The underwriting criteria for development are as follows:

• Rents: must be achievable in the market place.
• Operating Expenses: generally between $2,900 $3,900 per unit.
• Vacancy rate: must be related to market comparables.
• Debt Ratio: must be no less than 1.20 - 1.25.
• Development Budget: must verify construction numbers with construction contract.
• Reserves: must include construction contingency, replacement, and operating (6 months debt service + operating expenses) in place for 15 years.
• New Construction: replacement reserves; Senior Housing $300/unit; Family Housing $350/unit.
• Acquisition/Rehabilitation: requires capital needs assessment (reserve requirements may be higher)
• Development Team: must have experience in affordable housing and financial capacity to meet obligations.
• Financial Capacity: Developer / Guarantor must demonstrate sufficient net worth and liquidity to cover guarantee obligations.

Standard Guarantees include:

• Construction completion and Operating Deficit
• Tax Credit Adjuster/Recapture
• Payment of developer fees
• Right to recapture repurchase
• Indemnification
• Guarantees will be personal in nature

Financing Requirements:

• Permanent Loan with minimum term of 18 years
• Fixed rate (or an interest rate cap for Variable rate loans)
• Non-recourse (no guarantee back to owner or general partner)