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>>> WELCOME BACK, EVERYBODY. PLEASE HAVE A SEAT AFTER LUNCH.
GLAD YOU CAME BACK. NICE TO SEE EVERYONE DIDN'T RUN OFF.
[LAUGHING] WELL, THIS AFTERNOON, WE'RE GOING TO GET THROUGH
PART B OF OUR PRESENTATIONS. RIGHT NOW WE'RE GOING TO BE DAZZLING YOU WITH
INFORMATION ABOUT FORMS. OBVIOUSLY WE'RE THE GOVERNMENT AS YOU MIGHT
EXPECT WE HAVE A FORM OR TWO YOU MIGHT WANT TO TAKE A LOOK AT.
AS A MATTER OF FACT, WE'VE JUST UNDERTAKEN A FAIRLY SIGNIFICANT REVIEW OF ALL THE FORMS
BEING USED IN THE H.U.D. 242 PROGRAM. ONE OF THE SUBJECT MATTER EXPERTS ON THIS
IS J.B. NATHAN.
HE WAS KIND ENOUGH TO VOLUNTEER AND WALK UP AND GIVE US THE SIGNIFICANT CHANGES ON A LOT
OF THE FORMS THAT WE USE. LENDERS, THERE'S A LOT OF FORMS, I'M NOT GOING
TO KID YOU. THERE'S A LOT OF INFORMATION ON THESE.
J.B. IS GOOD WALKING US THROUGH THIS.
SOME RIGHT REQUIRE A LITTLE BIT MORE WORK. J.B., PLEASE WALK US THROUGH SOME OF THE INFORMATION
ON THE FORMS. THANK YOU FOR DOING THIS FOR US.
>> OKAY. FIRST OF ALL, I WANT TO ANSWER A COUPLE OF
YOUR QUESTIONS THAT I KNOW YOU'RE JUST DYING TO ASK AND THINGS LIKE THAT.
THE FIRST ONE IS, DO WE HAVE A 902 1023? I SENT OUT AN E MAIL ON MONDAY ON IT.
AT THIS POINT IT'S NOT READY BUT I'M TOLD IT'S GOING TO BE FAIRLY IMMINENT.
BUT UNFORTUNATELY RIGHT NOW, IT'S NOT THERE. I ALSO WANT TO POINT OUT FOR YOU ON THE APPLICANT'S
GUIDE, IF YOU JUST GO TO THE FHA.GOV AND THEN I CHOOSE THE HOSPITAL 242 PROGRAM.
IF YOU GO DOWN THERE AND CHOOSE THE RESOURCES AND CLICK ON THE HANDBOOK, YOU GET ONE THAT
DOESN'T HAVE ALL THE BOOKMARKS ON IT. BUT IF YOU CHOOSE "GETTING STARTED" ON A DEAL,
WHEN YOU GO IN THERE, THE FIRST PAGE THAT HAS THE LINK TO THE PREAPPLICANT'S GUIDE AND
THEN BUT TO THE SECOND PAGE, IT'S GOT THE APPLICANT'S GUIDE THERE?
IF YOU CLICK ON THAT ONE, IT'S GOT A VERSION WITH ALL THE BOOKMARKS IN IT.
SO IF IRP DOWNLOADING ONE TO MY SO IF I WERE DOWNLOADING ONE TO MY COMPUTER, THAT'S THE
ONE I WOULD TAKE. THAT'S THE TRICK I WANTED TO SHOW YOU.
I WANT TO THANK YOU WE'VE DONE A LOT OF WORK ON THIS HANDBOOK AND THE NEW 2013 WHICH I'LL
GO OVER IN JUST A MINUTE. QUITE FRANKLY, YOU AS THE LENDERS AND THE
HEALTHCARE FINANCE COMMITTEE HAS PUT A LOT OF INPUT INTO THAT.
SO I WANT TO THANK YOU FOR YOUR HELP IN THIS. QUITE FRANKLY, WE WOULDN'T BE WHERE WE ARE
TODAY IF IT WASN'T FOR YOUR HELP. THIS STUFF HAS BEEN IN THE WORKS FOR OVER
TWO YEARS. AND GOING WITH 2013, AT THE END WE'RE GOING
TO COME TO THE 2264 WHICH IS A H.U.D. FORM WHICH WAS MADE AVAILABLE TO YOU, BUT YOU'RE
GOING TO REALLY LIKE THAT BECAUSE IT RUNS THROUGH A LOT OF AUTOMATIC CHECKS.
SO IF THERE'S A PROBLEM IN IT, IT IDENTIFIES IT UP FRONT.
YOU'LL KNOW WHERE THE PROBLEM IS BEFORE YOU SEND IT TO US SO YOU CAN FIX IT.
LET'S GO INTO THE 2013. NEXT SLIDE HERE.
WE'RE NOT GOING TO GET TO THE NEXT SLIDE. I'VE GOT DOWN HERE SLIDE NUMBER 90 IS JUST
A PICTURE OF THE NEW 2013. WHAT I REALLY WANT TO DO IS I WANT TO GO OVER
ON THE FORM HERE SOME OF THE NEW THINGS THAT ARE CHANGED.
I'M NOT GOING TO GO OVER THE STUFF THAT'S BEEN THERE ALL ALONG.
I WANT TO GO OVER THE STUFF THAT'S NEW IN THERE.
HERE WE GO WITH THE FORM. SO THIS IS THE NEW 2013 IN HERE.
LET'S JUST GO AHEAD AND WE'LL GO TO THE NEXT SLIDE IN HERE.
WE'RE GOING TO TALK ABOUT SOME OF THE NEW FIELDS THAT ARE ON THE FORM.
AND FIRST OF ALL, THIS FORM HAS BEEN POSTED SINCE FOR OVER A YEAR, I WANT TO SAY LAST
SUMMER JULY IS WHEN IT WAS FIRST POSTED. THIS IS AN UPDATED VERSION OF IT, BUT A LOT
OF THIS STUFF HAS BEEN OUT THERE IT WAS MODIFIED. THERE USED TO BE INSTRUCTIONS ON 2013 ON ONE
PAGE. IT WAS HALF OF TWO PAGES IN HERE: NOW IT'S
LIKE 28 PAGES. YOU SAY, IF THIS ALL CHANGES, IT'S ALL BEEN
THERE BURIED IN POLICIES AND HANDBOOKS AND STUFF BEFORE.
WHAT WE'VE REALLY DONE IS JUST TAKEN THIS STUFF AND PUT IT TOGETHER IN ONE PLACE SO
THAT YOU HAVE IT ALL IN ONE PLACE FOR YOU IN THERE SO THERE'S NO HIDDEN SECRETS IN THERE.
YOU SHOULD LIKE THAT. UNDER 241, THERE IS NO REQUIREMENT FOR HARD
COSTS OR EQUIPMENT. THAT'S GOING TO BE A BIG CHANGE YOU'RE GOING
TO SEE IN THERE. TYPICALLY IT WOULD BE EQUIPMENT, BUT WE KIND
OF HAD AN INTERNAL DEBATE. WE SAID, WAIT A MINUTE, IF YOU'RE ACTUALLY
PURCHASING PROPERTY WITH THE 241, YOU COULD ACTUALLY HAVE NO HARD COSTS.
NOW, I WILL POINT OUT ON A 241 IN HERE, THIS MIGHT BE A CASE, IF IT'S ONLY EQUIPMENT, THIS
MIGHT BE A CASE WHERE YOU DON'T DO A 25 YEAR NOTE.
GUESS WHAT? THE LIFE OF THE EQUIPMENT IS NOT 25 YEARS.
THIS MIGHT BE THE CASE WHERE YOU USE A SHORTER PERIOD IN THERE.
223F IS NOW BUILT IN THERE. SWAP TERMINATION COSTS, THAT HAVE BEEN INCLUDED
IN IT AS WELL. YOU ALSO NOTICE OVER HERE I HIGHLIGHTED THEY
WENT A LITTLE BIT TOO FAST FOR ME. I WANTED TO POINT OUT THAT EVERYTHING IS IN
WHOLE DOLLARS IN HERE. DON'T GIVE US A 2013 THAT SAYS 36 CENTS ON
IT. WE'RE JUST DEALING WITH EVEN DOLLAR AMOUNTS
IN HERE. WHEN THE MORTGAGE AMOUNT, THAT HAS TO BE IN
MULTIPLES OF $100 IN HERE. SOMETIMES THAT COMES UP AS A QUESTION.
THEN FINALLY, WHAT HAPPENS WHEN I'M CALCULATING MY FEES AND PERCENTAGES AND STUFF IN THERE?
WHAT WE'RE DOING IS WE'RE ROUNDING DOWN TO THE NEAREST WHOLE DOLLAR THROUGHOUT THE ENTIRE
FORM. OKAY, NEXT SLIDE.
SO LET'S TAKE A LOOK AT THE TOP SECTION OF THE 2013 HERE AND WHAT ARE SOME OF THE CHANGES
IN THERE. FIRST OF ALL, WE POINTED OUT IT'S THE MORTGAGORS,
THE BORROWER'S LEGAL NAME GOES ON THE TOP LINE.
A LOT OF TIME THERE'S BEEN CONFUSION ON THAT. WE TRIED TO ADDRESS THAT ISSUE.
THEN SECTION A 2, THE 2 IS THE MORTGAGEE, THAT'S YOU IN THERE.
THE LINE OVER HERE FOR THE DATE PREPARED IN HERE, AS YOU KNOW DURING THE APPLICATION PROCESS,
FIRST OF ALL, FOR THE PREUP, YOU GIVE US A DRAFT 2013 AND THEN YOU SUBMIT THE APPLICATION
AND THERE'S A 2013. THEN YOU GET THE GNP AND THERE'S ANOTHER ONE.
WE'RE READY TO ISSUE THE COMMITMENT AND YOU'VE GOTTEN THE GNP AND COST OF THINGS AND YOU'RE
SHIFTING THINGS AROUND AND THERE'S ANOTHER ONE.
BETWEEN THE COMMITMENT AND THE ACTUAL ENDORSEMENT DATE, GUESS WHAT?
YOU WENT OUT AND SOLD HAD THE NOTE SALE OR WHATEVER AND GOT THE ACTUAL REAL PRICING,
UNTIL YOU COME BACK AND GUESS WHAT? WE'VE GOT ANOTHER ONE IN HERE.
TO KEEP ALL OF THIS STRAIGHT, WE PUT A PLACE HERE SAYING THE DATE PREPARED.
WHEN YOU'RE LOOKING AT THE 2013, YOU KNOW WHETHER YOU'RE LOOKING AT THE LAST ONE IN
HERE. SECTION OF THE ACT.
