Affordable Housing Acquisition and Preservation
First Capital Corporation acted as the strategic financial consultant and special advisor on HUD matters to the purchaser of a 250-unit Section 8 Property located in the US Virgin Islands. The project was originally financed with a FHA mortgage insured under Section 236 of the National Housing Act. First Capital devised potential acquisition strategies and options for our client and executed the selected strategies, which cumulated in the acquisition of the property. Two hundred fifty much needed affordable housing units were preserved. First Capital examined the Section 236 Decoupling option with a Budget base rent increase versus a Mark Up to Market Rent Increase and a separate refinancing using Section 223(f) mortgage insurance. The client ultimately decided to proceed with the Mark Up to Market Rent option. First Capital prepared the Mark Up to Market Application; drafted and negotiated a unique USVI Affordable Housing Land Use Restriction Agreement which provided over $95,000 in annual tax exemptions; assisted the client in obtaining the 223(f) financing, and reviewed all third party reports and legal documents associated with the transaction; First Capital also developed a strategy under HUD regulations to preserve the client’s rights and future options for rent increases and disposition.
