior to loan closing. Failure to receive approval of these items within this time frame may result in postponement of the closing date.
1. Borrower to comply with any and all recommendations noted in the December 1, 2014, Plan and Cost Review (“PCR”) by ConstruVision, Inc. (“CVI”), Land O’Lakes, Florida, that was last revised on January 16, 2015.
2. Signed and sealed survey, dated within 90 days of closing, unless otherwise approved by FHFC and its legal counsel, based upon the particular circumstances of the transaction. The Survey shall be certified to FHFC and its legal counsel, as well as the title insurance company, and shall indicate the legal description, exact boundaries of the Subject Development, easements, utilities, roads, and means of access to public streets, total acreage and flood hazard area, and any other requirements of FHFC.
3. Building permits and any other necessary approvals and permits (e.g., final site plan approval, water management district, Department of Environmental Protection, Army Corps of Engineers, Department of Transportation, etc.). Acceptable alternatives to this requirement are receipt and satisfactory review of a letter from the local permitting and approval authority that the above referenced permits and approvals will be issued upon receipt of applicable fees (with no other conditions), or evidence of 100% lien-free completion, if applicable. If a letter is provided, copies of all permits will be required as a condition of the first post-closing draw.
4. Final Sources and Uses of Funds itemized by source and line item, in a format and in amounts approved by the Loan Servicer. A detailed calculation of construction interest based upon the final draw schedule (see below), documentation of the closing costs, and draft loan closing statement must also be provided. The Sources and Uses of Funds schedule will be attached to the Loan Agreement as the approved Development Budget.
5. A final Construction Draw Schedule showing itemized sources and uses of funds for each monthly draw. SAIL and ELI Program Loan Proceeds shall be disbursed at Permanent Loan Conversion. The closing draw shall include appropriate backup and ACH wiring instructions.
6. At all times there will be undisbursed loan funds (collectively held by FHFC, the First Mortgage lender and any other source) sufficient to complete the Subject Development. If at any time there are not sufficient funds to complete the Subject Development, Borrower will be required to expend
Exhibit B Page 28 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE B-2
MARCH 6, 2015
additional equity on development costs or to deposit additional equity with FHFC, which is sufficient (in Florida Housing’s judgment) to complete the Subject Development before additional loan funds are disbursed. This condition specifically includes escrowing at closing all equity necessary to complete construction or another alternative acceptable to FHFC in its sole discretion.
7. Evidence of general liability, flood (if applicable), builder’s risk and replacement cost hazard insurance (as Certificates of Occupancy are received) reflecting FHFC as Loss Payee/Mortgagee, with coverages, deductibles and amounts satisfactory to FHFC.
8. If the development is not 100% lien-free completed at the time of initial Sail Loan funding, 100% Payment and Performance (“P&P”) Bonds or a Letter of Credit (“LOC”) in an amount not less than 25% of the construction contract is required in order to secure the construction contract between the general contractor and the Borrower. In either case, Florida Housing must be listed as co-obligee. The P&P bonds must be from a company rated at least “A-“by A.M. Best & Co. with a financial size category of at least FSC VI. Florida Housing and/or legal counsel must approve the source, amount(s) and all terms of the P&P bonds or LOC. If an LOC is utilized, the LOC must contain “evergreen” language and be in a form satisfactory to the Loan Servicer, FHFC, and its legal counsel.
9. Architect, Construction Consultant, and Borrower certifications on forms provided by Florida Housing will be required for both design and as-built with respect to Section 504 of the Rehabilitation Act, the Americans with Disabilities Act and Federal Fair Housing Act requirements, as applicable.
10. A copy of an Amended and Restated Limited Partnership Agreement reflecting purchase of the HC under terms consistent with the assumptions contained within this Credit Underwriting Report. The Amended and Restated Limited Partnership Agreement shall be in a form and of financial substance satisfactory to the Loan Servicer and to FHFC and its legal counsel.
11. Satisfactory resolution of any outstanding past due or noncompliance notices applicable to the development team by closing of the loan(s).
12. Payment of any outstanding arrearages to the Corporation, its legal counsel, its Loan Servicer or any agent or assignee of the Corporation for past due issues applicable to the development team (Applicant or Developer or Principal, Affiliate or Financial Beneficiary, as described in 67-21.0025(5) and 67-48.0075(5), F.A.C., of an Applicant or Developer).
13. During construction/rehabilitation, Developer is only allowed to draw a maximum of 50% of the total Developer fee (Developer Fee minus Acquisition Developer Fee), but in no case more than the payable Developer Fee, which is determined to be “Developer Overhead”. No more than 35% of “Developer Overhead” during construction/rehabilitation will be allowed to be disbursed at closing. The remainder of the “Developer Overhead” will be disbursed during construction/rehabilitation on a pro rata basis based upon the percentage of completion of the development, as approved and reviewed by FHFC and the Loan Servicer. The remaining unpaid Developer Fee shall be considered attributable to “Developer Profit” and may not be funded until the Subject development has achieved 100% Lien-Free Completion and Retainage has been released.
