FAQs for Health Center Projects
What are the eligibility requirements for the Healthy Futures Fund (HFF)? Is my project eligible?
- The operating entity of the proposed health center is a Federally Qualified Health Center (FQHC) or Look-Alike.
- The ideal health center project is co-located with a provider of non-clinical services that impact one or more social determinant of health. Examples of such services include, but are not limited to: affordable housing, health food outlets and grocery stores, education or job training, fitness and wellness services.
- The health center must occupy at least 51% of the space being financed through the Healthy Futures Fund using New Markets Tax Credits (NMTCs).
- The project must be located in an NMTC-qualified census tract and be designated highly distressed.
- The qualifying HFF mortgage loan is targeted between $2MM and $10MM.
What are the benefits of the HFF financing for health centers?
- Access to NMTC benefits for smaller-sized expansion projects;
- Committed sources of equity and loan capital;
- Significantly lower transaction costs compared to a traditional NMTC transaction;
- Efficient and shorter closing process and simplified post-closing reporting requirements;
- Potential access to grant funding to support the success of the FQHC and proposed project; and
- Additional NMTC financing is available to leverage other funding sources that the FQHC might have.
What are the terms of the HFF financing?
- 7-year initial term with first 30 months interest-only then amortizing based on a 19-year amortization schedule.
- Rate fixed for 7 years at 7-year LIBOR swap + 200 to 250 basis points (the 7-year swap rate as of 10/22/2015 is 1.69%, which would yield an interest rate of 3.69% to 4.19%).
- Loan-to-Value up to 110% based on as-built appraisal.
- 1.2 to 1.0 Debt Service Coverage Ratio.
- Transaction costs capped at $30,000 for lender legal fees, excludes borrower legal and consulting expenses and standard costs normally associated with a real estate loan, such as lender appraisal, cost review/inspection, insurance review, and title costs.
- Cancellation of approximately 24% of the original loan amount to the borrower upon the successful third-party refinance of the remaining principal balance.
Are there any geographic restrictions to where the project is located?
- The Healthy Futures Fund can invest in any eligible projects within the United States.
Can my renovation project qualify or is new construction required?
- HFF can finance renovation or new construction projects for health centers.
Can equipment be included in the financing?
- Assuming there’s sufficient collateral to achieve the specified Loan-to-Value requirement, equipment can be included along with hard construction costs, soft costs, acquisition costs and working capital.
Who can I contact for more information?
- Please call Emily Chen, LISC Program Director, at 212-455-9882 / firstname.lastname@example.org or Robert Poznanski, NMSC Senior Vice President, at 269-459-4123 / email@example.com for additional information regarding the Healthy Futures Fund or to discuss your project needs.