icon Blueprint for May

Private Activities

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3 min read

Our original game plan for May was to highlight case studies of the variety of options available in Private Activity Bonds. But this issue, like all of our lives, has been disrupted by the COVID-19 crisis. Private activity might also be the best description of our daily routines now as so many of us are restricted to our homes.

Before we get to the bonds, in this issue you will find our new monthly COVID-19 Response Report, a summary of actions, policy and economic updates from government, publications, associations and member companies. The grimness of it all is pounded into all of us all day each day by news websites, newspapers and news stations. (Whoever said a 24-hour television news channel was a good idea?) Our approach is to track progress for our members and their residents, activity that is designed to help us cope with and function through the crisis, end the crisis and maybe even learn something of value from this petrifying time in our history.

On that last note, two of our regular columnists, NH&RA President Thom Amdur and our guru David. A. Smith, both find that emergencies can impel temporary changes that may prove to be permanent. In his New Developments column, Amdur looks at modernizations of the affordable housing process that are probably overdue. And in his The Guru Is In column, Smith explains initiatives to make multifamily housing health secure in hope of limiting the human life disaster we are now witnessing in the future.

And then we turn to the bonds. With the dependence on this form of funding expanding nationally and rapidly, there is demand for additional bond cap. NH&RA Policy Director Kaitlyn Snyder provides an overview of bond cap utilization (A Tale of Two Bond Caps) followed by columnist Scott Beyer’s conversations with a trio of state and city housing authorities on their attempts to provide more to build more. (Housing USA)

Our case studies look at why specific bond options were selected for projects by their developers and funders:

  • Private Placement bonds were chosen by the Vitus Group of Nashville and R4 Capital Funding for the rehab of Market North in Wilmington, NC with speed as a necessity in advance of an approaching hurricane season;
  • Fannie Mae’s M.TEB was the choice of Sequoia Living and Bellweather Enterprise for renovation of Eastern Park in San Francisco, CA, as well as by Winn-Companies and Greystone for Hilltop Apartments in Washington, DC to drive down the spread for a lower interest rate and, as a result, increased proceeds;
  • Due to restrictive quirks in Texas law, Generation Housing and RBC Capital Markets utilized Short Term Cash Collateralization to add additional units for seniors at the Estates at Shiloh in Dallas, TX;
  • And the Colorado Housing and Finance Agency chose to conserve the state’s resources by sharing risk and mortgage insurance premiums teaming with FHA for rehabilitation of, and adding additional units to, Metro Village in Denver, CO.

We hope these examples help you determine the most effective bond product for your ventures. And that you enjoy the private activity of reading this issue.

Marty Bell, Editor