14. Final “as permitted” (signed and sealed) Site Plans, Building Plans and Specifications. The Geotechnical Report must be bound within the Final Plans and Specifications.
Exhibit B Page 29 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE B-3
MARCH 6, 2015
Seltzer’s recommendations are contingent upon the review and approval of the following items by FHFC and its legal counsel at least 30 days prior to loan closing. Failure to receive approval of these items within this time frame may result in postponement of the bond pricing date. For competitive bond sales, these items must be reviewed and approved prior to issuance of the Notice of Bond Sale.
1. Documentation of the legal formation and current authority to transact business in Florida for the Borrower, the general partner/principal(s)/manager(s) of the Applicant, the guarantors, and any limited partners of the Applicant.
2. Signed and sealed survey, dated within 90 days of closing, unless otherwise approved by Florida Housing, and its legal counsel, based upon the particular circumstances of the transaction. The Survey shall be certified to Florida Housing and its legal counsel, as well as the title insurance company, and shall indicate the legal description, exact boundaries of the Development, easements, utilities, roads, and means of access to public streets, total acreage and flood hazard area, and any other requirements of Florida Housing.
3. An acceptable updated Environmental Audit Report, together with a reliance letter to FHFC, prepared within 90 days of closing, unless otherwise approved by FHFC and legal counsel, based upon the particular circumstances of the transaction. Borrower to comply with any and all recommendations noted in the Environmental Assessment(s) and Update and the Environmental Review, if applicable.
4. Title insurance pro-forma or commitment for title insurance with copies of all Schedule B exceptions, in the amount of the MMRB Loan naming FHFC as the insured. All endorsements required by FHFC shall be provided.
5. Florida Housing and its legal counsel shall review and approve all other lenders closing documents and the limited partnership or other applicable agreement. Florida Housing shall be satisfied in its sole discretion that all legal and program requirements for the SAIL Program Loans have been satisfied.
6. Receipt of a legal opinion from Applicant’s legal counsel acceptable to FHFC addressing the following matters:
a. The legal existence and good standing of the Borrower and of any partnership or limited liability company that is the General Partner of the Borrower (the "GP") and of any corporation or partnership that is the Managing General Partner of the GP, of any corporate guarantor and any manager.
b. Authorization, execution, and delivery by the Borrower and the guarantors, of all Loan documents.
c. The Loan Documents being in full force and effect and enforceable in accordance with their terms, subject to bankruptcy and equitable principles only.
d. The Borrower's and the guarantor's execution, delivery and performance of the Loan Documents shall not result in a violation of, or conflict with, any judgments, orders, contracts, mortgages, security agreements or leases to which the Borrower is a party or to which the Subject Development is subject to the Borrower’s Partnership Agreement.
Exhibit B Page 30 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE B-4
MARCH 6, 2015
e. Such other matters as Florida Housing or its legal counsel may require.
7. Evidence of compliance with local concurrency laws.
8. UCC Searches for the Borrower and its partnerships, as requested by legal counsel.
9. Such other assignments, affidavits, certificates, financial statements, closing statements and other documents as may be reasonably requested by FHFC or its legal counsel in form and substance acceptable to FHFC or its legal counsel in connection with the Loan(s).
10. Any other reasonable conditions established by FHFC and its legal counsel.
Additional Loan Conditions
Seltzer’s SAIL recommendations are contingent upon the following additional conditions:
1. Compliance with all provisions of Sections 420.507(22) and 420.5087 Florida Statutes, RFA 2014-103, Rule Chapters 67-48, 67-60 and 67-53, F.A.C., Section 42, I.R.C., and any other State and Federal requirements.
2. If applicable, receipt and satisfactory review of Financial Statements from all Guarantors dated within 90 days of loan closing.
3. Guarantors are to provide a standard FHFC Construction Completion Guarantee, to be released upon Lien-Free completion as approved by the Loan Servicer..
4. Guarantors are to provide standard FHFC Operating Deficit Guarantees, to be released upon achievement of an average 1.15 Debt Service Coverage (“DSC”) on the combined Housing Finance Authority of St. Lucie County (“STLCHFA”) Permanent First Mortgage Loan and the Florida Housing SAIL Loan, 90% Occupancy and 90% of Gross Potential Rental Income, net of Utility Allowances, if applicable, for a period equal to twelve (12) consecutive months, all certified by an independent Certified Public Accountant (“CPA”). The calculation of the DSC Ratio shall be made by FHFC or the Loan Servicer. Notwithstanding the above, the Operating Deficit Guarantee shall not terminate earlier than three years following the final Certificate of Occupancy.
