Florida Housing Finance Corporation...Florida Housing Finance Corporation Amended Credit...

Florida Housing Finance Corporation

Amended Credit Underwriting Report

Spring Manor

MMRB, SAIL, ELI and 4% Non‐Competitive Housing Credit Programs

2014‐136B

RFA 2014‐111 (2014‐412S)

Section A Report Summary

Section B Loan Conditions and HC Allocation Contingencies

Section C Supporting Information and Schedules

Prepared by

Seltzer Management Group, Inc.

Final Amended Report

March 6, 2015, as amended on April 23, 2015

Exhibit F of 47

SMG

_____________________________________________________________________________

DATED MARCH 6, 2015, AS AMENDED APRIL 23, 2015

SPRING MANOR

TABLE OF CONTENTS

Page Section A

Report Summary Recommendation A1‐A8

Overview A9‐A13 Uses of Funds A14‐A21 Operating Pro Forma A22‐A24

Section B Loan Conditions and HC Allocation Contingencies B1‐B7

Section C

Supporting Schedules Additional Development and Third Party Information C1‐C13 Borrower Information C14‐C16 Guarantor Information C17‐C18 DUS Lender Information C19 Syndicator Information C20 General Contractor Information C21‐C22 Property Manager Information C23

Exhibits

15 Year Pro Forma 1 Features and Amenities and Resident Programs (2014‐136B) 2 1‐2 Features and Amenities and Resident Programs (2014‐412S)) 3 1‐4 Completeness and Issues Checklist 4 1‐2 HC Allocation Calculation 5 1‐3

Exhibit F of 47

SMG

_____________________________________________________________________________


Section A

Report Summary

Exhibit F of 47

MMRB, SAIL, ELI AND HC CREDIT UNDERWRITING REPORT SMG

SPRING MANOR A-1


Recommendation

Seltzer Management Group, Inc. (“SMG” or “Seltzer”) recommends the approval of this amended report which updates and revises certain terms and provisions of the credit underwriting report dated March 6, 2015, as amended SMG recommends a Multifamily Mortgage Revenue Bond (“MMRB” or “Bond”) tax exempt loan in the amended amount of $9,250,000 to be paid off at the time the development is placed‐in‐service, a State Apartment Incentive Loan Program (“SAIL”) loan in the amount of $4,398,240, an Extremely Low Income Loan Program (“ELI”) loan in the amount of $233,600 and a Housing Credit (“HC”) allocation in the annual amount of $667,468 be awarded to this development by Florida Housing Finance Corporation (“FHFC” or “Florida Housing”). All terms and provisions not amended in this report remain unchanged from the March 6, 2015 credit underwriting report the FHFC Board approved at the March 20, 2015 FHFC Board meeting.

Address: City: Zip Code:

County: County Size:

Development Category: Development Type:

Construction Type:

Demographic Commitment: Elderly: Homeless: ELI: Units @ 45% AMI

Farmworker or Commercial Fish Worker: Family: Link: Units

High

HOME

Rents

Low

HOME

Rents

$678

$542

$730

$730

$630

$749

$749

$678

$86

$96

$96

$678

$678

$730

$730

$86

$86

14

25

4.0 2.0

4

820

998

998

9

2 45%

3.0

3.0

Net HC

Rent

$315

$446

$446

$385

$542

$542

$448

$6301.5

2

138136160

4.0 2.0

2.04.0

1.5

60%

2.0 1.0

3.0 1.5

$749 $678

$132

$810

$810

$630

$475

$726

$607 $749

$678

$96

$132

Spring ManorDevelopment Name:

2833 NE 7th Street Ocala 34470

1.0

1.0

1.0

2.0

1.0

$446

$678

Bath

Rooms

1.0

RD/HUD

Cont

Rents

$620

$620

Applicant

Rents

$620

$620

48

16

No

No

DEVELOPMENT & SET‐ASIDES

Bed

Rooms

1.0

998

$628

$544

$726

1.0

1.0

2.0

Utility

Allow

$77

$77

$77

10

20

2

22

48

Square

Feet

820

Gross HC

Rent

$392

$523

$523

$471

$628

$132

$678

No

Yes

682

682

682

820

2014‐136BProgram Numbers: 2014‐412S

Medium

Acquisition/Rehab Garden Style Apartments

Wood frame with Vinyl siding and brick veneer on slab on grade foundation

Marion

RFA 2014‐111

Units

60%

AMI%

45%

60%

60%

60%

45%

60%

60%

45%

60%

1171

1171

2 1171 $16,272

$630

$749

$749

$678

$630

$749

$749

$1,296,312

Appraiser

Rents

$620

$620

$446

$678

$678

$542

$730

$730

CU Rents

$620

$446

$678

$678

$542

$730

$730

$620

Annual

Rental

Income

$74,400

$148,800

$10,704

$178,992

$390,528

$13,008

$122,640

$219,000

$68,040

$17,976

$35,952

Buildings: Residential ‐ Non‐Residential ‐

Parking: Parking Spaces ‐ Accessible Spaces ‐ 28

120

243

Exhibit F of 47


SPRING MANOR A-2


Set Asides:

70.0%

70.0%

30.0%

Program # of Units% of Units

60%

MMRB and HC 3045%

% AMI

30.0% 48

45%

60%

Term (Years)

30

50

50

MMRB and HC

SAIL/ELI

SAIL

112

48

112

Person with a Disabling Condition Set‐Aside Commitment: The proposed Development must set aside 10 percent of the total units for Persons with a Disabling Condition that are referred by a supportive services lead agency that serves Persons with a Disabling Condition and are designated by the Corporation. As of the place‐in‐service date for the proposed Development, this requirement will be deemed to be met with any existing units occupied by residents that do not qualify as a Person with a Disabling Condition; however, this set‐aside commitment must be met as new units are rented after the place‐in‐service date.

Some or all of the units set aside to meet this 10 percent Person with a Disabling Condition set‐aside commitment can be the same units that are set aside to meet the ELI Set‐Aside commitment; however, at least 50 percent of the Development’s dwelling units set aside for the Person with a Disabling Condition set‐aside commitment shall be ELI Set‐Aside units.

Absorption Rate units per month for months.

Occupancy Rate at Stabilization: Physical Occupancy Economic Occupancy

Occupancy Comments

DDA?: QCT?:

Site Acreage: Density: Flood Zone Designation:

Zoning: Flood Insurance Required?:

95.00%

Yes No

R3 ‐ Multifamily Residential

Current occupancy=89.1% due to fire damaged units

9.23 17.3421

No

0 0

X

94.08%

Exhibit F of 47


SPRING MANOR A-3


Applicant/Borrower:

General Partner 1:Limited Partner 1:

Special Limited Partner:

Construction Completion

Guarantor(s):

Operating Deficit

Guarantor(s):

Pvt Placement Purchaser:

Developer:

Principal 1

J. David Page

J. David Page

99.9900%

DEVELOPMENT TEAM

SP SM Apartments LLC

SP SM Manager LLC

J. David Page

SP SM Manager LLC

SP & MS LLC

SP & MS,LLC


Southport Development, Inc. d/b/a in Florida as Southport Development Services, Inc.


SP SM Manager LLCJ. David Page

% Ownership

0.0100%

General Contractor 1:

General Contractor 2:

Management Company:

Const. Credit Enhancer:

Perm. Credit Enhancer:

Syndicator:

Bond Issuer:

Architect:

Market Study Provider:

Appraiser:

DEVELOPMENT TEAM (cont)

Freddie Mac

Architectonics Studio, Inc.

Vaughn Bay Construction, Inc.

Cambridge Management, Inc.

Novogradac & Company LLP

Freddie Mac

Raymond James Tax Credit Funds, Inc.

FHFC

Novogradac & Company LLP

Exhibit F of 47


SPRING MANOR A-4


Debt Service Coverage

Second Third

4.95% 1.00% 0.00% 0.00% 0.00% 0.00%

0 0

$5,750,000 $4,398,240 $233,600

15.50 0.00 0.00 0.00

35.00

FHFC ELI

1.00% 0.00% 0.00%

$0.00

0

$0.00 $0.00

Lender/Grantor

Loan Term

Amortization

Lien Position

Amount

Underwritten Interest

Rate

All In Interest Rate 4.95%

First

0.00% N/A

15.00 15.50

Other5th Source4th Source3rd Source2nd Source1st Source

PERMANENT FINANCING INFORMATION

77.5% 79.3%

Loan to Cost

Restricted Market

Financing LTV

Operating/Deficit

Reserve

30.3% 23.2% 1.2%

Period of Operating

Expenses/Deficit

Reserve in Months

4.63

Market Rate/Market

Financing LTV

1.43 1.26 1.26

$280,000.00

43.9%

143.8% 253.7% 259.5%

OGC/Freddie

MacFHFC SAIL

$4,000,000

Year 15 Pro Forma Income Escalation Rate

Year 15 Pro Forma Expense Escalation Rate

2.00%

3.00%

Land Value

As‐Is Value

Projected Net Operating Income (NOI) ‐ Year 1 $493,342

$667,468

Bond Structure

Housing Credit Annual Allocation

$1.01

$800,000

$7,900,000

Rent Restricted Favorable Financing Stablized Value $8,900,000

Cash Collateralized Tax Exempt Fixed Rate

$525,695

$1,742,396

$13,100,000

Deferred Developer Fee

Market Rent/Market Financing Stabil ized Value

Rent Restricted Market Financing Stablized Value

Projected Net Operating Income (NOI) ‐ 15 Year

Housing Credit Syndication Price

Exhibit F of 47


SPRING MANOR A-5


$2,583,976

$35,938

$18,981,198

$5,750,000

$4,398,240

$233,600

$0

$18,981,198

$4,398,240

$233,600

$1,742,396

$5,750,000

$328,362

Deferred Developer Fee Southport $10,890

Second Mortgage

Third Mortgage FHFC ELI

Borrower

HC Equity RJTCF $5,687,020 $6,856,962 $42,856

$118,632

Perm Loan/UnitPermanentConstructionLenderSource

CONSTRUCTION/PERMANENT SOURCES:

TOTAL

FHFC/OGC/Freddie Mac *

FHFC SAIL

First Mortgage

NOI

$27,489

$1,460

$0

* The Construction Sources total of $18,981,964 does not include the $9,250,000 MMRB.

