Loading...
HomeMy WebLinkAbout01-17-2008 Housing & Community Development Commission AGENDA HOUSING AND COMMUNITY DEVELOPMENT COMMISSION LOBBY CONFERENCE ROOM, CITY HALL THURSDAY, JANUARY 17,2008 6:30 P.M. 1. Call Meeting to Order 2. Community Land Trust Presentation by Maryann Dennis of The Housing Fellowship 3. Discussion of FY08 Projects that have not Performed per the Unsuccessful or Delayed Projects Policy 4. Approval of the December 20,2007 Minutes 5. Public Comment of Items Not on the Agenda 6. Review of the FY09 Allocation Process & Proforma Basics 7. Monitoring Reports . Crisis Center - Facility Rehabilitation (Drum) . Iowa City Free Medical Clinic - Operational & Facility Rehabilitation (Richman) . Community Mental Health - FY07 Facility Rehabilitation (Drum) . Iowa City Housing Authority - FY06 & 07 Tenant Based Rent Assistance (Shaw) 8. Adjournment ,~ 1 -,...= -......!t ..... -......... t~~!i ~ ~aa.~ -"'r~ CITY OF IOWA CITY MEMORANDUM Re: January 11, 2008 Housing & Community Development Commission (HCDC) Tracy Hightshoe, Associate Planner January Meeting Packet Date: To: From: Community land Trust Presentation Maryann Dennis of The Housing Fellowship will be present to provide information about the basics of community land trusts. Discussion of Projects that have not Performed per the Unsuccessful or Delayed Projects Policy The Housing Fellowship was awarded $347,772 for an affordable rental housing project during the FY08 allocation round. The application identified Low Income Housing Tax Credits as a funding source needed to proceed; however THF was not able to apply for L1HTC in the application round immediately following the allocation of local HOME funds. Maryann Dennis, the THF Director will be present to discuss the project. Below is the applicable section of the Unsuccessful or Delayed Projects Policy: Should a recipient be unsuccessful in obtaining the funds listed in the application in the application round immediately following the allocation of local CDBG\HOME funds, and the project will not be able to proceed without the aforementioned funds, all CDBG/HOME funds will be recaptured by the City of Iowa City and recommendations be made by the HCDC for re-use of the funds or HCDC may allow the recipient to retain the funds for the previously approved project. If the project is unsuccessful in obtaining the required funds listed in the application after two consecutive funding rounds following the allocation of local CDBG/HOME funds, the City of Iowa City will recapture all CDBG/HOME funds. Review of the FY09 Allocation Process and Proforma Basics Staff will review the allocation cycle for the benefit of the current and new commission members. Staff will also provide a brief overview of the proforma sheet included in the housing application for rental housing projects. Please review the packet of information regarding housing project finance. This information will give you the basics in understanding the spreadsheet and rental housing budgets. Staff will also be discussing conflict of interest issues as they relate to the allocation process. Monitoring Reports (contact information included) . Crisis Center - Facility Rehabilitation (Drum) Contact Dawn Newbill at 351.2726 . Iowa City Free Medical Clinic - Operational & Facility Rehabilitation (Richman) Contact Sandy Pickup at 337.9727 . Community Mental Health - FY07 Facility Rehabilitation (Drum) Contact Stephen Trefz at 338.7884 x211 . Iowa City Housing Authority - FY06 & 07 Tenant Based Rent Assistance (Shaw) Contact Steve Rackis at 887.6065 If you have any questions about these agenda items, or will be unable to attend, please contact me at 356-5244 or by email at tracy-hightshoe@iowa-city.org. MINUTES HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 20, 2007 LOBBY CONFERENCE ROOM, CITY HALL DRAFT Members Present: Jerry Anthony, Charles Drum, Andy Douglas, Holly Jane Hart, Rebecca McMurray, Michael Shaw Members Absent: Steve Crane, Marcy DeFrance, Brian Richman, Staff Present: Tracy Hightshoe Others Present: Bob Burns, Charlie Eastham, Andy Johnson RECOMMENDA TIONS TO COUNCIL (become effective only after separate Council action): A motion to submit a letter of support for the Trust Fund's funding request to Council was made by Hart, and seconded by Drum. Motion carried 5:0 (Anthony abstaining). CALL TO ORDER: Anthony called the meeting to order at 6:38 PM. APPROVAL OF MINUTES: Anthony asked the Board is anyone had changes or corrections they would like made to the November IS, 2007 minutes. No comments were made. Drum made a motion for approval of the minutes, and Douglas seconded the motion. The motion carried 5:0 (McMurray arrived late and did not vote on this matter). PUBLIC COMMENTS OF ITEMS NOT ON THE AGENDA: None. STAFF/COMMISSION COMMENTS: Hightshoe reported that the subcommittee established to review CITY STEPS priorities is still meeting. Previously, subcommittee members attended three public meetings to gather input on community needs and they are currently investigating resources for non- housing related community development projects in high need areas. She hopes to have a meeting set up sometime early in January with various local funding sources. The committee did not pursue CITY STEPS changes at this point as the housing market analysis results will be presented in January. The committee preferred to review and recommend changes, if necessary, at the same time. Shaw asked if there were any updates on the Big 10 zoning request and what's going on with Planning and Zoning and the City Council in relation to that project. Drum said Planning and Zoning acted on the proposal from Big 10, and voted 4:3 to not recommend it to the City Council, which resulted in the applicant withdrawing their re-zoning proposal. Shaw asked for clarification on what Big 10's action meant, and was told that Big 10 can still develop under the current zoning code, but not go as large as they would have liked. LOW INCOME HOUSING TAX CREDIT PRESENT AION BY BOB BURNS OF BURNS & BURNS, LC: Burns, a local architect and developer, spoke to the Commission about the low-income housing tax credit program. He reviewed background information, history, and funding scenarios for the low-income tax credit, which is used for multi-family housing. The program, created in 1986, is the government's longest-running assisted multiple-family housing program. It is administered under Section 42 of the Internal Revenue Code, and credit is allocated every year to each state's housing finance agency, and in Iowa's case, the Iowa Finance Authority (IF A). States are allocated credit based upon population, and in 2007 Iowa received $1.97 per person, equaling approximately a $5.8 million credit. He said the program is popular on "both sides of the aisle" politically, and that businesses, such as his, have grown-up around the program. Burns said the most difficult aspect of utilizing the program in Iowa City is finding a building site that the owner is willing to sell, and which is zoned properly. Burns went through the process of how a developer applies for the credit, the Qualified Action Plan and scoring criteria, how to calculate the credit for the project, the responsibilities of the general partner and investors, and various monitoring requirements if awarded funds. DISCUSS THE HOUSING TRUST FUND OF JOHNSON COUNTY'S (HTFJC) REQUEST TO SUBMIT A LETTER OF SUPPORT TO THE CITY COUNCIL: Anthony said the purpose of the request is for the Commission to write a letter to the City Council in support of the Trust Fund's request for $53,000 (based on population). He said the Trust Fund is one of the top two in the state in regards to fund longevity and money raised. Anthony added that last year the Fund received funds from North Liberty, Coralville and Johnson County. Andy Johnson, HTFJC Director, explained that the Fund's first priority is to bring in new funds to Johnson County and not to be competing for funds that local housing providers utilize. He said, so far, their primary source of funding has been the State Housing Trust Fund. He explained that many housing trust funds around the county have dedicated sources of funding, but the state's housing trust fund and our local housing trust fund do not. He said the Fund is working on getting a part of the state's portion of the real estate transfer tax, which would guarantee $200,000 for Johnson County. As part of the application process they are required to have local matching funds. He said the Fund has brought over a million dollars of state and federal funding into Johnson County over the past three years. The Housing Trust Fund is looking for public funds from local governments, as well as donations from private entities. Johnson explained that while the request is only for money this year, the Fund hopes that in the future it will be allocated money yearly by the community. 