Volume 10, Issue 2
Keeping you up to date on MHEG in just a minute’s time.
CEO Update
Northeast Region Update
John Wiechmann Greetings Friend! Well, we’re halfway through April and, of course, it just snowed across Nebraska. Hopefully warmer weather arrives soon. Regardless, we’re working hard to grow more housing and help new deals spring to life: seven closings in the first quarter resulting in 243 rental homes. And 2017 was a banner year even with the political and legislative uncertainty. MHEG closed $129 million in investments into 29 developments, helping create over 1,000 safe, decent and affordable units. While we wait for spring to arrive, MHEG is celebrating 25 years in business, growing and looking to the future years ahead. We hosted an anniversary dinner last month to celebrate this milestone and show our appreciation to our many, many partners. As I reflect on the success of the company, I want to recognize the staff that make up our MHEG family. We have an incredibly talented team that is passionate about achieving our mission of changing lives for a better tomorrow through the provision of quality affordable housing. Their work and dedication, day in and day out, is how MHEG got this far. To the MHEG Team, thank you! We look forward to building on our past success as we expand once again, adding North Dakota to our footprint. The past four months have seen lots of legislative activity. The end of last year brought enactment of the Tax Cuts and Jobs Act. Despite an initial scare from the House of Representatives that private activity bonds might be eliminated, at the end of the day Section 42 remained intact and relatively unscathed. However, other tax law changes in the bill ultimately reduced the economic value of the LIHTC and will likely impact production in the coming years. Thankfully, we have strong advocates in the House and Senate. In March, as part of the Omnibus spending package, Congress increased the amount of 9% LIHTC by 12.5%. In addition, the Omnibus fully funded Section 8 contracts and brings HOME funding to its highest level in
Scott Fitzpatrick many years. We are grateful for these provisions! Of course, the advocacy efforts must continue. Among other things, we need to permanently lock the floating 4% applicable percentage at 4% and allow Housing Finance Agencies to award basis boosts to LIHTC transactions financed with tax-exempt bonds. Bringing Members of Congress and their staff to see the properties and meet the residents remains a very effective means of earning their support. I close with another Thank You. Thank you to all of our volunteer leaders, investors, developers, property managers, financing partners and government officials for letting MHEG change so many lives over the past 25 years! We are incredibly grateful for all of the partnerships and friendships we’ve established these past two and a half decades. See you on June 4th at our Annual Meeting!
I’d like to start off by congratulating Arch Icon Development for the closing of their Aberdeen project in Sioux City, Iowa, and Community Housing Initiatives for their Court View project also located in Sioux City. The Aberdeen is an adaptive reuse of the old Central High School Annex building and will add 46 units for families. Court View is the acquisition/ rehabilitation of 24 existing units for families. Both projects are due to complete construction in the fall of 2018. I’d also like to congratulate Carolann Jenson on assuming the role of Interim Executive Director of the Iowa Finance Authority (IFA). The IFA Board approved the recipients for the 2018 application round on March 6th, 12 projects were selected from across the state. Comments for the 2019 QAP are due to IFA on May 4th. Applications for the Minnesota 2019 Round 1 are due June 14th, 2018.
We are coming up on my six-year anniversary with MHEG, as I look back on the past several years it’s amazing to see what we’ve been able to accomplish. When I began in 2012, MHEG was just under the 10,000-unit mark, something we celebrated in 2013, and at 347 projects. Now in 2018, as we celebrate MHEG’s 25th year anniversary, we are approaching 16,000 units and have invested in 516 projects. I’m honored to be working at MHEG with all our partners and to be contributing to our mission of creating and sustaining quality and safe affordable housing. I’d like to close by asking that anyone who has not signed on with the ACTION Coalition to please do so! ACTION is a powerful advocate for affordable housing at the federal level. It is free and easy to do at: http:// rentalhousingaction.org/join
Northwest Region Update Cindy Koster
The Northwest Region closed three acquisitions since our last newsletter update in November. In Nebraska, Porter Estates, LLC, earned the title of the 500th project closed in MHEG’s portfolio. Congratulations to developer Excel Development Group for partnering with us on this milestone. Check out the Property Spotlight section on page 4 for more about Porter Estates. Additionally, we closed Southview Estates, LP, a 20-unit family project located in Wayne, Nebraska. Mesner Development Co. served as the developer and Wayne Community Housing Development Corporation is the Managing Member. Mesner Development Co. has been a partner of MHEG’s since 2000 and has closed 49 projects with MHEG. In Colorado, MHEG closed into Tammen Hall Apartments LLC. Developed by Solvera Developers the project is in Denver and involves the historic rehabilitation of a former nurse dormitory and children’s hospital building into 49 units that will house senior residents.
