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Frequently Asked Questions for Stand-Alone Bond Financing

What is Stand-Alone Bond Financing? Top of Page

  • Stand-Alone is designed to offer borrowers flexibility and expeditious timing.
  • WHEDA will issue the bonds, taxable or tax-exempt, and credit-enhance the bonds for a 1.35% fee built in to the loan rate, generally for a single development.
  • Borrowers can price their funds based on current market conditions, and customize their transaction regarding term, call provisions, and interest rate modes.

How does it differ from WHEDA's standard Tax-Exempt Bond Financing? Top of Page

  • With WHEDA's "standard tax-exempt product," multiple loans are funded by WHEDA, then "pooled" in a multiloan bond issue (generally annually). Additionally, stand-alone can be taxable or tax-exempt.
  • Normally, WHEDA absorbs the cost of bond issuance across a "pool.".
  • An advantage to "pooling" is to spread the cost of bond issuance across multiple loans. However, loan rates are "hedged" to protect WHEDA from interest rate risk.
  • Flexibility is limited in terms, call provisions, and interest rates as these are dictated by the structure of the typical 30-year fixed-rate WHEDA bonds.

Why should I use Stand-Alone Bond Financing?  Top of Page

The decision to use the Stand-Alone product vs. WHEDA's standard tax-exempt product should be done on a loan by loan basis. However, the most likely candidate will be a new construction development $4 to $5 million or larger. A development of this size can more efficiently carry the cost of bond issuance, which can be substantial. Please note the new construction example below.

  Stand-Alone Standard Tax-Exempt
Total development cost $5,987,000 $5,951,000
Term/amortization 30-Year 30-Year
Interest rate 5.50%* 6.30%
Fees $131,000 issuance cost $95,000 Orig Fee (2.5%)
DCR 1.20 1.15
Supportable loan $3,960,000 $3,800,000
Estimated gap $0 $124,000

*Assumes Stand-Alone option of variable rate bonds swapped to fixed-rate for 15 years, and assumes 80 bp spread between stand-alone and standard rates. This spread can vary.

What terms are available?  Top of Page

We offer non-recourse financing with terms of up to 30 years. We'll work with you to find the loan structure that best meets your development's needs.

What rate can I expect? Top of Page

Indicative rates for Stand-Alone financing are posted weekly on this web site in an interactive Excel spreadsheet. The spreadsheet can also be used to estimate bond cost-of-issuance by inputting the estimated loan amount.

Is technical assistance available? Top of Page

Yes. We have more than 25 years of experience in helping nonprofit and for-profit developers create affordable rental housing. We have access to information that may help you with your market analysis and we also perform an architectural review of your plans and specifications. Let us put our experience to work for you.

What types of developments are eligible? Top of Page

WHEDA multifamily loans can be used for many development types including:

  • New construction
  • Acquisition and/or rehabilitation of existing properties
  • Historic preservation
  • Community Based Residential Facilities (CBRF's)
  • Residential Care Apartment Complexes (RCAC's)
  • Section 8 properties

Although your development must be used mainly for residential purposes, some mixed use is acceptable, such as retail space or day care facilities.

Who can live in my development? Top of Page

A WHEDA-financed development can serve seniors, families or persons with special needs. A percentage of your development's units must be rented to lower income households. In most cases, 20% of all units must serve households at 50% of county median income (CMI), or 40% must be available to households at 60% of CMI.

Does WHEDA support mixed-income developments? Top of Page

Yes. In fact, we prefer it. Mixed-income developments are a better fit in most communities. Also, they are often more financially successful and generally easier to manage.

Can I combine WHEDA financing with funds from other sources? Top of Page

Yes. Our multifamily loans work with Low-Income Housing Tax Credits, Community Development Block Grants (CDBG), Federal Home Loan Bank (FHLB) grants or loans, several Wisconsin Division of Housing programs including, the Home Investments Partnership Program (Home), and the Wisconsin Housing Preservation Trust. We can structure our financing to make your deal work. Please contact us for more information or to request an application.

 
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