2 Shaw asked Anthony if he would exclude himself from the vote because of his ties to the fund, and Anthony said he would. Shaw asked why the request for funding was denied by the City last year. Johnson explained the Fund was a "new beast," there seemed to be . confusion over the funding allocation, and at the time the housing survey was competing for Council funding as well. A motion to submit a letter of support for the Trust Fund's funding request to Council was made by Hart, and seconded by Drum. Motion carried 5:0 (Anthony abstaining). Johnson said on January 25 the Housing Trust Fund is hosting the Second Regional Housing Summit. He added that Mullin & Lonergan Associates, the consultants hired to complete the housing market analysis, will present their findings to the City Council on Wednesday night, to the University community Thursday afternoon, and the public on Friday. Heather McDonald will present the results of the statewide affordable housing study at the Housing Summit as well. DISCUSS HCDC COMMUNICATION AND RECOMMENDATIONS TO THE CITY COUNCIL: Hightshoe touched on the Commission's previous questions about reviewing time- sensitive material, forming a consensus, and relaying information to the Planning and Zoning Commission and/or the City Council. She reminded the Commission they the need to follow the intent of open meeting laws in Iowa. She said a HCDC member could present his or her personal opinion, but to represent an opinion of the Commission, the issue must be voted upon by HCDC members. In order for the Commission to vote on an issue, 24 hours public notice must be given, and the meeting must be held in a public meeting place to allow the public the opportunity to attend. Email and teleconferencing are not allowed under the intent of the open meetings law. She said Commission members could register online to receive P & Z announcements in order to keep abreast of issues which might be of particular interest to HCDC. Hightshoe stated she will email how to subscribe to City email alerts. Anthony stated that members could review the agenda and staff reports and if any item needs further discussion the member could contact Anthony or Hightshoe to include on the next HCDC agenda. Commission members agreed to proceed in this manner. FY06 PROJECT UPDATES: DOWNP A YMENT ASSISTANCE AND THE HOUSING FELLOWSHIP-AFFORDABLE RENTAL HOUSING Hightshoe said that our HUD representative contacted her recently about the Housing Fellowship, Affordable Rental, and the Down-Payment Assistance Program. The Housing Fellowship, which is a FY06 HOME project, had not withdrawn any funds. Under the HOME agreement, THF would acquire two properties. As a site has not been found, HUD requests the project terminated. The $175,000 in HOME funds will be reallocated in the upcoming allocation cycle. The HUD representative also requests that the FY06 downpayment assistance program be terminated and the funds reallocated due to the slow expenditure rate. Only $1,000 of the $30,000 award has been spent. Since 3 July 2005, Hills Bank administered the program, announcement ofthe funds was sent to all local bankers and staff met with the Housing Authority to discuss the availability of the funds for their clients. She said the fund appeared to have too many regulations attached to it which made the application challenging for most potential homeowners and there were other programs the banks could utilize for first time homeowners. She also reported that the City might see a three percent reduction in the CDBG and HOME entitlement amounts so the funds that will be available for reallocation will more than offset the loss. MONITORING REPORTS VISITING NURSE ASSOCIATION: Drum reported that Sue Ellen Novotny, with the VNA, said the Association received $2,500 ofCDBG grant money. They have spent $1,173, while matching nearly $7,000, to provide home health services for seven patients in the Iowa City area with mental health problems. lOW A V ALLEY HABITAT FOR HUMANITY-FY07 & FY08 AFFORDABLE HOMEOWNERSHIP Hightshoe, reporting for Crane, said IVHH was allocated $117,000 in FY08 funds, and used $30,000 to purchase a lot on I St., with plans to purchase two more lots. For FY07 they purchased six lots in Whispering Meadows. Hightshoe stated one lot was removed from the original purchase due to failure to notify staff regarding the household once selected and the necessary income certification. Habitat repaid the City for this lot and will be purchasing another lot in the same subdivision for a total of six homes. There will be approximately $8,000 budgeted for each home for construction or landscaping expenses. Habitat plans to use the funds for building one stall garages. She said the homes won't have basements due to the high water table, so garages will be built DVIP-F ACILITY REHABILITATION Shaw said he didn't have exact numbers on how much money went into each aspect of the remodeling project, but carpet and screens were done and pluming work is still pending. Additionally, a local church did a "makeover" worth approximately $40,000 in