YOU USED TO HAVE ONE LITTLE SPACE TO TRY TO SQUEEZE IT IN.
WE'VE ADDED MORE ROOM THERE. TELLS US RIGHT THERE IT'S A 242 OR 241 PURSUANT
TO 242 OR F. THAT MAKES A DIFFERENCE ON THE M.I.T. AND THE FEES.
WE'RE ASKING FOR THAT INFORMATION RIGHT THERE WITH RESPECT TO THAT.
THE TYPE OF ENTITY IN HERE, IF IT'S A NOT FOR PROFIT OR FOR PROFIT OR GOVERNMENTAL THAT
EFFECTS SOME OF WHAT COULD BE INCLUDED, FOR EXAMPLE AMPO OR NOT AMPO.
WE ASK FOR THAT SPACE RIGHT IN HERE. THE FUNDING SOURCE, THAT'S A NEW BOX RIGHT
HERE FOR THE FUNDING SOURCE. BASICALLY WHAT WE'RE GETTING AT THERE, IS
THERE GOING TO BE RELATED BONDS IN HERE? ARE YOU JUST ISSUING THEM A LOAN STRAIGHT?
IS IT GOING TO BE GINNIE MAE. THAT EFFECTS THE FEES YOU'RE GOING TO CHARGE.
WE'RE ASKING YOU UP FRONT ON DAY ONE. IF YOU DON'T KNOW WHAT IT IS AT THAT POINT,
JUST SAY IT'S TO BE DETERMINED. PUT A TBD THERE.
WE'RE GOING TO ASSUME BONDS ARE NOT INVOLVED. SO THE FEE IS GOING TO BE LIMITED BY THAT
ONE THERE. THEN WE ASK OVER HERE FOR THE CALENDAR DAYS
IN THE CONSTRUCTION PERIOD, THAT'S USED TO DETERMINE THE AMOUNT OF MORTGAGE THAT CAN
BE CAPITALIZED AND STUFF LIKE THAT. WE'RE ASKING FOR THAT RIGHT THERE.
LET'S GO TO THE NEXT SLIDE. NEW CONSTRUCTION VERSUS REHAB.
THIS HAS BEEN A QUESTION THAT'S COME UP SEVERAL TIMES IN HERE.
NEW CONSTRUCTION IS BASICALLY BUILDING A BUILDING ON EMPTY GROUND IN HERE.
REHAB IS I'M KNOCKING OUT THE WALLS AND I'M REFURBISHING IT IN HERE.
SO THAT'S BASICALLY WHAT WE'RE GETTING AT ON THAT ONE THERE.
IF IT'S ONLY REFINANCING WITH NO HARD COSTS, LET'S SAY I'M DOING A 223F OR 223A 7, BASICALLY
A FLYING SEAL OF IT IS ZERO. YOU CAN JUST IGNORE THE BOX IN THERE.
NOT FOR PROFITS WHY IS THIS USED? IT'S USED TO HELP DETERMINE THE AMOUNT OF
CONTINGENCIES THAT'S ALLOWED. THAT'S THE NET EFFECT OF IT IN THE END.
NOT FOR PROFIT VERSUS FOR PROFIT, THAT AFFECTS THE AMPO IN THERE.
SO THAT'S WHERE WE ADJUST FOR THAT. THE SOURCE OF FUND, I'VE ALREADY REALLY TALKED
ABOUT THAT IN THERE. SO LET'S GO AHEAD AND GO TO THE NEXT SLIDE.
THE CALENDAR DAYS IN HERE, WE'VE ALREADY SAID THAT, WHERE IS THAT GOING TO BE USED FOR?
THAT'S GOING TO BE USED FOR ONE TO DETERMINE THE COMMENCEMENT OF AMORTIZATION DATE WHEN
THE COMMENCEMENT OF AMORTIZATION. WE JUST ASSUME THE CONSTRUCTION PERIOD TAKES
THE FULL TIME. YOU'RE ALLOWED UP TO TWO MONTHS AFTER THAT,
60 DAYS AFTER THAT. SO BASICALLY THE COMMENCEMENT OF AMORTIZATION
DAY IS GOING TO BE DETERMINED BY THE DAYS IN THE CONSTRUCTION CONTRACT.
WHEN YOU FIRST SUBMIT YOUR APPLICATION, YOU MAY NOT KNOW THOSE NUMBER OF DAYS.
BECAUSE UNTIL YOU'VE GOT THE GNP YOU MAY NOT HAVE IT.
YOU'RE GOING TO BE GUESSING OR ESTIMATING IN WHICH CASE YOU WRITE EST NEXT TO IT, IT'S
AN ESTIMATE. PRIOR TO ISSUING THE COMMENCEMENT, YOU'RE
GOING TO HAVE A GNP, THERE'S GOING TO BE A CONSTRUCTION CONTRACT, THERE WILL BE A PERIOD
ON IT. IN THAT CASE, YOU CAN FILL IN THE DATE AND
THAT'S GOING TO DETERMINE EVERYTHING ELSE THAT FLOWS AFTER THAT.
BUT IT DOES IN EFFECT THE COMMENCEMENT OF THE AMORTIZATION, IT AFFECTS THE M.I.T. ALLOWABLE
IN THE MORTGAGE BECAUSE THAT'S ALLOWED 60 DAYS PAST.
IT'S GOING TO AFFECT THE CAPITALIZED INTEREST. YOU SAY, WHAT'S THE BASIC FORMULA THAT WE
USE THEN TO DETERMINE THE CONSTRUCTION PERIOD IN HERE?
WHAT WE DO IS WE JUST ASSUME EVERY MONTHS 30 DAYS.
ISN'T THAT NICE? YOU KNOW?
SO BASICALLY WE'RE GOING TO TAKE THE NUMBER OF DAYS IN THE CONSTRUCTION CONTRACT, WE'RE
GOING TO DIVIDE THAT BY 30. IF IT COMES OUT TO BE 27.65 OR WHATEVER, WE'RE
JUST GOING TO ROUND IT UP. WE'RE GOING TO MAKE IT 28.
WE ALWAYS ROUND THAT UP BECAUSE YOU NEVER KNOW WHETHER IT'S GOING TO FINISH AT THE BEGINNING
OR THE END, AND THEN WE ADD TWO MONTHS. THAT'S YOUR CONSTRUCTION PERIOD.
THAT'S GOING TO DETERMINE WHAT THE COMMENCEMENT OF AMORTIZATION DATE IS.
IT REALLY BECOMES VERY OBJECTIVE AND YOU KNOW EXACTLY WHAT IT IS.
WITH OUR AUTOMATED 2264, IT WILL CALCULATE THAT.
SO IF YOU'VE GOT A PERIOD THERE THAT DOESN'T MATCH THAT ONE, THERE WILL BE A DISCUSSION.
NEXT SLIDE. ONE OF THE OTHER THINGS YOU'LL NOTICE IN HERE,
IT USED TO BE WE HAD LIKE FIELD ONE OR FIELD ONE WITH CONSTRUCTION, FIELD 2 AND IT HAD
LIKE ALL OF THESE OTHER LINES IN IT AND IT WAS ALL FIELD 2.
WE TALKED ABOUT 2A, 2B. WE GAVE EVERY ITEM ITS OWN NUMBER.
LET'S SOLVE THE PROBLEM AND MAKE IT EASY. YOU'RE GOING TO FIND NEW FIELDS.
WE DIDN'T HAVE A LINE ITEM FOR CONTINGENCY IN THERE.
WE THOUGHT MAYBE CONTINGENCIES SHOULD BE THERE. ON THE OTHER HAND, WHAT WAS THERE WAS DEMOLITION
COSTS AND HARDLY ANY DEAL THAT I'VE HAD, A LOT OF TIMES IF THERE IS DEMOLITION, IT'S
BUILT IN THE CONSTRUCTION CONTRACT ITSELF. SO WE JUST SAID WE'LL TAKE DEMOLITION AND
PUT THAT UNDER "OTHER" WHERE IT APPLIES THERE. THAT'S DETAILED OUT IN YOUR APPLICATION.
WE ALSO ADDED TOTAL HARD COSTS AND TOTAL SOFT COSTS.
YOU SAW IN THE REGS THAT IT TALKED ABOUT SOME THINGS ARE RELATE TODAY THE TOTAL HARD COSTS
TO THE TOTAL MORTGAGE AND THINGS LIKE THAT. THERE'S BEEN CONFUSION ABOUT WHAT IS HARD
COSTS? WELL, NOW YOU HAVE A LINE ON HERE THAT SAYS
TOTAL HARD COSTS, LINE 11. IT'S EVERYTHING ABOVE THAT.
CONSEQUENTIALLY THERE'S NO QUESTION IN HERE. IT'S PRETTY BLACK AND WHITE.
THERE'S A NEW LINE FOR SPECIAL TAX ASSESSMENTS. WE'LL TALK ABOUT THAT IN A LITTLE BIT.
LAND AND PP&E TO BE PURCHASED. QUESTIONS HAVE COME UP, WHAT IF THE HOSPITAL
IS PURCHASING PROPERTY? WHERE DOES IT GO?
GUESS WHAT? IF YOU'RE ACTUALLY PURCHASING LAND OR YOU'RE
PURCHASING THE BUILDING ACROSS THE STREET AS PART OF THE DEAL, IT GOES OVER HERE ON
LINE 31. AGAIN, WE'VE KIND OF PUT THE SPACES THERE.
IT WAS IMPLIED BEFORE. THOSE QUESTIONS ARE NOW KIND OF PUT TO BED,
WHERE DOES IT GO? WE'VE RENAMED SOME SECTIONS.
LEGAL OR CONSULTANT, AMPO AND SPECIAL ASSESSMENTS. WE BASICALLY TOOK AMPO OUT OF THE FINANCING
COST BECAUSE IT'S REALLY NOT A FINANCING COST. IT'S AN ALLOWANCE OF OTHER COSTS AND WE KIND
OF PUT IT WHERE IT BELONGED ON THAT ONE THERE. THEN SECTION D HAS BEEN RENAMED "ESTIMATED
CASH REQUIREMENT SOURCES AND USES." THAT REALLY HAS BEEN SO THAT SECTION REALLY
GOT REWRITTEN TO BECOME A TRUE SOURCES AND USES IN THERE WITH REGARD TO THAT.
LET'S GO TO THE NEXT SLIDE. SO LET'S GO TO C 10.
C 10 IS YOUR TOTAL HARD COSTS UNDER 242. TOTAL HARD COSTS FOR A 242 MUST BE GREATER
THAN OR EQUAL TO 20%. IT'S GOT TO BE 20% OR GREATER.
EQUIPMENT MUST BE THIS SLIDE WAS SUPPOSED TO BE CHANGED.
