; Portland Oregon + Home Equity Loan
Learning Center
Plans & pricing Sign in
Sign Out
Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

Portland Oregon + Home Equity Loan


Portland Oregon + Home Equity Loan document sample

More Info
  • pg 1
									                 OREGON STATE HOUSING COUNCIL
                                   Minutes of Meeting
                         Oregon Housing & Community Services
                            Large Conference Room –124 a/b
                   725 Summer Street NE, Suite B, Salem, Oregon 97301

                                          9:00 a.m.

                                       August 26, 2005

MEMBERS PRESENT                                STAFF PRESENT
Buz Ortiz                                      Bob Repine, Director
Scott Cooper Via Teleconference                Jack Kenny, Deputy Director
John Epstein                                   Bob Gillespie, Housing Division Administrator
Maggie LaMont                                  Craig Tillotson
Stuart Liebowitz                               John Wahrgren, Housing Finance Manager
Larry Medinger                                 Jeff Puterbaugh, Housing Development Rep.
Jeana Woolley                                  Shelly Cullin, Loan Officer
                                               Debie Zitzelberger, Loan Officer
GUESTS                                         Frank Silkey, Architect
Tim Albert, Chair, Sunset Housing, Inc.        Kim Manie-Oskoii, RAD (via phone)
Patti Dunn, Board Member, Sunset Housing       Betty Dominguez, RAD
Darlee Rex, Consultant, Sunset Housing         Jack Duncan, RAD
Julie Garver, Innovative Housing               Vince Chiotti, RAD (via phone)
Tom Brenneke, Guardian Management              Darcy Strahan, RAD (via phone)
Dan Steffey, Guardian Management               Betty Markey, Housing Resources Manager
Dahe Goode, Consultant to Guardian             Vicki Massey, Housing Resources Asst. Mgr.
Dave Castricano, Lender for US Bank            Richard Berger, Fair Housing Representative
Cindy Smith, Guardian Management               Kim DeMarcus
Sam Gottlieb, Owner                            Carol Kowash
Sara Fay, Consultant, Pacific Housing Advisors Teri Kucera, Recorder
                                                        *RAD = Regional Advisor to the Director
                                                      **HDR = Housing Development Representative

I.     CALL TO ORDER: Chair Buz Ortiz calls the August 26, 2005 meeting to order 9:10
a.m. and asks for roll call. Present: Scott Cooper via teleconference, John Epstein, Maggie
LaMont, Stuart Liebowitz, Larry Medinger, Jeana Woolley and Chair Buz Ortiz.


III.   APPROVAL OF MINUTES: Chair Ortiz: Asks for any corrections or comments on
minutes for May 20, 2005. Larry Medinger: We asked Corvallis Neighborhood Housing
Services (CNHS) to come back in 30 days with a program to protect the affordability of the co-
housing project. Did they do that? Jack Kenny: Yes. He distributes the memorandum from
CNHS to Bob Gillespie. CNHS testified that because they were in partnership with the County,
they were looking for a broader method to maintain affordability than specific to the co- housing.

Page 1—Oregon State Housing Council – August 26, 2005
They are taking the proceeds and using shared appreciation mortgages. If the owners sell the
house at a gain, because of the shared appreciation mortgage, part of that profit will come back to
affordable housing through this organization that requested the predevelopment loans. We felt
satisfied that their deal would maintain residential home ownership affordability in that area.
Medinge r shares that Ashland held meetings, provided money and gave density bonuses. Yet
some homeowners turned around and sold their homes for a profit. He indicates he wants to make
sure that Council and staff were not creating windfall profits for a few lucky people. Bob
Gillespie: They are also providing a down payment assistance grant of $30,000, as a deferred
payment loan with no interest. If somebody sells that unit, that $30,000 comes back -- plus a
portion of the shared appreciation mortgage. It is a substantial amount that that will be
rededicated to affordable home ownership.

               MOTION: Medinger moves that the Housing Council approve the
               minutes of the May 20, 2005 Council meeting, as amended.

               VOTE: In a roll call vote the motion passed unanimously.
               Membe rs Present: Cooper (abstains: I wasn’t present at the
               meeting), Epstein, LaMont, Liebowitz, Medinger, Woolley
               (abstains) and Chair Ortiz.

Chair Ortiz asks for a Motion on the July 29, 2005 minutes after hearing no comments.

               MOTION: Medinger moves that the Housing Council approve the
               minutes of the July 29, 2005 Council meeting.

               VOTE: In a roll call vote the motion passed unanimously.
               Membe rs Present: Cooper, Epstein (abstains), LaMont, Liebowitz
               (abstains), Medinger, Woolley (abstains) and Chair Ortiz.

Medinge r is amazed at the amount of inertia in the housing market. Jackson County has a
household income of $53,000 paying $215,000 to live in White City, Oregon, Chair Ortiz: It‘s
just incredible. There is one unit that is over $300 a square foot. Medinge r: As soon as interest
rates went to 5-6% about 5 years ago and if the market really were to correct to the interest rates,
it would have immediately moved to where it is today. It‘s just taken the inertia of the market to
finally get us here so that the same people, who could afford a house back then when the interest
rates were 8-9%, can now afford the same piece of real estate at 5-6%. The variable is the price.

               MOTION: LaMont moves that the Oregon State Housing Council
               approve the Consent Calendar.

               VOTE:     In a roll call vote the motion passed unanimously.
               Membe rs Present: Coope r, Epstein, LaMont, Liebowitz, Medinger,
               Woolley and Chair Ortiz.

Page 2—Oregon State Housing Council – August 26, 2005
Bob Repine asks for an update on the Admin Rules for the new single family thresholds. Jack
Kenny reports that the new emergency rules were adopted between the last Council meeting and
this one, so we‘re operating under the temporary rules today.