Changes from the Application:

COMPARISON CRITERIA YES NO

Does the level of experience of the current team equal or exceed that of the team described in the application?

X

Are all funding sources the same as shown in the Application? 1

Are all local government recommendations/contributions still in place at the level described in the Application?

X

Is the Development feasible with all amenities/features listed in the Application? X

Do the site plans/architectural drawings account for all amenities/features listed in the Application?

X

Does the Applicant have site control at or above the level indicated in the Application? X 2

Does the Applicant have adequate zoning as indicated in the Application? X

Has the Development been evaluated for feasibility using the total length of set‐aside committed to in the Application?

X

Have the Development costs remained equal to or less than those listed in the Application?

3

Is the Development feasible using the set‐asides committed to in the Application? X

If the Development has committed to serve a special target group (e.g. elderly, large family, etc.), do the development and operating plans contain specific provisions for implementation?

X

HOME ONLY: If points were given for match funds, is the match percentage the same as or greater than that indicated in the Application?

N/A

HC ONLY: Is the rate of syndication the same as or greater than that shown in the Application?

X

Exhibit F of 47


SPRING MANOR A-6


Is the Development in all other material respects the same as presented in the Application?

X

The following are explanations of each item checked “No” in the table above:

1. The first mortgage source of funds in the Application reflects a first mortgage from Oak Grove Capital as DUS lender for Freddie Mac (“OGC/Freddie”) for construction/permanent financing in the amount of $8,750,000. Borrower subsequently provided a revised proposal in the amount of $5,750,000.

The Application reflects a funding request for FHFC‐issued MMRB in the amount of $8,750,000. Borrower has requested a $500,000 increase in the FHFC‐issued MMRB to equal a total request of $9,250,000.

Borrower provided a MMRB Terms Memorandum (“Terms Memo”) from RBC Capital Markets (“RBC”) indicating that the bonds will be marketed to investors via a public offering. The Terms Memo also indicates the MMRB will mature on October 1, 2016 and are subject to a first optional redemption at par on or after April 1, 2016. The Bonds will be cash collateralized by a taxable immediate funding, permanent first mortgage loan through OGC/Freddie Mac and $3,500,000 in FHFC SAIL proceeds. Borrower anticipates the MMRB will be redeemed when the development is placed in service.

2. Borrower provided a Purchase and Sale Agreement (the “PSA”) with an effective date of September 17, 2014 between, Spring Manor Investors, LLC as Seller and SP SM Apartments LLC as Purchaser. The PSA requires closing by April 30, 2015. Borrower is in the process of obtaining an Amendment to the PSA to extend the closing date. Seltzer’s recommendation is contingent upon receipt and satisfactory review of an Amendment to the PSA extending the loan term..

3. Development costs have increased from $17,624,855 in the application to $18,981,198 or approximately 5.8% primarily due to increases in financial costs related to the current first mortgage, the addition of an operating deficit reserve, and an increase in developer fees.

These changes have no substantial material impact to the MMRB/HC recommendation for this development.

Does the Development Team have any FHFC Financed Developments on the Past Due/Noncompliance Report?

Florida Housing’s Past Due Report dated April 7, 2015 reflects the following past due item(s): None

The Asset Management Noncompliance Report dated February 13, 2015 reflects the following noncompliance issues: None

This recommendation is subject to satisfactory resolution (as determined by FHFC) of any outstanding past due or noncompliance issues prior to closing.

Strengths:

1. The subject’s renovation will be conducted with its existing residents in place and little turnover is anticipated due to the fact that the U.S. Department of Housing and Urban Development (“HUD”)

Exhibit F of 47


SPRING MANOR A-7


has committed to reserve the Project‐Based Rental Assistance (“PBRA”) currently being received for 145 of the subject units for an additional 20 years.

2. Although the Borrower and general partner are newly formed, the developer, contractor and management company along with their principal have sufficient experience and financial resources to develop, construct and operate the proposed development.

3. The scope of rehabilitation is significant and will enhance the subject development enabling it to continue to compete with new and/or existing affordable housing rental stock in the primary market area (“PMA”).

4. The Appraiser has opined that upon rehabilitation/stabilization, the development will maintain 95% occupancy with an additional 2% collection loss for a net occupancy of 93%.

Other Considerations: None

Mitigating Factors: None

Waiver Requests/Special Conditions: None

Additional Information:

1. Cash Collateralized MMRB: The FHFC tax‐exempt MMRB will be cash collateralized and repaid at the completion of rehabilitation when the development is placed‐in‐service. This is expected to occur within twelve (12) months of issuance. FHFC is not involved in the permanent first mortgage loan which will be provided by OGC via a Freddie Mac taxable fixed rate loan.

2. Survey: Pursuant to an interactive draft Boundary and ALTA/ACSM Land Title Survey coordinated by CDS Commercial Due Diligence Services (“CDS”), dated February 3, 2015, with field work actually performed January 6, 2015, two (2) of the residential buildings lie a distance of 5.6 feet and 2.2 feet respectively over and upon a ten (10) foot wide Florida Telephone Easement recorded in O.R. Book 579, Page 189 on July 26, 1973. The Borrower states that unless the easement is vacated, the encroachments cannot be remedied and will remain as encroachments and to date, they have not interfered with the use and operation of the development. Approval of the noted encroachments or other resolution of said encroachments satisfactory to Florida Housing and its legal counsel, prior to loan closing, is a condition of Seltzer’s recommendations.

3. Fire Damage: Attachment D, Life Safety Issues, Deferred Maintenance and All Repairs and Replacements Recommended, to the Draft Physical Condition Assessment (“PNA”) dated December 1, 2014 and performed by Dennis Jones of Orange Consulting, LLC (“OC”) indicates that one of the buildings has sustained fire damage and cannot be occupied until repairs are completed. OC reports the fire was deliberately set to conceal a crime and is covered by the Seller’s hazard insurance. The Property Description and Observations included in the Phase I Environmental Site Assessment dated December 30, 2014 indicates Building 2853 was not occupied at the time of the site reconnaissance due to a recent fire event. Borrower advises that an amendment to the Purchase and Sale Agreement is in process that will require the Seller to complete repairs to the fire damaged building. Borrower provided a construction contract dated November 3, 2014, where the basis of payment is a Stipulated Sum for the reconstruction of 6 units damaged by fire. The contract is between Reliance Capital Partners d/b/a Spring Manor Apartments, LLC as Owner and Disaster One Inc., Subchapter S Corporation, as Contractor in the amount of $441,682.69. The contractor shall achieve

Exhibit F of 47


SPRING MANOR A-8


Substantial Completion of the entire work not later than one hundred fifty (150) days from the date of commencement. OC has advised that a building permit dated March 3, 2015 to complete repairs to the fire damaged building has been received. Seltzer’s recommendations are conditioned upon receipt and satisfactory review, prior to loan closing, of (1) an amendment to the Purchase and Sale Agreement requiring the repair of all fire damage; and (2) evidence of sufficient funds to complete all repairs via a bond or a deposit to an escrow account to cover 1.5 times the amount of the estimate to complete all fire damage repairs or evidence that all repairs have been completed and the building is available for occupancy.

4. Termite Inspection: Borrower provided Wood‐Destroying Organisms Inspection Reports for all of the buildings. The reports noted visible evidence of wood‐destroying organisms including the damage caused for ten (10) residential buildings and the office building. The company that performed the inspections did not treat the structures at the time of inspection. However, the SAIL/ELI committed features and amenities include termite prevention and pest control which have been verified in the OC Plan and Cost Analysis (“PCA”).

Issues and Concerns:

1. Environmental: The 3rd party Phase I Environmental Site Assessment (“Phase I”) provider, ESI, recommended additional testing in the units exhibiting elevated radon levels.

Receipt and satisfactory review, prior to loan closing, of a report reflecting the findings of the radon re‐testing and/or a radon mitigation plan, if necessary, or verification from ESI that these items are not necessary are conditions of Seltzer’s recommendations.

Recommendation:

SMG recommends FHFC approve this amended report which recommends the approval of an increased amount of $9,250,000 MMRB consisting entirely of tax‐exempt bonds to be redeemed at the time the development is placed‐in‐service, SAIL in the amount of $4,398,240, an ELI loan in the amount of $233,600 and a Housing Credit (“HC”) allocation in the annual amount of $667,468 for the rehabilitation and permanent financing of Spring Manor.

This recommendation as revised is based upon the assumptions detailed in the Report Summary (Section A) and Supporting Information and Schedules (Section C). In addition, this recommendation as revised is subject to the MMRB, SAIL/ELI Loan Conditions and HC Allocation Contingencies (Section B). 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 March 6, 2015 approved credit underwriting report.

Prepared by: Reviewed by:

Wanda Greggo Cindy Highsmith Credit Underwriter Credit Underwriting Manager

Exhibit F of 47


SPRING MANOR A-9


Overview

Construction Financing Sources

Source Lender Applicant

Revised

Applicant Underwriter

Interest

Rate

Construction

Debt Service

Fi rs t Mortgage FHFC MMRB $8,750,000 $5,750,000 $5,750,000 4.95% $284,625

Second Mortgage FHFC SAIL $4,119,707 $4,398,240 $4,398,240 1.00% $43,982

Third Mortgage FHFC ELI $233,600 $233,600 $233,600 0.00% $0

HC Equity RJTCF $4,511,548 $5,687,020 $5,687,020 N/A N/A

Deferred Developer Fee Southport $0 $2,716,307 $2,583,976 N/A N/A

NOI Borrower $0 $0 $328,362 N/A N/A

Total $17,614,855 $18,785,167 $18,981,198 $328,607

Tax Exempt MMRB: Borrower applied for $9,250,000 in tax‐exempt bonds Multifamily Mortgage Revenue Bonds (“MMRB” or the “bonds”) to be issued by Florida Housing for the acquisition and rehabilitation of this development. The Term Memo provided by RBC indicates that the funds will be held in cash or eligible investments that will secure the repayment of the bonds. The release of the bond proceeds to fund the acquisition and rehabilitation of the development will be restricted, contingent upon a like sum being funded to the Trustee and placed in a collateral account.

