THE NHP FOUNDATION AND ITS AFFILIATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED YEARS ENDED DECEMBER 31, 2017 and 2016
Cleme’s acquisition and renovation work was financed with a construction loan, federal low-income housing tax credits, and a loan from Jamestown, the sole member of the managing member of the property. NHPF and/or Cleme 284 provided certain guarantees to facilitate this transaction. The most significant guarantee is: (1) Operating deficit guarantee - Cleme 284 guaranteed to pay all operating deficits, not to exceed a specified amount and time period, after the property achieves a debt service ratio, as defined in Cleme‘s partnership agreement. Ships Cove’s acquisition and renovation work was financed with a mortgage note, construction loan, federal low-income housing tax credits, and an acquisition loan from Milliken, the seller of the property. NHPF and/or Ships Cove GP provided certain guarantees to facilitate this transaction. The most significant guarantee is:
(1) Completion guarantee - NHPF is responsible for any cost overruns relating to development cost, bills, expenses, charges, cost and fees relating to the construction of Ships Cove.
(2) Operating deficit guarantee - Ships Cove GP guaranteed to pay all operating deficits, not to exceed a specified amount and time period, after the property achieves stabilization, as defined in Ships Cove’s partnership agreement.
Parkchester’s acquisition and renovation work was financed with mortgage loans and federal low- income housing tax credits. The most significant guarantee is:
(1) Completion guarantee - NHPF is responsible for any cost overruns relating to development cost, bills, expenses, charges, cost and fees relating to the construction of Parkchester.
(2) Operating deficit guarantee - Wade Road GP guaranteed to pay all operating deficits, not to exceed a specified amount and time period, after the property achieves stabilized occupancy, as defined in Parkchester’s operating agreement. (3) Tax credit recapture guarantee - If the property does not generate the promised amount of housing tax credits or does not generate them in the timeframe agreed to, then then the amount then the final pay-in by the equity investor will be adjusted per the terms of the partnership agreement.
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