EQUIPMENT MUST BE LESS THAN OR EQUAL TO TOTAL HARD COSTS NO.
THE EQUIPMENT MUST BE LESS THAN OR EQUAL TO 50% OF TOTAL HARD COSTS.
SO, THAT ONE SHOULD BE 50%. WE'LL GET A CORRECTED SLIDE I PRESUME AND
GET IT POSTED OR VERSION OR WHATEVER IN HERE. SECTION 223F, TOTAL HARD COSTS MUST BE LESS
THAN 20% OF THE LOAN IN THERE. IN FACT, THEY COULD BE ZERO.
THEY HAVE TO BE LESS THAN 20% OF THE LOAN. THERE IS NO RULE ON EQUIPMENT, SO ON A 223F
IT COULD BE ALL EQUIPMENT OR NO EQUIPMENT OR WHATEVER.
THE 50% RULE FOR EQUIPMENT DOESN'T APPLY ON A 223F.
ON A 223A 7 ON 241. ON 241, THERE'S NO REQUIREMENT FOR EQUIPMENT
IN THERE. PROBABLY THERE'S HARD COSTS IF YOU WERE ACTUALLY
PURCHASING A PROPERTY. THAT'S A CASE WHERE YOU COULD HAVE NO HARD
COSTS BECAUSE THE PURCHASE WOULD GO OVER ON THE OTHER SECTION THAT WE TALKED ABOUT EARLIER
IN THERE. TYPICALLY YOU ARE GOING TO HAVE HARD COSTS
ON A 241, BUT IT COULD BE ALL OF IT. IT COULD BE LESS.
IT COULD BE WHATEVER IN THERE. ON A 223A 7, THE ONLY HARD COSTS YOU'RE GOING
TO HAVE THERE ARE GOING TO BE REQUIRED REPAIRS. SO YOU'RE GOING TO HAVE TO JUSTIFY IN YOUR
APPLICATION WHY THIS IS A NEEDED REPAIR. IT'S NOT WE WANT TO DO IT.
IT HAS TO BE REQUIRED IN THERE. AND THEN THIS STUFF HERE, THESE TESTS HERE
ARE ALL INCLUDED IN THE 2264 THAT WE'LL GET TO.
IT ACTUALLY TESTS FOR WHETHER OR NOT THESE REQUIREMENTS ARE MET.
LET'S GO TO THE NEXT SLIDE. INTEREST: ALL I CAN SAY ON THE INTEREST, IF
YOU LOOKED AT THE OLD HANDBOOK REQUIREMENT, IT BASICALLY SAID IF IT'S A REHAB PROJECT,
YOU NEED TO INCLUDE 2/3 OF THE LOAN AMOUNT FOR CALFI.
IF IT'S A STARTUP, BASICALLY CONSTRUCTION, IT'S 50% COMING IN THERE.
YOU KNOW, THERE'S A BIG DIFFERENCE OF HOW MUCH CALFI YOU NEED.
IF 80% OF THE LOAN IS REFI VERSUS NONE OF THE LOAN IS REFI AND STUFF LIKE THAT.
HOW LONG IS THE CONSTRUCTION PERIOD? HOW DOES IT GO?
HOW MUCH EQUIPMENT VERSUS HOW MUCH IS THE CONSTRUCTION IN THERE.
SO THERE WAS ALL SORTS OF FACTORS. WHAT WE BASICALLY DID WITH YOUR INPUT IS WE
CAME AND REWROTE THIS SECTION WITH A VERY COMPLICATED FORMULA WHICH IS WRITTEN OUT IN
DETAIL IN THE HANDBOOK. BUT BASICALLY WHAT IT GETS DOWN TO IS WHAT'S
THE INITIAL DRAW GOING TO BE? BASED ON THE INITIAL DRAW, IT SAYS GUESS WHAT?
ON THE INITIAL DRAW, YOU'RE GOING TO HAVE TO START PAYING INTEREST ON DAY ONE.
IT ASSUMES THE REST OF IT IS KIND OF DRAWN OUT EQUALLY OVER THE CONSTRUCTION PERIOD.
THAT'S THE JV SIMPLE VERSION OF THE FORMULA IN THERE.
THE NUMBER OF MONTHS FOR THAT CONSTRUCTION PERIOD WE ALREADY TALKED ABOUT.
THAT'S ALREADY PREDETERMINED BASED ON WHAT IS WRITTEN IN THE CONSTRUCTION CONTRACT, PLUS
TWO MONTHS. AND THE 2264 WILL CHECK YOU PUT DOWN WHAT
YOU THINK THEY'RE GOING TO NEED IN HERE, AND I KNOW YOU HAVE THE ACTUAL DRAW SCHEDULES,
SO YOU'VE GOT INFORMATION THAT WE DON'T HAVE WHEN WE'RE DOING THE UNDERWRITING IN HERE.
OUR FORM IS GOING TO CHECK FOR PLUS OR MINUS 5% OF THE CALCULATED AMOUNT.
IF THE VARIANCE IS GREATER THAN THAT PLUS OR MINUS 5%, THE AE WHICH IS THE ACCOUNT EXECUTIVE
OR THE UNDERWRITING TEAM IS GOING TO BE TOLD TO GO AND TALK WITH THE UNDERWRITING DIRECTOR.
SO BASICALLY WE CAN OVERRIDE THAT AMOUNT VERY EASILY.
IT DOESN'T REQUIRE A HANDBOOK WAIVER TO CHANGE IT, BUT THERE'S GOING TO HAVE TO BE AN EXPLANATION
GIVEN TO THE UNDERWRITING TEAM AND THE DIRECTOR YOU CAN FIGURE IS GOING TO BE ASKING WHY IS
IT OFF OF THAT AMOUNT. SO JUST KNOW THAT THAT QUESTION IS GOING TO
COME UP. C 13 IS FOR TAXES.
WHEN WE COME DOWN HERE AND WE LOOK AT THIS TAXES AND INSURANCE ON C 13 AND C 14, THAT'S
FOR TAXES ON THE PROPERTY THAT'S BEING CONSTRUCTED DURING THE CONSTRUCTION PERIOD IN HERE.
IT COULD BE FOR BOND INSURANCE. IF THE BOND INSURANCE IS BEING PAID BY THE
HOSPITAL RATHER THAN BY THE CONTRACTOR, WHICH IS USUALLY NOT THE CASE IN HERE.
BUT IN THOSE CASES, THAT'S A CASE WHERE YOU WOULD HAVE THAT EASILY.
I WANT TO SAY 90% OF THE TIME, THOSE LINES ARE USUALLY LEFT BLANK, THEY'RE ZERO BECAUSE
THEY PLAIN DON'T APPLY. C 14 WE'VE ALREADY TALKED ABOUT THAT.
WE'RE GOOD. LET'S GO TO THE NEXT SLIDE.
I'M GOING TO TRY TO KEEP THIS MOVING. FOR A 223A 7, IT'S 55 BASIS POINTS.
FOR THE FIRST YEAR IT'S 50 BASIS POINTS. WE TALKED ABOUT THAT EARLIER ON THE FEES.
FOR THE 2223F IT'S 60 BASIS POINTS AND 270 IT'S 07 BASIS POINTS FOR INSURANCE.
NOW, FROM WHAT I SAID EARLIER, I KNOW THERE'S GOING TO BE DISCUSSIONS ABOUT THE 100 BASIS
POINTS FACTOR IN HERE. SO I'M JUST GOING TO SAY THAT'S UP IN THE
AIR. OKAY?
RIGHT NOW, THIS IS THE WAY IT GOES IN HERE. FOR UNDERWRITING PURPOSES IN HERE, MOST OF
OUR HOSPITALS AT THE END OF THE CONSTRUCTION PERIOD AFTER THEY GO TO FINAL ENDORSEMENT
AND THEN THERE'S AN AUDIT OF THE ACTUAL MIP FEE, MOST DEALS ARE GETTING MONEY BACK.
SO I DON'T KNOW THAT THERE'S A NEED TO CHANGE WHAT ACTUALLY GOES IN HERE FOR UNDERWRITING
PURPOSES AT THIS POINT IN HERE. THAT'S JUST THE FACT.
BUT THE FORM DOES CALCULATE THE MIP, MEANING THE 2264 IN THERE.
OBVIOUSLY IF THE CALCULATED AMOUNT IS DIFFERENT, IF YOU'VE GOT A NUMBER IN THERE THAT'S DIFFERENT
THAN THE CALCULATED AMOUNT, IT WILL REQUIRE AT THIS POINT A HANDBOOK WAIVER AND THE FORM
IS LOCKED SO THE AE CANNOT OVERRIDE THAT AMOUNT. THAT'S THE AMOUNT OF THE FEE BECAUSE IT AUTOMATICALLY
CALCULATES THE FEE. >> THE CALCULATION IS BASED ON MONTHS?
>> YES, ON THE CONSTRUCTION PERIOD. >> BUT H.U.D. ON A REGULATORY BASIS, H.U.D.
COLLECTS BASED ON FOUR YEAR. YOU ONLY HAVE A PARTIAL YEAR H.U.D. IS STILL
COLLECTING OR REQUIRING A FULL YEAR OF M ITCH MUCH.
>> LET ME REPEAT THIS HERE BECAUSE WE HAVE PEOPLE IN THE NETHER WORLD THAT WOULDN'T HAVE
HEARD YOUR QUESTION. MR. ANDRE'S QUESTION.
WHAT HAPPENS IF THERE'S A PARTIAL YEAR BECAUSE CONSTRUCTION PROJECTS NEVER END ON THE YEAR.
THERE'S ALWAYS A PARTIAL YEAR IN HERE. WHAT HAPPENS IS, YOU HAVE TO PAY THE FEE ONE
FULL YEAR IN ADVANCE IN THERE. BUT WHEN YOU GO TO COST CERTIFICATION AT THE
END OF THE PROJECT, ALL THAT'S ALLOWED TO BE INCLUDED IN THE MORTGAGE IS UP TO 60 DAYS
PAST THE SUBSTANTIAL COMPLETION DATE. SO WHAT HAPPENS THEN IS THAT ALL THAT IS ALLOWED
TO BE INCLUDED IN THE MORTGAGE IN THERE. THAT'S IN THE COST CERTIFICATION GUIDES IN
HERE. SO WHAT HAPPENS IS WE'VE NOW CLARIFIED THAT
ALL YOU CAN DRAW FROM THE MORTGAGE AMOUNT SO LET'S SAY IT'S A THREE AND A HALF YEAR
CONSTRUCTION PERIOD, YOU CAN ONLY PUT THEN THREE AND A HALF YEARS, PLUS TWO MONTHS IN
THE INSURANCE. DURING THE FINAL YEAR OF THE MORTGAGE, YOU
WOULD HAVE TO COLLECT FOR THE REMAINING FOUR MONTHS SO THAT YOU WOULD HAVE THAT MONEY ACTUALLY,
YOU WOULD HAVE TO COLLECT IT DURING THE SECOND YEAR BECAUSE YOU HAVE TO PAY THE FULL YEAR
AT THE BEGINNING OF THE THIRD YEAR. DOES THAT ANSWER YOUR QUESTION?