V.     OLD BUSINESS. None.

A.       Sunset Senior Housing – HOME Fund Request. Jeff Puterbaugh introduces Tim
Albert, Darlee Rex, and Patti Dunn. On the phone is RAD Kim Manie-Oskoii representing
Bruce Buchanan. Jeff reports that the application for Sunset Senior Housing was received in
the Spring CFC and went before the Finance Committee, who had two concerns. The first was
the capacity for a relatively new sponsor for the period of affordability. The second was market
need and marketability for this project in Athena. OHCS representatives, who meet with the
Volunteer Board on their requirements and responsibilities as the sponsor and project
manager/owner, did capacity training on June 27. RAD Bruce Buchanan conducted management
assessment training with the Board on July 6. He returned to Finance Committee and reported
that the sponsor and training was well received and they were ready to proceed with the project.
The Board signed a resolution on things that OHCS felt needed to be done. The project
proposes 10 units, 5 one- bedroom and 5 two-bedrooms, for seniors in Athena and Weston,
Helix, Milton-Freewater, Adams and Pendleton for income levels at or below 50% of Area
Median Income (AMI). With OAHTC, the rents will be 7 units at 40%, and 3 units at 50%.
Sunset Senior Housing will be partnering with several non-profit agencies in the delivery of
services to the tenants. There is one housing project in Athena that is currently owned and
managed by the Umatilla County Housing Authority with 20 multifa mily units. There is
estimated to be 175 elderly households that are 60% of AMI. Seventy surveys were returned to
the City of Athena regarding interest in the availability of rentals for low- income elderly units.
On page 36 of your packet, you‘ll see the breakdown of rents by funding sources, the proposed
rents for those units, and the comparison with the market rents. After discussing the funding, Jeff
states that OHCS recommends approval of $914,805 in HOME funds, contingent upon meeting
all HOME requirements and conditions of the award.

John Czarnecki introduces Frank Silkey and himself to Jeana Woolley and states that they are
charged with researching, analyzing, and providing expert advice to OHCS regarding
architectural issues. He distributes a site plan of the project and describes the layout of the
buildings and courtyards, and the apartment amenities. He notes that the sponsor has another
project recently funded and constructed in nearby Pilot Rock.

Tim Albe rt states that he was on City Council for 17 years and is the current Chairman of the
Board for Sunset Housing, Inc. He discusses the unsuccessful attempts to develop senior
housing over the years. Finally, through the efforts of Patti Dunn and others and the resources
offered by Darlee Rex, they were able to bring the project before Council today.

Jeanna Woolley: What happens to the seniors since you haven‘t had this kind of product
available? Tim Albert: Athena is a farming community, so you have a lot of widows in the area.
Either their children will find places for them in Milton-Freewater, Walla Walla or Pendleton.

Page 3—Oregon State Housing Council – August 26, 2005
John Epstein: Will Sunset Housing manage the project or is there is a third-party manager?
Darlee Rex: Umatilla County Housing Authority will be the manager. CAPECO, the local
community action area agency on aging, will provide the services in conjunction with OHCS,
which has weatherization and LIEAP assistance. There is very little senior housing in
Umatilla County. She mentions Pendleton and Hermiston sites, both with waiting lists. We do
have a housing project in Pilot Rock as well.

Maggie LaMont: It‘s really good in eastern Oregon to have senior housing that is actually
located in the small towns. It‘s a real hardship on someone that‘s lived in that community for
their whole life and when they need a smaller unit, they have to move to another area. I am really
glad to see this project. It is really needed in the small communities to assist the elderly.

               MOTION: LaMont moves that Housing Council approve a $914,805
               grant reservation of HOME funds to Sunset Housing, Inc., contingent
               upon meeting all HOME require ments and conditions of award.

Jeff Puterbaugh clarifies that the sponsor for Pilot Rock is different but the consultant is the
same. John Czarnecki apologizes and states he was thrown off because both projects used the
same architect and the Pilot Rock project is of comparable quality.

               VOTE: In a roll call vote the motion passed unanimously. Members
               Present: Coope r, Epstein, LaMont, Liebowitz, Medinger, Woolley and
               Chair Ortiz.

Larry Medinge r states that while he is happy with all the numbers in project, e.g. low developer
fees, a large commitment is being taken out of available annual HOME funds. Other projects will
not be funded. Jack Ke nny discusses the Department‘s efforts to provide a regional allocation.
Bob Gillespie explains that the project is too small to qualify for tax credits, so it necessitates
that HOME funds are used. Medinger: It‘s at that point that I look at the size of the mortgage
they were carrying and ask if this could have been bigger. After looking at the incomes, I‘d ask if
these could be raised a bit to carry more of the mortgage. The rent payments are really low: $200
and $300. Gillespie: Sixty percent of AMI in that area would be equivalent to 45% of AMI in
Portland. You have less income; therefore, less income for people to spend on rent. Medinger
suggests that in the future, staff thinks about higher rents regardless of the region. Even another
$50-$100 a month would pull out HOME funds that could be used in another project or region.
Kenny asks if the rents are restricted to HOME levels or by income? Gillespie: They are at 50%
of AMI, which is not all that much income. The rents are affordable to persons whose incomes
do not exceed 50% of AMI and the tenants‘ income must be at or below 50% AMI. Maggie
LaMont explains that these projects should fit within the Housing Authority‘s payment standard
so the residents don‘t have to pay more. When dollars are added to a rent structure, it is not
affordable for the elderly with vouchers. In rural areas the fair market rents and payment
standards are low - that really limits what you are doing. Jeana Woolley adds that seniors are
the most difficult because most of them are on fixed incomes. Rents were held down in Portland
for 8 years because half of the tenants have Section 8 vouchers; $25 more will put them on the
street. Medinger: I, too, have a very large senior project. My experience is that seniors say
―poor pockets‖ louder than other generations having grown up in the depression. But the truth is,

Page 4—Oregon State Housing Council – August 26, 2005
they can always come up with another $100. Bob Repine notes that in a rural community of
1,300 people, only a few might be able to pay the increased rate. You come from an area where
the population is significantly greater, so the pool of potential ‗deeper pockets‘ is greater than
this applicant will ever have.