The anticipated source of collateralization is a taxable, immediate funding, permanent first mortgage in favor of Freddie Mac or its DUS Lender, Oak Grove (“OGC/Freddie Mac”) in the amount of $5,750,000 that will maintain a first lien position on the development and $3,500,000 of the second mortgage SAIL from FHFC. The bonds and the requisite documents and agreements will be subordinate to the OGC/Freddie Mac loan. The bonds will mature October 1, 2016 and are subject to optional redemption on any date on or after April 1, 2016. The MMRB will bear interest at a fixed rate payable semiannually in April and October commencing October 1, 2015. Based on current market conditions, RBC anticipates the bond interest rate is expected to be approximately 0.60%. In addition, a Trustee fee equal to 0.03% of the MMRB amount plus a FHFC issuer fee anticipated to be 0.24% of the MMRB amount will be due. The method of sale of the MMRB is via public offering via RBC as sole manager. The MMRB will be issued as fully registered bonds in book entry form and will be issued in denominations of $5,000 or any integral multiple thereof.

Per an OGC/Freddie Mac proposal dated November 14, 2014, a taxable, immediate funding, first mortgage OGC/Freddie Mac permanent loan in the amount of $5,750,000 will be used to partially cash collateralize the tax exempt MMRB. The taxable mortgage will require payment of interest only for the first twelve (12) months at 4.95% followed by amortization on a 35‐year schedule. During construction, interest currently estimated at $284,625 on the taxable mortgage will be paid from HC equity for the anticipated twelve (12) month construction term.

Rehabilitation period debt service for the tax‐exempt bond mortgage is calculated based upon a fixed interest rate of 0.60%. As applicable, Issuer fees of 0.240%, Servicing Fees of 0.023%, plus Trustee fees of 0.03% will be paid until the MMRB are redeemed.

Exhibit F of 47


SPRING MANOR A-10


MMRB Credit Enhancement/Cash Collateralization:

The MMRB are considered immediate fundings and all of the bond proceeds will be deposited with the Trustee upon closing. The MMRB will be cash collateralized by funds held in escrow by the Trustee. As each dollar of tax exempt MMRB proceeds is disbursed to pay development costs, an equal amount of “replacement proceeds” must be simultaneously disbursed by Freddie Mac or from the FHFC SAIL proceeds and deposited in escrow with the Trustee to cash collateralize the disbursed MMRB proceeds. It is noted that the Freddie Mac/OGC proposal states the MMRB cannot be secured by any interest in the development, the Borrower, or by any membership interest in the Borrower; however, pursuant to Chapter 67‐21, F.A.C., the MMRB must be secured by a mortgage and Freddie Mac/OGC has verbally agreed, subject to Freddie Mac approval. Upon completion of the scheduled improvements and the placed‐in‐service date, the MMRB are anticipated to be redeemed. The MMRB maturity date is currently projected to be October 1, 2016 with the MMRB subject to optional redemption on or after April 1, 2016.

Other Construction Sources of Funds:

Additional sources of funds for this development during rehabilitation are SAIL in the amount of $4,398,240; an ELI loan in the amount of $233,600; housing credit equity of $5,687,020, deferred developer fees in the amount of $2,583,976 , and net operating income (“NOI”) in the amount of $328,362. See the Permanent Financing section below for details.

Construction/Stabilization Period:

The subject’s rehabilitation will be conducted with its existing residents in place and little turnover is anticipated. The property is currently reporting an occupancy rate of 89.1% which includes all of the units in the fire damaged building. Due to the fact that the current set asides will remain the same and the HAP rents will be the same, the appraiser projects a stabilized occupancy of 93%, including collection loss, post renovation with no absorption period. The construction contract requires substantial completion of the rehabilitation within twelve (12) months. Seltzer has used a twelve (12) month construction/stabilization period.

Exhibit F of 47


SPRING MANOR A-11


Permanent Financing Sources

Source Lender Applicant

Revised

Applicant Underwriter

Interest

Rate

Amort.

Yrs.

Term

Yrs.

Annual

Debt

Firs t Mortgage OGC/Freddie Mac $7,353,579 $5,750,000 $5,750,000 4.95% 35 15 $346,037

Second Mortgage FHFC SAIL $4,398,240 $4,398,240 $4,398,240 1.00% N/A 15.5 $43,982

Third Mortgage FHFC ELI $233,600 $233,600 $233,600 0.00% N/A 15.5 $0

HC Equity RJTCF $5,639,436 $6,231,168 $6,856,962 N/A N/A N/A N/A

Def. Developer Fee Southport $0 $2,172,159 $1,742,396 N/A N/A N/A N/A

Total $17,624,855 $18,785,167 $18,981,198 $390,020

Taxable First Mortgage: The Borrower has submitted a proposal dated November 14, 2014 from OGC/Freddie Mac for permanent financing to provide a fixed rate taxable loan through the Freddie Mac Multifamily Affordable Housing DUS Loan program. The loan will be in the amount of $5,750,000. The OGC/Freddie first mortgage is subject to a maximum loan‐to‐value of 85% of the as‐rehabilitated as‐stabilized value of the property. The loan has a permanent/amortization period of 15 years following the 12 months construction/stabilization phase and will be amortized over a 35–year schedule. The interest rate will be fixed at closing and is currently estimated by OGC/Freddie Mac to be 4.95%. For purposes of the MMRB/HC underwriting, SMG has utilized the OGC rate of 4.95%. The permanent loan will be secured by a first mortgage lien on the Spring Manor development and a first security interest in all personalty of the development.

As previously noted, upon completion of the scheduled improvements and achievement of the placed‐in‐service date, the MMRB are anticipated to be redeemed in full. Consequently, the interest rate shown above for the permanent period does not include any FHFC Issuer fees, Servicer fees or Compliance fees. However, Compliance fees are still due, and when the MMRB are redeemed, Borrower shall pay to FHFC the full amount of the compliance monitoring fees due through the end of the QPP. The compliance monitoring fee will be calculated using the fee schedule in effect at the time the fee is paid, and FHFC will make annual payments to the Compliance Monitoring Agent.

SAIL

Borrower applied to FHFC RFA 2014‐111 for SAIL funds in the amount of $4,398,240. As required by Freddie Mac and permitted by the RFA, the SAIL will be co‐terminus with the First Mortgage Loan plus six (6) months. Therefore, the entire SAIL term will be 16.5 years. The term of the SAIL permanent period will be 15.5 years. The SAIL will be non‐amortizing and will bear 1% simple interest per annum plus annual payments of applicable fees at the rate of 0.3174% comprised of a Servicing Fee equal to 0.2500% plus a Compliance Monitoring Fee equal to 0.0674%. Payment on the loan shall be based upon 75% of Development Cash Flow, as required by Freddie Mac and the RFA. Any unpaid interest will be deferred until Cash Flow is available. At the maturity of the SAIL, however, all principal and unpaid interest is due.

ELI Loan

All Borrowers who submitted an Application for RFA 2014‐111 are also eligible for ELI gap funding for ELI set‐aside units not to exceed 10% of the total units for Applications with a Family Demographic

Exhibit F of 47


SPRING MANOR A-12


Commitment. The Demographic Commitment for Spring Manor is Family. The ELI Loan is in the form of a forgivable loan in an amount of $233,600.

The ELI AMI for Marion County is 45%. The Borrower committed to set side 30% of the units (48 units) at or below 45% AMI. The ELI units are distributed across the unit mix on an approximate pro‐rata basis. The ELI loan is non‐amortizing at 0% simple interest per annum plus annual payments of applicable fees at the rate of 0.2701% comprised of a Servicing Fee of 0.2500% plus a Compliance Monitoring Fee of 0.0201%. The principal is forgivable at maturity provided the units for which the ELI loan amount is awarded are targeted to ELI Households for the duration of the 50 year Compliance Period. However, after 15 years all of the ELI set‐aside units may convert to serve residents at or below 60% AMI. The Person with a Disabling Condition set‐aside requirement must be maintained throughout the entire compliance period. The entire loan term of the Spring Manor ELI loan is 16.5 years and is commensurate with the loan term of the first mortgage plus six months and the term of the SAIL as permitted by the RFA. The ELI permanent loan term will be 15.5 years.

Housing Credits Equity Investment:

The Borrower has applied to Florida Housing to receive 4% Non‐Competitive Housing Credits (“HC”) directly from the United States Treasury in conjunction with tax‐exempt financing. A HC calculation is contained in Exhibit 5 of this credit underwriting report.

Based upon an April 13, 2015 Draft Amended and Restated Operating Agreement, Raymond James Tax Credit Funds, Inc. (“RJTCF”) will provide HC equity as follows:

Capital Contributions Amount

Percent of

Total When Due

1st Ins ta l lment $2,008,378 29% Prior to or Simultaneous with Clos ing

2nd Ins ta l lment $650,000 10% 25% Construction Completion

3rd Ins ta l lment $700,000 10% 50% Construction Completion

4th Ins ta l lment $1,117,159 16% 75% Construction Completion

5th Ins ta l lment $660,475 10% 90% Construction Completion

6th Ins ta l lment $551,008 8% Later of January 1, 2016 and 99% Completion

7th Ins ta l lment $200,000 3% Construction Completion

8th Ins ta l lment $869,942 13% Later of Apri l 1, 2016 and Stabi l i za tion

9th Ins ta l lment $100,000 1% Form 8609, EUA and Form K‐1 for Income Tax Purposes

Tota l $6,856,962 100%

Annual Tax Credits per Syndication Agreement: $678,907

Total HC Syndication: $6,788,391

Syndication Percentage (limited partner interest): 99.990%

Calculated HC Exchange Rate (per dollar): $1.010

Proceeds Available During Construction: $5,687,020

Other Permanent Sources of Funds:

Exhibit F of 47


SPRING MANOR A-13


The developer will have to defer $1,742,396 of developer fees after all loan proceeds and capital contributions have been received.