>> I DISAGREE WITH YOUR ANALYSIS.
[INAUDIBLE]
>> THIS WOULD BE A BIG CHANGE BECAUSE WE'RE GOING FROM LOAN SIZING TO QUAL CERTIFICATION
IN THE 2013. NO HOSPITAL HAS EVER GOT TO SUBSTANTIAL COMPLETION
WITHIN 60 DAZE OF ITS SCHEDULED COMPLETION DATE OR INITIAL COMPLETION DATE.
SO, IN REALITY, THEY COULD COLLECT OR THEY COULD DRAW MORE MIP THAN WHAT YOU'RE ALLOWING
THEM TO CAPITALIZE IN THE LOAN. BECAUSE IF THE CONSTRUCTION PERIOD GOES LONG,
THEY CONTINUE TO DRAW MIP EVEN BEYOND THE 60 DAY PERIOD, BEYOND THE SCHEDULED SUBSTANTIAL
COMPLETION BECAUSE IT'S 60 DAYS BEYOND SUBSTANTIAL >> WE HAVE A GNP WITH A CONTRACT DATE THAT
IS A FIXED CONTRACT DATE. IF THEY DON'T COMPLETE IT BY THAT DATE, IT'S
LIQUIDATED DAMAGES. >> BUT THE DATE IS ALWAYS CONSTANTLY EXTENDED
THROUGH CHANGE ORDERS. THAT STILL DOESN'T MEAN YOU ACTUALLY GET TO
SUBSTANTIAL COMPLETION. WHAT DO THEY DO AFTER THEY'VE DRAWN OUT YOU
GET TO THE FINAL YEAR AND THEY'VE ONLY GOT THREE OR FOUR MONTHS IN THE LOAN BUDGET BUT
THEY NEED TO DRAW OUT OR THEY HAVE THE ABILITY TO DRAW BECAUSE THEY HAVEN'T GOTTEN SUBSTANTIAL
COMPLETION. ARE YOU GUYS GOING TO AUTOMATICALLY LET THEM
DRAW OUT AN AMPO FOR THE FULL YEAR OR ARE YOU GOING TO MAKE THEM START THIS WOULD BE
THE ONLY H.U.D. PROGRAM THAT YOU WOULD HAVE TO START ESCROW IN THE MIP?
>> THAT'S ONE OF THE STATED POTENTIAL USES OF AMPO.
SO AMPO, YES. >> YOU'LL LET THEM DRAW OUT THE FULL YEAR?
>> NO, THEY ALL THEY'LL ONLY BE ABLE TO DRAW OUT MIP MAY ONLY BE INCLUDED UP TO 60 DAYS
PAST THE SUBSTANTIAL COMPLETION DATE. THAT'S THE FIXED DATE DETERMINED AT THE TIME.
SO IF THERE'S A CONTRACT EXTENSION FROM I WANT TO SAY JUNE TO JULY BECAUSE THEY NEED
AN EXTRA 30 DAY TO COMPLETE THIS BECAUSE OF SOMETHING IN HERE, THEN THE ANSWER IS COULD
THEY USE AMPO TO COVER THAT 30 DAYS FOR THE MIP AT THAT POINT?
THAT'S ONE OF THE POTENTIAL USES OF AMPO. >> BUT YOU DON'T KNOW THAT AT THE TIME THAT
YOU HAVE TO PUT THIS 2013 IN AND THE LOAN IS APPROVED AND YOU WON'T KNOW THAT UNTIL
YOU GET TO THE MIP PAYMENT DATE, YOU KNOW, WHICH IS TWO OR THREE
>> WE WON'T EVEN KNOW THAT ON THE MIP PAYMENT DATE BECAUSE ON THE MIP PAYMENT DATE, THEY
GOT PAID BACK ON JANUARY 1. >> YOU'RE MAKING US ASSUME IN LOAN SIZING
THAT WE'RE GOING TO EVERYTHING IS GOING TO HAPPEN ON TIME AND THE QUAL CERTIFICATION
RULES AS WRITTEN ARE GOING TO WORK, YOU KNOW, ASSUMING NO DELAYS.
THAT'S NEVER HAPPENED IN THIS PROGRAM.
>> IN UNDERWRITING AND WHAT CAN GO ON THERE, WE HAVE TO ASSUME AT THE COMMENCEMENT OF AMORTIZATION
DATE FROM THE BANK'S PERSPECTIVE, YOU DON'T CARE WHETHER THERE WAS A LONG DELAY.
WHEN THE COMMENCEMENT OF AMORTIZATION DATE HITS, THEY HAVE TO START MAKING THE MORTGAGE
PAYMENT. SO I'M SAYING THAT'S JUST THE WAY IT IS.
>> NO, IT'S NOT. THE WAY IT IS IS THAT YOU DRAW OUT MIP EACH
YEAR THAT YOU HAVE TO PAY IT OUT OF THE BUDGET UNTIL AND YOU'VE CAPITALIZED FOR ONE YEAR
FOR EACH YEAR OF CONSTRUCTION. THAT'S THE WAY IT'S WORKED UNTIL TODAY.
WHEN YOU RUN OUT OF THAT MONEY, YOU CAN GO TO OTHER LINE ITEMS TO TRANSFER IT IN IF YOU'RE
STILL GOING THROUGH CONSTRUCTION. OR, WHEN YOU GET TO THE ACTUAL SUBSTANTIAL
COMPLETION AND YOU DO YOUR QUAL CERTS, THEN THE H.U.D. ALLOWS THE COSTS AND KIND OF BALANCES
IT OUT AND FIGURES IT. YOU'RE PROHIBITING THAT PROCESS TO HAPPEN
ON THE BACK END BY BUDGET RULES. >> NO, WE'RE NOT PROHIBITING IT BECAUSE THAT'S
WHAT AMPO IS FOR. I DON'T KNOW THAT I AGREE THAT ALL PROJECTS
HAVE SIGNIFICANT EXTENSIONS OF TIME ON THE CONSTRUCTION IN HERE.
I THINK THERE'S A CERTAIN AMOUNT BECAUSE OF RAIN DAYS THAT ARE KIND OF BUILT IN THERE
THAT'S NORMAL. IN TERMS OF SIGNIFICANT THINGS GOING ON BEYOND
THE SUBSTANTIAL COMPLETION DATE, I DON'T KNOW THAT THAT HAPPENS REGULARLY ON THE ACTUAL
CONSTRUCTION. IT DOES HAPPEN ON FINAL ENDORSEMENT I'LL AGREE.
I DON'T SEE TERESA SHAKING HER HEAD AT ME WITH REGARD TO THAT.
SO YOUR COSTS ARE ONLY ALLOWED UP TO THE SUBSTANTIAL COMPLETION DATE, PLUS THE 60 DAYS IN THERE.
THE 2264, LIKE I SAY, DOES CALCULATE THAT IN THERE.
THERE'S NO CAP I, WHICH IS CAPITALIZED INTEREST; TAXES, INSURANCE, MORTGAGE AND PREMIUM IN
SECTION C, IF IT'S INSURED UPON COMPLETION. GUESS WHAT?
YOU DON'T HAVE INSURANCE ON ADVANCES THEN. SINCE THIS IS 60 DAYS PAST THE SUBSTANTIAL
COMPLETION DATE, IF YOU DON'T HAVE A SUBSTANTIAL COMPLETION DATE, THEN BASICALLY IT ALL GOES
OVER IN SECTION D IN THERE. IT WILL GO ON LINE D 5 OR D 6 IN THERE BECAUSE
THESE JUST PLAIN DON'T APPLY. LET'S GO TO THE NEXT SLIDE.
A LOT OF TIMES WE'VE HAD QUESTIONS BECAUSE WE TALKED ABOUT THE APPLICATION FEE AND WE
TALK ABOUT THE EXAM FEE AND THERE'S BEEN QUESTIONS AND THERE'S THE COMMITMENT FEE AND THERE'S
BEEN QUESTIONS, HOW DO THESE RELATE? WELL, THE APPLICATION FEE AND THE COMMITMENT
FEE EQUAL THE EXAM FEE. SO WE'VE JUST KIND OF SPECIFIED THAT OUT FOR
YOU. THE APPLICATION FEE OF 15 BASIS POINTS IS
DUE WITH THE APPLICATION. AS FAR AS WE'RE CONCERNED, WE DON'T HAVE AN
APPLICATION IF WE DON'T HAVE A CHECK IN HERE. THE COMMITMENT FEE OF 15 BASIS POINTS IS DUE
WITHIN 30 DAYS OF THE ISSUANCE OF THE COMMITMENT AND THE REGS SAY IF WE DON'T HAVE THAT FEE,
THE COMMITMENT EXPIRES AND YOU CAN BE SUBJECT TO A REOPENING FEE.
YOU DON'T WANT THAT TO HAPPEN. THE ANSWER IS, YOU'RE GOING TO MAKE SURE YOU
GET THE CHECK TO H.U.D. DON'T WAIT UNTIL AN INITIAL ENDORSEMENT TO
PAY THE COMMITMENT FEE. IT NEEDS TO BE PAID WITHIN 30 DAYS OF THE
COMMITMENT IN HERE. THE INSPECTION FEE IN HERE, GIVEN THE CITATION
ON THAT, THAT'S BASED ON THE TOTAL HARD COSTS WHICH IS LINE C 11 IN HERE AND IT'S A VARIABLE
RATE. DEPENDING ON THE RATIO OF THE HARD COSTS TO
THE LOAN AMOUNT. AND REMEMBER, YOU CALCULATE THE PERCENTAGE,
YOU FIND OUT WHERE IT GOES AND THEN IT'S GOING TO BE ROUNDED DOWN TO THE NEAREST DOLLAR.
THE 2264 CALCULATES THAT AUTOMATICALLY FOR YOU, BUT HERE'S THE BASIS POINTS FOR THAT.
IN THE HANDBOOK, YOU HAVE THE ACTUAL I BELIEVE MATHEMATICAL CALCULATIONS AND FORMULAS.
LET'S GO TO THE NEXT SLIDE. PERMANENT FINANCING.
YOU'LL SEE WE HAVE THE PERMANENT FINANCING FEE AND THE INITIAL SERVICE CHARGE WHICH MATCHES
THE REGULATIONS. THERE'S NO QUESTION, THERE WAS A LOT OF CONFUSION
WHICH ONE WAS WHICH AND LENDERS WERE MIXING THEM UP.
