Developing Affordable Housing: A Practical Guide for Nonprofit Organizations (Wiley Nonprofit Law, Finance and Management Series)

842 Pages·2006·24.7 MB·English

by  Bennett L. Hecht

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Developing Affordable Housing
A Practical Guide
for Nonprofit Organizations
Third Edition
Bennett L. Hecht, JD, CPA
John Wiley & Sons, Inc.
ffirs.fm Page ii Wednesday, March 15, 2006 4:54 PM
ffirs.fm Page i Wednesday, March 15, 2006 4:54 PM
Developing Affordable Housing
ffirs.fm Page ii Wednesday, March 15, 2006 4:54 PM
ffirs.fm Page iii Wednesday, March 15, 2006 4:54 PM
Developing Affordable Housing
A Practical Guide
for Nonprofit Organizations
Third Edition
Bennett L. Hecht, JD, CPA
John Wiley & Sons, Inc.
ffirs.fm Page iv Wednesday, March 15, 2006 4:54 PM
This book is printed on acid-free paper.
Copyright © 2006 by John Wiley & Sons. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
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Library of Congress Cataloging-in-Publication Data:
Hecht, Bennett L., 1959-
Developing affordable housing : a practical guide for nonprofit organizations / Bennett L.
Hecht.—3rd ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: *978-0-471-74346-0 (cloth)
ISBN-10: 0-471-74346-1 (cloth)
1. Housing development—United States—Handbooks, manuals, etc. 2. Housing
rehabilitation—United States—Handbooks, manuals, etc. 3. Housing management—United
States—Handbooks, manuals, etc. 4. Nonprofit organizations—United States—Handbooks,
manuals, etc. I. Title.
HD259.H43 2006
333.73'150973—dc22
2005058121
Printed in the United States of America
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To Lynn, Eliza, and Sam
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Contents
PART ONE GETTING STARTED 1
Chapter 1 Developing Affordable Housing in the Twenty-First Century 3
1.1 Introduction 3
1.2 The Current State of America’s Affordable Rental Housing 4
1.3 The State of America’s Working Poor Seeking Affordable Housing 4
1.4 Current Trends in Affordable Housing 6
1.5 Unique Opportunities for Nonprofit Organizations: Rental and
Homeownership 10
Chapter 2 The Real Estate Development Process for Nonprofit
Organizations: An Overview 13
2.1 Nonprofit Organizations and the Real Estate Development Process 13
2.2 An Overview of the Real Estate Development Process 14
2.3 Addressing the Specific Needs of a Community
and a Specific Project Site 17
Chapter 3 Establishing the Development Team 19
3.1 In General 19
3.2 The Sponsor 20
3.3 The Financial Development Specialist 20
3.4 Attorneys 21
3.5 Accountant/Bookkeeper 25
3.6 Architect 26
3.7 Property Management Company 28
3.8 General Contractor 29
3.9 Construction Manager 29
3.10 Community Organizer 29
3.11 Appraiser 31
3.12 Conflicts, Multiple Roles, and Oversight 32
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CONTENTS
PART TWO PROJECTING COSTS, INCOME, AND EXPENSES 33
Chapter 4 Project Feasibility and Total Development Costs 35
4.1 Project Feasibility Defined 35
4.2 Determining Preliminary Project Feasibility 36
4.3 Estimating Total Development Costs 36
Appendix 4A Sample Letter of Value 60
Appendix 4B Summary of Key Federal Regulations Governing
Underground Storage Tanks 63
Appendix 4C Summary of Relevant Laws and Regulations
Governing Lead-Based Paint 66
Chapter 5 Determining Projected Income and Expenses 69
5.1 Introduction 69
5.2 Projecting Income—Generally 70
5.3 Identifying Targeted Income Levels 70
5.4 Determining Affordability as a Percentage
of Income and Market Rents 71
5.5 Income from Nonresidential Use 74
5.6 Projecting Expenses—Generally 74
5.7 Evaluating Past Operating Expenses 75
5.8 Projecting Expenses Where No Operating History Exists 77
5.9 Allowances and Reserves 80
5.10 The Role of Lenders 83
Appendix 5A Controllability of Expenses 84
PART THREE RAISING CAPITAL 85
Chapter 6 Raising Capital to Meet Total Development Costs 87
6.1 Introduction 87
6.2 Sources of Capital—Generally 88
6.3 Loans 88
6.4 Grants 102
6.5 Equity and Sales Proceeds 103
Appendix 6A Example of an Amortizing Loan 105
Appendix 6B Example of a Nonamortizing Loan 106
Chapter 7 Sources of Capital: Loans 107
7.1 Who are Possible Lenders? 107
7.2 Sources of Loan Funds from Public Lenders—Generally 107
7.3 Sources of Loans from State and Local Governments 108
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