Exhibit F of 47


SPRING MANOR PAGE A-14


Uses of Funds

Applicant CostsRevised

Applicant Costs

Underwriters

Total Costs ‐ CUR

Cost Per

Unit

HC Ineligible

Costs ‐ CUR

Accessory Buildings

Demolition

Installation of Pre Fab Units

New Rental Units

Off‐Site Work

Recreational Amenities

Rehab of Existing Common Areas

Rehab of Existing Rental Units $5,440,000 $5,269,000 $5,269,000 $32,931

Site Work

Swimming Pool

General Conditions $316,140 $316,140 $1,976

Overhead $105,380 $105,380 $659

Profit $750,000 $316,140 $316,140 $1,976

Builder's Risk Insurance

General Liability Insurance

Payment and Performance Bonds

Furniture, Fixture, & Equipment

Total Construction Contract/Costs $6,190,000 $6,006,660 $6,006,660 $37,542 $0

Hard Cost Contingency $400,000 $526,900 $526,900 $3,293

Fees for LOC used as Construction Surety

Other: P&P Bonds Outside GC Contract $65,336 $65,336 $408

Other:

Other:

Other:

Other:

$6,590,000 $6,598,896 $6,598,896 $41,243 $0

CONSTRUCTION COSTS:

Total Construction Costs:

Notes to the Actual Construction Costs:

1. As required by the RFA, the Borrower has provided a construction contract between the Borrower and Vaughn Bay Construction, Inc. (“VB”) where the basis for payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price in the amount of $6,006,660. The date of commencement shall be April 1, 2015. The contract requires the contractor to achieve substantial completion of the entire work by March 30, 2016. Retainage shall be limited to 10% of the first 50% of the contract amount. Final payment will be made when the contract has been fully performed and a final Certificate for Payment has been issued by the Architect. The Owner’s final payment to the Contractor shall be made no later than 30 days after the Architect’s final Certificate for Payment.

2. General contractor fees as stated are within the 14% maximum per the RFA and Rule 67‐21.

3. The Hard Cost Contingency for this development is less than 15% of the construction hard costs as allowed by the RFA and Rule 67‐21.

4. Payment and Performance Bond fees are paid outside of the GC Contract.

Exhibit F of 47




5. OGC/Freddie Mac engaged a Physical Needs Assessment (“PNA”) from OC. Complete results are set forth in Section C of this credit underwriting report. A Pre‐Construction Analysis (“PCA”) was ordered from OC by Freddie Mac/OGC and its results are also set forth in Section C. hereof.

Exhibit F of 47




GENERAL DEVELOPMENT COSTS: Applicant CostsRevised

Applicant Costs

Underwriters

Total Costs ‐ CUR

Cost Per

Unit

HC Ineligible

Costs ‐ CUR

Accounting Fees $20,000 $5,000 $5,000 $31

Appraisal $10,000 $5,000 $5,000 $31

Architect's and Planning Fees

Architect's Fee ‐ Green Initiative

Architect's Fee ‐ Landscape

Architect's Fee ‐ Site/Building Design $160,000 $110,000 $110,000 $688

Architect's Fee ‐ Supervision $25,000 $30,000 $30,000 $188

Building Permits $62,524 $62,701 $62,701 $392

Builder's Risk Insurance $45,000 $39,363 $39,363 $246

Capital Needs Assessment/Rehabilitation $17,500

Demolition paid outside Const Contract

Engineering Fees $20,000 $4,800 $4,800 $30

Environmental Report $12,500 $15,000 $15,000 $94

Federal Labor Standards Monitoring

FF&E paid outside Construction Contract

FHFC Administrative Fees $48,000 $31,545 $53,397 $334 $53,397

FHFC Application Fee $6,000 $6,000 $6,000 $38 $6,000

FHFC Credit Underwriting Fee $21,941 $21,941 $23,969 $150

FHFC HC Compliance Fee (HC) $124,221 $124,221 $776 $124,221

FHFC Other Processing Fee(s)

Impact Fee

Lender Inspection Fees / Const Admin $20,000 $20,000 $20,000 $125

Green Building Cert. (LEED, FGBC, NAHB)

Home Energy Rating System (HERS)

Insurance $73,000 $40,000 $40,000 $250 $20,000

Legal Fees $225,000 $174,000 $174,000 $1,088 $5,000

Local Subsidy Underwriting Fee

Market Study $5,000 $9,321 $9,321 $58

Marketing and Advertising $5,000 $0

Plan and Cost Review Analysis $12,500 $12,500 $78

Property Taxes $52,500 $35,000 $35,000 $219 $11,250

Soil Test

Start‐Up/Lease‐up Expenses

Survey $12,500 $10,000 $10,000 $63

Tenant Relocation Costs

Title Insurance and Recording Fees $88,265 $68,922 $68,922 $431

Traffic Study

Utility Connection Fees

Soft Cost Contingency $35,000 $35,000 $219

Other: Application Fee‐Oak Grove $5,000 $31

Other:

Other:

Other:

$929,730 $860,314 $889,194 $5,557 $219,868Total General Development Costs:

Exhibit F of 47




Notes to the General Development Costs:

1. Architect’s Fees for Site/Building Design and Supervision have been revised to reflect the fees as stipulated in the Architect Contract dated January 15, 2015 by Architectonics Studio, Inc. for Spring Manor. The Architect Contract has been fully executed.

2. The cost of the Physical Needs Assessment is anticipated by the Borrower to be paid by the first mortgagee.

3. The FHFC Administrative Fee is based on 8% of the recommended annual allocation of HC. The FHFC Application Fee is reflective of the 2014 MMRB and HC application fee and the RFA 2014‐111 application fee. The FHFC Underwriting Fee reflects $17,845 for the MMRB and HC and $4,096 for the SAIL/ELI plus $2,028 for re‐underwriting. Compliance monitoring fees reflect the fees due for the remaining QPP and the HC affordability period after the QPP ending date.

4. Existing properties undergoing rehabilitation with minimal new construction do not typically require impact fees, utility connection fees, or soil tests.

5. The Borrower anticipates rehabilitation to occur with relocation of the residents from a maximum of ten (10) units into ten (10) units of off‐site hospitality units. The hospitality units are 10 apartments in a complex located less than 5 miles from the development. The per unit construction schedule anticipates 21 working days will be required to complete the rehabilitation for each unit. After rehabilitation is complete, the residents will be relocated back into the rehabilitated units at the subject development. The residents will be provided notice of the date and approximate duration of the temporary relocation. The Owner and the General Contractor will employ a Temporary Relocation Manager to assist with the relocation of the residents. A relocation budget in the amount of $130,000 has been included in the Construction Contract.

6. Soft cost contingency is equal to or less than 5% as allowed per RFA 2014‐111 and Rule 67‐21.

7. Other: Application Fee‐Oak Grove is the application fee charged by OGC/Freddie Mac for the taxable first mortgage permanent loan.

8. Other General Development Costs are based on the Borrower’s estimates, which appear reasonable.

Exhibit F of 47





Applicant Costs

Underwriters

Total Costs ‐ CUR

Cost Per

Unit

HC Ineligible

Costs ‐ CUR

Construction Loan Application Fee

Construction Loan Underwriting Fee

Construction Loan Origination Fee $75,000

Construction Loan Commitment Fee

Construction Loan Closing Costs $10,000

Construction Loan Interest $25,000 $328,607 $2,054

Construction Loan Servicing Fees

Permanent Loan Application Fee

Permanent Loan Underwriting Fee

Permanent Loan Subsidy Layering Review

Permanent Loan Commitment Fee

Permanent Loan Origination Fee $75,000 $185,731 $57,500 $359 $57,500

Permanent Loan Closing Costs $10,000

Permanent Loan Interest

Permanent Loan Servicing Fee

FHFC Bond Application Fee

FHFC Bond Underwriting Fee

FHFC Bond Subsidy Layering Review

FHFC Bond Origination Fee

FHFC Bond Short Term Fee $28,875 $30,525 $191

FHFC Bond Trustee Fee

FHFC Bond Credit Enhancement Fee

FHFC Bond Rating Fee

FHFC Bond Closing Costs (COI) $210,125 $217,278 $219,278 $1,370 $219,278

FHFC Bond Interest $50,000 $61,905 $387

FHFC Bond Servicing Fee

SAIL Application Fee

SAIL Underwriting Fee

SAIL Origination Fee

SAIL Commitment Fee $43,981 $275 $43,981

SAIL Closing Costs

SAIL Interest

SAIL Servicing Fee

Negative Arbitrage

Reserves ‐ Operating Deficit $280,000 $280,000 $1,750 $280,000

Reserves ‐ Debt Service Coverage

Reserves ‐ Required by Lender

Reserves ‐ Required by Syndicator

Reserves ‐ Required by FHFC

Reserves ‐ Replacement Escrow

Other: Prepayment Penalty ‐ PSA $675,000 $675,000 $4,219 $675,000

Other: ELI Loan Commitnent Fee $2,336 $15 $2,336

Other: Syndicator ‐ Due Diligence Fee $25,000 $156 $25,000

$405,125 $1,436,884 $1,724,132 $10,776 $1,303,095

FINANCIAL COSTS:

Total Financial Costs:

Reserves ‐ ACC Reserve

Exhibit F of 47




Notes to the Financial Costs:

1. Construction loan interest is the interest anticipated to be paid during the rehabilitation/stabilization period for the Freddie Mac/Oak Grove first mortgage, the SAIL, plus the ELI loan.

2. Applicant only included the interest anticipated to be paid on the MMRB during the 12 month construction period prior to the date the Bonds are anticipated to be redeemed. Seltzer has moved this MMRB anticipated interest to FHFC Bond interest and added the amount of the Trustee Fees and the Issuer Fees.

3. The Permanent Loan Commitment Fee is 1% of the permanent loan amount per the Freddie Mac/OGC proposal. Per the OGC LOI, there is no construction loan commitment fee.

