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Success Stories in Financing Housing for the Elderly

Learn about Dakota County CDA's impactful strategies in financing affordable senior housing developments, addressing demographic shifts and funding challenges.

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Success Stories in Financing Housing for the Elderly

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  1. Success Stories in Financing Housing for the Elderly NalHFA--2013 Annual Conference Mark Ulfers, Executive Director Dakota County Community Development Agency (CDA) mulfers@dakotacda.state.mn.us (651)675-4400 www.dakotacda.org

  2. Dakota County Community Development Agency Dakota County CDA: • Established in 1971 • One of the largest housing and community development program providers in the Minnesota • Administers over 30 different programs Area Served: • South of Minneapolis-St. Paul • 3rd largest county in Minnesota • Population: 402,006 • 21 cities and 12 townships • Suburban and rural

  3. Why Senior Housing? Park Ridge Place, Burnsville • 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+ • 3 Phases totaling 1,543 units in 26 buildings • Phase I 1990-1997 535 units • Phase II 1998-2007 600 units • Phase III 2008- Present 408 units • There are currently 1,220 seniors residing in CDA Senior Developments. Crossroads Commons, Lakeville

  4. 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

  5. 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

  6. 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

  7. Senior Housing Development Program • Households: 1,417 • Individuals: 1,590 • 77% female/23% male • Average age: 75 • Average length of residency: 5 years • Average income: $21,000

  8. Financing Structure • 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

  9. Common Bond Fund – Flow of Funds 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

  10. Financing • 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

  11. 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

  12. 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

  13. For more information: Dakota County CDA 1228 Town Centre Drive Eagan, MN 55123 651-675-4400 www.dakotacda.org Questions?

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