the facility's living room and kitchen. Shaw also said Bright Spaces did a makeover for the children's space in the basement. ADJOURNMENT: McMurray made a motion for adjournment, which was seconded by Shaw. It carried 6:0, and the meeting was adjourned at 8:40 PM. 4 an I I - . . A practical guide to real estate financing for nonprofit developers 2nd EDITION ~ Iii ROBERT R. REAM LYNN ARLINGTON PHARE Commissioned by a consortium of New York banks Rules of Thumb for Estimating Development Soft Costs (Note: Soft costs vary according to the size, type and location of the de- velopment project. Most of the guidelines presented below are based on formulas currently used by the New York City Division of Housing Preservation and Development (HPD) and the Community Preservation Corporation (CPe). These rules of thumb reflect current (1996) cost es- timates which are subject to change. Whenever possible, obtain information about actual costs for your project. Architect and Engineering: The fee charged by the architect for pre- paring drawings and monitoring the project during construction. Usu- ally 4% to 10% of the construction cost, not including the contingency allowance. Government funders frequently set a maximum allowable percentage. The architects fee includes the cost of hiring engineers needed for structural and major system design. Environmental Survey: Survey of building and lot for toxic sub- stances including asbestos. Varies from about $1,700 to $2,500 per building or site. Appraisal: A determination of the value of the existing property and the value of the property after completion of construction. The ap- praised value determines the maximum loan amount based on the loan to value formula used by the lender. Varies with the size and complex- ity of the project. Cost will be higher for mixed-use and scattered site projects. Allow at least $2,500 to $5,000. Consultant Fees: Varies with the size and complexity of the project and the extent of consultant services to be provided. Allowable con- sultant fees are usually limited by government funders. Survey: Determines the boundaries and exact location of the lot and is required in order to obtain title insurance. Fee varies, allow $1,500 per building or lot. Tax Exemption Program Filing Fee: A fee paid to a government agency for processing an application for real estate tax exemption and/or abatement. Varies with the program. Title Insurance: Insurance that protects the owner .and lender from possible future losses caused by defects in the title. Estimated cost is .007 x the amount of the mortgage or the total development cost. Mortgage Recording Tax: A State tax charged when a mortgage is re- corded in a book of public records. Calculate as 2.75% of the mort- gage recorded. Calculate as 2.5% of mortgages over $500,000 and 2% of mortgages under $500,000. This fee can be waived for certain types of nonprofit development corporations. .. J.. 61 Developer Legal Lawyer's fees for reviewing and preparing docu- ments and managing the legal aspects of the closing. Varies with the complexity of the project. Allow from $10,000 to $25,000. Develop- ers of projects with multiple sources of government and private financ- ing may incur higher legal fees. Developer Fee: Varies. Usually calculated at 3% to 10% of the total project cost or as a flat fee based on the number of units. Certain gov- ernment programs allow developer fees of up to 15% of the total devel- opment cost. The fee is intended to compensate the developer for project-related administrative costs, salaries, office rent, transporta- tion, etc. Government funders may limit or disallow this fee. Construction Period Real Estate Taxes: Real estate taxes on the land and the building under construction. Calculate by using the present as- sessed value x tax rate x length of the construction period. Real estate taxes will be higher if the project is re-assessed during construction and is not exempt from tax increases. Construction Period Water and Sewer: Charges for water and sewer service during construction. Calculated by assessment x length of the construction period or as a flat fee for limited usage during construction. Construction Period Insurance: Cost of fire and liability insurance during construction. Insurance is in addition to insurance carried by the general contractor. Use actual quote from your insurer or estimate at $5 to $8 per $1,000 of replacement value. Permanent Lender Fee: A fee charged by the lender for underwriting and processing the loan. Usually 1 % to 2% of the loan. Permanent Lender Legal: Legal expenses incurred by the lender in connection with making the loan. Paid by