PRESERVATION CASE STUDYPRESERVATION CASE STUDY

Marketing/transformationMarketing/transformation

RelocationRelocation

Credit DeliveryCredit Delivery

Investor issuesInvestor issues

Union Square Apartments Windsor

MARKETING/TRANSFORMATIONMARKETING/TRANSFORMATION

Armory Square to Union Square, WindsorArmory Square to Union Square, WindsorYear rehabbed: 2009Year rehabbed: 2009

Creek View Housing, VergennesCreek View Housing, VergennesYear rehabbed: 2004Year rehabbed: 2004

ARMORY SQUARE APARTMENTS ARMORY SQUARE APARTMENTS PROFILE AT TIME OF PROFILE AT TIME OF PURCHASEPURCHASE

Downtown historic building in poor conditionDowntown historic building in poor condition

74 Units Mod Rehab Section 8 with expired Tax 74 Units Mod Rehab Section 8 with expired Tax Credits (2004)Credits (2004)

50 of the 74 units occupied50 of the 74 units occupied

Local reputation as housing of last resortLocal reputation as housing of last resort

UNION SQUARE - UNION SQUARE - TRANSFORMATIONTRANSFORMATION

Reduce number of units from 74 to 58Reduce number of units from 74 to 58Reducing PB section from 74 to 25 Reducing PB section from 74 to 25 Change unit mixChange unit mix

Three bedroom units size increasedThree bedroom units size increasedTwo bedroom units size increased Two bedroom units size increased One bedrooms weren’t availableOne bedrooms weren’t available

New Tenant Amenities: community room, on-site management, laundry room, and New Tenant Amenities: community room, on-site management, laundry room, and elevatorelevator

UNION SQUARE - UNION SQUARE - TRANSFORMATIONTRANSFORMATION

Management and marketing to re-brand the buildingManagement and marketing to re-brand the building

New nameNew name

New tenant profile – part of marketingNew tenant profile – part of marketing

CREEKVIEW ATCREEKVIEW ATTIME OF PURCHASETIME OF PURCHASE

Rural Development subsidy for 20 of 36 unitsRural Development subsidy for 20 of 36 units

Management not local and didn’t have a big Management not local and didn’t have a big presencepresence

Risk of Conversion to Market Rate HousingRisk of Conversion to Market Rate Housing

CREEK VIEW CREEK VIEW TRANSFORMATIONTRANSFORMATION

Preserved affordabilityPreserved affordability

Local management and ownershipLocal management and ownership

Tenant amenities: laundry, porches, storage, accessibilityTenant amenities: laundry, porches, storage, accessibility

Creekview Apartments – Vergennes

EXISTING TENANT PROFILEEXISTING TENANT PROFILE

Critical to know existing tenant incomesCritical to know existing tenant incomes

Income mix informs financing optionsIncome mix informs financing options

Cost of permanent relocation can be highCost of permanent relocation can be high

RELOCATIONRELOCATION

Occupied rehabOccupied rehab

Contractor selection is keyContractor selection is key

Temporary moves require a lot of owner coordinationTemporary moves require a lot of owner coordination

Involvement of management is criticalInvolvement of management is critical

Benefit of occupied rehab is quicker credit deliveryBenefit of occupied rehab is quicker credit delivery

CREDIT DELIVERYCREDIT DELIVERY

Claim the credit back to January 1Claim the credit back to January 1stst or acquisition date or acquisition date

Construction completed before end of yearConstruction completed before end of year

Improves return – investor must be admitted to Improves return – investor must be admitted to partnershippartnership

RETURN CALCULATIONRETURN CALCULATION

IRR Annual IRR Annual10.74% 8.76%

Capital LIHTC Losses @ Tax Capital LIHTC Losses @ Tax

Year Quarter Payments Credits Losses 35% Savings Year Quarter Payments Credits Losses 35% Savings

2009 3/31/2009   0   0 0 2009 3/31/2009   0    0  0 

6/30/2009   0   0 0 6/30/2009 100         

9/30/2009 100 0 0 0 0 9/30/2009          

Start Construction 12/31/2009   0 0 0 0   12/31/2009          

2010 3/31/2010     10,511    (7,446)   2,606    13,117  2010 3/31/2010          

6/30/2010     10,511    (7,446)   2,606    13,117  6/30/2010       0  0 

9/30/2010                    -      10,511    (7,446)   2,606    18,531  9/30/2010       0  0 

Complete Construction 12/31/2010        412,776    15,925    (7,446)   2,606    18,531    12/31/2010 412,776      0  0 

2011 3/31/2011        103,194    15,925    (7,417)   2,596    18,521  2011 3/31/2011 103,194  15,925  (7,417) 2,596  18,521 

6/30/2011                    -      15,925    (7,417)   2,596    18,521  6/30/2011   15,925  (7,417) 2,596  18,521 

9/30/2011     15,925    (7,417)   2,596    18,521  9/30/2011   15,925  (7,417) 2,596  18,521 

8609   12/31/2011     15,925    (7,417)   2,596    18,521    12/31/2011   15,925  (7,397) 2,589  18,514 

2012 3/31/2012     15,925    (7,397)   2,589    18,514  2012 3/31/2012   15,925  (7,397) 2,589  18,514 

6/30/2012     15,925    (7,397)   2,589    18,514  6/30/2012   15,925  (7,397) 2,589  18,514 

9/30/2012     15,925    (7,397)   2,589    18,514  9/30/2012   15,925  (7,397) 2,589  18,514 

12/31/2012     15,925    (7,397)   2,589    18,514  12/31/2012   15,925  (7,397) 2,589  18,514 

RELOCATIONRELOCATION

Vacate building and substantial rehab:Vacate building and substantial rehab:

Critical to have a plan and a budgetCritical to have a plan and a budget

Decision about when to begin leaving vacancies unfilled Decision about when to begin leaving vacancies unfilled

Who will be returning?Who will be returning?

INVESTOR ISSUESINVESTOR ISSUES

Timing of admission – take care to deliver the best returnTiming of admission – take care to deliver the best return

Bank financial participation is limited if it’s a bond Bank financial participation is limited if it’s a bond deal – no construction loandeal – no construction loan

Good historical data with regard to market, income and Good historical data with regard to market, income and expensesexpenses