5. Guarantors are to provide the standard FHFC Environmental Indemnity Guarantee.
6. Guarantors are to provide the standard FHFC Guaranty of Recourse Obligations.
7. A mortgagee title insurance lender’s policy naming FHFC as the insured second and third mortgage holder in the amount of the Loan(s) is to be issued immediately after closing. Any exceptions to the title insurance policy must be acceptable to FHFC or its legal counsel. All endorsements that are required by FHFC are to be issued and the form of the title policy must be approved prior to loan closing.
8. Property tax and hazard insurance escrows are to be established and maintained by the First Mortgage Lender or the Loan Servicer. In the event the reserve account is held by Florida Housing’s loan servicing agent, the release of funds shall be at Florida Housing’s sole discretion.
Exhibit B Page 31 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE B-5
MARCH 6, 2015
9. Replacement Reserves in the amount of $300 per unit per year will be required to be deposited on a monthly basis into a designated escrow account, to be maintained by the First Mortgagee. Borrower may choose to fund a portion of the Replacement reserve at closing. The amount cannot exceed 50 percent of the required Replacement Reserves for two (2) years and must be placed in escrow at closing.
New construction developments shall not be allowed to draw during the first five (5) years after closing or until the establishment of a minimum balance equal to the accumulation of five (5) years of replacement reserves per unit. The Reserve shall be adjusted based upon a Capital Need Assessment (“CNA”) beginning no later than the 10th year after the first Residential Building receives a certificate of occupancy, a temporary certificate of occupancy or is placed in service, whichever is earlier (“Initial Replacement Reserve Date”). A subsequent CNA is required no later than the 15th year after the Initial Replacement Reserve Date and subsequent assessments are required every five years thereafter.
10. CVI, or other construction inspector acceptable for FHFC, is to act as Florida Housing’s inspector during the construction period.
11. A minimum of 10% retainage holdback on all construction draws until the Development is 50% completed, and 0% retainage thereafter is required. Retainage will not be released until successful completion of construction and issuance of all Certificates of Occupancy.
12. Satisfactory completion of a pre-loan closing compliance audit conducted by Florida Housing or its Loan Servicer, if applicable.
13. Acceptance by Borrower and execution of all documents evidencing and securing the SAIL and ELI Loan(s) in form and substance satisfactory to FHFC, including, but not limited to the Promissory Note, the Loan Agreement(s), the Mortgage and Security Agreement, the Land Use Restriction Agreement(s) and the Final cost certificate.
14. Closing of the MMRB First Mortgage Loan simultaneously with or prior to the closing the SAIL and ELI Loans.
15. Any other reasonable requirements of the Loan Servicer, FHFC or its legal counsel.
Exhibit B Page 32 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS PAGE B-6
MARCH 6, 2015
Housing Credit Allocation Recommendation
SMG recommends a preliminary annual Housing Credit (“HC”) allocation of $1,138,603. Please see the HC Allocation Calculation section of this report for further details.
Contingencies
Seltzer’s annual HC allocation recommendation is contingent upon the receipt and satisfactory review of the following items by SMG and FHFC by the deadline established in the Preliminary HC Allocation. Failure to submit these items within this time frame may result in forfeiture of the HC Allocation.
1. All items listed under the Special Conditions section of the Loan Conditions to Close, if applicable.
2. Receipt and satisfactory resolution (as determined by FHFC) of any outstanding past due items or noncompliance issues.
