Finally free of government obligations laid out in its Section 95 agreement, a Social Housing Provider wanted to make improvements to its 270-unit building. An assessment determined that the building required $16 - $18 million in upgrades in the next four to five years. However, as a result of the restrictions of operating under a Section 95 affordable housing agreement, the provider lacked funds to complete the improvements.
The First National Solution:
The First National team proposed a refinance of the property to generate the needed funds. However, with the complexity of affordable housing, there was a significant amount of administrative work required. Based on indemnity agreements made between CMHC and the province, providers require a Section 9D Waiver to cancel the indemnity. Without that waiver, CMHC does not consider additional financing on any property. Securing the 9D Waiver is a complicated process that includes three levels of government.
The First National Approach:
Ingenuity, quick delivery and CMHC expertise all played key roles in securing this financing. The First National team secured the 9D waiver ahead of time and completed the CMHC application in advance as well to ensure that funding could proceed right away once the agreement expired. In addition, there was a shortfall of $1 million in the funding application to CMHC as a result of CMHC’s underwriting restrictions on affordable housing rent levels. The First National team suggested using CMHC’s energy program to try to cover the $1 million differential. It was an excellent strategy. In the end, the provider received the desired $18 million in financing within three months of its agreement expiring.