WE MADE THE FORM MATCH THE REGULATIONS SO THERE SHOULDN'T BE ANY QUESTIONS, JUST GET
RID OF CONFUSION. BECAUSE YOU DETERMINE THOSE FEES, WE'VE LEFT
A BLANK HERE. YOU CAN JUST PUT DOWN WHAT PERCENT YOU CHARGED
IN THERE WITH REGARD TO THAT. NOW, AS WE STATED EARLIER, THERE ARE SOME
CAPS. THAT'S WHAT THE HANDBOOK AND REGS DO.
THEY PUT CAPS ON THE AMOUNT OF THE FEES YOU CAN CHARGE.
IT'S LIMITED TO 1.5% FOR THE PERMANENT FINANCING FEE OR 3% IF THERE'S BOND.
REMEMBER, YOU CHECK THAT BOX UP ABOVE, YOU GET THE TOTAL SET UP THERE.
THERE ARE SPECIAL RULES FOR MIXED FINANCING. THERE'S AN EXAMPLE IN THE INSTRUCTIONS THAT
GOES THROUGH A MIXED FINANCING EXAMPLE FOR YOU.
SO IF THAT ACTUALLY IS THE CASE, YOU CAN TAKE A LOOK AT IT.
OUR FORM WILL NOT DO THE MIXED FINANCING THING, MEANING THAT WE'RE GOING TO HAVE TO MAKE OUR
OWN MANUAL CALCULATION TO VERIFY ON THAT ONE THERE.
THE INITIAL SERVICE CHARGE IS LIMITED TO 2%. IN THE CASE OF A 7, REMEMBER THE COMBINATION
OF THE TWO, THE 1.5 OR 3, IT'S LIMITED TO 1.5 OR 3% AS THE CASE MAY BE.
SO LET'S GO TO THE NEXT SLIDE. SPECIAL TAX ASSESSMENT.
THIS IS J.B.'S DEFINITION FOR LEGALESE PURPOSES. DON'T HOLD THIS TO BE AN ILLEGAL THING HERE.
LET'S JUST TRY TO PUT IT IN SIMPLE LANGUAGE. A SPECIAL SET TAX ASSESSMENT IS LIKE WHEN
THE CITY COMES IN AND THEY PUT IN CURBS OR THEY PUT IN SEWER LINES OR NEW WATER LINES
AND THEY COME THROUGH AND IT'S BASICALLY A PROPERTY IMPROVEMENT TO THE IMPROVED LAND.
REMEMBER, H.U.D. INSURES BASED ON THE IMPROVED LAND SITE.
SO WHAT THEY DO IS THEY SEND YOU, THE TAXPAYER A NOTICE AND SAY, GUESS WHAT?
YOU'RE RESPONSIBLE FOR X NUMBER OF LINEAR FEET.
WE'RE GOING TO GO AHEAD AND SELL BONDS ON THIS AND YOU CAN PAY YOUR SHARE NOW OR WE'LL
SELL BONDS ON IT AND YOU CAN PAY IT THE NIX TEN YEARS.
BASICALLY WHAT IT AMOUNTS TO IS A BORROW FORGO THE LAND IMPROVEMENT.
IT'S ALL DUE ON THE INITIAL ENDORSEMENT BECAUSE WE REQUIRE A FIRST ON EVERYTHING, THE SAME
AS IF THEY HAD A LOAN ON THE HOUSE BEFORE. SO THAT'S REALLY WHAT'S GOING ON THERE.
AMPO, IT'S UP TO 2% IN THERE. IT ONLY APPLIES FOR NON PROFIT OR GOVERNMENTAL.
IF IT'S NON PROFIT, THAT IS ZERO. IT'S UP TO 2%.
FURTHERMORE, SOME HOSPITALS OR NON PROFITS, THEY'LL SAY, WE DON'T WANT TO PUT ANY AMPO
IN THERE, BUT WE RECOGNIZE WE'RE GOING TO HAVE AMPO IS ALLOWANCE TO MAKE PROJECT OPERATIONAL.
THAT'S WHAT IT STANDS FOR. AT THE END OF THE DEAL, YOU HAVE MOVE IN EXPENSES,
OTHER COSTS THAT COME UP IN THE END. WHAT HAPPENS IF IT RAN LONGER AND WE HAD THE
ADDITIONAL MIP THERE? SOMETHING IS COMING UP THERE, WHAT DO I DO
ON THIS ONE HERE? FOR UNDERWRITING PURPOSES, WE WANT TO KNOW
YOU HAVE ENOUGH MONEY TO GET TO COMPLETION. THE HOSPITAL SAYS WE WOULD RATHER POST THE
ADDITIONAL WORKING CAPITAL. ADDITIONAL WORKING CAPITAL IS MONEY THE HOSPITAL
POSTS OUTSIDE THE LOAN OVER IN SECTION D AND THEN THEY DON'T HAVE TO BORROW THE MONEY FOR
IT. IF THEY DON'T WANT TO BORROW THE MONEY FOR
IT, THEY CAN POST IT AS ADDITIONAL WORKING CAPITAL.
FOR PROFITS ARE STILL REQUIRED TO HAVE THAT AMPO IN QUOTES: CAN I JUST POST NONE?
THE ANSWER IS YES, YOU CAN JUST POSE NONE BUT IT'S LIABLE TO BECOME AN UNDERWRITING
QUESTION. YOU MAY HAVE TO POST SOME TO CLEAR UNDERWRITING.
THERE WAS CONFUSION ABOUT WHAT HAPPENS IN HERE WITH THE AMPO AT THE END WHEN WE GO TO
FINAL ENDORSEMENT. IF I GOT SAVINGS, CAN I JUST THIS MONEY TO
BUY EITHER EQUIPMENT? DO I GET ALL OF THIS MONEY BACK AS CASH IN
THE END? THE HANDBOOK SAYS IT'S NOT INTENDED TO COVER
ITEMS THAT COULD BE PAID FROM OPERATION OR ADDITIONAL CHANGE ORDERS APPROVED BY THE HOSPITAL
WITHOUT PRIOR H.U.D. AUTHORIZATION. SO IF THE HOSPITAL JUST GOES OUT AND SPENDS
THE MONEY AND SAYS NOW WE'RE GOING TO FOLD IT INTO THE LOAN, GUESS WHAT?
YOU'RE LIABLE TO FIND THAT THE ANSWER IS NO. THE SAVINGS CLAUSE APPLIES WHICH IS IN THE
COVENANTS, IT'S IN THE REGS. IT BASICALLY SAYS WE'RE GOING TO TAKE THE
SAVINGS AT THE END AND IT'S GOING TO BE DISTRIBUTED PRO RATA IN HERE.
SECTIONS C 27 AND 28, THAT'S YOUR TOTAL SOFT COSTS AND TOTAL LEGAL ORG COSTS, JUST SECTION
TOTALS. LET'S GO TO THE NEXT SLIDE.
SO C 29 HERE IS OUR TOTAL ESTIMATED PROJECT COSTS.
WE REDEFINED LINES HERE, MEANING SPECIFIED THE LANGUAGE TO ELIMINATE CONFUSION BECAUSE
YOU HAVE ESTIMATED REPLACEMENT COSTS AND YOU HAVE ESTIMATED PROJECT COSTS.
SO C 29 GOT RENAMED TO TOTAL ESTIMATED PROJECT COSTS.
THAT'S BASICALLY YOUR TOTAL HARD COSTS, PLUS YOUR TOTAL SOFT COSTS IN HERE.
SO THAT'S THE COST OF THE PROJECT IN HERE. IT'S USED TO DETERMINE THE AMOUNT OF THE INSPECTION
FEES. SO THAT INSPECTION FEE, THAT'S THE LINE THAT
WE GO BY. C 30 TO C 31 IS YOUR EXISTING LAND AND PP&E
TO BE INCLUDED IN THE COLLATERAL IN HERE. THE HOSPITAL MEETING THEIR REQUIREMENTS AND
STUFF ALREADY HAS EQUITY IN THE PROJECT. THAT'S YOUR NET PP&E.
THERE'S A LOAN TO VALUE FORM, WE'VE POSTED THAT ON THE WEB FOR YOU, IT'S A H.U.D. FORM.
QUITE FRANKLY, YOU WANT TO TAKE A LOOK AT THAT FORM BECAUSE IT GOES THROUGH LINE BY
LINE EXACTLY HOW TO CALCULATE THE NET PP&E. BASICALLY WHAT WE DO IS START WITH THE PRIOR
YEAR AUDITED FINANCIAL STATEMENTS. FROM THOSE WE THEN SUBTRACT ANY CARVE OUTS
IN HERE. WE'RE GOING TO ELIMINATE ANYTHING WE HAD A
CASE, FOR EXAMPLE, WHERE A HOSPITAL WAS GOING TO BE SOLD AT THE END OF IT BECAUSE THEY WERE
BUILDING A REPLACEMENT HOSPITAL. GUESS WHAT?
IF DOLLARS SIGNIFICANT WRITE DOWN THAT'S GOING TO HAPPEN AT THE END OF THE PROJECT, WE'RE
GOING TO TAKE THAT OFF. THEN WE ADD THE PROJECT COSTS ON TWO ON TWO.
THERE'S A DISCOUNT FORM LEASEHOLD INTERESTS. THAT'S ALL SPELLED OUT ON THAT FORM.
IT GOES THROUGH STEP BY STEP. WE CALCULATE IT FOR OUR PURPOSES, BUT THAT
FORM IS MADE AVAILABLE FOR YOU. THAT'S THE VALUE BUT YOU HAVE TO DO THAT TO
FILL IN LINES 30 AND 31. OKAY?
WE ASK YOU WHEN YOU PUT IN THE AMOUNT FOR LINE 30 AND 31, FOR YOU TO GIVE US HOW YOU
GOT AT IT. YOU COULD USE OUR FORM THAT WE USED IN HERE
OR YOU CAN JUST PUT IT IN YOUR NOTES. I WOULD SAY JUST PUT IT IN YOUR NOTES.
YOU OUGHT YOU'VE GOT THE FORM IN THERE. I JUST INCLUDE IT AS A NOTE TO THE 2013 IN
THERE. I THINK I'VE ANSWERED THESE QUESTIONS HERE.
MAKE SURE THAT THE HOSPITAL ONE OF THE THINGS, MAKE SURE THE HOSPITAL HAS FEE SIMPLE TITLE
AND NOT A LEASEHOLD INTEREST IN THE PROPERTY. YOU DON'T WANT TO FIND OUT WHEN WE'RE READY
TO GET TO INITIAL ENDORSEMENT THAT LOAN TO VALUE IS CALCULATED ON HAVING THIS PROPERTY.