3. Any reasonable requirements of FHFC and/or SMG.
Exhibit B Page 33 of 44
Exhi
bit 1
Grov
e Pa
rk A
part
men
ts 1
5 Ye
ar In
com
e an
d Ex
pens
e Pr
ojec
tion
Year
1Ye
ar 2
Year
3Ye
ar 4
Year
5Ye
ar 6
Year
7Ye
ar 8
Year
9Ye
ar 1
0Ye
ar 1
1Ye
ar 1
2Ye
ar 1
3Ye
ar 1
4Ye
ar 1
5
$2,0
06,1
60$2
,046
,283
$2,0
87,2
09$2
,128
,953
$2,1
71,5
32$2
,214
,963
$2,2
59,2
62$2
,304
,447
$2,3
50,5
36$2
,397
,547
$2,4
45,4
98$2
,494
,408
$2,5
44,2
96$2
,595
,182
$2,6
47,0
86$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$4
2,84
0$4
3,69
7$4
4,57
1$4
5,46
2$4
6,37
1$4
7,29
9$4
8,24
5$4
9,21
0$5
0,19
4$5
1,19
8$5
2,22
2$5
3,26
6$5
4,33
1$5
5,41
8$5
6,52
6$6
3,00
0$6
4,26
0$6
5,54
5$6
6,85
6$6
8,19
3$6
9,55
7$7
0,94
8$7
2,36
7$7
3,81
5$7
5,29
1$7
6,79
7$7
8,33
3$7
9,89
9$8
1,49
7$8
3,12
7$3
4,02
0$3
4,70
0$3
5,39
4$3
6,10
2$3
6,82
4$3
7,56
1$3
8,31
2$3
9,07
8$3
9,86
0$4
0,65
7$4
1,47
0$4
2,30
0$4
3,14
6$4
4,00
8$4
4,88
9$1
9,20
0$1
9,58
4$1
9,97
6$2
0,37
5$2
0,78
3$2
1,19
8$2
1,62
2$2
2,05
5$2
2,49
6$2
2,94
6$2
3,40
5$2
3,87
3$2
4,35
0$2
4,83
7$2
5,33
4$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$2,1
65,2
20$2
,208
,524
$2,2
52,6
95$2
,297
,749
$2,3
43,7
04$2
,390
,578
$2,4
38,3
89$2
,487
,157
$2,5
36,9
00$2
,587
,638
$2,6
39,3
91$2
,692
,179
$2,7
46,0
22$2
,800
,943
$2,8
56,9
62
Econ
omic
Los
s - P
erce
ntag
e:Ph
ysic
al V
acan
cy L
oss -
Per
cent
age:
4.0%
($86
,609
)($
88,3
41)
($90
,108
)($
91,9
10)
($93
,748
)($
95,6
23)
($97
,536
)($
99,4
86)
($10
1,47
6)($
103,
506)
($10
5,57
6)($
107,
687)
($10
9,84
1)($
112,
038)
($11
4,27
8)Co
llect
ion
Loss
- Pe
rcen
tage
:1.
0%($
21,6
52)
($22
,085
)($
22,5
27)
($22
,977
)($
23,4
37)
($23
,906
)($
24,3
84)
($24
,872
)($
25,3
69)
($25
,876
)($
26,3
94)
($26
,922
)($
27,4
60)
($28
,009
)($
28,5
70)
$2,0
56,9
59$2
,098
,098
$2,1
40,0
60$2
,182
,861
$2,2
26,5
19$2
,271
,049
$2,3
16,4
70$2
,362
,799
$2,4
10,0
55$2
,458
,256
$2,5
07,4
22$2
,557
,570
$2,6
08,7
21$2
,660
,896
$2,7
14,1
14
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$241
,375
$248
,616
$256
,075
$263
,757
$271
,670
$279
,820
$288
,214
$296
,861
$305
,767
$314
,940
$324
,388
$334
,119
$344
,143
$354
,467
$365
,101
$52,
500
$54,
075
$55,
697
$57,
368
$59,
089
$60,
862
$62,
688
$64,
568
$66,
505
$68,
501
$70,
556
$72,
672
$74,
852
$77,
098
$79,
411
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0
Man
agem
ent F
ee -
Perc
enta
ge:
5.0%
$102
,848
$104
,905
$107
,003
$109
,143
$111
,326
$113
,552
$115
,823
$118
,140
$120
,503
$122
,913
$125
,371
$127
,878
$130
,436
$133
,045
$135
,706
$73,
500
$75,
705
$77,
976
$80,
315
$82,
725
$85,
207
$87,
763
$90,
396
$93,
108
$95,
901
$98,
778
$101
,741
$104
,793
$107
,937
$111
,175
$252
,000
$259
,560
$267
,347
$275
,367
$283
,628
$292
,137
$300
,901
$309
,928
$319
,226
$328
,803
$338
,667
$348
,827
$359
,292
$370
,070
$381
,173
$215
,670
$222
,140
$228
,804
$235
,668
$242
,738
$250
,021
$257
,521
$265
,247
$273
,204
$281
,400
$289
,842
$298
,538
$307
,494
$316
,719
$326
,220
$39,
900
$41,
097
$42,
330
$43,
600
$44,
908
$46,
255
$47,
643
$49,
072
$50,
544
$52,
060
$53,
622
$55,
231
$56,
888
$58,
594
$60,
352
$73,
500
$75,
705
$77,
976