B.       82nd Avenue Place – Predevelopment Loan Request. Shelly Cullin introduces Julie
Garver, the Housing Developer for Innovative Housing (IH), who has requested $380,000 in
predevelopment loan funds for the acquisition of approximately two acres for the development of
82nd Avenue Place in Portland. The proposed project is a 59 unit multi- family apartment
complex that will be affordable to households at or below 50% of AMI, with 20 units set aside
for homeless families with substance abuse recovery needs. IH‘s tenant Services Program will
provide resource, referral and service coordination for basic needs, life skills, and employment
skills training. They will partner with other service providers to provide supportive services for
those in recovery. IH is also working with the Housing Authority of Portland and Bridges to
Housing to obtain rental subsidies and service dollars. The borrower intends to submit a Fall
2006 CFC application for funding of the project. IH manages 685 units and has experience with
special needs and tax credit projects. The asset management function of the organization is very
successful and generates enough management fees to support the organization‘s operating
budget; they are not dependent on external operating support. IH entered into a purchase and
sale agreement with Portland Habilitation Center, who purchased the property from the Oregon
Department of Transportation (ODOT). She recommends approval of this request.

Chair Ortiz asks if a Level 1 Environmental study has been done? Cullin: Yes, the property is
clean. Ortiz: And the zoning is correct for the density? Cullin:Yes. Ortiz: Comments?

Julie Garve r thanks Council for their consideration and for the opportunity to partner with
OHCS. The Portland Habilitation Center is providing the property for below market value
because they believe in IH‘s mission of providing affordable housing. The site is located one
block from the MAX station and sits on the major north-south bus line for 82nd Ave. IH is
helping to lead redevelopment in the area and pursuing the opportunity to serve families in
recovery and formerly homeless families. She discusses service partners hips and the
development of IH‘s tenant services program. Their service partners - Portland Impact, Cascadia
and LifeWorks NW - will be real helpful for the special needs populations that will be served.

Betty Dominguez: The site has potential for a good project. IH has developed their projects and
managed them for the last several years. I am very impressed that they have been able to live off
their cash flow and management fees. They do not receive operating support from the funding
collaborative in the area, nor do they have to develop a new project every few years so that they
can live off developer fees.

Maggie LaMont asks about homeless families with substance abuse recovery needs and the
units that will be set aside. How will their eligibility be determined? Garver: We will work with
our service partners. We acquired a 14-unit project that we are developing in St. John‘s called
Bridgeview. We received about $800,000 in HOME Funds from PDC for chronically homeless
singles. That definition is fairly straightforward for the federal definition of the chronically
homeless. We will work with the City of Portland and their homeless initiative Bridges to

Page 5—Oregon State Housing Council – August 26, 2005
Housing and our service providers to determine the appropriate definition. The service
partnerships and the service dollars for case management that we‘re going after are really critical
for this project. LaMont: Are they coming out of treatment centers? Is that who they are
targeting? Garver: That is what we‘ve talked about - as folks who have either committed to
treatment so that they could go through treatment while they‘re with their family instead of going
to a treatment center, or folks that have already been through a program.

Bob Repine: Council will probably see more applications with wrap-around service
opportunities for homeless families or individuals, especially from the metro Portland area.
Under the new Mayor, Portland has adopted a very strong initiative on addressing homelessness
issues. Oregon and all the states are addressing a federal mandate to discuss the reduction or
elimination of chronically homeless people. We will contemplate that our third statewide set-
aside pool will be for homelessness, so we can encourage people to be involved on this issue.
We‘ve been very successful with our other set-asides for special needs people.

Betty Dominguez adds that Portland created a ―risk mitigation pool‖ in the event a CDC has a
family that trashes or destroys a unit; fixing a unit can wipe out reserves. Multnomah County has
committed $1 million to the Bridges to Housing program, a fairly new four-county initiative.

               MOTION: Epstein moves that Housing Council approve a
               Predevelopment Loan in the amount of $380,000 at a current interest
               rate of 5.70% per annum until October 27, 2006, at which time the rate
               will be updated to reflect any Program rate changes, for a maximum
               term of two years, to Innovative Housing Inc. for the acquisition of the
               proposed property located on 82nd Avenue in Portland, Oregon.

               VOTE: In a roll call vote the motion passed unanimously. Members
               Present: Coope r, Epstein, LaMont, Liebowitz, Medinger, Woolley and
               Chair Ortiz.

Jack Kenny: Announces that John Wahrgren has taken a promotion with OECDD and notes his
good work. He was very much involved, along with Rick Crager, in the development of OHCS‘s
predevelopment loan program. Bob Repine adds that John was very instrumental in many of the
agency‘s program designs over the last 7seven years. He commends John for his thoughtfulness
and creativity to create many of the products currently in place today.

Chair Ortiz: Asks if the next five loans will be presented separately or as a group? Debie
Zitzelberger responds that they will be presented as a group.

C.     Lincoln Village Apartme nts – Conduit Financing Request.
D.     Park Manor Apartments – Conduit Financing Request.
E.     Pine Tree Apartments – Conduit Financing Request.
F.     West Alameda Apartments – Conduit Financing Request.
G.     Willamalane Apartments – Conduit Financing Request.