GUESS WHAT? THEY REALLY DON'T OWN IT.
THEY'RE LEASING IT. THEY OWN 90% OF IT BUT THERE'S THESE PIECES
OVER HERE THAT REALLY THEY HAVE A LEASEHOLD INTEREST IN WITH REGARD TO THAT PART THERE.
ALSO ON THE LEASE PART OF IT, I WILL TELL YOU THAT IF THE LEASEHOLD INTEREST IS WE CANNOT
TAKE A LEASEHOLD INTEREST THAT'S LESS THAN 50 YEARS.
SO IT HAS TO BE 50 YEARS. IF IT IS 50 YEARS, WE'RE GOING TO DISCOUNT
IT 90% ON THE VALUE IN THERE. IF IT IS FOR I'M GOING TO SAY 99 YEARS BUT
WE'VE WORKED OUT IT COULD BE 50 YEARS WITH THE OTHER 49 YEARS, IT ONLY COMES INTO PLAY
IF THERE'S A CLAIM. THIS IS J.B.'S SIMPLIFIED ENGLISH IN HERE.
IN THAT CASE, THEN THE DISCOUNT IS ONLY 5%. SO WHAT YOU REALLY WANT TO DO IS HAVE A 99
YEAR LEASE. OKAY?
IN HERE, LET'S GO ON TO THE NEXT SECTION HERE. SO NOW WE'RE LOOKING AT REFINANCE CAPITAL
DEBT. ONE OF THE THINGS I WANT TO POINT OUT, ALL
DEBT IS NOT NECESSARILY ELIGIBLE TO BE INCLUDED. IT'S ONLY REFINANCED CAPITAL DEBT.
SO IF THEY HAVE AR FINANCING, IF THEY'VE GOT WORKING CAPITAL LOANS, THAT'S NOT GOING TO
BE ELIGIBLE TO BE REFINANCED HERE. NOW, THE DEFINITION OF REFINANCED CAPITAL
DEBT AND I'VE TAKEN THIS STRAIGHT FROM THE IN THE REVISED REG IN HERE, BUT THE OUTSTANDING
INDEBTEDNESS USED FOR THE CONSTRUCTION REHABILITATION OR ACQUISITION OF THE PHYSICAL PROPERTY AND
EQUIPMENT OF A HOSPITAL, INCLUDING THOSE FINANCING COSTS APPROVED BY H.U.D. IN THERE.
NOW, IT MAY INCLUDE SWAP TERMINATION COSTS OR A PORTION OF THE SWAP TERMINATION COSTS
BECAUSE YOU'RE GOING TO HAVE TO LOOK AT THE QUALIFICATIONS FOR WHAT'S ALLOWABLE.
IT SHOULD BE A NOTE SHOWING THOSE COSTS. IF YOU HAVE THOSE COSTS, YOU'RE GOING TO HAVE
TO ATTACH A NOTE TO THEM IN HERE WITH REGARD TO THAT.
BY THE WAY, I THINK ON THE SWAP TERMINATION, IT WAS FOR SWAP ENTERED INTO PRIOR TO I WANT
TO SAY 2008. IF IT WAS AFTER THAT, I THINK IT'S NOT GOING
TO BE ALLOWED IN THERE. THE SWAP TERMINATION COSTS I COULD BE WRONG,
IT COULD BE 2009. I'M JUST SAYING, LOOK AT THAT NOTE IF YOU'RE
DEALING WITH THAT. SWAP TERMINATION COSTS INCLUDED ON LINE D
2 SHOULD BE LISTED IN THE BOX TO THE LEFT OF SECTION E.
YOU'LL SEE THIS IN A PICTURE. BUT BASICALLY IN THE LOWER LEFT HAND CORNER
OF THE FORM IN HERE, THERE'S A NOTE, IT'S A LITTLE BOX CARVED OUT THAT SAYS FOR H.U.D.
USE ONLY, BUT THERE'S A NICE EMPTY BLANK BOX THERE.
IN THAT LITTLE BLANK BOX, THAT'S WHERE THE IF THERE'S SWAP TERMINATION COST THAT IS ARE
INCLUDED UP HERE IN THE REFINANCE CAPITAL DEBT, YOU'RE GOING TO WRITE DOWN "SWAP COSTS
INCLUDED IN D 5. THEN THAT'S GOING TO GO DOWN ON D 5 OR D 6
AND YOU'RE GOING TO PUT A NOTE OR YOU'RE JUST GOING, WHERE IT SAYS "IDENTIFY "YOU'RE GOING
TO WRITE "SWAP TERMINATION COSTS THERE." A LOT OF TIMES, THE TWO LINES IT'S ONLY A
COUPLE OF THINGS. YOU CAN EASILY PUT IT RIGHT THERE.
YOU DON'T HAVE TO DO A NOTE BEHIND. THAT'S WHERE THAT'S GOING TO GO.
THERE'S A NEW LINE FOR PURCHASE PRICE OR PROPERTY PURCHASE, YOU'LL SEE HERE WE GO ON LINE D
3, PURCHASE PRICE OF PROPERTY TO BE PURCHASED. UP ABOVE YOU PUT THE VALUE OF THAT PROPERTY.
NOW YOU'RE PUTTING DOWN THE ACTUAL PURCHASE PRICE OF IT IN HERE.
WHAT HAPPENS IS THE REGS SAYS ONLY 90% OF THE LOWER OF THE VALUE OR THE PURCHASE PRICE
MAY BE INCLUDED. SO BASICALLY WHAT'S GOING TO HAPPEN IS, THE
2264 WHEN I GO THROUGH WITH MY AUTOMATED TEST, IT'S GOING TO DO A COMPARISON BETWEEN THE
VALUE AND THE PURCHASE PRICE AND SAY WHICH ONE IS LOWER.
THEN IT'S GOING TO SAY 90% OF THAT, THAT'S ALL THAT CAN BE INCLUDED IN THE MORTGAGE IN
HERE. D 5 AND D 6, THAT'S YOUR OTHER FUNDING REQUIREMENTS.
THAT COULD BE FOR YOUR MORTGAGE INSURANCE PREMIUM.
IF WE'RE TALKING ABOUT INSURANCE UPON COMPLETION. IT COULD BE FOR YOUR ADDITIONAL WORKING CAPITAL.
IF YOU'RE A FOR PROFIT OR NOT FOR PROFIT, YOU CHOSE TO GO THE AWP ROUTE.
IT COULD BE FOR A H.U.D. SPECIAL ESCROW. IF WE ASKED FOR A SPECIAL ESCROW IN THERE.
IT COULD BE TO PAY OFF A LINE OF CREDIT. A LOT OF LINE CREDIT IS NOT ELIGIBLE.
THAT'S WORKING CAPITAL. IT MIGHT BE MONEY TO PAY THAT OFF.
IT COULD BE FOR DISALLOWED SWAP TERMINATION COSTS.
WHO KNOWS WHAT ELSE. KIND OF DEPENDS ON THE FACTS AND CIRCUMSTANCES
IN THERE. USUALLY THERE'S NOT A WHOLE LOT OF STUFF THAT
GOES IN THIS ONE, TO BE HONEST. EVERY ONCE IN A WHILE ONE OF THESE APPLIES.
LET'S GO TO THE NEXT SLIDE. TOTAL USES OF FUNDS.
BEFORE WE HAD SOURCES OF FUNDS. NOW WE'VE GOT TOTAL USES OF FUNDS.
GUESS WHAT? THAT WAS EVERYTHING WE JUST DID ABOVE.
DON'T ASK ME WHY IT DIDN'T GET TOTAL USES ON THE PREVIOUS SLIDE.
NOW WE'VE GOT THE TOTAL SOURCES. WHERE AM I GOING TO GET THE MONEY FROM?
LINE 12, TOTAL ESTIMATED FHA CASH REQUIREMENTS, IF I REALLY HAD BETTER THOUGHTS, I WOULD RENAME
THAT TOTAL SOURCES OF FUNDS NOW. THAT'S THE SOURCES THAT GO IN THERE TO MAKE
UP THE ABOVE. FIRST OF ALL, WE'RE GOING TO SUBTRACT OFF
THE INSURED LOAN AMOUNT WHICH WAS THE AMOUNT YOU LISTED WAY UP ON THE FRONT IN HERE AT
THE TOP IN SECTION A. GUESS WHAT? IT GOES DOWN HERE.
THAT'S THE AMOUNT OF THE INSURED LOAN. LESS GRANTS AND APPROVED LOANS.
MAYBE THEY'RE GETTING SOME OF THE MONEY FOR THIS BECAUSE IN SOME CASES WE'VE HAD LIKE
AN FHA I WANT TO SAY AN AGRICULTURAL LOAN THAT WAS DOING PART OF IT WITH IT.
MAYBE THERE'S A STATE GRANT WITH FUNDS COMING IN HERE.
THE HANDBOOK HAS ALWAYS SAID GOING BACK TO THE 1973 HANDBOOK, IT SAYS THAT GETS EXCLUDED
FROM THE LOAN AMOUNT. THERE'S A LINE HERE FOR YOU TO LIST THAT IN
HERE. LIST OTHER FHA REQUIREMENTS.
WE'VE ALREADY TALKED ABOUT THAT. THIS IS THOSE OTHER REQUIREMENTS.
GUESS WHAT? YOU'VE LISTED THEM UP ON D 5, NOW YOU'RE GOING
TO PUT IT DOWN HERE. YOU HAVE TO HAVE CASH FOR THAT.
THEN THAT GETS TO THE CASH EQUITY. WHEN WE'RE TALKING ABOUT, HAVE YOU MET THE
EQUITY REQUIREMENTS AND STUFF? HOW MUCH EQUITY YOU'RE PUTTING IN, THAT'S
THE EQUITY YOU'RE PUTTING IN THERE. GUESS WHAT?
IF YOU ADD ALL OF THOSE UP, YOU'RE GOING TO HAVE YOUR TOTAL SOURCES OF FUNDS.
THAT'S WHAT THAT ONE IS. LET'S GO TO THE NEXT SLIDE.
SO SECTION E IS WE NOW ADDED A NEW SECTION DOWN AT THE BOTTOM ON YOUR FORM.
H.U.D. MANAGED TO GET A PICTURE ON THAT. I DON'T KNOW HOW I DIDN'T DO THAT.
ANYWAY, YOUR INFO, THIS IS WHERE YOU PUT THE INFO ON THE LEASED PROPERTY.
BECAUSE, REMEMBER, WE SAID HOW MUCH OF THAT COULD BE INCLUDED OR HOW MUCH WAS THE DISCOUNT?