4. FHFC Bond Short Term Fee is the FHFC anticipated short term MMRB commitment fee equal to 33 bps of the amount of the MMRB if the bonds are redeemed in 18 months or less. If the redemption occurs within 18 to 24 months, the short term fees decreases to 25 bps. In either case, the short term fee is payable at the time of bond redemption.

5. Bond Closing Costs are comprised of the Cost of Issuance and include fees and expenses of the Issuer, Real Estate Counsel, Bond Counsel, Disclosure Counsel, and the Rating Agency as well as arbitrage calculations, cash flow verification, the Fiscal Sufficiency Determination, and TEFRA fees.

6. SAIL Commitment Fee is equal to 1% of the anticipated SAIL.

7. SAIL and ELI loan legal fees are included in the Bond Closing Costs (COI).

8. RJTCF requires an Operating Deficit Reserve of $280,000 which will be paid concurrent with the fourth equity installment. The Operating Deficit Reserve is equal to approximately 4.63 months of operating expenses. The reserve will be held by OGC throughout the compliance period. Notwithstanding any and all provisions including those pertaining to release, expenditure, or other conditions to the Operating Deficit Reserve or any subsequent Operating Agreement, any and all terms and conditions of the Operating Deficit Reserve must be acceptable to Florida Housing, its servicer, and its legal counsel.

9. Other: Prepayment Penalty – PSA is the amount the Borrower shall pay to Seller at closing for the prepayment penalty/premium required as a result of the prepayment of the Seller’s first mortgage loan encumbering the property. The amount has been calculated by the Borrower. Seltzer’s recommendation is conditioned upon receipt and satisfactory review, prior to loan closing, of an actual payoff statement from the Seller’s first mortgage provider specifying the prepayment penalty amount.

10. Other: ELI Loan Commitment Fee is equal to 1% of the anticipated ELI loan.

11. Other: Syndicator‐Due Diligence Fee is as specified in the April 13, 2015 Draft Amended and Restated Operating Agreement.

Exhibit F of 47





Applicant Costs

Underwriters

Total Costs ‐ CUR

Cost Per

Unit

HC Ineligible

Costs ‐ CUR

Brokerage Fees ‐ Building

Building Acquisition Cost $6,200,000 $6,450,980 $6,450,980 $40,319

Other: Prepayment Penalty ‐ PSA $400,000

Other:

Other:

$6,600,000 $6,450,980 $6,450,980 $40,319 $0Total Non‐Land Acquisition Costs:

NON‐LAND ACQUISITION COSTS

Notes to the Non‐Land Acquisition Costs:

1. The Borrower submitted a Purchase and Sale Agreement (“PSA”) between Spring Manor Investors, LLC, a Delaware limited liability company (“Seller”), and Borrower (“Purchaser”), with an effective date that is defined as the date that a copy of the agreement, fully executed by Purchaser and Seller, is delivered to both Purchaser and Seller. No exact date has been specified. Purchaser and Seller executed the PSA on September 17, 2014. The PSA provides for the purchase of Spring Manor Apartments (160 units) for a purchase price defined as $7,000,000 and a closing date on or before the 60th day after the expiration or earlier termination of the Allocation Contingency Period and shall be, if required by Seller’s lender, the last calendar day of a calendar month. The Allocation Contingency Period is defined as the period commencing on the Effective Date and ending on the date which is ninety (90) days after the Effective Date. The PSA does allow for an extension of the closing date if the Purchaser is unable to obtain HUD approval of an assignment and assumption of the existing Housing Assistance Payments contract affecting the property on terms acceptable to Purchaser in its sole discretion prior to the expiration of the Allocation Contingency period. The PSA may be extended for a period of thirty (30 days) after which the PSA may be cancelled by either the Purchaser or the Seller. The closing date may also be extended by the Purchaser for up to two (2) additional periods of thirty (30) days each by Purchaser providing written notice of such extension to the Seller and Escrow Agent and posting a deposit of $25,000 per extension period with the Escrow Agent which is to be delivered on or before the then applicable closing date. The PSA also allows for an extension to allow time for the Seller to obtain estimates to repair damage as a result of fire or any other casualty whatsoever. Borrower is in the process of obtaining an Amendment to the PSA to extend the closing date. Seltzer’s recommendation is contingent upon receipt and satisfactory review of an Amendment to the PSA extending the loan term.

The appraisal estimated a current “as is” value of the property and improvements using restricted rents of $7,900,000 which supports the purchase price.

2. The appraisal estimated the “as if vacant” market value of the land to be $800,000. The Marion County Property Appraiser website does not value the land separately from the improvements. The “as is” value subject to market conditions is $10,200,000, resulting in a pro rata land value allocation of 0.0784313725. This percentage has been applied to the total purchase price to determine the allocated land value of $549,020. Subtracting the allocated land value from the purchase price results in a total non‐land acquisition price of $6,450,980.

Exhibit F of 47





Applicant Costs

Underwriters

Total Costs ‐ CUR

Cost Per

Unit

HC Ineligible

Costs ‐ CUR

$14,524,855 $15,347,074 $15,663,202 $97,895 $1,522,963

Developer Fee $2,300,000 $2,704,073 $2,583,976 $16,150

Other: Brokerage Fees ‐ Land $150,000 $150,000 $938 $150,000

Consultant Fees $35,000 $35,000 $219 $35,000

Excess Acquisition Costs

Excess Land Value

Guaranty Fees

Other:

Other:

Other:

$2,300,000 $2,889,073 $2,768,976 $17,306 $185,000

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. Developer Fees shown above are within 18% of the total development cost as permitted by the RFA for tax exempt bond transactions.

2. A Brokerage Fee in the amount of $150,000 has been paid from the developer fees as required by the RFA.

3. Consultant fees in the amount of $35,000 have been paid from the developer fees as required by the RFA.


Applicant Costs

Underwriters

Total Costs ‐ CUR

Cost Per

Unit

HC Ineligible

Costs ‐ CUR

Brokerage Fees ‐ Land

Land Acquisition Costs

Land $800,000 $549,020 $549,020 $3,431 $549,020

Land Lease Payment

Land Carrying Costs

Other:

Other:

Other:

$800,000 $549,020 $549,020 $3,431 $549,020Total Acquisition Costs:

LAND ACQUISITION COSTS

Notes to the Land Acquisition Costs:

1. As noted above in the Notes to the Non‐Land Acquisition Costs, the allocated land value is $549,020

$17,624,855 $18,785,167 $18,981,198 $118,632 $2,256,983TOTAL DEVELOPMENT COSTS:

Exhibit F of 47




Operating Pro forma ANNUAL PER UNIT

$1,296,312 $8,102

$0 $0

$0 $0

$15,000 $94

$0 $0

$0 $0

$0 $0

$0 $0

$1,311,312 $8,196

Economic Loss ‐ Percentage: $0

Phys ica l Vacancy Loss ‐ Percentage: 5.0% ($65,566) ($410)

Col lection Loss ‐ Percentage: 2.0% ($26,226) ($164)

$1,219,520 $7,622

Ground Lease $0 $0

Sub‐Ground Lease $0 $0

$56,570 $354

$62,556 $391

Other $0 $0

Management Fee ‐ Percentage: 4.0% $52,452 $328

$76,800 $480

$122,100 $763

$123,200 $770

$0 $0

$116,000 $725

$16,000 $100

$0 $0

$0 $0

$52,500 $328

$0 $0

$48,000 $300

$726,178 $4,539

$493,342 $3,083

$346,037 $2,163

$43,982 $275

$0 $0

$25,838 $161

$0 $0

$415,858 $2,599

$77,484 $484

EXPENSES

Uti l i ties

Marketing and Adverti s ing

Maintenance and Repairs

Grounds Maintenance and Landscaping

Insurance

Variable:

Genera l and Adminis trative

Payrol l Expenses

Other Fees ‐ Agency/Trustee/Servicer

Total Debt Service Payments

Cash Flow After Debt Service

DEB

T SERVICE

Anci l lary Income‐Parking

Other Fees ‐ SAIL/ELI Servicing/Compl iance Fees

Res ident Programs

Contract Services

Security

Other‐Pest Control

Reserve for Replacements

Total Expenses

Net Operating Income

Debt Service Payments

Fi rs t Mortgage

Second Mortgage

Third Mortgage

Miscel laneous

Total Effective Gross Revenue

Fixed:

Rea l Estate Taxes

OPERATING PRO FORMA

Gross Potentia l Renta l Income

Less :

Gross Potentia l Income

Other Income:

Washer/Dryer Rentals

Cable/Satel l i te Income

Rent Concess ions

Alarm Income

INCOME

Rent Subs idy (ODR)

Exhibit F of 47




1.426

1.2651.265

1.186

Debt Service Coverage Ratios

DSC ‐ Fi rs t Only (incl . Negative Arbi trage)

DSC ‐ Fi rs t and Second

DSC ‐ Al l Mortgages and Fees

DSC ‐ Fi rs t, Second and Thi rd

59.5%

87.1%

Operating Expense Ratio

Break‐Even Ratio

Financial Ratios

Notes to the Operating Pro forma and Ratios:

1. The MMRB and SAIL/ELI programs do not impose any rent restrictions. However, this development will be utilizing Housing Credits in conjunction with the tax exempt bond and SAIL/ELI financing, which will impose rent restrictions. Spring Manor is projected to achieve 2014 Maximum Allowable HC Rents published by Florida Housing on all units based upon the appraiser’s estimate of achievable rents per the comparables surveyed. However, the rents utilized herein for 145 of the units are based upon the current PBRA rent schedule from HUD effective September 1, 2014. Rents for the remaining 15 units are based on the 2014 Maximum Allowable HC Rents. The utility allowances for all of the units are based on the PBRA rent schedule from HUD effective September 1, 2014 and reflects the resident paying all electric utilities and the Borrower paying water, sewer, natural gas, trash disposal and pest control. The Borrower provided a letter from HUD dated September 16, 2014 that includes a statement that the committed rental assistance will be reserved and available for use by the proposed development and committed for a minimum of 20 years upon the 145 units being Placed‐in‐Service, subject to congressional appropriation and continuation of the rental assistance program and, the property being in compliance with all business agreements. No manager/employee units are anticipated at this time. The rent roll is shown below:

