ASSET MANAGEMENT

TECHNOLOGY

Virtual Site Acquisition

New Web site offers QCT, DDA property listings and due diligence info for the affordable housing community

AFFORDABLE HOUSING FINANCE • July 2008

BY JERRY ASCIERTO

A new Web site aims to make the land procurement process easier for affordable housing developers. QCTsites.com, launched in June, is an online database of Qualified Census Tract (QCT) and Difficult Development Area (DDA) opportunities. It includes both vacant land for new construction and conventional or historic rehabilitation deals.

The site identifies opportunities in areas targeted by qualified allocation plans (QAPs), and marries it with reams of information, such as site plans, zoning information, demographic research, and development fee analysis.

The site also lists additional financial incentives, such as tax abatements or Enterprise Zone funding available for each site, and features market research that lists existing low-income housing tax credit (LIHTC) properties in the area to help establish market rents.

The site is run by the Mecca Cos., a Mishawaka, Ind.-based brokerage and consulting firm that specializes in LIHTC application preparation and site selection for the affordable housing industry.

Kyle Bach, president of the Mecca Cos., had the idea for the site while working for developers The Sterling Group and The Richman Group. Bach’s job was to procure affordable housing deals—research QAPs, travel to QCTs and DDAs in multiple states to find available land, and talk with municipalities and market analysts to determine where the viable development opportunities were.

“It takes about 50 hours of a person’s time and between $12,000 and $15,000 per deal to identify these opportunities, so it gets expensive,” said Bach. “What we offer is the validity of each site, by doing our homework to make sure the site is viable. Hopefully, we can help developers and nonprofit agencies that might not have the ability to bring on full-time staff to go out and procure these deals.”

The site had about 70 listings at press time, with a heavy concentration on properties in the Midwest and Southeast. Bach hopes to expand to 250 listings within a year, with a goal of providing one development site per $2 million in tax credit dollars per state.

Registration on the site is free. Mecca Cos. makes its money by having about 70 percent of the properties on the site under land control, with an option to purchase. The other 30 percent are listings by other brokers or agents, with Mecca Cos. set to receive a cut for any resulting transactions.

Mecca Cos. has partnered with an architecture/site planning firm, a law firm, a general contractor, and a market research firm to expand its due diligence efforts.

“We make sure all the economics of a deal make sense, get a contract on the land, and then package the entire application for somebody to look at,” said Bach. “We specialize in procuring opportunities that developers can actually submit for financing.”

The startup currently has five employees, but hopes to double its head count over the next year. The company is hoping to grow the roster of available properties by striking further partnerships, especially in the West and the Plains states, with likeminded firms.

At press time, the site already had 25 registrants, two weeks before it was scheduled to go live. And the early returns are positive: Representatives from two affordable housing developers, Cohen-Esrey Real Estate Services and Herman & Kittle Properties, said the site was unique and would be helpful to small and mid-sized tax credit developers.

One concern expressed by those developers was how frequently the site will be updated. Another concern is the spread between the price developers would pay to the Mecca Cos. for their site control in contrast to doing the due diligence and obtaining the land directly themselves. But both agreed it was worth a test drive.

For more information, visit www.QCTsites.com.

Charlotte Housing Authority Goes Paperless

The Charlotte Housing Authority (CHA) recently completed a three-year effort to make its office paperless. The need to move to a paperless office became more apparent as the 70-year-old public housing authority (PHA) became overrun with stuffed filing cabinets and began running out of office space.

The CHA’s Real Estate Development division was the first department to go paperless, replacing a manual process that stored grant applications, signed agreements, and contracts in a series of threering binders. Because other CHA divisions needed access to those documents, two binders were produced for each deal—a master containing original documents and a copy.

“We were holding on to a lot of paper that we really did not need anymore,” said Kathleen Foster, the CHA’s vice president of real estate development. “We had shelves and shelves of beautifully done three-ring binders, but it really was not an efficient way for people to access documents.”

The real estate division now stores and retrieves all documents related to its HOPE VI developments, dating back to 1993, electronically, resulting in improved productivity. It previously took two days to compile all of a deal’s paperwork and send it off to the attorneys and other interested parties for their signatures at closing. It now takes 15 minutes to print the electronic documents that need to be signed, according to Ralph Vestuti, the CHA’s director of information technology.

The CHA also electronically stores all of its Sec. 8 documentation, though it had to first seek approval from the Department of Housing and Urban Development, a process that took a year. The Sec. 8 division now shreds documentation after scanning it into the electronic system.

After reviewing a few different document management software suites, CHA chose FileVision, a software product that enables organizations to scan documents and organize them into electronic files, with a user interface that looks like a filing cabinet.

The agency offers a couple of tips for other PHAs considering the move. First, going paperless forces organizations to dig through old filing cabinets and sort the keepers from the dead weight. “You can’t just turn your file drawers over to a scanner,” said Foster. “You need to have program people involved in the process to make sure the right documents are being scanned and named in a way that you can access them.”

Second, with so many large electronic files being e-mailed, many employees forget to delete items from their inbox and “sent” folders, causing e-mail servers to buckle under the weight of so much data.

Beyond being a more “green” organization, the process improvements are helping the CHA fulfill its mission. “Not only are we a more environmentally friendly organization now, we are also being more efficient with the public dollars that we use, thanks to the software,” said Foster.