Financing Resources for Community Health Centers February 12, 2014

Transcription

1 Financing Resources for Community Health Centers February 12, 2014 Presented by Emily Chen, Director, Health Center Lending & Healthy Futures Fund Victor Abla, Director, Lending, Detroit LISC Robert Poznanski, SVP, New Markets Support Company For the Michigan Primary Care Association

2 LISC: Background and Impact HISTORY AND MISSION TOTAL COMMUNITY INVESTMENTS INVESTMENTS IN COMMUNITY HEALTH The Local Initiatives Support Corporation was formed in 1980 with lead investments from the Ford Foundation and others. $12.9 billion which has leveraged $38.3 billion in total development in: 298,300 affordable homes & apartments $105 million which has leveraged $489 million in total development in: 52 total health centers (stand alone and mixed use) LISC is a national organization whose mission is to help community residents transform distressed neighborhoods into healthy and sustainable communities of choice and opportunity. Today, LISC has 32 offices nationwide, a dedicated Rural LISC program and two affiliates that deploy and manages our Low Income Housing Tax Credit (National Equity Fund) and New Markets Tax Credit resources (New Markets Support Company) million sq ft of retail & community space 180 schools financed for 72,000 students 184 child care facilities supported for 19,700 children 269 playing fields renovated for 467,500 kids 900,000 sq ft of health care delivery space 1 million individuals with improved access to care

3 LISC FINANCING RESOURCES Loan products New Markets Tax Credits Healthy Futures Fund LISC sstructured New Markets Tax Credit product

4 Financing by Project Type: HEALTH Eligible Borrowers Purpose Loan Amount Interest Rate Term Repayment Loan Fees Collateral Federally Qualified Health Centers, FQHC Look-Alikes, community health centers, special purpose entities or subsidiaries managed by centers Funds may be used for bridge, working capital, predevelopment, acquisition, construction and permanent loans for the planning, development and/or improvement of community-based health care facilities in low-income areas LISC has the ability to provide loans varying between $50,000 to $5,000,000 depending on loan product Varies Permanent: fixed at spread over US Treasuries of comparable duration Bridge Working Capital Predevelopment Acquisition Construction Mini-perm Permanent Bridge Working Capital Predevelopment Acquisition Construction Mini-perm Permanent 3 years 2 years 2 years 3 years 3 years 7 years 29 years 0.5% - 1.5% of loan amount plus legal fees Bridge Working Capital Predevelopment Acquisition Construction Mini-perm Permanent Interest-only; payable monthly Interest-only; payable monthly Interest-only; payable monthly Interest-only; payable monthly Interest-only; payable monthly Amortizing payments based on period of up to 25 years; payable monthly Fully amortizing payments based on period of up to 30 years; payable monthly Bridged receipts and/or real estate collateral Flexible; generally secured Flexible; generally secured Real Estate Collateral with LTV of up to 90% Real Estate Collateral with LTV of up to 90% Real Estate Collateral with LTV of up to 90% 1 st lien on Real Estate Collateral with LTV of up to 90%; additional collateral may be required for any amount in excess of 80% LTV PROJECT SNAPSHOT Community Health and Social Services Center (CHASS), Detroit, MI Access to quality, affordable health care is a particular challenge for low-income residents. Detroit LISC worked to close the gap by helping Community Health and Social Services Center (CHASS) open a $17 million state-of-the-art health care center and administrative facility in southwest Detroit, an area where many residents are uninsured or on Medicaid. Detroit LISC provided a $3 million loan that allowed CHASS to more than double its exam facilities, add 50 full-time staff, create 200 construction jobs, and triple the number of healthcare providers, thereby reducing the disparity between the physician to patient ratio. The new facility offers expanded preventive services, including screening for colon and cervical cancers and wellness, exercise, nutrition and cooking programs. The 48,000 square-foot medical center was designed to meet the needs of Detroit s multi-cultural community. CHASS provides culturally competent services in English and Spanish. For the uninsured, CHASS provides a sliding-fee scale that charges patients for services based on their ability to pay, however, no one is ever denied medical care because of the inability to pay. lending@lisc.org

5 Lending Products Predevelopment Acquisition Construction Mini-Permanent PURPOSE PURPOSE PURPOSE PURPOSE To pay due diligence expenses, deposits, and other predevelopment costs. To pay purchase price and closing costs for property acquisition. To pay hard and soft construction costs of new construction or renovation projects. To provide longer-term, amortizing loans for certain projects requiring stabilization and/ or interim financing prior to permanent financing. TYPES OF PROJECTS TYPES OF PROJECTS TYPES OF PROJECTS TYPES OF PROJECTS Rental housing; for-sale housing; community facilities; commercial and mixed-use projects. Rental housing; for-sale housing; community facilities; commercial and mixed-use projects. Rental housing; for-sale housing; community facilities; commercial and mixed-use projects. Rental housing; for-sale housing; community facilities; commercial and mixed-use projects. LOAN AMOUNT LOAN AMOUNT LOAN AMOUNT LOAN AMOUNT $50,000 - $1,000,000 $100,000 - $5,000,000 $100,000 - $5,000,000 $100,000 - $5,000,000 INTEREST RATE INTEREST RATE INTEREST RATE INTEREST RATE 6% Fixed 6% Fixed 6% Fixed 6% Fixed TERM TERM TERM TERM Up to 2 Years Up to 3 Years Up to 3 Years Up to 7 Years REPAYMENT REPAYMENT REPAYMENT REPAYMENT Interest-Only Payable Monthly Interest-Only Payable Montly Interest-Only Payable Montly Amortizing payments based on period of up to 25 years depending on project type Payable Monthly LOAN FEES LOAN FEES LOAN FEES LOAN FEES 0.5% - 1.5% of loan amount plus legal fees 0.5% - 1.5% of loan amount plus legal fees 0.5% - 1.5% of loan amount plus legal fees 0.5% - 1.5% of loan amount plus legal fees COLLATERAL COLLATERAL COLLATERAL COLLATERAL Flexible; generally secured Real Estate Collateral with LTV of up to 90% Real Estate Collateral with LTV of up to 90% Real Estate Collateral with LTV of up to 90% Terms subject to change. All loans are subject to underwriting and credit approval. For more information and details on LISC s loan products, visit our website. lending@lisc.org

