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Property Stabilization Investments (PSIs) help address urgent threats to the financial viability of properties in the OHCS portfolio. These investments are to be employed only when other resources and strategies have been exhausted.
Below are answers to common questions. Still need help? Please contact us through our ORCA Questions and Feedback help portal.
NEW! If a PSI award eliminates debt, there is no DCR to calculate – how is success defined then?
For such projects without debt post intervention, OHCS will evaluate applications based on the expense-to-income (E/I) ratio. The PSI subsidy requested should bring the properties without remaining debt to an E/I of no less than 77% for the first five years post-award. Where the E/I for a property without debt is higher than 87% (equivalent to a 1.15 DCR) and under 100%, they may proceed but are required to incorporate efforts within their Property Improvement Plan to reduce project operating costs and increase project revenue within 12 months of funding reservation.
If we want to use OAHTCs with PSI, how do we do that?
Once you have submitted an intake and gotten a Procorem WorkCenter, upload the lender letter of interest (LOI) for OAHTCs as part of your initial submission. Note that using OAHTCs will likely reduce the amount of PSI for debt buydown that is needed, and the PSI amount will be adjusted during the underwriting process. OHCS has issued temporary Oregon Administrative Rules that allow OAHTCs to be used with PSI, however per HB 2087 (2025) this is only available to loans made or modified on or after January 1, 2026. This will delay your PSI closing until after that date. This will not affect the applicant's place in the queue for PSI funds.
If we would like to use the PSI to refinance the debt with a new lender, is that allowed?
Yes. You should fill in the current lender information and all terms in the application workbook. Additionally, if you have already been in discussion with the new lender, please upload the letter of interest (LOI) and leave a comment indicating that there will be a change in lenders, in your Procorem WorkCenter. OHCS staff will review and gather more information during underwriting. If the project is funded with bonds, then the refinancing of the debt with a new lender and new tax-exempt debt will likely involve a refunding instead of a reissuance and will add several weeks to the process, but this will not affect the applicant’s place in the queue for PSI funds. The sponsor would need to reach out to bond counsel to determine next steps with regard to either a refunding or reissuance transaction, including any taxable refinancing.
If our project was funded with OHCS-issued bonds (including private activity bonds), it will likely trigger a bond reissue for federal tax purposes. Is a tax reissuance from implementation of a PSI award problematic for OHCS?
No. OHCS works with tax reissuance on a regular basis. Sponsors need to reach out to OHCS’s Bond Counsel to modify the terms, interest rate, and principal adjustments occurring as part of the PSI award and confirm that the modifications trigger a “reissuance” for federal tax purposes. If so, Bond Counsel can assist to ensure appropriate documentation and that necessary steps (including the Tax Equity and Responsibility Act (TEFRA) hearing and approval) are taken to ensure continuing tax compliance. Sponsors can use PSI administrative fees to cover costs associated with bond reissuance, if desired (maximum is 3% of the total PSI funding request). In connection with a tax reissuance a new TEFRA hearing will likely be required, and the State Treasurer’s Office will need to approve the reissuance. The TEFRA hearing and approval will take 4-6 weeks, so sponsors should initiate the process as soon as possible as they have indication of a PSI award. This will not affect the applicant’s place in the queue for PSI funds.
The PSI instruction guide says we may apply for debt buydown and “optionally" for repairs. Can we apply for repairs even if we don't want debt buydown?
No. PSI is intended to stabilize financially distressed properties through debt buydown. Debt buydown is not optional, and all applications must ask for at least some amount of debt buydown. Optional items that applicants can choose to request (or not) include repairs and an administrative fee.
Can PSI funds be used for our property's operations costs?
No. Operating funds are not an eligible use of the PSI funding source, which is lottery revenue bonds.
Is a scattered site with two distinct properties eligible for the maximum $2 million (or $25,000 per unit, whichever is less) in total in PSI support, or is that amount available to us per property?
If the project is already considered to be a scattered site project within the OHCS portfolio, then you should submit one project application as a scattered site. Otherwise, you should generally submit the applications separately and each property would need to meet the eligibility criteria. Once you submit two or more applications for separate sites, an OHCS production analyst would be available to work with you and your lender to determine whether and how to combine the sites into one project, and potentially recapitalize as a 4% LIHTC project, if desired.
Will there be enough funding under the Oregon Affordable Housing Tax Credit (OAHTC) program cap for a high volume of new activity, and is there a set-aside for PSI under the OAHTC cap?
OHCS has sufficient capacity for OAHTC, including all the PSI loans that may be made in the funding allocated in the 2025-27 biennium. As such, there is no need for a PSI set-aside.
If a project is not 100% affordable, is the maximum loan amount based on number of units in the project or number of use-restricted units in the project?
The loan amount is based on a pro rata formula, meaning that only affordable units are counted to determine the maximum funding level of $25,000 per unit (or $2 million, whichever is less). For repairs, only affordable units can be counted and funded under the $50,000 plus $5,000 per unit maximum.
