Property Type: Section 202 supportive affordable housing for people with disabilities
Location: 13 sites near Iowa City, Iowa
Project Objective: Refinance/Renovation
Financing Amount: $2.73 million

Source of Funding:
Fixed-rate notes insured by the FHA Sec. 223(f) program
Background and Challenges
Systems Unlimited is a nonprofit that serves people with disabilities and other challenges throughout eastern Iowa. The organization had three outstanding Section 202 direct loans, which covered 13 group homes in five counties. Each site was built between 1981 and 1986, and each loan carried an interest rate of 9.25 percent.

Financial Solution
Lancaster Pollard proposed combining the three existing 202 loans as one new Section 223(f) insured loan because of the economies of scale. This structure allowed for more repair money to be put aside, whereas three separate refinances would not even have been financially feasible.

Part of the refinance process included third-party reports that helped outline a repair schedule for the next several years, allowing the organization to better understand each site’s needs.

Outcome
Refinancing through HUD allowed for the consolidation of the three Section 202 direct loans, reducing administrative burden for Systems Unlimited. The new loan funds $436,613 in repairs and improvements, including replacing roof repairs and replacement, new vinyl floor covering and carpeting, renovating kitchens, replacing windows and doors, renovating bathrooms, replacing heating and air conditioning units, and replacing basement windows. The new lower interest rate also allows for $62,210 in annual debt service savings.