NALHFA--2013 Annual Conference

Mark Ulfers, Executive DirectorDakota County

Community Development Agency (CDA)

mulfers@dakotacda.state.mn.us(651)675-4400

www.dakotacda.org

Success Stories in Financing Housing for the

Elderly

Dakota County Community Development Agency

Dakota County CDA:Established in 1971One of the largest housing and community development program providers in the Minnesota

• Administers over 30 different programs

Area Served:South of Minneapolis-St. Paul3rd largest county in Minnesota

• Population: 402,00621 cities and 12 townships

• Suburban and rural

Why Senior Housing?

Senior Need Demographics clear about

the wave that was coming Graying of suburbia From 2005 to 2035 in

Dakota County: 138% increase in 55+ 245% increase in 65+

Why Senior Housing?

Decline in Federal Funding Section 202, Public Housing and Section 8 new construction

Lack of state focus on senior housing Minnesota Housing decision to not use Low Income Housing Tax Credits (9%)

Lack of private market to address affordability for low/moderate income senior households In 2015, 32.1% of households with head of household ages 75 to 84 will have

incomes of less than $25,000 In 2015, 40.4% of households with head of household ages 85 and older will have

incomes of less than $25,000

Senior Housing Development Program

• Program developed in 1989• Phase I 1990-1997 = 535 units• Phase II 1998-2007 = 600 units• Phase III 2008- Present = 408 units

• First building opened in 1990 • 26 developments • 1,543 units

• Developments are: • Generally three story buildings• Mix of 1 and 2 bedrooms• Include: underground parking,

community room/common space, laundry on each floor, emergency call systems

Senior Housing Development Program

• Maximum income:• 1 person household: $45,500• 2 person household: $52,000

• Rents:• Income Based

• 1 bedroom = 30% of income minimum $373/maximum $686

• 2 bedroom = 32% of income minimum $549/maximum $869

• Fixed Rent • 1 bedroom: $566-$586• 2 bedroom: $691-$711

Senior Housing Development Program

Households: 1,417Individuals: 1,59077% female/23% maleAverage age: 75 Average length of

residency: 5 yearsAverage income: $21,000

• The Dakota County CDA created a Common Bond Fund in order to finance the Senior Housing Development Program

• Rental revenues of all the buildings are pooled to pay the expenses and debt service for all buildings

Financing Structure

Common Bond Fund – Flow of Funds

[2] [3] [6] [7]

$ Revenues & Supplemental

Revenues

Receipts Account (subset of lockbox

account)

U.S. Bank Trust

[1] [8] [4] [5]

Operating Account (subset of lockbox

account & 4m)

Operating Surplus Account (4m)

Annual Release Test

Fund shortfalls in:- operating account- bond account- reserve account

Operating Reserve (4m)

Replacement Reserve (4m)

[1] Next month operating costs [5] Deposit[2] Trust fees [6] Debt service[3] Rebate [7] Bond reserve[4] To equal operating reserve requirement [8] Residual

Revolving Fund20th of the month

Note: For the Annual Release Test, first, you must meet debt coverage of 1.10 and then anything in excess of $5,000 is released

• The Dakota County CDA issues tax exempt bonds, credit enhanced with a general obligation pledge from Dakota County

• The major source of supplemental revenue to pay debt service is the CDA’s Special Benefit Tax Levy

Financing

Basic Indenture Requirements

Operation– CDA is responsible for paying all operating costs

Pledge of Revenues - tax increment, senior levy

Insurance requirements – “All risk” property, liability insurance and business interruption insurance

Debt service coverage requirements – 1.15 DCR

Replacement Reserve requirements - $600/unit/year

Operating Reserve requirements – 25% of annual operating costs

Net Operating Income average of $200/unit/year

Resources Accessed

Levy• Cash on hand from Senior Levy• Ongoing Senior Levy Collections

Tax Increment (for equity and debt service) Earnings on bond funds, including fully funded debt service reserves General obligation pledge of the County CDA purchases the land and then contributes it

• Sources used to purchase land have included CDBG, HOME, TIF, and CDA and/or City General Funds

City Waiver of Fees Sales Tax Rebate on construction materials PILOT (Payment in Lieu of Taxes) – 5% of gross shelter rents

Questions?

For more information: Dakota County CDA

1228 Town Centre DriveEagan, MN 55123

651-675-4400 www.dakotacda.org