YOU'RE NOW GOING TO TELL US. IS THERE ANY LEASED PROPERTY THAT YOU'RE INCLUDING
IN THIS. IF SO, HOW LONG IS IT?
BECAUSE THAT GOES IN THE CALCULATION OF THE LOAN TO VALUE.
YOU'RE PUTTING THAT INFORMATION RIGHT THERE ON THE FRONT OF THE FORM IN THERE.
IT'S USED IN UNDERWRITING TO REDUCE NOW THERE'S ANOTHER BOX THERE, E 2, THAT'S YOUR OTHER
NON FHA CASH REQUIREMENT. SO LET'S SAY I'M USING BOND.
I'VE GOT A BOND SALE OUT HERE AND THE BONDS ARE ASKING ME I'M GOING TO HAVE A LETTER OF
CREDIT OUT HERE AND THEY'RE ASKING ME TO POST SO MUCH MONEY OUT HERE.
WHATEVER IT IS, IF AN ORDER TO GET THIS DEAL TO CLOSE IS GOING TAKE PART OF THE HOSPITAL'S
CASH AND IT'S OUTSIDE OF THE FHA DEAL, WHICH WE HAVE UP ABOVE, YOU'RE GOING TO PUT THE
NUMBER DOWN HERE OR YOUR ESTIMATE OF IT. YOU SAY, WHY DO WE NEED TO KNOW THAT?
WE NEED TO KNOW THAT IN UNDERWRITING, BECAUSE GUESS WHAT?
WHEN WE CALCULATE WHAT THE DAY'S CASH ON HAND, IF THE CASH IS OVER HERE, SECURITY FOR THE
BONDS, GUESS WHAT? IT'S NOT AVAILABLE FOR, YOU KNOW, FOR H.U.D.
SO THAT'S MONEY ALREADY BEEN CARVED OUT. BASICALLY WE NEED TO KNOW WHAT THAT AMOUNT
IS FOR THAT ONE THERE. THEN THE H.U.D. USE SPACE, WE'VE GOT A SPOT
IN THERE TO INITIAL THE DATE THAT WE ACTUALLY RECEIVED IT, INDICATE THAT THE AMOUNT, THE
APPLICATION FEE HAS BEEN RECEIVED BECAUSE WE DON'T DO ANYTHING WITHOUT THAT, CHECK.
THEN THE BIG BLANK AMOUNT YOU'RE GOING TO USE FOR SWAP.
OTHERWISE IT'S JUST PLAIN NOT USED. OKAY?
NEXT SLIDE. FINALLY NOW TO PAGE 2.
BASICALLY PAGE 2 IS WE REALLY HAVEN'T MADE ANY CHANGES TO THAT, OTHER THAN A COUPLE OF
EXTREMELY MINOR CHANGES IN HERE. BUT IT NEEDS TO BE COMPLETED AND SIGNED.
GUESS WHAT? IF IT'S NOT SIGNED AND DATED, WE DON'T HAVE
AN APPLICATION. DO MAKE SURE THE TOTAL MORTGAGE AMOUNT YOU'VE
GOT BACK HERE NEEDS TO MATCH THE TOTAL MORTGAGE AMOUNT THAT WAS ON THE FRONT.
THE PERMANENT FINANCING RATE, THAT'S GOING TO MATCH WHAT YOU HAD UP ON THE FRONT.
THE TERM OF THE LOAN IS USUALLY 25 YEARS. I GAVE YOU ONE CASE IF IT WAS 241 FOR EQUIPMENT
IT MIGHT NOT BE. I KNOW OF A CASE WHERE THEY HAD SEISMIC CONCERNS
THAT CAME IN THERE AND THE HOSPITAL WOULD NOT MEET THE SEISMIC REQUIREMENTS AFTER 20
YEARS. GUESS WHAT?
IT WAS A 20 YEAR LOAN. NOT A 25 YEAR LOAN.
THE INITIAL SERVICE FEE CHARGE AND PERMANENT FINANCING FEE, THAT'S AMOUNTS ON PAGE 1.
THERE IS A STATEMENT FOR CERTIFICATE OF NEED DOWN HERE AT THE BOTTOM WHERE YOU CHECK OFF
A BOX DOWN THERE. THAT'S THE CHANGES ON THE DOWN THERE.
LET'S GO TO THE NEXT SLIDE. SO LOAN TO VALUE, I TOLD YOU YOU HAVE A COPY
OF THAT. I BELIEVE YOU GOT A COPY OF IT IN YOUR PACKET
HERE. THIS HERE IS THE NEW FORM FOR CALCULATING
THE LOAN TO VALUE. IT'S BASICALLY A H.U.D. INTERNAL FORM, BUT
WE GO THROUGH THE ENTIRE LOAN IN HERE. BASICALLY THE AEs PREPARE THEIR OWN AND THEY
CONFIRM THE VALUES THAT YOU HAVE ON THE APPLICATION. GUESS WHAT?
WE DON'T WANT SURPRISES. WE THINK UNDER TRANSPARENCY, YOU OUGHT TO
KNOW WHAT WE'RE DOING, YOU OUGHT TO KNOW UP FRONT.
GUESS WHAT? WE'VE MADE THAT AVAILABLE TO YOU.
SO YOU CAN SEE IT, THAT DID THERE'S A PROBLEM, WHY SHOULD WE EVEN HAVE TO IDENTIFY IT.
IT'S PRETTY STRAIGHTFORWARD. YOU KNOW THE HOSPITAL NAME, YOU ENTER THE
MORTGAGE AMOUNT UP HERE AT THE TOP, YOU ENTER THE PROJECT NUMBER.
THAT GOES OVER HERE. THEN YOU'LL FILL IN THE LINES HERE AS DIRECTED
AS YOU COME DOWN IN HERE. YOU ONLY FILL IN THE APPRAISAL LINES HERE,
IF THERE IS AN APPRAISAL. OTHERWISE, LEAVE THEM BLANK.
YOU'LL FIND IT WILL DO CALCULATIONS RIGHT THERE THAT YOU'LL SEE RIGHT AWAY SO YOU'LL
BACK THEM OUT OVER THERE. SO THAT WILL GO THROUGH.
LINES 12 AND 19. SO LINE 12 GETS DOWN HERE, IT SAYS THAT'S
YOUR EXISTING LAND PP&E. THAT'S THE NUMBER THAT GOES OVER ON THE 2013
FOR THE EXISTING LAND PP&E. THE SECOND PART OF THE FORM DOWN HERE IS PP&E
TO BE ACQUIRED. THE LAST LINE ON THIS ONE HERE IS LINE 19.
GUESS WHAT? THAT'S THE AMOUNT THAT YOU GO OVER ON THE
LINE THAT SAYS PLANT PROPERTY AND EQUIPMENT TO BE ACQUIRED IN THERE WITH REGARD TO THAT.
DOWN HERE IT CALCULATES THE LOAN TO VALUE, YOU'LL SEE THAT.
YOU'LL SEE WHAT THE LOAN TO VALUE IS. I'M LIKE, YOU KNOW, IT'S PRETTY STRAIGHTFORWARD.
LET'S GO TO THE NEXT SLIDE. THE NEXT SLIDE IS THE NEW AUTOMATED 2264.
WHEN YOU BRING IT UP, IT SAYS LENDERS COURTESY COPY OR SOMETHING LIKE THAT.
AGAIN, THIS IS A COURTESY FOR YOU IN HERE, BUT IT DOES SEVERAL CHECKS IN HERE.
AGAIN, IF THERE'S A PROBLEM ON THE 2013, IF THERE'S A PROBLEM IN THE LOAN TO VALUE, IF
THERE'S A PROBLEM IN THE FEES OR THE INSPECTION FEE BEING MISCALCULATED, IT BRINGS UP RED
FLAGS AND STUFF LIKE THAT. YOU'LL SEE RIGHT AWAY IF THERE'S A PROBLEM.
WE AGAIN THINK AS PART OF TRANSPARENCY, YOU OUGHT TO KNOW THERE'S A PROBLEM BEFORE WE
EVEN SEE IT. LET'S JUST GET IT RIGHT THE FIRST TIME.
DOES THAT MAKE SENSE? I THINK YOU'RE REALLY GOING TO LIKE IT.
YOU DO HAVE TO FILL IT DOWN IN ORDER. BECAUSE IT CONSISTS OF STATEMENTS GOING IN
THERE, IF YOU FILL THE STUFF OUT AND THEN GO BACK AND SAY NO, THIS REALLY ISN'T GOING
TO BE A 242, IT'S REALLY GOING TO BE A 223F, GUESS WHAT?
ALL THE TESTS IT DID FOR 223F, IT WASN'T GOING TO DO.
IT DID THE ONES FOR 241. YOU HAVE TO GO THROUGH AND HIT A THING ON
EVERY FIELD AS YOU GO DOWN. YOU HAVE TO DO IT IN ORDER FOR IT TO REALLY
WORK. IT'S LOCKED.
BUT WHEREVER YOU SEE A WHITE SPACE ON THERE, IT CAN BE CHANGED.
SO THEY BROUGHT UP HERE THE FORM ON SOME OF THE OTHER SLIDES.
YOU CAN SEE THEM OVER HERE. WHEREVER YOU SEE WHITE SPACE, YOU CAN GO IN
AND EDIT THAT IN THERE WITH REGARD TO IT. SO YOU'RE GOING TO COME DOWN AND IT'S GOING
FILL IT UP IN HERE. LET'S GO BACK TO THE PREVIOUS SLIDE ON MINE.
SO, THE INSTRUCTION, YOU'VE GOT THE INSTRUCTIONS. WE'VE POSTED THAT, TOO.
THE INSTRUCTIONS ARE DETAILED. THEY HAVE THE ACTUAL FORMULAS THAT GO WITH
THE CALCULATIONS. SO YOU CAN SEE EXACTLY WHAT WE'RE DOING.
YOU'LL ALSO SEE OVER ON THE RIGHT OF THE FORM, IT'S GOT THE CODE SECTION OR THE LINE FROM
THE 2013, YOU'RE GOING TO SEE A CODE SECTION OR HANDBOOK SECTION THAT'S GOING TO BE REFERENCED.
SO YOU KNOW EXACTLY WHERE IT'S TESTING WHEN WE GET INTO THE TESTING PART OF IT.
COLUMN A SPACE FOR THE AE COMMENTS. YOU CAN WRITE YOUR OWN NEATS THERE IF YOU
WANTED NOTES THERE IF YOU WANTED TO DO IT ON YOUR OWN.
COLUMN A GIVES THE SOURCES, WE TALKED ABOUT THAT.
BASICALLY YOU JUST FREED THE 2013 AND GO DOWN FROM THE TOP TO THE BOTTOM AND FILL IT OUT.
