Everything Happens to Me
Reds Take Series, A's Lose Rubber Match, Giants Swept by Yankees. What I Did this Weekend. Our Last Look at Acacia Meadows. Romantic Vampires
Happy Monday one and all. We had a busy weekend so we’ll get into that a bit. We have some baseball news. We conclude the anatomy of the Acacia Meadows funding. We go out with a romantic vampire song. Vampires are misunderstood, right?
Reds Beat Cubs
The Cincinnati Reds won a series for the first time in over a month, beating the Chicago Cubs 5-2 yesterday afternoon to take the series 2 games to 1. Outfielder Jake Fraley and starting pitcher Nick Lodolo were the stars for the Reds. Fraley went 3 for 3 while Lodolo threw six solid innings, yielding only 2 runs on seven hits while striking out three batters. T.J. Friedl cleared the bases with a three run shot in the second inning, his first home run of the season. The victory was tainted somewhat by the fact that our hot shot shortstop, Elly De La Cruz, continues to slump, and I mean slump badly. He was 0 for 5 yesterday with four strikeouts. He finished the series 0 for 14 with 9 strikeouts.
Bay Area Teams Lose
The Atlanta Braves best the Oakland A’s yesterday, 3 to 1, behind a good start by Braves veteran hurler Charlie Morton who threw six shutout innings. Sean Murphy, a former A’s catcher, belted a bloop double that provided the go-ahead run in the seventh inning for the Braves who took 2 of 3 from the hapless A’s.
The San Francisco Giants blew a 5-3 lead in the ninth inning as closer Camilio Doval was shelled for four runs as the Yankees came back to win 7-5 to sweep the series in San Francisco. Juan Soto dirlled the go-ahead ninth inning home run to pace the Yankees. Aaron Judge had a nice series for the Yankees, clubbing three homers while going 6 for 10 for the series. Judge was raised in northern California in the tiny town of Linden, population of about 1500 people, mostly farmers raising all sorts of crops such as cherries, wine grapes and vegetables. It’s an Italian town - families with last names like Guadagnola, Podesta and Colombini. Then there’s Aaron Judge, a mixed-race 6 foot 7 inch giant of a guy. I’m sure he was noticed by the locals at the outset.
This Weekend
My son, Michael, competed in a Special Olympics swim meet yesterday. Here he is swimming the 100 meter.
He took first place. He took second place in the 50 meter and 25 meter as well. Those meets last forever so it was a long day.
The night before Michael and I attended the Sacramento RiverCats game at Sutter Home Park, future home of the A’s starting next year.
The RiverCats came from behind to defeat the Tacoma Rainiers 5-3 on a beautiful summer evening.
Acacia Meadows - Conclusion
As you recall from last week, CHOC (and I) raised the final piece of a $30 million plus puzzle to fund the 140 unit Acacia Meadows Apartments due, in large part, to the advocacy of a drinking buddy of mine at the Rubicon Brewpub, a guy named Mark Maldonado. I now had a little over $7 million in MHP funding from the California Department of Housing and Community Development (HCD) to go along with local funding from the Sacramento Housing and Redevelopment Agency (HCD) as well as federal tax-exempt bonds and equity from the sale of federal low income housing tax credits.
Put it all together and we were going to build this complex.
Big Man In Town
Little did I know that the fact that CHOC had secured this complex financing structure would lead us to be a Big Thing. Lenders and investors wanted us. We got over five bids from investors and six bids for the debt. I had never been so popular in my life.
When I first got into this career, many investors were leery of tax credits. They did not understand them so most of the purchasers were syndicates who put together funding from a variety of investors, thereby spreading the risk. The result - pricing that was low, about 60 to 65 cents to the dollar. Lenders were also risk averse although one bank, the previously mentioned Bank of America Community Development Bank, was all in on these deals.
Now, 10 years later, investors loved tax credits. They understood them and knew that they provided value. After all, these are tax credits. That means they provide a dollar for dollar reduction in your net tax bill for ten years. Pricing went up, way up, to 85 to 90 cents on the dollar.
Lenders, too, liked them because these were basically risk-free loans with guarantees posted by strong developers such as CHOC. So now pricing was also more favorable for the borrower. Instead of paying a 1% origination fee, they were now going to 0.75% to 0.5%. And interest rates were pegged to LIBOR, a London-based rate that was much lower than some of the more conventional riskier construction loans.
CHOC was also considered a strong developer. The agency had earned a reputation as a strong, solid developer that delivered, had strong staff and understood this complex affordable housing environment. This favorable reputation was held by SHRA, by lenders and by many investors.
Competition for Acacia Meadows
Everyone wanted a piece of the action for Acacia Meadows. We let our consultant, Community Economics, select the investor and we got 90 cents on the dollar. As for the construction loan, one lender, Union Bank, wanted the deal more than any other.
One Monday morning I came into work and noticed I had a voice mail. It was from a senior loan officer from Union Bank, a woman we will call Molly, and she said, “Paul, Union Bank will match and exceed any offer from any lender for Acacia Meadows. We want this loan.”
It’s good to be king. On the other hand, by this time Bank of America had ditched its Community Development Bank and put in an offer. A buddy of mine, Jim Mather, came to visit Nancy Conk and me at CHOC one day to put in his offer. We laughed. Jim understood. He said, “Our pricing is lousy these days. I think I’m going to go across the street in Walnut Creek to see if Union Bank will hire me.” He did, and Union Bank did hire him.
Needless to say, Union Bank got the loan. It was a great deal for CHOC. Origination fee was 0.5%, the loan was a draw down loan (you only paid interest on the amount lent out according to pace of construction) with pricing at LIBOR plus 0.5%. That was an unreal deal.
Again, it’s good to be king.
Attractive and Romantic Vampire
We go out with a song from one of my favorite bands, as you know. It’s Blue Oyster Cult’s I Love the Night from their 1977 album Spectres. Some people call this song a clone of Don’t Fear the Reaper but that’s primarily because both songs were written and sung by lead guitarist Buck Dharma.
Dharma, whose real name is Donald Roeser, said that he wrote the song to ‘..paint vampires in an attractive and romantic light.” Sure, why not? I mean vampires get a bum rap all the time, right? As the lyrics say, “That night her kiss told me it was over”, meaning his life was over. “One look in the mirror told me so.” Evidently he looked in the mirror and saw nothing. He had been bitten by an attractive vampire so, now, he loves the night. Here it is - it’s a great song.