Debie Zitzelberge r introduces Tom Brenneke and Dan Steffey, representing the borrower, and
Dave Castricano, representing US Bank. Cindy Smith (in the audience) is also with Guardian

Page 6—Oregon State Housing Council – August 26, 2005
Management (GM). She states that she will combine and present the five conduit financing
requests for: Lincoln Village in Lincoln City, Park Manor in Lebanon, Pine Tree in Winston,
West Alameda in Ontario, and Willamalane in Milwaukee together. For process purposes, five
individual motions will be needed. GM has formed single asset entities that will be the
respective borrowers and owners of the individual five properties. An affiliate of GM will be the
managing member/general partner in each of the five transactions. WNC & Associates is the
equity investor in all five transactions. WNC has issued strong letters of interest that include pay-
in schedules, terms and conditions. US Bank is both the lender and the bond purchaser on all five
transactions. US Bank has underwritten both the borrower and the individual projects and has
issued firm commitments for each of the five projects.

All five-conduit requests are basically the same financing structure. Differences are in local rent,
expenses, and cash flow (distributes comparison chart later). All five properties have scopes of
work and rehab budgets designed to address each of the individual project‘s needs. The lender,
equity investor, and OHCS have reviewed the scope of work and found it to be appropriate for
each project. All five projects have both a long-term bond and a short-term bond. The two loans
on each project are cross collateralized, but the loans between the projects are not cross
collateralized. All five projects were originally funded by HUD under Section 236, which is a
20-year interest reduction payment (IRP) subsidy. The HUD loans have been prepaid through a
process called ‗decoupling,‘ and HUD has approved the IRP subsidy to continue for the
remaining period. OHCS‘s legal and bond counsel have been involved in the structuring of these
transactions and found no areas of concern. The 4% Low-Income Housing Tax Credit Program
has completed their due diligence and has made adjustments to each of the projects to bring them
into compliance with the Program. The tax credits were approved at the Finance Committee
meeting on August 16, 2005.

GM purchased the properties on a line of credit and has been operating and managing the
projects for about 16 months. They are familiar with the individual projects, the market needs,
physical conditions and the tenant population. However, under tax-exempt bond financing
requirements, the borrower must place bond proceeds on a property within 18 months of
purchase or they are no longer eligible for bond proceeds. OHCS scheduled a bond sale for
September 15th in order to close the bond proceeds before the 18- month period expires. That is
why legal and bond counsels have been so active in these transactions to make sure the financing
structure is appropriate for the bond sale. Debie distributes the Comparison of Projects that
summarizes the number of units, rental income, operating expenses, appraised values, tax credits,
loan amounts, rehab budgets, and the HAP Contracts. These are all conduit financings, which
mean the risk to OHCS is minimized by passing it through to US Bank as the lender and bond
purchaser. For process purposes, we will need five individual separate motions. She recommends
approval of the five individual requests.

Tom Brenneke states that GM is a 35-year old property manager that operates over 150
affordable properties. In 2002, GM created a development entity to acquire and preserve existing
low- income housing. GM has a successful track record and has acquired 1,200 housing units,
primarily in Oregon, a few in Washington and elsewhere. He notes there were unique challenges
with these small rural properties due to the small number of units at each of the properties.
Because the costs to acquire, develop and rehab were high, the five small projects were

Page 7—Oregon State Housing Council – August 26, 2005
combined. The units are in average to below-average condition and all need rehab. GM is ready
to move forward with the rehabilitation work.

Dan Steffey: Loan applications for this group of projects have been around for about 3 years.
There were a huge number of issues to work through. GM is looking forward to rehabbing the
sites and improving the resident‘s living environments. These projects will be used as a model
for financing similar small properties in rural areas to preserve existing affordable housing. He
states that US Bank is a great partner and commends lender Dave Castricano.

Chair Ortiz: We are close to a bond sale deadline because of the amount of work that had to be
done to get these projects to this point? Dan Steffey: GM had to deal with getting regulatory
issues through HUD and finding an equity investor that was willing to do these kinds of projects.
Ortiz: What is the total volume cap going out on these 5 projects? Bob Repine: Zitzelberger is
figuring that out. However, we do have ample volume cap available. Ortiz: We talk about the
high percentage of Developer Fee (DF) but it never gets to 10%-12% or doesn‘t exceed 15%.
What is the percentage of DF per project? Steffey: These are all 15% or less of the total project
costs, less the DF. In a bond 4% deal, you want to find as many eligible costs as you can to load
in to increase the amount of tax credits that you can use in your debt and equity combination.
The trick is to try and fold the maximum DF in, and then defer what you need to in order to
make Sources and Uses balance. Repine : Does the chart show the deferral of that, Mr. Steffey?
Ortiz: There is only one that has a deferral. Steffey: These properties, because of the HUD 236
decoupling, come with a limit on cash distribution from HUD that is 2% of your equity. You
have a very small amount of capacity to service the deferred portion of the debt. If you don‘t get
the deferred portion paid in 12 years, your equity investor won‘t stay with you. In order to get
the maximum fee in, you can‘t defer much because of the HUD limits on distribution. For
example, asset management fees for our equity investor must come o ut of the owner‘s
distribution. Bond regulatory fees, tax credit regulatory fees and Resident Services fees must
come out of limits on distribution. By the time you add those all in, there is little or no ability to
defer a fee. Jack Kenny states that Finance Committee discussed the DF. The consensus was
that the complexity of the deal justified the fee. Zitzelberger adds that the projects have been a
challenging group to develop. GM has invested a lot of time and energy into working with
OHCS, as well as equity investors to get equity investors interested in projects in rural Oregon.
Bob Repine: There are going to more of these projects statewide and most are in rural areas. In
order to attract sophisticated business partners, such as GM who do well in metro areas, you
need to entice them to look outside the metro areas. The return has to be enough because they do
not have to develop these types of projects. OHCS is going to be hard-pressed to capture these
projects as they start flipping over to market rate without business partners to purchase similar
rural properties. Chair Ortiz states that most non-profit grassroots organizations in rural areas
do not have capacity, so this is a good step toward getting housing out in those areas.