the developer. Estimate at $10,000 to $30,000 depending on the size and complexity of the project. Construction Lender Fee: A fee charged by the lender for underwrit- ing and processing the loan. Usually I % to 2% of the loan. Construction Lender Legal: Legal expenses incurred by the lender in connection with making the lpan. Paid by the developer. Estimate at $10,000 to $30,000 depending on the size and complexity of the project. Bank Engineer: Usually a consultant selected by the lender to inspect the construction work and approve the release of funds to the general con- tractor. Fee includes the initial review of construction drawings ($2,500 to $5,000) plus a charge for each inspection of the building and review of the contractor's requisitions for payment. Allow $500 to $750 for each inspec- tion and assume one inspection per month during construction. Construction Loan Interest: Interest paid monthly on the portion of the loan that has been advanced to the borrower. Usually estimated at 62 r 50% to 60% of the construction loan x the interest rate x the length of the construction period. Marketing and Leasing: Costs incurred during leasing of apartments and commercial space or the sale of residential units can vary enormously-esti- mates should be given careful consideration. For low and moderate income residential rental projects, HPD allows $9,000 plus $300 per unit. Soft Cost Contingency: This is an allowance for unforeseen costs and overruns. Allow a lump sum of$10,000 to $25,000 depending on the size of the project, or use 5% to 10% of the soft costs. Income and Expenses The Schedule of Pro Forma Income and Expenses is used for income producing property only and is frequently referred to as the pro forma. The pro forma presents the expected results of the first year of opera- tion of the project after it has been completed and leased. The pro forma is simply a detailed presentation of the following formula: Gross Rents - Vacancy Allowance - Expenses = Net Operating Income. Each of the components of this formula is discussed below. (In the case of a sales project, the comparable schedule would show projected gross in- come from the sale of the units less the expenses incurred in selling the units such as legal costs, brokerage fees, advertising and transfer taxes. The schedule should include a breakdown of the projected per unit sales price for each unit or type of unit. For a sales project, the schedule is a detailed presentation of the following formula: Gross Sales Pro- ceeds - Sales Expenses = Net Sales Proceeds. The developer's profit equals Net Sales Proceeds less the total development cost shown in the Sources and Uses schedule.) Gross Rents: This item includes all sources of income including resi- dential rents broken out by unit type, number of units; commercial units with square footage and rent per square foot, and any other in- come such as coin operated laundry, parking, and other charges. The total gross rent is the projected total income from the project if all units are occupied for the full year and all rents are collected. Vacancy and Loss Allowance: Gross rents are reduced by this allow- ance for vacancies and uncollected rents. The rule of thumb for determin- ing the vacancy and loss allowance is 5% for residential and at least 10% for commercial space. Banks may require higher vacancy and loss allow- ances depending upon the location of a project and market conditions. While the demand for affordable rental housing is usually very strong, de- mand for commercial space can vary greatly and the lender may require a vacancy allowances of 20% or more for commercial space. 63 Expenses: Lists all operating expenses, management fees, and alloca- tions to reserve funds. Remember to include the operating expenses for the superintendent's apartment. (See Rules of Thumb for Estimat- ing Annual Operating Expenses, below.) Net Operating Income: This "bottom line" is referred to as the Net Operating Income (NOI). It is the most important number on the spreadsheet because it will be used by the lender to determine the amount of debt that your project can support. (Determining the maxi- mum loan amount using the NOI is discussed in Chapter 3.) Rules of Thumb for Estimating Annual Operating Expenses (Note: Operating costs vary greatly depending upon the age, size and location of the building. The guidelines presented below are based on formulas used by the New York City Division of Housing Preservation and Development (HPD) and the Community Preservation Corporation (CPC). For cost estimates based on the number of rooms, calculate the room count by using two rooms for studios, three