Property Type:
Section 202 Senior Housing
Location:
Orange, TX
Objective:
Substantial Rehabilitation
Financing Amount:
$3.78 million
Source of Funding:
Fixed-rate bonds with FHA Sec. 223(f) mortgage insurance
Closing Date:
Jan. 30, 2007

Background & Goals
Small steps made of piecemeal repairs generally maintain low-income housing communities, but overall facility aging and deterioration can outstrip even these steady improvements. Refinancing can create the opportunity to take a property one giant leap forward in terms of modernization, offering funds to essentially recreate the property all at once.

Administrator LaJuan Fuller Granger recognized that refinancing offered Optimist Village the chance to make major, necessary upgrades all at once by providing $432,291 for immediate repairs. The goals to re-establish the 96-unit senior community as a modern place to live, and to improve its residents’ comfort and safety, will be realized through its HUD refinance.

Financing Structure & Outcome
Lancaster Pollard helped Optimist Village use HUD’s  Sec. 223(f) mortgage insurance to secure the capital needed to preserve the 22-year-old property. The refinance reduces the property’s interest rate, lowering annual payments by $15,404, and offers a 35-year term. The savings, Fuller Granger said, might be put toward additional hours for a resident services coordinator.

Major repairs to be completed immediately include replacing original air conditioners with more energy-efficient models, repairing sidewalks and water pipes, new window treatments and lighting, and replacing every resident’s tub with a walk-in shower to improve safety. The property also will resolve drainage issues, and an additional $517,323 was deposited to the replacement reserve.

Lancaster Pollard is an expert in refinancing Section 202 properties to fund repairs or restructure finances. In fiscal year 2006, according to HUD data, the firm refinanced more Section 202 direct loan dollars than any other in the country.