MSA/County: Marion County (Ocala MSA)

$68,040

$17,976

$35,952

Annual

Rental

Income

$74,400

$148,800

$10,704

$178,992

$390,528

$13,008

$122,640

$219,000

CU Rents

$620

$446

$678

$678

$542

$730

$730

$620

Appraiser

Rents

$620

$620

$446

$678

$678

$542

$730

$730

$1,296,312

$630

$749

$749

$678

$630

$749

$749

$16,272

Units

60%

AMI%

45%

60%

60%

60%

45%

60%

60%

45%

60%

1171

1171

2 1171

682

682

682

820

$628

$132

$678

2.0

Utility

Allow

$77

$77

$77

10

20

2

22

48

Square

Feet

820

Gross HC

Rent

$392

$523

$523

$471

Bed

Rooms

1.0

998

$628

$544

$726

1.0

1.0

1.0

1.0

1.0

2.0

1.0

$446

$678

Bath

Rooms

1.0

RD/HUD

Cont

Rents

$620

$620

Applicant

Rents

$620

$620

$630

$475

$726

$607 $749

$678

$96

$132

$132

$810

$810

$749 $678

1.5

60%

2.0 1.0

3.0 1.5

4.0 2.0

2.04.0

138136160

Net HC

Rent

$315

$446

$446

$385

$542

$542

$448

$6301.5

2

14

25

4.0 2.0

4

820

998

998

9

2 45%

3.0

3.0

$678

$542

$730

$730

$630

$749

$749

$678

$86

$96

$96

$678

$678

$730

$730

$86

$86

High

HOME

Rents

Low

HOME

Rents

2. Miscellaneous income includes vending income, late fees, pet deposits, and forfeited security deposits. Seltzer has utilized the Borrower’s estimate which is within the range of the subject’s historical range of income and the range of the comparables.

Exhibit F of 47




3. The appraiser estimates a physical vacancy rate of 5% and collection loss of 2% and stabilized occupancy of 93% which is utilized herein for underwriting purposes.

4. Real estate tax expense is based on the appraiser’s estimate. It is noted that it is higher than the current assessment due to the sale of the property to a new owner resulting in a loss of the 10% per year cap on tax increases for non‐homestead properties upon reassessment.

5. Insurance is based on the quote received by the Borrower.

6. Management Fees of 4% are based upon the Property Management Agreement effective March 1, 2015. It is noted that the Borrower’s management agreement reflects 4% of gross income plus a potential 1% incentive management fee to be paid to the management agent provided the debt service coverage is equal to or in excess of 1.15. The management agent will not be paid any monthly fees for bookkeeping and/or accounting services.

7. The costs of Resident Programs are included in the General and Administrative line item.

8. Other operating expense estimates are based on either market comparables or historical operations at the subject and are supported by the appraisal.

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. This is the minimum amount to be deposited per unit per month unless a higher amount is required by the property’s PNA. The PNA inflated replacement reserve per unit per year is $187.22. The amount established as the replacement reserve shall be adjusted based on a PNA to be received by Florida Housing or its servicer beginning no later than the 10th year after the first residential building in the development receives a certificate of occupancy. A subsequent PNA is required no later than the 15th year after the Initial Replacement Reserve Date and subsequently every five (5) year thereafter.

10. A 15‐year income and expense projection shows increasing debt service coverage. This projection is attached to this report as Exhibit 1.

Exhibit F of 47

SMG


Section B

Loan Conditions

HC Allocation Recommendation and Contingencies

Exhibit F of 47


SPRING MANOR PAGE B-1


Special Conditions

This recommendation is contingent upon the review and approval of the following items by SMG and Florida Housing at least 30 days prior to real estate 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. An Amendment to the PSA extending the loan term.

2. Documentation regarding repair of the fire damaged building:

a. an amendment to the Purchase and Sale Agreement requiring the repair of all fire damage; and

b. evidence of sufficient funds to complete all repairs and a bond to cover 1.5 times the amount of the estimate to complete all fire damage repairs or evidence that all repairs have been completed and the building is available for occupancy.

3. Approval of the noted encroachments of two (2) of the subject’s residential buildings into the 10 foot telephone easement or other resolution of said encroachments satisfactory to Florida Housing and its legal counsel.

4. Additional radon testing and/or a fully executed radon mitigation plan, if necessary, or verification from ESI that this item is not necessary.

5. An actual payoff statement from the Seller’s first mortgage provider specifying the prepayment penalty amount.

6. Resolution of all outstanding items noted in the PCA including a review of a fully executed AIA guaranteed maximum price construction contract, a review of all features and amenities for both the MMRB and SAIL/ELI and a review of all necessary plans and specifications.

General Conditions

This recommendation is contingent upon the review and approval of the following items by SMG and Florida Housing at least 30 days prior to real estate 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. Borrower to comply with any and all recommendations noted in the capital needs assessment and in the plan and cost review.

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. 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

Exhibit F of 47




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 Servicer. A detailed calculation of the construction interest based on 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. MMRB, SAIL and ELI Program Loan Proceeds shall be disbursed pro rata with other funding sources during the construction or rehabilitation phase, unless otherwise approved by the Credit Underwriter. The closing draw shall include appropriate backup and ACH wiring instructions.

6. During construction/ rehabilitation, the developer is only allowed to draw a maximum of 50% of the total developer fee during construction/rehabilitation, but in no case more than the payable developer fee, which is determined to be “developer’s overhead”. No more than 35% of “developer’s overhead” during construction/rehabilitation will be allowed to be disbursed at closing. The remainder of the “developer’s overhead” will be disbursed during construction/ rehabilitation on a pro rata basis, based on the percentage of completion of the development, as approved and reviewed by FHFC and Servicer. The remaining unpaid developer fee shall be considered attributable to “developer’s profit” and may not be funded until the development has achieved 100% lien free completion, and retainage has been released.

7. Evidence of general liability, flood (if applicable), builder’s risk and replacement cost hazard insurance (as certificates of occupancy are received) reflecting Florida Housing as Loss Payee / Mortgagee, with coverages, deductibles and amounts satisfactory to Florida Housing.

8. 100% Payment and Performance (“P&P”) Bonds are required in order to secure the construction contract between the general contractor and the Borrower. 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.

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 Servicer and to FHFC and its Legal Counsel.

11. Satisfactory resolution of any outstanding past due or noncompliance issues.

Exhibit F of 47




12. Payment of any outstanding arrearages to the Corporation, its legal counsel, 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) F.A.C. and 67‐48.0075 (5) F.A.C., of an Applicant or a Developer).

13. At all times there will be undisbursed loan funds (collectively held by Florida Housing, the first lender and any other source) sufficient to complete the Development. If at any time there are not sufficient funds to complete the Development, the Borrower will be required to expend additional equity on Development costs or to deposit additional equity with Florida Housing which is sufficient (In Florida Housing’s judgment) to complete the 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 Florida Housing in its sole discretion.

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.

This recommendation is contingent upon the review and approval of the following items by Florida Housing and its legal counsel at least 30 days prior to real estate 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/member(s/principal(s)/manager(s) of the Borrower, the guarantors, and any limited partners of the Borrower.

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 Florida Housing, prepared within 90 days of the MMRB, SAIL and ELI loan closing, unless otherwise approved by Florida Housing, 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 plus the SAIL and ELI loans 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 Loans have been satisfied.

Exhibit F of 47




6. Evidence of general liability, flood (if applicable), builder’s risk, and replacement cost hazard insurance (as certificates of occupancy are received) reflecting Florida Housing as Loss Payee / Mortgagee, with coverages, deductibles and amounts satisfactory to Florida Housing.

7. Receipt of a legal opinion from the Borrower’s legal counsel acceptable to Florida Housing 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 Development is subject to the Borrower’s Partnership Agreement and;

e. Such other matters as Florida Housing or its legal counsel may require.

8. Evidence of compliance with local concurrency laws, as applicable for rehabilitation.

9. UCC Searches for the Borrower, its partnerships, as requested by counsel.

10. Such other assignments, affidavits, certificates, financial statements, closing statements and other documents as may be reasonable requested by Florida Housing or its legal counsel in form and substance acceptable to Florida Housing or its legal counsel, in connection with the Loan(s).

11. Any other reasonable conditions established by Florida Housing and its legal counsel.

Additional Conditions

This recommendation is also contingent upon the following additional conditions:

1. Compliance with all provisions of Sections 420.507 and 420.509, Florida Statutes, Rule Chapter 67‐21, F. A. C., Sections 420.507(22) and 420.5087, Florida Statutes, Rule Chapter 67‐53, F.A.C., Rule Chapter 67‐60, F.A.C., RFA 2014‐111, Section 42 I.R.C. and any other State and Federal requirements.

2. Development and execution by the Borrower of the required Memorandum of Understanding with a designated supportive services lead agency to assist Persons with a Disabling Condition, as outlined in Section Four A.7.b.(2) of the RFA.

3. Acceptance by the Borrower and execution of all documents evidencing and securing the MMRB Loan and First Mortgage Loan in form and substance satisfactory to Florida Housing and its legal counsel, including, but not limited to, the Promissory Note(s), the Loan Agreement(s), the Mortgage and Security Agreement(s), the Land Use Restriction Agreement(s), and Extended Low Income Housing Agreement(s).

Exhibit F of 47




4. Acceptance by the Borrower and execution of all documents evidencing and securing the SAIL and ELI Loan and First Mortgage Loan in form and substance satisfactory to Florida Housing and its legal counsel, including, but not limited to, the Promissory Note(s), the Loan Agreement(s), the Mortgage and Security Agreement(s), the Land Use Restriction Agreement(s), and Extended Low Income Housing Agreement(s).