Jeana Woolley: Could you tell me what populations you are serving in these various
communities? Dan Steffey: These are all family projects, so they are one, two, and three
bedroom units. They all have a major component of HAP subsidies, project-based assistance. We
are serving a population of very low- income families. Woolley: Below 50%? Steffey: There are
many below 30%. These are truly the hardest to serve in the hardest to serve areas. Woolley:
After the financing on these are restructured, will the same covenants and terms of affordability

Page 8—Oregon State Housing Council – August 26, 2005
on who you are serving still be there? Steffey: Correct. The HUD 236 program, in the course of
the decoupling, requires you maintain the regulatory restrictions on occupancy. Not only for low-
income housing tax credits, but for the old 236 program for the remainder of the original 236
mortgage, plus 5 years. That runs us out another 14 years before the HUD regulations expire.
Then we overlay the tax credit 30-year requirement on that. Zitzelbe rger: The bonds also have a
30-year requirement. The borrowers are required to sign an operating agreement, and that
maintains the affordability for 30 years. Woolley: At what level? Zitzelberge r: At the level that
they were approved. Woolley: OK.

Debie Zitzelberge r: And Buz, to answer your question on volume cap, these five projects
between Series A and Series B bonds total $8,048,921. Ortiz: Thank you.

Dave Castricano talks about US Bank‘s commitment and why they are a lender on this type of
project. The bank worked for 2 ½ years with GM to develop a model that would actually work.
This ―Model 25‖ is going to work well. They expect to do this again. The bank is experimenting
with other ideas for the future because thousands of HUD projects are maturing. This model
provides a way for older owners to get out. It works to give them a fair price for their property
and give money to the buyer to fix up the properties and then apply some term-debt. US Bank
has fully underwritten all these properties and is comfortable with the risk it is taking.

Bob Repine: Mr. Chairman, Ms. Zitzelberger requested that you take action on these
individually for the purpose of public record. Ortiz: You have the pages down there for the
recommended motion to help us? Zitzelbe rger: I do. They start on page 51.

               MOTION: Epstein moves that Housing Council approve a Pass-
               Through Revenue Bond Financing in an amount not to exceed
               $1,682,815, for the acquisition, rehabilitation and permanent
               financing of Lincoln Village Apartments by Lincoln Village
               Apartments LLC, at an interest rate to be determined by a future
               bond sale; subject to OHCS staff finalizing the terms and conditions,
               meeting underwriting criteria, the Borrowe r to employ an unrelated
               third party construction contractor and sub-contractors acceptable to
               the Departme nt, draft documentation satisfactory to legal counsel and
               Treasury approval for the bond sale.

               VOTE: In a roll call vote the motion passed unanimously. Members
               Present: Coope r, Epstein, LaMont, Liebowitz, Medinger, Woolley and
               Chair Ortiz.

Debie Zitzelberger: The Park Manor Apartment Motion is on page 59.

               MOTION: Medinger moves that Housing Council approve a Pass-
               Through Revenue Bond Financing in an amount not to exceed
               $1,443,246, for the acquisition, rehabilitation and permanent
               financing of Park Manor Apartme nts by Park Manor Apartments
               LLC, at an interest rate to be determined by a future bond sale;
               subject to OHCS staff finalizing the terms and conditions, meeting

Page 9—Oregon State Housing Council – August 26, 2005
              underwriting criteria, the Borrower to employ an unrelated third
              party construction contractor and sub-contractors acceptable to the
              Department, draft docume ntation satisfactory to legal counsel and
              Treasury approval for the bond sale.

              VOTE: In a roll call vote the motion passed unanimously. Members
              Present: Coope r, Epstein, LaMont, Liebowitz, Medinger, Woolley
              and Chair Ortiz.

Debie Zitzelberger: The Pine Tree Apartments Motion is on page 69.

              MOTION: Liebowitz moves that Housing Council approve a Pass-
              Through Revenue Bond Financing in an amount not to exceed
              $1,546,890, for the acquisition, rehabilitation and permanent
              financing of Pine Tree Apartments by Pine Tree Apartme nts LLC, at
              an interest rate to be determined by a future bond sale; subject to
              OHCS staff finalizing the terms and conditions, meeting underwriting
              criteria, the Borrowe r to employ an unrelated third party
              construction contractor and sub-contractors acceptable to the
              Department, draft docume ntation satisfactory to legal counsel and
              Treasury approval for the bond sale.

              VOTE: In a roll call vote the motion passed unanimously. Members
              Present: Coope r, Epstein, LaMont, Liebowitz, Medinger, Woolley and
              Chair Ortiz.

Debie Zitzelberger: The West Alameda Apartments Motion is on Page 77.

              MOTION: Woolley moves that Housing Council approve a Pass-
              Through Revenue Bond Financing in an amount not to exceed
              $940,660, for the acquisition, rehabilitation and permanent financing
              of West Alameda Apartme nts by West Alameda Apartments LLC, at
              an interest rate to be determined by a future bond sale; subject to
              OHCS staff finalizing the terms and conditions, meeting underwriting
              criteria, the Borrowe r to employ an unrelated third party
              construction contractor and sub-contractors acceptable to the
              Department, draft docume ntation satisfactory to legal counsel and
              Treasury approval for the bond sale.