$80,
315
$82,
725
$85,
207
$87,
763
$90,
396
$93,
108
$95,
901
$98,
778
$101
,741
$104
,793
$107
,937
$111
,175
$42,
000
$43,
260
$44,
558
$45,
895
$47,
271
$48,
690
$50,
150
$51,
655
$53,
204
$54,
800
$56,
444
$58,
138
$59,
882
$61,
678
$63,
529
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$63,
000
$63,
000
$63,
000
$63,
000
$63,
000
$63,
000
$63,
000
$64,
890
$66,
837
$68,
842
$70,
907
$73,
034
$75,
225
$77,
482
$79,
807
$1,1
56,2
93$1
,188
,063
$1,2
20,7
66$1
,254
,429
$1,2
89,0
81$1
,324
,750
$1,3
61,4
67$1
,401
,152
$1,4
42,0
06$1
,484
,061
$1,5
27,3
53$1
,571
,920
$1,6
17,7
99$1
,665
,029
$1,7
13,6
49$9
00,6
66$9
10,0
35$9
19,2
94$9
28,4
32$9
37,4
38$9
46,2
99$9
55,0
03$9
61,6
47$9
68,0
50$9
74,1
96$9
80,0
68$9
85,6
50$9
90,9
22$9
95,8
67$1
,000
,465
$648
,526
$649
,356
$650
,291
$651
,344
$652
,531
$653
,869
$655
,376
$657
,074
$658
,988
$661
,144
$663
,574
$666
,312
$669
,397
$672
,874
$676
,792
Seco
nd M
ortg
age
SAIL
Loa
n$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0$5
5,33
0Th
ird M
ortg
age
ELI L
oan
$4,2
53$4
,253
$4,2
53$4
,253
$4,2
53$4
,253
$4,2
53$4
,253
$4,2
53$4
,253
$4,2
53$4
,253
$4,2
53$4
,253
$4,2
53So
ft-P
ay F
ourt
h M
ortg
age
Loan
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0Fi
fth
Mor
tgag
e$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$0
$0$7
08,1
10$7
08,9
40$7
09,8
75$7
10,9
28$7
12,1
15$7
13,4
53$7
14,9
60$7
16,6
58$7
18,5
72$7
20,7
28$7
23,1
58$7
25,8
96$7
28,9
81$7
32,4
58$7
36,3
76$1
92,5
56$2
01,0
95$2
09,4
19$2
17,5
05$2
25,3
23$2
32,8
47$2
40,0
44$2
44,9
89$2
49,4
78$2
53,4
68$2
56,9
10$2
59,7
54$2
61,9
42$2
63,4
09$2
64,0
89
1.39
1.40
1.41
1.43
1.44
1.45
1.46
1.46
1.47
1.47
1.48
1.48
1.48
1.48
1.48
1.28
1.29
1.30
1.31
1.32
1.33
1.34
1.35
1.36
1.36
1.36
1.37
1.37
1.37
1.37
1.27
1.28
1.30
1.31
1.32
1.33
1.34
1.34
1.35
1.35
1.36
1.36
1.36
1.36
1.36
1.27
1.28
1.30
1.31
1.32
1.33
1.34
1.34
1.35
1.35
1.36
1.36
1.36
1.36
1.36
1.27
1.28
1.30
1.31
1.32
1.33
1.34
1.34
1.35
1.35
1.36
1.36
1.36
1.36
1.36
56.2
%56
.6%
57.0
%57
.5%
57.9
%58
.3%
58.8
%59
.3%
59.8
%60
.4%
60.9
%61
.5%
62.0
%62
.6%
63.1
%86
.1%
85.9
%85
.7%
85.5
%85
.4%
85.3
%85
.2%
85.1
%85
.2%
85.2
%85
.3%
85.4
%85
.5%
85.6
%85
.8%
Ope
ratin
g Ex
pens
e Ra
tioBr
eak-
Even
Rat
io
Rent
Sub
sidy
(ODR
)
Anci
llary
Inco
me-
Park
ing
Misc
ella
neou
s
Gro
und
Leas
eSu
b-G
roun
d Le
ase
Oth
er
Rese
rve
for R
epla
cem
ents
Debt
Ser
vice
Cov
erag
e Ra
tios
DSC
- MM
RB F
irst +
SAI
L Se
cond
Mor
tgag
e Lo
ans
DSC
- All
Oth
er M
ortg
ages
DSC
- All
Mor
tgag
es a
nd F
ees
Fina
ncia
l Rat
ios
DSC
- MM
RB F
irst +
SAI
L an
d EL
I Mor
tgag
e Lo
ans
Cash
Flo
w A
fter
Deb
t Ser
vice
DSC
- MM
RB F
irst M
ortg
age
Loan
DEBT SERVICE
Oth
er F
ees
Oth
er F
ees -
Age
ncy/
Trus
tee/
Serv
icer
Tota
l Deb
t Ser
vice
Pay
men
ts
MM
RB F
irst M
ortg
age
Loan
Oth
er F
ees
Tota
l Exp
ense
sN
et O
pera
ting
Inco
me
Util
ities
Mar
ketin
g an
d Ad
vert
ising
Mai
nten
ance
and
Rep
airs
Gro
unds
Mai
nten
ance
and
Lan
dsca
ping
Resid
ent P
rogr
ams
Debt
Ser
vice
Pay
men
ts
Payr
oll E
xpen
ses
Rent
Con
cess
ions
Alar
m In
com
eGr
oss P
oten
tial I
ncom
eLe
ss:
Tota
l Effe
ctiv
e Gr
oss R
even
ueFi
xed:
Real
Est
ate
Taxe
s
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Exhibit B Page 34 of 44
SAIL AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 2, PAGE 1
MARCH 6, 2015
EXHIBIT 2 Grove Park Apartments RFA 2014-103 (2014-301S)/2013-521C
Features/Amenities and Resident Programs
A. The Subject Development will consist of:
202 Garden Apartments located in 6 Residential Buildings plus 8 Townhome Apartments located in 4 Residential Buildings.
Unit Mix:
Twenty ( 20) One-Bedroom/One-Bath units:
Twenty-Nine ( 29) Two-Bedroom/One-Bath units:
One ( 1) Two-Bedroom/Two-Bath unit:
One Hundred Thirty-One (131) Three-Bedroom/Two-Bath units;
Twenty-Nine ( 29) Four-Bedroom/Three-Bath units of 1506 sq. ft., heated and cooled area
210 Total Units B. The Subject Development must meet all requirements of local, state & federal laws,
rules, regulations, ordinances, orders and codes, Federal Fair Housing Act as implemented by 24 CFR 100, the 2012 Florida Accessibility Code for Building Construction as adopted pursuant to Section 553.503, F.S., Section 504 of the Rehabilitation Act of 1973, and Titles II and III of the Americans with Disabilities Act (“ADA”) of 1990 as implemented by 28 CFR 35, incorporating the most recent amendments, regulations, and rules, as applicable.
C. The Subject Development must provide the following General Features:
1. Termite prevention
2. Pest control 3. Window covering for each window and glass door inside each unit
Exhibit B Page 35 of 44
SAIL AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 2, PAGE 2
MARCH 6, 2015
4. Cable or satellite TV hook-up in each unit and, if the Development offers cable or satellite TV service to the residents, the price cannot exceed the market rate for service of similar quality available to the Development’s residents from a primary provider of cable or satellite TV
5. Full-size range and oven in all units 6. At least two full bathrooms in all 3 bedroom or larger new construction units 7. Bathtub with shower in at least one bathroom in at least 90% of the new
construction non-Elderly units.
D. All new construction units that are located on an accessible route must have the following Accessibility, Adaptability, Universal Design and Visitability Features listed below. All rehabilitation units that are located on an accessible route must include as many of the features listed below as are structurally and financially feasible within the scope of rehabilitation work utilizing a capital needs assessment performed during the credit underwriting process:
1. Primary entrance door shall have a threshold with no more than a ½-inch rise
2. All door handles on primary entrance door and interior doors must have lever
handles 3. Lever handles on all bathroom faucets and kitchen sink faucets
4. Mid-point on light switches and thermostats shall not be more than 48 inches
above finished floor level
5. Cabinet drawer handles and cabinet door handles in bathroom and kitchen shall be lever or D-pull type that operate easily using a single closed fist
E. All new construction units must include the following General Features and Required
Green Building Features:
1. General Features in all Family Demographic Developments: Provide reinforced walls for future installation of grab bars that meet or exceed 2010 ADA Standards for Accessible Design around each tub/shower unit in each dwelling unit. At the request of and at no charge to a resident household, the
Exhibit B Page 36 of 44
SAIL AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 2, PAGE 3
MARCH 6, 2015
Subject Development shall purchase and install grab bars around each tub/shower unit in the dwelling unit. The product specifications and installation must meet or exceed 2010 ADA Standards for Accessible Design. The Subject Development shall inform a prospective resident that the Development, upon a resident household’s request and at no charge to the household, will install grab bars around a dwelling unit’s tub/shower unit, pursuant to the 2010 ADA Standards. At a minimum, the Subject Development shall inform each prospective lessee by including language in the Development’s written materials listing and describing the unit’s features, as well as including the language in each household’s lease.
