July 28, 2008

 

 

 

Dear Housing Partner:

 

The on-going volatility in the financial markets is having repercussions for all of us involved in the financing and development of affordable rental housing.  One consequence of the crisis has been the reduction of resources available to the Illinois Housing Development Authority (“IHDA”) from the Illinois Affordable Housing Trust Fund (“Trust Fund”).  As you might already know, the Trust Fund resources are generated from half of the State of Illinois’ real estate transfer tax.  The decline in the number of real estate transactions has resulted in a drastic decrease in the resources available for affordable housing.

 

While IHDA is actively seeking creative solutions to address the shortage of funds, it is necessary for us to take some immediate action to better manage applications and fund draws within our existing pipeline.  Effective immediately, the following policies will be implemented:

 

  1. All Trust Fund commitments are currently being reviewed for project feasibility, levels of outside commitment (lender and syndicator), readiness to proceed and expected closing date.  It is also expected that Trust Fund commitments will need to be reduced and/or other resources identified due to the shortage of funds. Trust Fund Advisory Commission and/or IHDA Board commitments do not guarantee funding and all commitments have been and continue to be subject to available appropriations and available funding.

 

 

  1. Expired commitments for the Trust Fund will no longer be automatically considered for extension.  If IHDA determines, in discussion with the applicant, that the project is not progressing toward closing due to financing, syndication and/or other issues, IHDA reserves the right to deem the application “inactive”.  Applicants with inactive applications will be informed in writing of this status and will be required to reapply at a future date if their application becomes feasible.

 

 

  1. In order to better manage the fund balances, the threshold for drawing down cash from the Trust Fund for a development will be amended to include not only the receipt of the signed Conditional Commitment Letter (CCL), but also all required due diligence for the loan closing. Only when all of the required due diligence material is received and approved by IHDA will we be able to place your transaction in the queue for Trust Funds and schedule the closing.

 

 

  1. While IHDA will continue to accept multifamily applications under the Trust Fund, applicants should take care to reduce project costs and seek alternative resources.  In addition, recommendations for approval by the Trust Advisory Commission and/or IHDA Board will be prioritized based on needs under the Comprehensive Housing Plan, project feasibility, and readiness to proceed. Any recommendations for Trust Fund resources made at future Advisory Commission meetings cannot expect funding until FY 2010.

 

 

Despite all the measures outlined, I anticipate there will continue to be timing issues as to the availability of Trust Funds for a number of developments and fully expect that some project closings will be delayed due to the unavailability of funds. To that end, I encourage you to speak directly to your loan officer about the status of your specific transaction.  It is extremely important that you keep your loan officer informed of the status of the project and any changes or developments that might impact your progress. 

 

We will do everything in our power to work with you to bring your project to a successful conclusion.  In the interim, I appreciate your cooperation during this unprecedented period. 

 

Sincerely,

 

 

Linda Thurmond

Managing Director Multifamily Programs