rooms for one bed- room units, four rooms for two bedroom units and five rooms for three bedroom units.) Real Estate Taxes: Varies with the type of tax exemption program. Most projects in low and moderate income areas will be eligible for tax exemption. For projects without tax exemption benefits, annual taxes equal the estimated assessed value of the completed project x the .,..J. applicable tax rate. . , Insurance: Includes fire and liability insurance. Estimate insurance costs at $2.50 per $1,000 of coverage for fire insurance plus $250 per unit for liability insurance. If possible, obtain an estimate from your in- surance agent. Payroll: Varies with the size of the building, location and the services to be provided. This cost is usually estimated on a case by case basis. HPD uses the following general guidelines: Superintendent Porter . . . . $25,000 $12,000 Superintendents oflarger buildings (20+ units) are usually also given a free apartment. A porter is usually required for buildings with more than 35 units. Elevator Maintenance: Includes the cost of the elevator maintenance contract and an allowance for repairs. Estimate at $4,000 per elevator. 64 Exhibit 3: Pro Forma Income and Expenses DATE NAME OF PROJECT SCHEDULE 2 : Pro Forma INCOME AND EXPENSES RESIDENTIAL INCOME Unit Type Rent/Mo. Units GrosslY r One Bedroom $650 6 $46,800 Two Bedroom $750 6 $54,000 Three Bedroom $850 -A $40.800 TOTALS 16 $141,600 COMMERCIAL INCOME Gross Rentable SF 1,200 Rent per SFIYear $17.50 TOTAL COMMERCIAL INCOME $21,000 GROSS ANNUAL INCOME $162,600 (less) Residential Vacancy 5.00% ($7,080) (less) Commercial Vacancy 10.00% ( 2,100) EFFECTIVE GROSS INCOME $153,420 -.,. ,I;. EXPENSES Real Estate Taxes $0 Insurance 7,348 Payroll 18,000 Elevator Maintenance 4,000 Water and Sewer 7,750 Heating 10,850 Utilities 2,790 Clean ing/Exterrn inat ing/S upp lies 2,604 Repairs and Replacements 3,680 Painting 2,480 Legal and Accounting 3,200 Management Fee (6%) 9,205 Building Reserve (2% of gross) 3..ill TOTAL EXPENSES AND RESERVES $75.159 NET OPERATING INCOME $78.261 65 :~:'~ -- Water and Sewer: Based on frontage or metered water use. Use the actual assessment or calculate at $125 per room. Heat: Varies with the age and type of the building and the type of fuel used. HPD estimates at $150 to $175 per room per year. Build- ings heated with gas or the best grade of fuel oil are estimated at $175 per room. Utilities: Apartment gas and electricity is usually individually metered and paid by the tenant. For common area utility expenses (hall- ways,basement, exterior), the City uses $40 per room for walk-up buildings and $45 per room for elevator buildings. Supplies, Cleaning and Exterminating: Charge for contract with ex- terminating service and for cost of supplies used by superintendent and porter. Varies. CPC and HPD use $42 per room. Repairs and Replacements: Estimate at $230 to $390 per unit depend- ing upon the extent of the work. Includes the cost of repairing and re- placing appliances. Gut rehabs and new construction projects will have lower repair and replacement expenses, at least during the early years of operation. Painting: Annual allowance for painting apartments and hallways. Es- timate at $40 per room. Legal and Accounting: Covers legal fees for leasing and evictions and accountant's fees. CPC and HPD estimate this cost at $1,600 plus $100 per unit. Management Fee: Use 6% to 8% ofthe net rent (gross income less vacancy allowance). Note that lenders will require a deduction for this expense even if your organization intends to manage the project. Building Reserve: Annual payments into a fund used for future major expenses such as replacing the roof or the boiler. Usually calculated as 2% to 3% of the gross rent. Total rehabilitation and new construction projects should use 2%. Questions To Ask The Lender Before taking the time to prepare and submit a loan application, contact prospective lenders and briefly describe the project and the type and ap- proximate amount of the loan required for your project. Lender guidelines regarding the type and size of loans being made are subject to change. The fact that six months ago XYZ Bank made a construction loan at 1.5% over prime for a mixed-use project in Brooklyn does not assure that they would make the same loan today. The overall availabil- ity of loans, the availability of particular types of loans, and the terms 66 - ~.._-----_..