              VOTE: In a roll call vote the motion passed unanimously. Members
              Present: Coope r, Epstein, LaMont, Liebowitz, Medinger, Woolley and
              Chair Ortiz.

Debie Zitzelberger: The Willamalane Apartments Motion is on Page 87.

              MOTION: LaMont moves that Housing Council approve a Pass-
              Through Revenue Bond Financing in an amount not to exceed

Page 10—Oregon State Housing Council – August 26, 2005
               $2,435,310, for the acquisition, rehabilitation and permanent
               financing of Willamalane Apartme nts by Willamalane Apartme nts
               LLC, at an interest rate to be determined by a future bond sale;
               subject to OHCS staff finalizing the terms and conditions, meeting
               underwriting criteria, the Borrower to employ an unrelated third
               party construction contractor and sub-contractors acceptable to the
               Department, draft docume ntation satisfactory to legal counsel and
               Treasury approval for the bond sale.

               VOTE: In a roll call vote the motion passed unanimously. Members
               Present: Coope r, Epstein, LaMont, Liebowitz, Medinger, Woolley and
               Chair Ortiz.

Bob Repine states that Ms. Zitzelberger put in a tremendous amount of effort and work to put
together five very complex deals into one large deal and then presented it in the way she did. He
expresses his appreciation and thanks her for her work. Betty Dominguez commends the entire
staff and notes that Tom Brenneke and Dan Steffey also helped in the process. Repine expresses
his appreciation for GM‘s efforts and looks forward to other opportunities.

H.       Redwood Park Apartments – Conduit Financing Request. Shelly Cullin: Distributes
corrected copies of pages 95 and 96, which correctly reflects the current ownership entity. Redwood
Park Apartments, LLC is requesting an allocation of bond cap through OHCS‘s Pass-Through
Revenue Bond Program in an amount not to exceed $10,900.000 to acquire and rehab the existing
market rate units in Eugene, convert them to affordable units for households at or below 60% of
AMI. The project consists of 216 units in 28 two-story buildings with a community building.
The borrower is proposing to construct 16 new one-bedroom units (in two buildings). With the
new one-bedroom units, the unit mix will consist of 6 studio; 180 one-bedroom; and 46 two-
bedroom units. Shelly notes that the acquisition of the property will occur October 3, 2005, rather
than September 21, 2005, as indicated in the write-up, because the underlying loan does not allow
prepayment between the 20th of the month and the 1st of the following month. The borrower has
prepared a relocation plan that has been approved by OHCS and the lenders for the project. The
scope of rehab has been reviewed and approved by the lenders, equity investor and OHCS according
to tax credit architectural requirements. Proposed rents will be 6-10% below market. The estimated
total project costs is approximately $18 million. Shelly recommends approval of this request.

Chair Ortiz: Approximately 90 households will be relocated? Cullin: Right. She discusses the plan
to relocate the residents. It is estimated that approximately 90 households are over income and
will need to be displaced. Once the borrower has completed the acquisition and has control of
the property they will be able to complete the income verification process. Bob Repine talks
about the income verification process. Shelly continues that the borrower will work with over
income households in locating new residences. In addition, they will offer $500 to residents that
wait until they receive their 60-day eviction notices to move. If residents move on their own,
they will not receive a financial subsidy. The goal is not to evict all over income tenants at the
same time so that the project can maintain its rental income during the rehabilitation and new
construction period. For tenants that will be temporarily displaced due to the rehab, they will
be offered $75 a night for lodging and meals.

Page 11—Oregon State Housing Council – August 26, 2005
A majority of the tenants are currently paying rents that are proposed post-rehab. Rents will be
increased to the proposed rents at unit turnover, and for those tenants who do remain, rents will
be phased in. According to the sponsor, occupancy for the project has seen 60%-70% turnover
annually. Therefore, new rents will be imposed upon new occupancies. We have one year to
bring the project into tax compliance through attrition. Sam Gottlieb: We certainly have no desire to
put 90 people out on the street. Sara Fay discusses how they arrived at their numbers and that they
approached them very conservatively. Ortiz: Is notification given to the tenants? Fay: Yes. Cullin:
One notice has been sent out already.

John Kenny: Have the tax credit rules changed? Shelly Cullin: No, the tax code has changed. John
Epstein asks if the current rents are higher? Sara Fay: They are the same. Shelly Cullin reports that
Arial South in Bend, a project that Council approved at a prior meeting, actually had less people
needing to relocate. Sam Gottlieb: Ideally, people will move on their own. Cullin emphasizes that
the project does not want mass exodus.

John Epstein discusses rents and asks LIHTC process questions. After further discussion, Epstein
makes an Amended Motion that changes the owner‘s name from Redwood Partners, LLC to
―Redwood Park Apartments, LLC‖.

       AMENDED MOTION: Epstein moves that Housing Council approve a Pass -
       Through Revenue Bond Financing in an amount not to exceed $10,900,000
       for the acquisition, rehabilitation and construction of 16 ne w units at
       Redwood Park Apartments to Redwood Park Apartments, LLC subject to
       documentation satisfactory to legal counsel and Treasury approval for the
       bond sale.

       VOTE: In a roll call vote the amended motion passed unanimously.
       Membe rs Present: Cooper, Epstein, LaMont, Liebowitz, Medinger, Woolley
       and Chair Ortiz.