6 Lending Products Permanent Bridge Working Capital Line of Credit PURPOSE PURPOSE PURPOSE To provide long-term fully amortizing financing. To bridge the timing gap between project or program costs and receipt of cash from committed or anticipated sources. To provide flexible capital to meet organizational cash flow needs or pay project-based expenses. TYPES OF PROJECTS TYPES OF PROJECTS TYPES OF PROJECTS Rental housing; health centers; charter school facilities. Rental housing; for-sale housing; community facilities; commercial and mixed-use projects. LOAN AMOUNT LOAN AMOUNT LOAN AMOUNT Rental housing; for-sale housing; community facilities; commercial and mixed-use projects. $500,000 - $5,000,000 $100,000 - $5,000,000 $100,000 - $5,000,000 INTEREST RATE INTEREST RATE INTEREST RATE Fixed at spread over U.S. Treasuries of comparable duration 6% Fixed 6% Fixed TERM TERM TERM Up to 29 Years Up to 3 Years Up to 2 Years REPAYMENT REPAYMENT REPAYMENT Fully amortizing payments Payable Monthly Interest-Only Payable Monthly Interest-Only Payable Monthly LOAN FEES LOAN FEES LOAN FEES 1.5% of loan amount plus legal fees 0.5% - 1.5% of loan amount plus legal fees 0.5% - 1.5% of loan amount plus legal fees COLLATERAL COLLATERAL COLLATERAL 1st lien on Real Estate Collateral with LTV of up to 90%; additional collateral required for any amount in excess of 80% LTV Bridged receipts and/or real estate collateral Flexible; generally secured Terms subject to change. All loans are subject to underwriting and credit approval. For more information and details on LISC s loan products, visit our website. lending@lisc.org

7 LISC: New Markets Support Company Manages over $900MM in New Markets Tax Credit (NMTC) Financing with $778 million in LISC allocation and the balance from other CDEs LISC brings NMTCs to communities served by LISC by financing transactions that advance the community development strategies of LISC s local programs, National Rural Program, & other national programs and affiliates LISC generally uses $5 $15 million in NMTC financing per transaction and can partner with other CDEs on larger transactions LISC has also developed two structured NMTC products: Small Business Loan Fund provides advantageous first mortgage financing in connection with the SBA 504 Program Health Futures Fund provides favorable financing for Federal Qualified Health Centers (FQHCs) East Side Health Clinic St. Paul, MN

8 LISC: Healthy Futures Fund Overview INVESTMENT CRITERIA AND FUND BENEFITS Operating entity of the proposed health center must be a Federally Qualified Health Center or Look Alike entity. Financing will support expansions for FQHCs and Look Alikes. The development project needs to be located in a qualified census tract. Look up at or call to confirm (see info at end of presentation). Fund benefits include: Access to NMTC benefits for small projects Committed sources of capital Lower transaction costs Shorter closing process Minimizes need for NMTC expertise Established documentation for financing Grants to support the success of the FQHC and proposed development

9 LISC: Healthy Futures Fund Overview FINANCING TERMS First mortgage loans $1MM minimum, $10MM maximum can support smaller renovations and large scale capital projects Total financing up to 80% LTV w/ 1.20 DSCR; the LTV allowance may be higher pending due diligence review 7 year initial term, with first 30 months interest only then 19 year amortization schedule Rate fixed at 7 year LIBOR swap to 250 basis points for 7 years At least 20% of the total loan to borrowers will have the ability to be cancelled (through a put call structure) upon successful third party refinance of the remaining principal balance LISC financing / legal fee capped at $30,000 per transaction

10 Healthy Futures FQHC Financing Examples PIPELINE EXAMPLES New construction to relocate and expand satellite site for health center to expand services for multi site health center network; Tenant improvements in ground floor space of supportive housing project for a satellite health center to deliver both behavioral health and primary care services; FAMILY HEALTH CENTERS Omak, WA The Family Health Centers undertaking consists of a 20,000 SF medical clinic expansion in rural Washington State. The expansion will quadruple the size of the medical clinic to 18,000 SF and more than double the size of the pharmacy to 2,000 SF. The health center will be able to serve over 5,000 additional patients per year resulting in an increase of 16,000 patient visits to 65,000 visits overall. HFF is providing a grant to FHC to increase community awareness of the benefits of primary care and provide transportation access to patients in need. New construction of FQHC located on integrated campus with affordable housing and other supportive services.

11 Contact Information Emily Chen Director, FQHC Lending & Healthy Futures Fund Victor Abla Director, Lending, Detroit LISC x17