June 2014 Newsletter

Avoid Closing Headaches

headachesClosing on projects with multiple public/private funding sources, such as Low Income Housing Tax Credits, New Market Tax Credits, HOME, CDBG, HUD 202s, County Trust Funds, or State Capital Financing, can be a nightmare. Taking proactive steps to avoid problems and delayed closings is the responsibility of the developer or non-profit sponsor/owner. We recently aided our Clients through two (2) closings in May 2104 and made a list of take-aways that may be helpful:

Hire an experienced Attorney and Closing Agent: Your local real estate attorney may not be qualified to handle complex transactions that are driven by Section 42 or Section 45D of the IRS Code. Your Closing Agent must understand order of recording with no errors or omissions.

Multiple Players: If 4-5 banks and agencies are involved, obtain their closing list early and negotiate out duplicative documents. Also ascertain what documents are acceptable to each lender. For example, in a recent transaction all the Agencies and Banks accepted the current zoning variance as acceptable. However, the construction lender would only accept the current “zoning permit,” and the original “zoning permit” issued 20 years ago when the project was originally built as affordable housing. We could not find a copy of the old zoning permit but luckily the current architects also did the original design 20 years prior and they were able to locate.

Who is on First: Create and distribute subordination agreements and inter-creditor agreements early as that can become a major barrier to closing. The subordination agreement determines the order of lien placement and loan repayments. An inter-creditor agreement outlines the relationship between all the lenders and the borrower. A recent closing was delayed by 2-3 weeks because the financial institution in 4th position refused to sign the subordination agreement because it gave excessive advantage to the lender in 1st position.

Manage the Orchestra: Getting to the closing table is like managing a traveling orchestra – there are so many moving parts including transportation, hotel, cleaning uniforms, rehearsals, and getting all the musicians in place before the curtain rises. “The performance” is the closing itself at a pre-determined date and time – taking care of the many specific items to get there is no easy task and requires an experienced team of professionals.

New Staff at BFW Group, LLC

staff-june-2014BFW is pleased to welcome John Poole III, LEED AP, and Alana Seggman to the staff. John Poole III serves as Senior Program/Project Manager and is responsible for all project management, LEED Administration and cost estimating at BFW. Mr. Poole is also Principal of Constructonomics a construction related blog and general contracting firm.

Alana Seggman serves as an Executive Assistant at BFW. Ms. Seggman is a graduate of Syracuse University and the University of the Arts. Ms. Seggman is responsible for marketing research and proposal writing at BFW.

BFW Group, LLC
BFW Group, LLC provides Construction Project Management, Green Building Retrofits, Owner’s Representation, Cost Estimating, Capital Needs Assessments, LEED Administration, and Financial Packaging and Fundraising for Capital Projects. BFW Group works with Real Estate Developers, General Contractors, Non-Profits, Schools and Institutions, Quasi-Government Organizations, Multi-Family, and Commercial Property Managers in the Mid-Atlantic region.

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