I. Aspen Court – Additional Trust Fund Request. Shelly Cullin reports that Aspen Court is a
16-unit senior apartment complex located in Lakeview that was built in 1975 with Rural
Development (RD) financing. The Klamath Housing Authority (KHA) was approached by the
owners to acquire the property, as they wanted to see the project remain affordable to the community.
KHA submitted an Elderly and Disabled Loan request and on April 25, 2003, the Housing Council
approved a $100,000 E/D loan; and the Finance Committee had approved $72,000 in Trust Funds.
The property was acquired and all loans (OHCS and RD) closed on June 12, 2003. At that time, the
project received 100% RD rental assistance. Since that time, KHA has encountered several set
backs to completing the rehabilitation for Aspen Court. Shelly discusses the setbacks that are
detailed on pages 105-106 in the packet. She notes that in April of 2004, KHA submitted a request
for an additional $13,685 in Trust Funds to hire an engineering firm to complete more detailed
plans and specs for the formal bidding process and to oversee the rehab. Finance Committee
approved this request on May 5, 2004. She talks about weatherization activities and the project
delays because of engineering firm issues that set them back on their schedule. After more
issues, in June 2005, KHA contacted Rob Thornton Construction to see if he was still interested
in the job. During June and July KHA has been negotiating with the contractor, and the final bid
has been submitted for $259,610. This is approximately $108,000 more than the original budget

Page 12—Oregon State Housing Council – August 26, 2005
in 2003. KHA has contacted OHCS for assistance in finding resources for this gap. Shelly notes
that Frank Silkey and she reviewed the scope of work and there has been no change. The only
change from the original Uses of Financing is that KHA was required to hire an engineering firm
to complete the bid and spec packet; which cost an additional $13,865 (which they received
additional Trust Funds for in May of 2004). She recommends approval of this request.

Chair Ortiz comments that Aspen Court is a difficult project. Bob Repine talks about affordable
housing issues in Lakeview. He notes that while the high-value of the prison construction project is a
good thing for economic purposes, it has had a chilling effect on another project OHCS has in
Lakeview. Currently it is a sub-contractors market in Lakeview, but that will come to an end when
the prison is constructed. Bob spoke to DOC Director Max Williams who said that many of the
houses were for DOC employees relocating to Lakeview from places like West Linn and required
new housing. Bob talks about the discussions held in Finance Committee and in hindsight, how the
project could have been approached differently.

       MOTION: Medinger moves that Housing Council approve an additional
       Trust Fund award not to exceed $90,000 for a total Trust Fund Award not to
       exceed $175,685, to the Klamath Housing Authority for the rehabilitation of
       Aspen Court.

       VOTE: In a roll call vote the motion passed unanimously. Members Present:
       Coope r, Epstein, LaMont, Liebowitz, Medinge r, Woolley and Chair Ortiz.

Jeana Woolley: Are we real comfortable that KHA can manage this unit? Bob Repine: Yes. KHA
brought permanent staff to the Lakeview area for this project and will also be the managing partner
for the other project I discussed. These projects will provide good stability in that community.

Council breaks for lunch.


A. Report of the Chief Financial Officer - Rick Crager
        Bond Calendar. Multifamily. With the approvals by Council today on the six
conduits, we close on September 15 for the five conduits and on October 3 for the Redwoods
project. Single Family. We anticipate a deal around November 8, at the time OHCS will
need proceeds. In the past we had to have an end-of-the year deal if we had excess cap that we
needed to put into escrow. Now with the drawdown bonds in place we do not necessarily need
to have a long-term deal at year-end. Multifamily Restructuring was successfully priced
Aug. 16 and includes the North Main, Ariel South and Quail Run projects. We achieved a
rate of 5.90% on most of those; we needed to achieve a 6%. We are finishing that deal and
hope early next week to close on those three deals. Then we will focus on the conduit deals
approved today and finish up with the single family. That is the long-term deals for the year.
        OHCS Financial Condition. Issues that that impacted OHCS‘s financial condition for
FY 2004 ending last June 30 were a slower economy, slower originations, high prepayments and
a $15.5 million reduction in fund balance. He discusses re medies: drawdown bonds to prevent
negative arbitrage, loan originations and structuring bond financing. All resulted in the agency

Page 13—Oregon State Housing Council – August 26, 2005
breaking even. Moody‘s continues to monitor us and has not downgraded our rating. There were
no legislative raids, which contributed to those losses in the past.
       Secretary of State Auditors continue to review our work. Everything still looks good.
        2005-07 Budget. Staff is in the process of compiling section numbers and insuring that
they are operating correctly. All of the program budgets are established. OHCS is moving out of
the continuing resolution phase and into the 2005-07 budget implementation.
       OIG Audit. As reported last month, HUD agreed with OIG‘s findings and asked OHCS
to make payment of about $1.6 million within 30-days. We sent a response to HUD that said we
disagreed with those findings and would not pay. He offers to email that response to Council.

