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HomeMy WebLinkAboutHEO Solomon Towers Interview Follow-up1 Post Interview Response AUGUST 14, 2024 Solomon Towers 2 PROJECT SUMMARY │Transaction Overview The City of Wilmington Housing Authority (WHA) and its affiliate, Housing and Economic Opportunities, Inc. (HEO) (collectively, the Applicant), are seeking to complete an extensive, $10 million rehabilitation of Solomon Towers, a 151-unit public housing complex located at 15 Castle Street, Wilmington, NC. The rehabilitation will be funded through the Applicant’s closing of a 4% low-income housing tax credit transaction (LIHTC) paired with a HUD RAD/Section 18 Conversion (RAD Conversion). The RAD Conversion will convert the property’s units from public housing units to units covered by project-based Section 8 rental assistance which will allow existing residents to remain in place (with rental assistance) and all the Applicant to leverage the Section 8 subsidy to finance the property’s rehabilitation. Closing of the LIHTC/RAD transaction, anticipated to occur by October 1, 2025, is an incredibly unique opportunity to maximize the debt and equity proceeds available to the Applicant to rehabilitate the property and preserve the asset. FUNDING REQUEST │Request Summary The Applicant requested $1.5 million in WHSP funding from New Hanover County to serve as gap financing for the proposed LIHTC/RAD transaction noted above. The requested funds will allow the Applicant to complete the extensive rehabilitation the property requires and assure it continues to provide high-quality affordable housing for seniors in the local community for decades to come. As noted above, the LIHTC/RAD transaction is a rare opportunity to amass the necessary capital to transform Solomon Towers for the benefit of its residents, its staff, and the greater Wilmington community. APPLICANT CLARIFICATION │ Estimated Total Project/Program Cost The Applicant’s narrative submission stated that Estimated Total Project/Program Cost would be “Approximately $34,000,000”. This was a typographical error. The Program Budget Worksheet submitted by the Applicant included the correct Total Development Costs (TDC), $30,278,792, currently estimated by the Applicant. APPLICANT CLARIFICATION │ Timing of LIHTC Award/Process The Applicant currently anticipates submitting both an application to WHA for the issuance of tax- exempt bonds for the project and its Pre-Application to North Carolina Housing Finance Agency (NCHFA) prior to October 1st of this year. Thereafter, the Applicant anticipates submitting its full application to NCHFA in January 2025; however, per prior conversations with NCHFA, the Applicant expects to receive confirmation of adequate available bond cap prior the end of 2024. The dates noted here support the Applicant’s planned closing of the LITHC/RAD prior to October 1, 2025. APPLICANT CLARIFICATION │ Construction Cash Flow An award of funds prior to yearend 2024 would close the current, anticipated funding gap, allow the Applicant to present this award to its lender(s) and investor(s) as it closes the proposed LIHTC transaction in the fall of 2025. The Applicant would then plan to use the requested loan proceeds to fund construction during the end of 2025 through the 3Q2026 with full disbursement will in advance of December 31, 2026. The Program Budget Worksheet submitted by the Applicant mirrors this timing; however, as noted in the interview, the Applicant can be flexible regarding the timing of funding should the County have additional requirements/constraints that need to be addressed.