Financial analysis of low and moderate income housing has several important differences from commercial or market based financial analysis.
1) While in commercial projects rent is determined by market conditions, rent for low and moderate income housing is developed from an assessment of costs involved in developing and operating housing and appropriate assumptions or regulations about acceptable levels of profit, return on investment, or debt service coverage. Basic rent in ProCash© is normally input with AVI. If AVI is left at zero and development costs, operating costs, financing terms, and acceptable profit and debt service coverage levels are entered, then ProCash© will determine rent needed. If unit mix is entered, then ProCash© will determine rent for each unit type.
2) Similarly, the mortgage amount is often determined as a function of cost rather than as a function of capitalized value. Mortgage amounts may be specified as decimals of cost (or value). ProCash© will then determine the mortgage amount.
3) It is important to consider different family sizes, different unit sizes, and household income limitations. Household income limitations involve matching family size to unit size, the cost of tenant paid utilities, the expected percent of household income to apply to housing costs, and median income in the area. ProCash© includes inputs and calculations for these purposes. Each row of UNITMIX represents a different unit type or market segment.
The inputs shown below are all the inputs necessary to produce a complete syndication analysis of a project financed by means of the Low Income Housing Tax Credit.
This is even a somewhat complicated financial structure with land retained by the non-profit developer and leased to the project. It includes a conventional first mortgage, a low interest second mortgage, credit enhancement, and points.
With a small amount of additional input it could include analysis by type of unit and comparison with household income (use of the input UNITMIX).
|AVI||Square feet/unit (affects AVI)||339||3|
|AVI||Utilities allowance (for rent formula, AVI periods)||339||3|
|UNITMIX[;1]||Apartment mix: Bedrooms per unit||339||3|
|UNITMIX[;2]||Apartment mix: Number of units||339||3|
|UNITMIX[;3]||Apartment mix: Square feet||339||3|
|UNITMIX[;4]||Apartment mix: Rent per month||339||3|
|UNITMIX[;5]||Apartment mix: Tenant utilities estimated monthly cost||339||3|
|UNITMIX[;6]||Apartment mix: Income limit||339||3|
|UNITMIX[;7]||Apartment mix: Persons per family||339||3|
|AVI||Financing subsidy or sales (see AVI)||339||2|
|AVI||Who Provides Financing Subsidy (see AVI[ 57])||339||2|
|AVI||Mortgage Limit per Unit $ (0 Means Don't Use)||339|
|AVI||Portion of Household Income for Rent||339|
|AVI||Mortgage Interest Rate After Subsidy||339|
|AVI||Credits Against Vacancy Loss (HAP)||339|
|AVI||Period to Start Credits Against Vacancy Loss (HAP)||339|
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|Inputs||Shelter School Renovation (L&H)||(unit mix)||3377||38||339|
|Turnkey Syndication : LIHTC||(unit mix)||3689||53||339|
|Brandon Villas of Tampa (market housing)||(unit mix)||3917||82||339|
|Windsong Housing Associates : LIHTC||(unit mix)||4286||92||339|
|BHP II Limited Partnership : LIHTC||(unit mix)||5609||197||339|
|Tower Point Apartments (demo)||(unit mix)||5611||240||339|
|Tower Point Apartments (detail)||(unit mix)||5613||240||339|
|Conv. 9% FAHP 3% 25 Years: 13 Areas (housing)||(unit mix)||6928||343||339|