The Institute for Professional and Executive Development, Inc.

Annual Affordable Housing & Development Update: Opportunities in a Changing Economy

Santa Monica, CAJune 4-5, 2009

Monica Hilton Sussman, Esq.401 9th Street, NW, Suite 900

Washington, DC 20004

(202) 585-8833

msussman@nixonpeabody.com

HUD UPDATE

• LIHTC Market on life support

• Investors Gone – FannieMae, FreddieMac, Bank of America (accounted for majority of equity market)

– Exchange Program

– TCAP

– State Equity funds

– Many deals stuck without an equity investor

• Renewed Interest in FHA

– Pros

• Long term

• fixed rate

• non recourse

• Construction and permanent loan all in one

– Cons• 2530

– Flags

– APPS process

• REAC

• MORS

• Audited Financial Statements

• Asset Management Fees

• TPA process for Limited Partners to remove General Partners

• Davis Bacon Wages

• LIHTC equity pay in addressed by HUD and Congress

• Back up of floating rate risk test with CAP or SWAP on mortgage rate

• Statutory limits in certain locations

• Processing time

• Prepayment penalties

• Lockouts

• Declining Markets

• PPCs

– Regulatory Agreement Issues

• Less for affordable transaction

• Bigger issue for “market rate” properties

– use of project funds

– timing of distributions

– use of replacement reserves

– Innovations

• Use of FHA with

– New Market Tax Credits

– Historic Tax Credits (pass through lease structure)

• New Opportunities in Stimulus and Omnibus Legislation – $4B Public Housing money

– $2B Neighborhood Stabilization Program

– “Green” funding

– 202 Prepay – Old 202s

• no savings needed if below 6% rate

• Tenants provided with enhanced vouchers

• EVs can become PBVs without regard to caps

– MF PD – Use Agreement and repairs taken into account for value of note

– 318/215/213