How We Work, Pt. 2: Going to Board
by Marcus Smith
How We Work is a series that takes you inside CHFA’s multifamily department, explaining the “who”, “why” and “how” of all that we do. Check out Pt.1 here.
Underwriting an application for financing or tax credits is truly a collaborative effort that relies on a wide range of expertise from our underwriting team as well as Technical Services, Asset Management and the Legal departments. But getting that application through the early stages of underwriting is just the beginning.
An application will undergo an extensive analysis before it is ready for the next stage in the process: consideration by CHFA’s Board of Directors. During this analysis phase, the development team continues to fine tune their proposal by finalizing architectural plans and specifications, obtaining firm construction pricing and any detailed environmental and structural reports. Throughout this process, staff continues to test an application’s financial assumptions, working with the applicant to refine the financial structuring aspects of the proposal. Also during this time, Technical Services looks to verify that all outstanding issues of design, construction cost, or environmental and hazardous materials concerns have been adequately addressed based on the development team’s submissions.
A series of internal, management reviews lead up to the Board meeting, which is generally held on the last Thursday of each month. These reviews come in two stages: Loan Review occurs in the early part of the month, and Staff Agenda Briefing takes place towards the middle of the month.
At Loan Review, staff presents to executive leadership potential developments for the upcoming Board meeting. In addition to discussing the overall characteristics of the application, the team considers the challenges a development seeks to address (e.g., increase affordable housing that is accessible by CTfastrak, or potential barriers that a development may face during construction, lease-up or operation). Questions or concerns that are raised at this time will be considered by staff following the meeting, and those applications that are most ready will proceed to the next stage.
As the image of the development begins to sharpen, Staff Agenda Briefing is used to follow up on any concerns raised in Loan Review, and to provide final comment on the proposed financing resolution.
For those developments that include resources from other state agencies (e.g., CHAMP funds from CT Department of Housing or Brownfield funds from CT Department of Economic and Community Development), CHFA works to align the Board approval process with the State Bond Commission schedule.
Above all else, the main objective of this process is to ensure that, once approved by the Board, a development can move quickly to initial closing.
After Staff Agenda Briefing, the Board agenda and all materials inclusive of the resolution are finalized. Board members then receive the materials for their consideration prior to the Board meeting.
CHFA is governed by a 16-member Board of Directors, as provided by statute. Some members, such as Chairperson and Department of Housing Commissioner Evonne Klein, serve by right because of their roles in the state government. Other Directors are appointed by the Governor or the General Assembly. (Additional information about CHFA’s Board of Directors can be found on our website.)
“Our duty is to see that the resources of the Authority are being used effectively and efficiently to serve the affordable housing needs of Connecticut residents as we understand them,” says Board Director Carla Weil. “We look to see that the projects being funded reflect the strategic goals of the Authority in terms of the income levels and special needs of the individuals and families who will occupy the units, the geographic distribution of different types of units throughout the State, and the cost/benefit relationship of the projects.”
At the Board meeting, management presents each proposal for review, discussion and approval. In the Summer 2017 issue of Developing Partnerships, “How We Work” will follow the approved development to the next step: preparing for initial closing.
Marcus Smith is a Manager in the Planning, Research and Evaluation department with the Connecticut Housing Finance Authority.