MHEG celebrated it’s 500th acquisition during our 25th Year Celebration on March 13th, 2018. Partners of Porter Estates included, Horizon Bank (Trina Brown and Greg Dunlap), John Wiechmann, NIFA (Sara Tichota) and Excel Development Group (Brent Williams).
Central Region Update Pat Michaelis The word for the day in the Central Region is “Patience”. Developers have submitted applications to KHRC and MHDC and are awaiting LIHTC awards to be announced. Forty-two applications were submitted in Kansas and 115 in Missouri. Kansas awards should be announced in early May. The Missouri announcement date has not been set; however, a Commissions meeting is scheduled for June 14th. Awards are always very competitive and this year is no exception. Tax reform reduced the value of LIHTC’s. However, the Omnibus Bill increased allocations to states by 12.5% for four years (as mentioned above), which mostly replaces the reduction from tax reform. It also allows for resident income averaging. Income may be as high as 80% of area medium income if the average in the development is 60%. This is very helpful to a potential resident whose income is at 62% and will now qualify. It will also help workforce housing with the 80% cap. I would note that the Kansas Delegation voted 100% for the Omnibus Bill; Missouri at 70%; and Oklahoma at 43%. John Wiechmann, Andrea Frymire and I were part of the Kansas and Oklahoma contingency that visited state delegations in Washington D.C. this past March. I would like to think we helped make a difference. Welcome Brad Reiff to the Central Region and MHEG team. Brad is Acquisitions Manager serving the Central Region, Kansas and Missouri. He is responsible for underwriting MHEG equity investments in developments financed with Federal Low-Income Housing Tax Credits. Brad has extensive affordable housing experience with prior service as Loan Specialist, USDA Rural Development; Deputy Director, Housing & Neighborhood Development, City of Topeka; and HOME Program Director, Kansas Housing Resources Corporation. Brad is an experienced professional and wants to be a resource to all partners. Brad and his wife, Debbie, have three children. Welcome Brad! As always, Lisa, Brooke, Brad and I are always available to assist you 2
November 2017
MHEG recently signed a commitment letter for a new construction, senior project located in Aurora, Colorado, called Cornell Senior Apartments. The property sponsor is Community Housing Development Association, Inc. (CHDA). MHEG is excited to partner with CHDA again and this will be the second project MHEG and CHDA have worked on together. Looking ahead, Colorado LIHTC applications are in for the state’s first round with awards expected to be made in early May. We appreciate both our new and past relationships and partnerships and look forward to working with you again in the coming year. Thank you for continuing to make MHEG a company I am proud to work for.
South Region Update Andrea Frymire
Spring is here and all of our applications are in with the respective HFAs. It will be a busy summer with awards coming in from Oklahoma, Texas and Arkansas between May and July. We look forward to award season which begins in May in Oklahoma. The Oklahoma Affordable Housing Act has survived another year of the Oklahoma Legislature. With a significant budget deficit again this year, we were concerned that our industry might lose this valuable resource. Between 2015 and 2017, the Oklahoma Affordable Housing Act provided financing for 30 developments across 24 counties in 28 different cities. The total number of housing units produced was 1,548. The Oklahoma Housing Finance Agency allocated $12,227,080 in state affordable housing credits during this three year period. The Oklahoma Coalition for Affordable Housing hosted their third annual Affordable Housing Day at the State Capitol in March. Showing your support at the state and national levels is one of the best things you can do for the industry. I had the honor of representing Oklahoma in Washington D.C. in March and met with six of the seven offices for Oklahoma’s Senators and Representatives. Our agenda continues to be support of affordable
housing throughout the state. The Oklahoma delegation was receptive to our message as we continue to show the need for affordable housing as demonstrated in the Oklahoma Statewide Housing Needs Assessment. For all of our partners in Oklahoma, please reach out to your Senators and Representatives and request their support. We wish all of our partners the best of luck on their pending applications and look forward to working with everyone on 2018 awards. Please do not hesitate to contact me if I may be of assistance. It is a pleasure working with each and every one of you!
Greg Shinn (Mental Health Assoc OK), Representative Mark Lepak, Andrea Frymire (MHEG) and Wanda DeBruler (DeBruler Inc.) attending the 3rd Annual Affordable Housing Day at the Oklahoma State Capitol.
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