B.       Report of the Deputy Director – Jack Kenny distributes his written memorandum to
Council and reports as follows:
        HUD OIG Audit. Adding to Rick‘s comments, Jack reports that OHCS‘s letter to HUD
was copied to the Governor‘s office and the Oregon congressional delegation. Renee Greenman,
HUD Region 10 Director, has contacted Bob Repine. OHCS has been in contact with
congressional staff and the National Council on State Housing Agencies (NCSHA) for their
assistance as well. He notes that the OIG audited the State of Idaho and fined them $14 million
on different issues. John Epstein: Have you set aside any reserves of our financial statements?
Rick Crager: No, we did make it contingent liability. The Housing Finance Fund, a collection of
single- family and multi- family bond programs, is the main resource for OHCS. Also known as
―reserves‖, this is the basis for cash flows and monies that we use for operating dollars. Epstein:
Are those reserves invested and earning interest that operates this department? Crager: Yes. We
would lose $1.5 million in interest carried. Bob Repine: Marlys Laver, APM Administrator, and
I met with staff from US Senators Ron Wyden and Gordon Smith‘s office. OHCS staff and legal
counsel will meet with Renee Greenman, staff and their attorney on September 8 at the HUD
office in Portland. We will take our documentation and AG attorney to that meeting.
        Community as Customer Initiative: He gives an update to Lisa Joyce‘s report at the July
Council meeting. The survey of 10 Mayors has been completed. We asked the Mayors for the
three top issues relative to affordable housing in their community and what things they could do
to improve affordable housing. Results will be presented to Council in the future so they can
formulate a plan for advocacy and additional research. Single- family housing is a top priority. A
big issue is local governments‘ lack of money, so they look to the State for help.
        Strategic Plan work is moving forward. The deliverables and timelines have been
presented to the Steering Committee, who will narrow those down. Customer service is key
and we are maintaining our initiatives.
        Incarceration to Community Housing. Staff is exploring housing that provides services
wraparound for offenders to help reduce the incarceration and recidivism rates and save money.
Andi Howell, OHCS Community Resource Analyst, helped organize a Community Corrections
Directors forum in McMinnville. She will research our funded housing projects to determine
whether wraparound services have actually reduced recidivism. We plan to take those findings to
the Legislature to demonstrate a return on the investme nt of state monies. Ortiz: Is there a
report? Bob Repine promises to check with Andi and have a copy of the meeting minutes sent
to Ortiz, when completed. Scott Cooper asks who supports the initiative at the state level?
Repine: Obviously, Community Corrections, LOC and AOC do not have the economic
resources to address this issue either and need some assistance to help start this transition. He
talks about released offenders with mental health or substance abuse issues and the impact on

Page 14—Oregon State Housing Council – August 26, 2005
community‘s resources. Those issues are being rolled into the Governor‘s strategy on housing
issues in total.
       Services Monitoring Initiative. Roberto Franco met with different developers in all six
regions of the state to identify best practices. He is compiling that data in a template and has
written a draft report. With this information, our external partners will know what OHCS
considers ―adequate services‖, especially when our APM staff monitors a project for compliance.
       PacifiCorp. The Oregon PUC is analyzing the potential sale of PacificCorp. When
OHCS receives weatherization funds, it allocates those to its Community Action Agency
partners. PacifiCorp serves a four-state service area: Oregon, Washington, Idaho and Montana.
Both Oregon and Washington believe that the public purpose money should be used for
weatherization. OHCS may file as an intervener in order to protect our federal use of the Low
Income Energy Assistance Program (LIEAP).
       Manufactured Home Parks. OHCS financed a manufactured park purchase several
years ago. During the 2005 Legislature, proposed legislation was introduced that would protect
park tenants being forced to relocate in the event the parks were sold. OHCS is taking on a
greater role and making available information on where people can move if they are being
displaced. More work will be done during the interim on financing options.

C. Report of the Director – Bob Repine
       Statewide meetings. Bob reports that over the last month he has attended a series of
Grand Openings of projects funded by the Department and toured potential project sites with
RADs Betty Dominguez, Kim Manie-Oskoii and Darcy Strahan. The RADs have met with
county commissioners in their respective regions about county owned surplus lands and whether
the county would work with OHCS and make that land available for affordable housing.
       Personal Financial Modeling. State Housing Analyst, Richard Bjelland, will report
to Council next month and demonstrate the use of his Personal Financial Modeling tool that
was developed to be used with Individual Development Accounts (IDA). People can set aside
money for creating a business, going to school, or buying a house. Richard has developed a
very simple annuity equation formula. We would like to see this model introduced in the
education system, so parents and children can plan ahead for their financial future.
       Community Development Block Grant (CDBG) Funds. Staff recently met with
OECDD to discuss the use of CDBG funds. OECDD hired a contractor to analyze CDBG funds
and how people have used it over the last few years. The contractor concluded that using CDBG
funds to help finance off-site infrastructure (roads, sewer, water) for property to be used for
affordable housing was not advisable. OECDD had only one application in the last year, and the
contractor believed, for instance, that if a road ran straight through a property with lower
incomes and higher incomes on opposite sides, then the rich benefited from the use of that road
which was an inappropriate use of CDBG resources. A letter is being written to OECDD asking
them to reconsider their elimination of off-site infrastructure for new affordable housing. He
will ask Gordon Fultz from AOC for assistance. Scott Cooper agrees with Repine‘s comments
and adds that OECDD‘s goal is to take 25% of CDBG funds and dedicate it to a ―category‖
broadly called ‗economic development‘, the definition of which will be developed later. He
discusses using CDBG funds to replace the reduced level of strategic investment funds that the
Legislature refused to allocate to the Governor for cash transfers to private business, as an
enticement to come to Oregon. Secondarily, to fund the local infrastructure in terms of the
economic development staff. Repine promises to copy Council with OHCS‘s letter to OECDD.

Page 15—Oregon State Housing Council – August 26, 2005
D.      Report of the Chair. Ortiz states that a project called Sandy Vista in Sandy, OR, is
available but not being utilized and that about 50% of the units are empty even though there is a
great need for farmworker housing in that area. He asks staff to look into the matter for him. Bob
Repine: How interesting. The one we just opened? Ortiz: Yes. They have a long list of people
waiting to move in but cannot because of certain RD regulations. Repine promises to have staff
look into the matter.

Chair Ortiz: We are adjourned. (1:00 p.m.)

__________________________________           __________________________________
Buz Ortiz, Chair             DATE            Bob Repine, Director        DATE
Oregon State Housing Council                 Oregon Housing & Community Services

Page 16—Oregon State Housing Council – August 26, 2005

To top