2. Required Green Building Features in all Family and Elderly Demographic
Developments:
a. Low or No-VOC paint for all interior walls (50 grams per liter or less for flat paint; 150 grams per liter or less for non-flat paint)
b. Low-flow water fixtures in bathrooms – WaterSense labeled products or the following specifications
i. Toilets: 1.6 gallons/flush or less ii. Faucets: 1.5 gallons/minute or less
iii. Showerheads: 2.2 gallons/minute or less
c. Energy Star qualified refrigerator
d. Energy Star qualified dishwasher
e. Water heating minimum efficiency specifications (choose gas, electric, or gas tankless or boiler/hot water maker):
i. Gas:
30 gal = .63 EF; or 40 gal = .61 EF; or 50 gal = .59 EF; or 60 gal = .57 EF; or 70 gal = .55 EF; or 80 gal = .53 EF; or
Exhibit B Page 37 of 44
SAIL AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 2, PAGE 4
MARCH 6, 2015
ii. Electric:
30 gal = .94 EF; or 40 gal = .93 EF; or 50 gal = .92 EF; or 60 gal = .91 EF; or 70 gal = .90 EF; or 80 gal = .89 EF; or
iii. Tankless gas water heater: minimum .80 EF.
iv. Boiler or hot water maker:
<300,000 Btu/h: 85% Et (thermal efficiency); or 300,000 Btu/h or higher: 80% Et.
f. Energy Star qualified ceiling fans with lighting fixtures in the bedrooms
g. Air Conditioning (choose in-unit or commercial)
i. In-unit air conditioning: minimum 14 SEER; or
ii. Central chiller AC system – based upon size:
0-65 KBtuh: Energy Star certified; or >65-135 KBtuh: 11.3 EER/11.5 IPLV; or >135-240 KBtuh: 11.0 EER/11.5 IPLV; or >240 KBtuh: 10.6 EER/11.2 IPLV.
F. Applicant committed to provide the following Resident Programs:
1. After School Program for Children – This program requires Applicant or its Management Company to provide supervised, structured, age-appropriate activities for children during after school hours, Monday through Friday. Activities must be on-site.
2. Literacy Training – Applicant or its Management Company must make available, at no cost to the resident, literacy tutor(s) who will provide weekly literacy lessons to residents in private space on-site. Electronic media, if used, must be used in conjunction with live instruction. If the Subject Development consists of
Exhibit B Page 38 of 44
SAIL AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 2, PAGE 5
MARCH 6, 2015
Scattered Sites, this resident program must be provided on the Scattered Site with the most units.
3. Employment Assistance Program – Applicant or its Management Company must
provide, at no cost to the resident, a minimum of quarterly scheduled Employment Assistance Program workshops/meetings offering employment counseling by a knowledgeable employment counselor. Such a program includes employability skills workshops providing instruction in the basic skills necessary for getting, keeping, and doing well in a job. The instruction must include, but not be limited to, the following:
Evaluation of current job skills Assistance in setting job goals Assistance in development of and regular review/update of individualized
plan for each participating resident Resume assistance Interview preparation Placement and follow-up services
Exhibit B Page 39 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 3 – PAGE 1
MARCH 6, 2015
COMPLETENESS AND ISSUES CHECKLIST DEVELOPMENT NAME: Grove Park Apartments _________________
DATE: March 6, 2015 _____
In accordance with applicable Program Rule(s), the Applicant is required to submit the information required to evaluate, complete, and determine its sufficiency in satisfying the requirements for Credit Underwriting to the Credit Underwriter in accordance with the schedule established by the Florida Housing Finance Corporation (“Florida Housing” or “FHFC”). The following items must be satisfactorily addressed. “Satisfactorily” means that the Credit Underwriter has received assurances from third parties unrelated to the Applicant that the transaction can close within the allotted time frame. Unsatisfactory items, if any, are noted below and in the “Issues and Concerns” section of the Executive Summary.
CREDIT UNDERWRITING
REQUIRED ITEMS:
STATUS NOTE
Satis. /Unsatis.
1. The development’s final “as submitted for permitting” plans and specifications.
Note: Final “signed, sealed, and approved for construction” plans and specifications will be required thirty days before closing.
Satis.
2. Final site plan and/or status of site plan approval. Satis.
3. Permit Status. Satis.
4. Pre-construction analysis (“PCA”). Satis.
5. Survey. Satis.
6. Complete, thorough soil test reports. Satis.
7. Full or self-contained appraisal as defined by the Uniform Standards of Professional Appraisal Practice.
Satis.
8. Market Study separate from the Appraisal. Satis.
9. Environmental Site Assessment – Phase I and/or Phase II if applicable (If Phase I and/or II disclosed environmental problems requiring remediation, a plan, including time frame and cost, for the remediation is required). If the report is not dated within one year of the application date, an update from the assessor must be provided indicating the current environmental status.
Satis.
Exhibit B Page 40 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 3 – PAGE 2
MARCH 6, 2015
10. Audited financial statements for the most recent fiscal year ended or acceptable alternative as stated in the Rule for credit enhancers, Applicant, general partner, principals, guarantors and general contractor.
Satis.
11. Resumes and experience of Applicant, general contractor and management agent.
Satis.
