Eighth Annual Development Symposium



OCCH held the 8th annual Development Symposium on January 23, 2010 to provide our partners with current insight into polices from the Ohio Housing Finance Agency (OHFA), equity pricing, gap financing, underwriting, and tips and strategies to help get projects funded. Several panels of speakers addressed the challenges faced in 2009 and discussed the upcoming 2010 and 2011 application rounds in Ohio.

QAP Update

Sean Thomas, the Director of Planning, Preservation and Development at OHFA and Arthur Krauer, the OHFA Coordinator for Planning and Public Policy discussed the agency’s broad policy goals and provided an update on the agency’s ARRA funding process. OHFA has been at the forefront of the country in terms of committing and expending the State’s ARRA resources. They also offered specific insight into the 2010 and 2011 Qualified Allocation Plans. OHFA opted to forward-commit some of the 2010 credits to 2009 projects, meaning less credits are available for this year’s competition. Projects hoping to receive funding from the State’s 2010 pool of Housing Credits must submit an application by March 18, and then OHFA will visit each site, review each application, and release a list of recipients in early July. For 2011, OHFA plans to make the deadline much earlier than the traditional March due date. Applications for 2011 credits will be in late summer of 2010, and OHFA will conduct a series of meetings with each applicant to determine which projects should receive funding. The 2011 QAP is not finalized, and OHFA is welcoming feedback from the affordable housing community.

Site and Market Summary

A discussion of site and market concerns followed. Mr. Krauer emphasized that while site quality was a predominant factor in determining who received credits in 2009, the agency wants to take a broader approach and increase the importance of policy objectives and market viability for 2010. Rob Vogt with VWB Research, Inc. discussed Ohio markets and indicated that occupancy is strong throughout the state, but Developers need to pay attention to the specific market details for any given proposed project. Mr. Krauer explained that OHFA does not want to fund new projects that will jeopardize the success of existing properties funded by the agency, and the agency will pay increased attention to this going forward.

OCCH Strategies

OCCH provided strategies to help partners maximize their efforts to secure funding. An analysis of the 2009 awards indicated that experienced developers fared well, senior projects slightly outnumbered other product types, and OHFA much preferred attractive sites without any unfavorable neighboring uses. With less credits available in 2010 but Developer appetite for funding remaining strong, OCCH predicted a very competitive year with a less than 25% chance of receiving credits. OCCH staff went over many of the nuances of the QAP and the application and offered to help partners work through any specifics on a particular application.

Investor Perspective

Panelists also discussed underwriting and the equity market. Catherine Cawthon, President, Fifth Third Community Development Corporation, said that investors are still interested in the economic return that Housing Credits provide, and interest will likely increase as banks continue to recover. The tighter equity market has led to an increased preference for deals that meet Community Reinvestment Act standards, requests for stronger reserves and guarantees, and stricter underwriting criteria. Underwriting pressures also have been affected by existing properties experiencing pressure meeting debt coverage expectations. Tony DiBlasi, Chief of Asset Management at OCCH, explained that bad debt, tenant receivables, maintenance, real estate taxes, and utility expenses all contribute to this pressure. Jack Kukura, Chief of Acquisitions at OCCH, concluded the day by examining the recent history of the equity market and made predictions for the year ahead. OCCH is currently raising money for its next fund and expects to be in a healthy position for deals seeking equity commitments.