Louisville Housing Authority Agenda and Packet 2013 07 25

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Louisville Housing Authority BOARD MEMO Date: July 25, 2013 To: Board of Commissioners From: Frank Alexander, Executive Director Re: Board Report for July 25, 2013 Meeting Intergovernmental Agreement Update At the end of August, four parties all executed the IGA to transfer the LHA properties to BCHA and bind BCHA to a number of commitments over the next 50 years. Progress on the IGA commitments is as follows: 1. Transfer of Properties Since the adoption of the agreement, we have successfully transferred the first five properties, Acme, Lilac, Lydia Morgan, Regal Court II, and Regal Square. The first four properties were refinanced simultaneously with their transfer, and BCHA has restricted $1.7 million to complete renovations in Louisville in the next three years. Property Anticipated Transfer Date Consenting parties Consents obtained? Status Acme Done 4 party IGA Yes Transfer complete Lilac Done 4 party IGA, lender Yes Transfer complete Regal Court II Done 4 party IGA, lender Yes Transfer complete Lydia Morgan Done 4 party IGA, lender Yes Transfer complete Regal Square Done 4 party IGA, HUD – office of multifamily housing, Lender Yes Transfer complete Hillside Square August, 2013 4 party IGA, HUD – office of public housing Yes HUD has approved the transfer, and we are working on the legal documents and accounting structure to be completed in the next 30 days. Sunnyside September 2013 4 party IGA, Investor, Lender, CHFA In process In process – see below Sunnyside – Transfer and Loan We discussed the Sunnyside Loan in May, and the Board provided support for exploring refinance options. At the time, we had only the information from US Bank that a significant capital reduction might be needed. Since then, we have gathered a number of positive proposals from Wells Fargo and FirstBank, as summarized below. The new loan will be guaranteed by BCHA and all closing costs will be paid by BCHA. Option 1 is undesirable because we would not be allowed to transfer the property from LHA to BCHA. Option 2 is undesirable because we would be required to bring $380,000 to the closing for principle reduction. We are recommending that we utilize the third option: Wells Fargo 3.36% BQTED. The Year 10 DSCR of 1.52 and additional operating cash of $245,000 over 10 years are both significant improvements over the current debt structure. While options 3-7 are all quite close in terms of rate, Debt Service Coverage, and increased operating cash compared to the current debt structure, the Wells Fargo 3.36% option represents the best opportunity to balance a low interest 11