5. If MMRB, SAIL or ELI funds are used for construction or rehabilitation, all amounts necessary to complete construction must be deposited with the Bond Trustee prior to Loan Closing, or any phased pay‐in of amount necessary to complete construction shall be contingent upon an unconditional obligation, through a Joint Funding Agreement or other mechanism acceptable to Florida Housing, of the entity providing HC Equity payments (and evidence that 100% of such amount is on deposit with such entity at Loan Closing) to pay, regardless of any default under any documents relating to the HC as long as the First Mortgage continues to be funded.

6. If applicable, receipt and satisfactory review of Financial Statements from all Guarantors dated within 90 days of Real Estate Closing.

7. Guarantors are to provide the standard FHFC Construction Completion Guarantee, to be released upon lien free completion as approved by the Servicer.

8. Guarantors are to provide the standard FHFC Operating Deficit Guarantee to be released upon achievement of an average 1.15 DSC on the First Mortgage (MMRB Program 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 debt service coverage ratio shall be made by Florida Housing or the Servicer. Notwithstanding the above, the Operating Deficit Guarantee shall not terminate earlier than three years following the final certificate of occupancy.

9. Guarantors are to provide the standard FHFC Operating Deficit Guarantee to be released upon achievement of an average 1.15 DSC on the combined permanent first mortgage and SAIL, 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 debt service coverage ratio shall be made by Florida Housing or the Servicer. Notwithstanding the above, the Operating Deficit Guarantee shall not terminate earlier than three years following the final certificate of occupancy.

10. Guarantors are to provide the standard FHFC Environmental Indemnity Guaranty.

11. Guarantors are to provide the standard FHFC Guaranty of Recourse Obligations.

12. Closing of the MMRB first mortgage loan simultaneous with or prior to closing of the SAIL and ELI loan.

13. A mortgagee title insurance lender’s policy naming Florida Housing and the Trustee as the insured second mortgage holder in the amount of the Loan is to be issued immediately after closing. Any exceptions to the title insurance policy must be acceptable to Florida Housing 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 closing.

Exhibit F of 47




14. Property tax and hazard insurance escrows are to be established and maintained by the First Lender or the 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. Replacement Reserves funds in the amount of $300 per unit per year are required to be deposited on a monthly basis into a designated escrow account to be maintained by the First Mortgagee/Credit Enhancer, the Bond Trustee, or Florida Housing’s loan servicing agent. Preservation or Rehabilitation Developments (with or without acquisition) shall not be allowed to draw until the start of the scheduled replacement activities as outlined in the pre‐construction capital needs assessment report (“CNA”) subject to the activities completed in the scope of rehabilitation, but not sooner than the third year.

The initial Replacement Reserve will have limitation on the ability to be drawn. The amount established as a Replacement Reserve shall be adjusted based on a CNA to be received by the Corporation or its servicers, prepared by an independent third party and acceptable to the Corporation and its servicers at the time the CNA is required, beginning no later than the 10th year after the first residential building in the development 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 subsequently every five (5) years thereafter.

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. FHFC requirements are applicable for the SAIL and ELI mortgages. Per the OGC proposal, replacement reserves will be no less than what is required in the Limited Partnership Agreement or Regulatory Agreement. Per the RJTCF proposal, replacement reserves will be $300 per unit per year. OC, or other construction inspector acceptable for Florida Housing, is to act as Florida Housing’s inspector during the construction period.

15. 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.

16. Satisfactory completion of a pre‐loan closing compliance audit conducted by Florida Housing or its Servicer, if applicable.

17. Any other reasonable requirements of the Servicer, Florida Housing or its legal counsel.

Exhibit F of 47




Housing Credit Allocation Recommendation

Seltzer Management Group, Inc. recommends a preliminary annual Housing Credit allocation of $667,468. Please see the HC Allocation Calculation section of this report for further details.

Contingencies

The HC allocation recommendation is contingent upon the receipt and satisfactory review of the following items by SMG and the Florida Housing Finance Corporation 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.

2. Satisfactory resolution of any outstanding past due items or noncompliance issues.

3. Any reasonable requirements of Florida Housing and/or SMG.

Exhibit F of 47

Exhibit 1

Spring Manor

15 Year Income and Expense Projection

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15

$1,296,312 $1,322,238 $1,348,683 $1,375,657 $1,403,170 $1,431,233 $1,459,858 $1,489,055 $1,518,836 $1,549,213 $1,580,197 $1,611,801 $1,644,037 $1,676,918 $1,710,456

$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

$15,000 $15,300 $15,606 $15,918 $16,236 $16,561 $16,892 $17,230 $17,575 $17,926 $18,285 $18,651 $19,024 $19,404 $19,792

$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

$1,311,312 $1,337,538 $1,364,289 $1,391,575 $1,419,406 $1,447,794 $1,476,750 $1,506,285 $1,536,411 $1,567,139 $1,598,482 $1,630,452 $1,663,061 $1,696,322 $1,730,248

Economic Loss ‐ Percentage:

Physical Vacancy Loss ‐ Percentage: 5.0% ($65,566) ($66,877) ($68,214) ($69,579) ($70,970) ($72,390) ($73,838) ($75,314) ($76,821) ($78,357) ($79,924) ($81,523) ($83,153) ($84,816) ($86,512)

Collection Loss ‐ Percentage: 2.0% ($26,226) ($26,751) ($27,286) ($27,831) ($28,388) ($28,956) ($29,535) ($30,126) ($30,728) ($31,343) ($31,970) ($32,609) ($33,261) ($33,926) ($34,605)

$1,219,520 $1,243,911 $1,268,789 $1,294,165 $1,320,048 $1,346,449 $1,373,378 $1,400,845 $1,428,862 $1,457,439 $1,486,588 $1,516,320 $1,546,646 $1,577,579 $1,609,131

$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

$56,570 $58,267 $60,015 $61,816 $63,670 $65,580 $67,548 $69,574 $71,661 $73,811 $76,025 $78,306 $80,655 $83,075 $85,567

$62,556 $64,433 $66,366 $68,357 $70,407 $72,520 $74,695 $76,936 $79,244 $81,621 $84,070 $86,592 $89,190 $91,866 $94,622

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Management Fee ‐ Percentage: 4.0% $52,452 $49,756 $50,752 $51,767 $52,802 $53,858 $54,935 $56,034 $57,154 $58,298 $59,464 $60,653 $61,866 $63,103 $64,365

$76,800 $79,104 $81,477 $83,921 $86,439 $89,032 $91,703 $94,454 $97,288 $100,207 $103,213 $106,309 $109,498 $112,783 $116,167

$122,100 $125,763 $129,536 $133,422 $137,425 $141,547 $145,794 $150,168 $154,673 $159,313 $164,092 $169,015 $174,085 $179,308 $184,687

$123,200 $126,896 $130,703 $134,624 $138,663 $142,823 $147,107 $151,520 $156,066 $160,748 $165,570 $170,538 $175,654 $180,923 $186,351

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$116,000 $119,480 $123,064 $126,756 $130,559 $134,476 $138,510 $142,665 $146,945 $151,354 $155,894 $160,571 $165,388 $170,350 $175,460

$16,000 $16,480 $16,974 $17,484 $18,008 $18,548 $19,105 $19,678 $20,268 $20,876 $21,503 $22,148 $22,812 $23,497 $24,201

$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

$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

$48,000 $49,440 $50,923 $52,451 $54,024 $55,645 $57,315 $59,034 $60,805 $62,629 $64,508 $66,443 $68,437 $70,490 $72,604

$726,178 $743,694 $765,507 $787,965 $811,086 $834,891 $859,399 $884,632 $910,610 $937,357 $964,895 $993,247 $1,022,438 $1,052,493 $1,083,436

$493,342 $500,216 $503,281 $506,199 $508,961 $511,558 $513,979 $516,214 $518,252 $520,082 $521,693 $523,073 $524,208 $525,087 $525,695

$346,037 $346,037 $346,037 $346,037 $346,037 $346,037 $346,037 $346,037 $346,037 $346,037 $346,037 $346,037 $346,037 $346,037 $346,037

$43,982 $43,982 $43,982 $43,982 $43,982 $43,982 $43,982 $43,982 $43,982 $43,982 $43,982 $43,982 $43,982 $43,982 $43,982

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$25,838 $25,838 $25,838 $25,838 $25,838 $25,838 $25,838 $25,838 $25,838 $25,838 $25,838 $25,838 $25,838 $25,838 $25,838

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$415,858 $415,858 $415,858 $415,858 $415,858 $415,858 $415,858 $415,858 $415,858 $415,858 $415,858 $415,858 $415,858 $415,858 $415,858

$77,484 $84,359 $87,424 $90,342 $93,104 $95,700 $98,121 $100,356 $102,394 $104,225 $105,836 $107,215 $108,351 $109,229 $109,837

1.426 1.446 1.454 1.463 1.471 1.478 1.485 1.492 1.498 1.503 1.508 1.512 1.515 1.517 1.519

1.265 1.283 1.290 1.298 1.305 1.312 1.318 1.324 1.329 1.333 1.338 1.341 1.344 1.346 1.348

1.265 1.283 1.290 1.298 1.305 1.312 1.318 1.324 1.329 1.333 1.338 1.341 1.344 1.346 1.348

1.186 1.203 1.210 1.217 1.224 1.230 1.236 1.241 1.246 1.251 1.254 1.258 1.261 1.263 1.264

59.5% 59.8% 60.3% 60.9% 61.4% 62.0% 62.6% 63.1% 63.7% 64.3% 64.9% 65.5% 66.1% 66.7% 67.3%

87.1% 86.7% 86.6% 86.5% 86.4% 86.4% 86.4% 86.3% 86.3% 86.3% 86.4% 86.4% 86.5% 86.6% 86.7%

Operating Expense Ratio

Break‐Even Ratio

Rent Subsidy (ODR)

Ancillary Income‐Parking

Miscellaneous

Ground Lease

Sub‐Ground Lease

Other

Reserve for Replacements

Debt Service Coverage Ratios

DSC ‐ First and Second

DSC ‐ All Mortgages and Fees

Financial Ratios

DSC ‐ First, Second and Third

Cash Flow After Debt Service

DSC ‐ First Only (incl. Negative Arbitrage)