How will PSI loans be secured and recorded?
PSI funds will be subordinate to primary debt and can be subordinate to other existing soft debt if the need is demonstrated. Individual project financial structures will be evaluated for need, and OHCS would seek participation by other subordinate lenders especially where OHCS is asked to subordinate. For example, if interest has accrued on that soft debt, OHCS would seek to have debt increases reduced or reamortized wherever possible in support of the overall project financial operational budget adjustment in alignment with the primary lender and OHCS investments.
What does a 0-1% rate on the stabilization loan mean? What makes a loan get 0% and what makes a loan get a 1% rate?
There are no specific criteria that determine the interest rate on the PSI loan. A 1% loan is considered standard. If a lower rate is requested, your OHCS production analyst will discuss the barriers with you and your lender and determine whether a 0% rate may be justified. Please note that OHCS does not collect interest payments annually during the loan term.
If our property at one time had Low-Income Housing Tax Credits (LIHTC) but is now past year 15, and we no longer have an investor, do we still need some type of LIHTC documentation?
No. If there is not currently an investor, the LIHTC letter is not applicable.
NEW! Is a completed Property Improvement Plan (PIP) before funds are awarded?
No. If you have been working on a PIP with your OHCS asset manager (AM), you are welcome to continue that work, but a completed, signed PIP is not required for PSI funding. Note that if your application is funded and you requested funds for repairs, your assigned AM will work with you to demonstrate that those items are complete. If your project cannot meet the success metrics defined above, you will be required to complete a PIP with your asset manager within 12 months of award.
If we have been subsidizing our own property from other sources within our organization, does that count for meeting the financial distress indicator “Accounts Payable >120 days and >$25,000"?
Yes, if the amount is >120 days and >$25,000). OHCS reviewers will be able to see on your financial statements whether outside subsidy has supported the property, and whether paying those funds back to the source is needed.
What if we have been subsidizing our property with cash from other sources within our organization? Will this make it look like we don't need stabilization?
No. If this is your situation, you should fill out the application workbook as if you had not been subsidizing it. You should also provide either an attachment or make a comment in Procorem indicating where on the property's financial statements those support payments are shown.
For the lender commitment letter, you ask them to indicate that they will agree to place the property's loan in forbearance for 120 days during the application period. If my lender won't do that, does that make the project ineligible?
No. Placing the loan into forbearance is highly desirable, but not something that will exclude the application from consideration. Once the application review is underway, the OHCS production analyst will be happy to discuss this with the lender, as needed.
If we have a loan already in forbearance, it makes the cash flow look artificially better. How can we show that the property would have otherwise met the eligibility criteria?
If this is your situation, you should fill out the application workbook as if the property did not have a loan(s) in forbearance. That means you will include the lender information, as well as all principal and interest payments that you would have normally made, showing them in the application proformas. This will give OHCS reviewers a true picture of how the property would be performing without forbearance and without stabilization.
If a loan is already in forbearance, does that make us ineligible?
No, loans in forbearance do not make the property ineligible.
If we are funded through PSI, and are able to buy down our debt and reamortize the loan, doesn’t it designate the loan as “Troubled Debt Restructuring,” which is undesirable for lenders?
Check with your lender, but they should be aware that due to a regulatory change, so long as the maturity date and interest rate stay the same, accepting the PSI buy-down should not trigger the loan to be labeled as troubled debt.
If my lender declines to consider paying down and re-amortizing the debt with PSI funding, could we structure a different type of deal that achieves the same outcome, such as creating a debt service reserve?
No, this is an ineligible use of funds. The funding source must be used for items considered capital expenses and cannot be used for operating or other non-capital expenses.
We are submitting for a property with less than $2 million left on its loan, and if we are successful with the application, we would just be fully paying off the loan. Can we do that, and if so, do we still need to provide the lender letter of commitment?
PSI can fully pay off a loan if your balance is less than the funding amount requested. In this situation, however, a lender payoff letter detailing the specific amount of funding needed to pay off the loan would be needed as part of the application. Upload this in Procorem where you are prompted for the lender letter of commitment.
How do we maintain exactly Debt Coverage Ratio (DCR) 1.15 for five years?
If the project is eligible and approved for funding, the PSI loan will be the amount needed to achieve 1.15. In line with OHCS's standard proforma guidelines, fluctuation up to 1.30 within the first five years is allowed. If the DCR floats below 1.15, then the proposed funding is not enough to stabilize. If the DCR goes over 1.30, the OHCS production analyst will look at whether less funding is needed to stabilize.
Can we use the funds to buy down two or more loans?
The offering says that it is to buy down senior lender debt. Is it required that it be the “senior” debt, or if there are multiple loans, can we choose a different one?
We have a newer project that is having a hard time converting to permanent financing and have not been able to achieve a debt coverage ratio of 1.0 for at least 12 months. Can we still use PSI?
Does the Oregon Centralized Application (ORCA) two-project limit apply to PSI projects?
Are housing authorities eligible for the $20 million nonprofit set-aside?
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