12. Credit authorizations; verifications of deposits and mortgage loans. Satis.
13. Management Agreement and Management Plan. Satis.
14. Firm commitment from the credit enhancer or private placement purchaser, if any.
Satis.
15. Firm commitment letter from the syndicator, if any. Satis.
16. Firm commitment letter(s) for any other financing sources. Satis.
17. Updated sources and uses of funds. Satis.
18. Draft construction draw schedule showing sources of funds during each month of the construction and lease-up period.
Satis.
19. Fifteen-year income, expense, and occupancy projection. Satis.
20. Executed general construction contract with “not to exceed” costs. Satis.
21. HC ONLY: 15% of the total equity to be provided prior to or simultaneously with the closing of the construction financing.
Satis.
22. Any additional items required by the credit underwriter. Satis.
NOTES AND APPLICANT’S RESPONSES:
None
Exhibit B Page 41 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 4 – PAGE 1
MARCH 6, 2015
HC Allocation Calculation
$36,374,225Less Land Cost ($3,150,000)Less Federa l Funds $0Less Other Inel igible Cost ($999,522)Less Disproportionate Standard $0
$32,224,70379.94%
130.00%$33,488,311
3.40%$1,138,603
Section I: Qualified Basis Calculation
Development Cost
Total El igible Bas isAppl icable FractionDDA/QCT Bas is CreditQual i fied Bas isHous ing Credit PercentageAnnual Hous ing Credit Al location
Notes to the Qualified Basis Calculation:
1. Other Ineligible Costs consist of the cost of income-producing assets, Florida Housing Finance Corporation (“FHFC”) application, administration and compliance monitoring fees, MMRB permanent loan origination and closing fees, marketing/advertising costs, reserves and portions of title insurance and recording fees plus soft cost contingency.
2. Applicant committed to a set aside of 80.00%, however the floor fraction calculation is 79.94%. SMG therefore utilizes an Applicable Fraction of 79.94%.
3. The Subject Development is located in the Port St. Lucie MSA, a Difficult Development Area (“DDA”). A 130.00% Basis Credit has therefore been utilized.
4. Per Florida Housing Rule, 15 basis points are added to the HC percentage of 3.25% reported as of the June 2014 date of invitation to credit underwriting. For purposes of this report, a HC Credit Percentage of 3.40% is applied.
Exhibit B Page 42 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 4 – PAGE 2
MARCH 6, 2015
$36,374,225
Less Mortgages ($21,275,000)Less Grants $0
$15,099,225
99.98%$1.03
$14,662,374$1,466,237
Section II: Gap Calculation
Total Development Cost (Including Land and Inel igible Costs )
Equity Gap
Percentage to Investment PartnershipHC Syndication PricingHC Required to Meet GapAnnual HC Required
Notes to the Gap Calculation:
1. Mortgages are the $13,000,000 Housing Finance Authority of St. Lucie County MMRB First Mortgage Loan, the $4,200,000 FHFC SAIL Second Mortgage Loan, the $1,575,000 FHFC ELI Third Mortgage Loan and the $2,500,000 Bank of America, N.A., “Soft-Pay” Fourth Mortgage Loan.
2. HC Syndication Pricing and Percentage to Investment Partnership are based upon a Second Amended and Restated Agreement of Limited Partnership effective January 1, 2015.
$32,224,703Plus Land Cost $3,150,000
$35,374,703
$18,000,000Less Debt Service Reserve $0Less Proceeds Used for Costs of Issuance $0Plus Tax-exempt GIC earnings $0
$18,000,000
50.88%
Tax-Exempt Bond Amount
Tax-Exempt Proceeds Used for Bui lding and Land
Proceeds Divided by Aggregate Bas is
Section III: Tax-Exempt Bond 50% Test
Total Depreciable Cost
Aggregate Bas is
Notes to 50% Test:
1. SMG estimates the Housing Finance Authority of St. Lucie County MMRB loan amount to be 50.88% of depreciable development costs plus land acquisition costs. If, at the time of Final Cost Certification, the Tax-Exempt MMRB Loan Amount is less than 50%, developer fees will have to be reduced by an amount to ensure compliance with the 50% Test. That may, in turn, result in a reduction to HC Equity.
Exhibit B Page 43 of 44
SAIL, ELI AND HC PROGRAMS CREDIT UNDERWRITING REPORT SMG
GROVE PARK APARTMENTS EXHIBIT 4 – PAGE 3
MARCH 6, 2015
$1,372,237$1,138,603$1,466,237
$1,138,603
HC per Qual i fied Bas is
Section IV: Summary
HC per Appl icant Request
HC per Gap Calculation
Annual HC Recommended
Notes to the Summary:
1. The Annual HC Recommended is based upon the Qualified Basis Calculation.
Exhibit B Page 44 of 44