National Church Residences HUD refinance project nearing completion

Ed Zatezalo, Alan Mileti and Dorothy Patsy, all of National Church Residences.

Ed Zatezalo, Alan Mileti and Dorothy Patsy, all of National Church Residences.

By LANCE CRANMER                                 

COLUMBUS – Roughly four years ago the National Church Residences Housing team began piecing together a plan that would not only benefit the organization financially, but further its mission by providing repairs that will maintain the viability of our HUD properties for many years to come.

“It may have been one of the most forward-thinking, innovative concepts HUD has come up with,” said Steve Bodkin, National Church Residences Senior Vice President and Chief Operating Officer of the Housing Division.

The HUD 202 refinancing project allowed National Church Residences to refinance outstanding HUD 202 loans on all HUD properties and reinvest in them by providing critical repair work.

“We never got over-budget,” Steve said. “It’s been a real team effort from a lot of different people. But I really have to mention Alan Mileti, Ed Zatezalo and Dorothy Patsy. They are the three people that drove this entire project.”

Alan, National Church Residences Manager, Energy and Capital Planning, worked with contractors on firm pricing and provided oversight of construction work. Ed, a Procurement Specialist, was responsible for providing payments to contractors and handling closing paperwork. And Dorothy, the Regional Manager, supervised critical repairs, prepared budgets for each property and handled HUD paperwork.

“It’s really rewarding to see these needed repairs happen to communities. And the residents are really excited,” said Dorothy. “Really the property managers and maintenance teams are the heroes in all this.”

When a property was chosen to participate in the program, Dorothy worked with Regional Property Managers and site managers on a budget to submit to HUD.

“Every time we had to refinance, we had a list of critical repairs we had to do before closing. The manager and maintenance team would have to get those complete before we could close the loan,” she said. “They would work on those diligently.

“After the loan closes, we are given a set of projects to be completed within the one-year construction timeline.”

The initial list of 55 properties in 15 states were mostly owned by National Church Residences, though there were some managed sites and even a few owned by National Baptist Convention that National Church Residences was brought in to take the lead and oversee the refinancing of.

“HUD goes over cost review questions, and when the loan closes, the money comes, we accept the (construction) bids and the work starts,” Alan said. “From a property standpoint, it makes them sustainable.”

Separate contractors – one for interior work and one for exterior – were brought in for each project.

“We did all this in occupied buildings,” added Alan. “We never moved any residents out.”

Up front the benefits of the project are obvious.

“There are $38 million in repairs. Thirty-four are completed. There are another 16 we are working on,” said Ed.

The 50 properties that have closed to date represent 2,514 units. The repairs have averaged $766,000 per property, or $15,235 per unit.

Another benefit to the refinancing was an innovative concept that HUD approved.

“They allowed additional proceeds from some of the refinanced properties to be moved to other HUD properties,” Steve said. “We were able to move $3.6 million from 11 properties to benefit 11 other properties that didn’t have the funds to complete repairs like replacing roofs, windows, boilers, and settling issues. This forward thinking approach by HUD was a real blessing.”

In the long run, National Church Residences will also save money thanks to the refinancing itself.

Ed said the previous average interest rate for the properties involved was 6.5 percent. The new average interest rate for the properties is 3.3 percent. This has generated $1.7 million in annual debt service savings or mortgage payments. This means additional cash flow for these properties.

The project, which began in 2012, will continue into 2016 before wrapping up.

“It’s still pretty busy right now,” said Dorothy. “The ones we’re finishing up now are the ones that are more challenging. In three or four months we should see it tapering off. With Steve, Alan and Ed and everyone else, this has been an amazing team to work with.”

“The refinance initiative has been a real benefit for our residents,” said Steve. “The repairs that have been made make the properties sustainable as affordable housing for another 15 years.”

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s