DEB

T SERVICE

Second Mortgage

Third Mortgage

Other Fees ‐ SAIL/ELI Servicing/Compliance Fees

Other Fees ‐ Agency/Trustee/Servicer

Total Debt Service Payments

First Mortgage

Total Expenses

Net Operating Income

Utilities

Marketing and Advertising

Maintenance and Repairs

Grounds Maintenance and Landscaping

Resident Programs

Debt Service Payments

Payroll Expenses

Rent Concessions

Alarm Income

Gross Potential Income

Less:

Total Effective Gross Revenue

Fixed:

Real Estate Taxes

EXPEN

SES

Insurance

Variable:

General and Administrative

Contract Services

Security

Other‐Pest Control

FINANCIAL COSTS:

OPERATING PRO FORMA

Gross Potential Rental Income

Other Income:

Washer/Dryer Rentals

INCOME

Cable/Satellite Income

Seltzer Management Group, Inc. Exhibit 1 ‐ Page 1 DATED 3/6/2015, AS AMENDED 4/23/2015

Exhibit F of 47

MMRB, SAIL/ELI AND HC CREDIT UNDERWRITING REPORT SMG

______________________________________________________________________________ SPRING MANOR EXHIBIT 2 ‐ PAGE 1


SPRING MANOR MMRB / #2014‐136B

DESCRIPTION OF FEATURES AND AMENITIES A. The Development will consist of: ` 160 units located in 20 residential buildings. Unit Mix:

Thirty‐two (32) one bedroom/one bath units containing 682 square feet each; and Seventy‐two (72) two bedroom/one bath units containing 820 square feet each; and Forty‐eight (48) three bedroom/one and one‐half bath units containing 998 square feet each; and Eight (8) four bedroom/two bath units containing 1,171 square feet each.

160 Total Units

The Development is to be constructed in accordance with the final plans and specifications approved by the appropriate city or county building or planning department or equivalent agency, and approved as reflected in the Pre‐Construction Analysis prepared for Florida Housing or its Servicer, unless a change has been approved in writing by Florida Housing or its Servicer. The Development will conform to requirements of local, state & federal laws, rules, regulations, ordinances, orders and codes, Federal Fair Housing Act and Americans with Disabilities Act (“ADA”), as applicable.

B. The Applicant commits to provide the following Optional Features and Amenities for All

Developments:

1. Playground/tot lot, accessible to children with disabilities (must be sized in proportion to Development’s size and expected resident population with age‐appropriate equipment.

2. Car care area (for car cleaning/washing/vacuuming). 3. Each unit wired for high speed internet. 4. Shuffleboard court and appropriate equipment.

C. The Applicant has committed to provide the following Green Building Features:

Exhibit F of 47




1. Programmable thermostat in each unit.

2. Energy Star qualified roofing material or coating.

3. Energy Star exhaust fans in bathrooms.

4. Energy Star rating for all windows.

5. Install daylight sensors, timers or motion detectors on all outdoor lighting attached to buildings.

D. The Applicant has committed to provide the following Qualified Resident Program:

1. Health and Nutrition Classes – At least 8 hours per year, provided on site at no cost to the residents. Classes must be held between the hours of 8:00 a.m. and 7:00 p.m. and electronic media, if used, must be used in conjunction with live instruction. If the Development consists of Scattered Sites, this resident program must be provided on the Scattered Site with the most units.

Exhibit F of 47




SPRING MANOR

SAIL/ELI / RFA 2014‐111 (2014‐412S)

DESCRIPTION OF FEATURES AND AMENITIES

A. The Development will consist of:

160 Garden Apartments located in 20 residential buildings. Unit Mix:

Thirty‐two (32) one bedroom/one bath units; Seventy‐two (72) two bedroom/one bath units; Forty‐eight (48) three bedroom/one and one half bath units; Eight (8) four bedroom/two bath units;

160 Total Units B. The 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 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; 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; and 7. Bathtub with shower in at least one bathroom in at least 90% of the new construction

non‐Elderly units.

Exhibit F of 47




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; and

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 rehabilitation units must 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 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 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 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.

F. Required Green Building Features in all Family and Elderly Demographic Developments:

1. All rehabilitation units must include as many of the following required Green Building features as are structurally and financially feasible within the scope of the rehabilitation work utilizing a capital needs assessment performed during credit underwriting:

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;

Exhibit F of 47




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

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 on 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;

h. Caulk, weather‐strip, or otherwise seal all holes, gap, cracks, penetrations, and electrical receptacles in the building envelope; and

i. Seal and insulate heating and cooling system ducts with mastic or metal backed tape.

2. In addition to the Required Green Building Features above, the following Green Building

Features were committed to the in the application:

a. Programmable thermostat in each unit;

Exhibit F of 47




b. Energy Star qualified roofing materials (metal, shingles, thermoplastic polyolefin

(TPO), or tiles);

c. Energy Star rating for all windows in each unit; and

d. Install daylight sensors, timers or motion detectors on all outdoor lighting attached to buildings

** Where multiple items are listed (F. 1. e. and g. above), the item selected by the Applicant is in bold print and has been underlined.

G. The Applicant has committed to provide the following Resident Programs:

1. After School Program for Children – This program requires the 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 Development consists of 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 F of 47


SPRING MANOR EXHIBIT 4 – PAGE 1


COMPLETENESS AND ISSUES CHECKLIST

DEVELOPMENT NAME: Spring Manor _________________

DATE: Dated March 6, 2015, as amended April 23, 2015 _____

In accordance with applicable Program Rule(s), the Borrower 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 Borrower 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. N/A

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.

Unsatis. 1

10. Audited financial statements for the most recent fiscal year ended or acceptable alternative as stated in the Rule for credit enhancers, Borrower, general partner, principals, guarantors and general contractor.

Satis.

11. Resumes and experience of Borrower, general contractor and management Satis.

Exhibit F of 47


SPRING MANOR EXHIBIT 4 – PAGE 2


agent.

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:

1. The 3rd party Phase I provider, ESI, recommended additional testing in the units exhibiting elevated radon levels.

Applicant’s Response: A report reflecting the radon findings and/or a radon mitigation plan, if necessary, will be provided to Seltzer prior to loan closing. Receipt and satisfactory review, prior to loan closing, of a report reflecting the findings of the radon re‐testing and/or a mitigation plan, if necessary, or a revised Phase I indicating that one or more of these items are not necessary are conditions of Seltzer’s recommendations.

Exhibit F of 47


SPRING MANOR EXHIBIT 5, PAGE 1


HC Allocation Calculation

$18,981,198

Less Land Cost ($549,020)

Less Federal Funds $0

Less Other Inel igible Cost ($1,707,963)

Less Disproportionate Standard $0

Acquis i tion El igible Bas is $6,450,980

Rehabi l i tation El igible Bas is $10,273,235

$16,724,215

100.00%

130.00%

Acquis i tion HC Percentage 3.37%

Rehabi l i tation HC Percentage 3.37%

Annual HC on Acquis i tion $217,398

Annual HC on Rehabi l i tation $450,070

$667,468Annual Hous ing Credit Al location

Section I: Qualified Basis Calculation

Development Cost

Tota l Qual i fied Bas is

Appl icable Fraction

DDA/QCT Bas is Credit

Notes to the Qualified Basis Calculation:

1. Other Ineligible Costs primarily include FHFC administrative, application and HC compliance fees, legal fees, insurance and property taxes paid after rehabilitation is completed; permanent loan origination and closing costs; bond costs of issuance, pre‐payment penalty on the current first mortgage loan; and all escrows/reserves.

2. The Borrower committed to a set aside of 100%. Therefore, SMG has utilized an Applicable Fraction of 100.00%.

3. This development is located in a Difficult Development Area (“DDA”). Therefore, the 130.00% basis credit has been applied to the Rehabilitation Qualified Basis.

4. Per Florida Housing Rule, 15 basis points are added to the actual percentage (3.22%) reported as of the date of invitation to credit underwriting for 4% Housing Credits. For purposes of this report, a Housing Credit Percentage of 3.37% is applied.

Exhibit F of 47




$18,981,198

Less Mortgages ($10,381,840)

Less Grants $0

$8,599,358

99.99%

$1.0100

$8,515,067

$851,507

Section II: Gap Calculation

Tota l Development Cost (Including Land and Inel igible Costs )

Equi ty Gap

Percentage to Investment Partnership

HC Syndication Pricing

HC Required to Meet Gap

Annual HC Required

Notes to the Gap Calculation:

1. Mortgages are the taxable OGC/Freddie Mac first mortgage, and FHFC SAIL and ELI second and third mortgages.

2. HC Syndication Pricing and Percentage to Investment Partnership are based upon the April 13, 2015 draft Amended and Restated Operating Agreement between Borrower and RJTCF. .

$16,724,215

Plus Land Cost $549,020

$17,273,235

$9,250,000

Less Debt Service Reserve $0

Less Proceeds Used for Costs of Is suance $0

Plus Tax‐exempt GIC earnings $0

$9,250,000

53.55%

Section III: Tax‐Exempt Bond 50% Test

Tota l Depreciable Cost

Aggregate Bas is

Tax‐Exempt Bond Amount

Tax‐Exempt Proceeds Used for Bui lding and Land

Proceeds Divided by Aggregate Bas is

Notes to 50% Test:

1. SMG estimates the Tax‐Exempt MMRB loan amount to be 53.55% of Depreciable Development Costs plus Land Acquisition Costs. If, at the time of Final Cost Certification, the Tax‐Exempt Bond 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 F of 47




$667,468

$851,507

$667,468

Section IV: Summary

HC per Appl icant Request

HC per Qual i fied Bas is

HC per Gap Ca lculation

Annual HC Recommended

Notes to the Summary:

1. The Annual HC Recommended is based on the Qualified Basis Calculation.

Exhibit F of 47

Florida Housing Finance Corporation...Florida Housing Finance Corporation Amended Credit...

Documents

Transcript of Florida Housing Finance Corporation...Florida Housing Finance Corporation Amended Credit...