~~------~~'"'-~- r I., and conditions of those loans are all subject to change. Make sure there is a match between your project and the type of loans currently being made by the lender. If the lender is willing to consider your application, ask for guidelines regarding terms and conditions such as the current rate or range of rates, the commitment fee, bank legal fees, and bank policy regarding equity requirements and guarantees. (You may want to request a letter confirming the lenders interest in the project.) Don't be afraid to ask questions, but don't expect precise answers. Remember that at this stage, information provided about rates, fees, and other terms will be very preliminary and subject to negotiation and change during the loan review and underwriting process. If your loan is approved, the lender will issue a commitment letter detailing the terms and conditions of the loan. Until the commitment letter has been signed by both parties, terms and conditions can be negotiated and changed. Listed below are some questions you may want to ask the lender prior to submitting an application. (Many of these items are discussed in Chapter 3.) . For the type ofloan requested, what is the current interest rate or range of rates? For variable rate loans, how is the rate calculated? (Construc- . ./ tion loans are usually keyed to the prime interest rate, variable rate mortgages are usually keyed to treasury bill rates.) Interest Rate Loan-to-Value and Debt Service Coverage Ask about the lender's guidelines for these underwriting criteria. (For- mulas for calculating loan-to-value and debt service coverage are presented in Chapter 3.) Fees For the type ofloan requested, what is the range of percentage points charged as a commitment fee? (Although commitment fees usually vary with the type of loan and the perceived level of risk, the lender can usually provide an estimate that is within a fairly narrow range.) Does the lender normally charge a lower commitment fee to non-profit bor- rowers. Could payment of the commitment fee be deferred until the loan closing? If not; what is the likely schedule for payment of the fee. 67 (This is an important consideration in planning for the pre-closing ex- penses you will incur.) If the loan is approved but does not close, will your organization still be liable for payment of the commitment fee and other bank expenses? Other Fees and Expenses For the type ofloan requested, what is a reasonable estimate of bank le- gal fees? Would the legal work be done in-house or by outside counsel? (Fees for outside counsel are usually higher.) Ask about the timing of payments for fees and expenses such as the cost of the ap- praisal, surveys, and environmental reports. (The loan officer can be a useful source of information about expenses you will incur and pay prior to the closing.) Equity Requirements and Guarantees What is the lender's policy regarding corporate guarantees by nonprofit organizations? What are the lender's guidelines regarding equity re- quirements by nonprofits? Would grants and loans be accepted as equity contributions? What types of expenses previously incurred in connection with the project would be acceptable as equity? Will the lender require that the equity be spent prior to release of funds by the lender? ,oJ. Nature and Timing of the Loan Review Process What are the steps in the loan review process and how much time is re- quired for each step? What types of information or documentation will be required at each step? Loan Application Checklist A suggested list of documents and additional information that should be submitted with the loan proposal is presented below. Some of these items supplement information about your organization, others are pro- ject specific. Prior to submitting your application, contact the loan officer and list for her the items you plan to include in the application. Ask about any additional items you should include. By submitting a complete package to the lender now, you will avoid future delays and frustration. 68 City of Iowa City MEMORANDUM TO: FROM: DATE: Staff of City Boards and Commissions Marian K. Karr, City Clerk January 9, 2008 (E-mail attachment; hard copy to follow) The City Council has scheduled a budget work session addressing the FY08 budget requests for Wednesday, January 23, starting at 6:30 p.m. If your Board or Commission would like to address the Council during this work session, please call me at 356-5041 (or email works too) to schedule a time as soon as possible. Boards and Commissions are being scheduled 15 minutes apart, and suggest each appearance include a 10 minute presentation followed by five minutes for questions. It is intended this time be used to discuss changes to the proposed budget. I will provide a schedule to you and include in the Council information packet of January 17. S:budget presentations-Boards & Commissions