THERE'S ONE EXCEPTION TO THAT. I'LL SHOW YOU THAT IN A MINUTE.
DID NOT SUBMIT THIS TO H.U.D. GUESS WHAT?
YOU FILLED IT OUT AND YOU GET FINISHED, YOU KEEP IT FOR YOUR FILES.
DON'T SEND IT TO US. ELECTRONICALLY OR ANY OTHER WAY, WE DON'T
WANT TO SEE YOUR COPY IN THERE. BRING THE FORM BACK UP HERE AND I WANT TO
SHOW THEM WHERE YOU SEE THE GREEN SPACES, IT SAYS OVER HERE YOU'VE GOT A NOTE.
FILL IN GREEN HIGHLIGHTED FIELDS PRIOR TO ENTERING CAPITAL INTEREST.
IT NEEDS ALL THE FIELDS. HERE YOU GOT A GREEN ONE, IF YOU SLIDE ON
DOWN ON THE FORM, YOU'LL SEE IT HERE, FOR EXAMPLE.
AGAIN, TO CALCULATE THE CAPITALIZED INTEREST, I NEED TO KNOW THE PERMANENT FINANCING FEE,
I NEED TO KNOW THE INITIAL SERVICE CHARGE, I NEED TO KNOW THE TITLE AND RECORDINGS.
GUESS WHAT? THOSE ARE ALL GOING TO BE PART OF THE INITIAL
DRAW. ANY FIELD THAT IS IN GREEN HERE HAS TO BE
FILLED OUT BEFORE YOU ENTER THE CAPITALIZED INTEREST.
ACTUALLY CALCULATE IT WITH THE PLUS OR MINUS 5% AMOUNT IS GOING TO BE.
AT THAT POINT IT WILL CALCULATE THAT FIELD AND YOU CAN SEE WHAT YOU GOT AND YOU'LL SEE
IF YOU GOT A PLUS OR MINUS VARIANCE OF 5%. IT WON'T LET YOU OVERRIDE IT WITH REGARD TO
THAT. LET'S GO TO THE NEXT SLIDE WHICH IS ON THE
THE NEXT ONE THAT PART. THE ACTUAL 2264.
SO IF YOU SLID ON DOWN, BRING UP THE 2264, NICK.
SLIDE DOWN TO THE BOTTOM. HERE IS WHERE IT SAYS MORTGAGE.
YOU GOT A TAB. THIS IS THE DATA ENTRY TAB, THIS IS WHERE
YOU ENTER THE DATA IN. IF YOU GO OVER TO THE 2264 THERE, YOU ACTUALLY
HAVE THE ACTUAL FORM THAT GETS CREATED. NOW, IN YOUR PACKETS, I DID SEE THAT YOU HAD
A COURTESY COPY THAT I WENT THROUGH AND DID. SO IF YOU'VE GOT THIS ONE HERE, YOU WANT TO
BRING UP THE COURTESY COPY THAT I FILLED OUT THE NUMBERS ON.
IN YOUR PACKET, I THINK YOU SAW ONE. FOR EXAMPLE, THIS TAB IN HERE, THIS IS BASICALLY
WHERE IT'S THE RATES THAT ARE BEING CHARGED. THAT WHOLE PAGE IS LOCKED, BUT THAT'S BASICALLY
THE RATES. THE 2264, LET'S GO TO THIS ONE HERE.
IF THEY DIDN'T FILL THIS ONE OUT, I HAD ONE THAT I WAS GOING TO GO THROUGH WITH YOU THAT
WAS FILLED OUT WHERE BASICALLY WE HAD A FAILED DOWN HERE.
IF YOU HAVE A FAILED DOWN HERE, BASICALLY IT'S SAYING THERE'S A PROBLEM.
OVER HERE YOU CAN SEE THE CRITERION. YOU'LL SEE WHAT'S GOING ON.
SO, LIKE I SAID, THERE ARE SEVERAL FLAGS ON THE FRONT THAT WILL POP UP IF YOU'VE GOT SOMETHING
THAT'S WRONG. IF YOU TRY TO PUT IN A RATE THAT IS OVER THE
AMOUNT, LET'S SAY A MORTGAGEE, YOUR INITIAL SERVICE CHARGE AND IT'S GREATER THAN THE AMOUNT,
IT JUST WON'T LET YOU DO IT. OKAY?
THERE'S OTHER CASES WHERE IT BRINGS UP A WARNING. IF YOU GO BACK TO THE DATA ENTRY PAGE HERE.
IF YOU COME DOWN HERE, AT THE VERY BEGINNING, YOU PUT IN THE ESTIMATED MORTGAGE AMOUNT RIGHT
HERE. YOU'VE GOT YOUR ESTIMATED PROJECT COSTS, YOU
CAN PUT IT ON E 11. WHEN YOU GET DOWN TO FILLING IT OUT, IT CALCULATES
WHAT THE REAL PROJECT COST IS. IF THAT PROJECT COST DOESN'T MATCH THE AMOUNT
UP TOP, IT WILL POINT UP A BIG YELLOW BOX SAYING GUESS WHAT?
THE THERE'S A PROBLEM HERE, THE NUMBERS DON'T MATCH.
START OVER. THAT'S ALL I'VE GOT ON THE 2013.
[APPLAUSE]
>> THANKS, J.B. TIME FOR THE POP QUIZ.
YOU ALL READY? J.B., THANK YOU AGAIN.
OFTENTIMES THAT FORM DOES CAUSE PEOPLE A LOT OF HEARTACHE WHEN THEY SEE IT.
IT'S A DIFFICULT PROCESS TO GET THROUGH. FOR THOSE OF YOU WHO HAVE NEVER USED IT BEFORE,
MYSELF, J.B. AND OTHERS HERE ARE HAPPY TO HELP YOU WORK YOUR WAY THROUGH YOUR FIRST
EFFORTS TO TRY TO UNDERSTAND ALL THE DATA THAT GOES THERE.
AGAIN, REACH OUT TO US ANY TIME. FOR THOSE OF YOU ON LINE ALSO, IF YOU HAVE
QUESTIONS AT ANY POINT THROUGH TODAY'S CONVERSATIONS, HOSPITALS@HUD.GOV IS THE MAILBOX WHERE WE'RE
ACCEPTING QUESTIONS FOR THIS AFTERNOON'S QUESTION AND ANSWER PERIOD WHICH COMES UP SHORTLY.
THAT'S HOSPITALS@HUD.GOV. TODAY, WE'RE NOW GOING TO MEET WITH TERESA
BILLICK. SHE'S WITH THE OFFICE OF ARCHITECTURE AND
ENGINEERING. WE'VE TALKED A LOT ABOUT CONSTRUCTION PROJECTS,
FINANCING AND REFINANCING HOSPITAL PROJECTS, REFINANCING DEBT.
CLEARLY, ONE OF THE AREAS THAT I THINK H.U.D. HAS SOME INCREDIBLE EXPERTISE IS IN THE AREA
OF CONSTRUCTION, CONSTRUCTION MANAGEMENT, ARCHITECTS, ENGINEERS, INSPECTIONS, REVIEW
OF PLANS. THE GROUP THAT WE HAVE WITHIN H.U.D. THAT
CAN HELP HOSPITALS AND LENDERS ALIKE WITH THEIR PROJECTS IS JUST AMAZING.
IT'S LED BY TERESA AND HER GROUP. I'M REALLY PROUD TO HAVE HER TODAY.
SHE CAME DOWN FROM NEW YORK SPECIFICALLY TO BE WITH US.
TERESA, I'D LIKE TO HAVE YOU TELL US A LITTLE BIT MORE ABOUT H.U.D.'S ROLE IN CONSTRUCTION
PROJECTS AND HOW WE MANAGE THAT RISK. >> THANK YOU VERY MUCH, JEFF, FOR INVITING
ME HERE TODAY. WHEN JEFF AND I GOT TOGETHER TO DISCUSS WHAT
THE TRAINING WAS GOING TO BE ABOUT, WE WERE GOING TO FOCUS ON THE 223F PROGRAM AND THE
DEVELOPMENTS AND THE NEW HANDBOOK. SINCE THERE'S SO MANY OF YOU WHO ARE TOTALLY
UNFAMILIAR WITH OUR OFFICE, THE O' OFFICE, THE OFFICE OF ARCHITECTURE AND ENGINEERING,
THERE'S NOT ENOUGH TIME TODAY TO COVER ANY OF THAT.
I WELCOME YOU TO CONTACT US. IF YOU CAN'T GET WHAT YOU NEED OUT OF THE
HANDBOOK, WE WOULD BE MORE THAN HAPPY TO TALK TO YOU ABOUT THE PROGRAM.
ESSENTIALLY WE'RE INVOLVED FROM THE BEGINNING OF THE APPLICATION PROCESS ALL THE WAY THROUGH
THE DESIGN AND CONSTRUCTION APPLICATION PROCESS AND ALL THE WAY THROUGH THE CLOSEOUT AND FOR
25 YEARS AFTER THAT. WE'RE PRETTY WELL INVOLVED.
I THINK WE'VE COVERED PRETTY WELL THIS MORNING THE CONSTRUCTION COSTS, PLUS THE EQUIPMENT,
PLUS ALL THE OTHER HARD COSTS HAVE TO BE LESS THAN 20% OF THE MORTGAGE TO HAVE A 223F PROJECT.
IN MANY CASES, THE CONSTRUCTION COSTS WE KNOW WILL BE ZERO.
ONE PARTICULAR ITEM OF NOTE IS THAT MINIMUM FEDERAL WAGE RATES ARE NOT REQUIRED FOR 223F
PROJECTS. NEVERTHELESS, THE OFFICE OF ARCHITECTURE AND
ENGINEERING AS WAS STATED EARLIER HAS TO MAKE A SITE VISIT FOR EVERY 223F PROJECT.
WE DO HAVE TO PERFORM AN ENVIRONMENTAL REVIEW AS WELL.
AS WAS STATED THIS MORNING, THIS IS A NEW FUNCTION FOR OUR OFFICE, AND OUR STAFF IS
BEING TRAINED TO DO THE 4128. HOW MANY OF YOU ARE NOT FAMILIAR WITH THE
4128 PROCESS? THAT'S GOOD, YOU KNOW WHAT WE'RE TALKING ABOUT.
YOU'RE USED TO THE PROTOCOL. NOW, WE WERE ASKED TO GO OUT AND KICK THE
TIRES, SO TO SPEAK, FOR THE 223F PROJECTS. BEING WE'RE ARCHITECTS AND ENGINEERS, WE CAN'T
JUST GO KICK TIRES. WE HAVE A TENDENCY TO GET INVOLVED MORE THAN
THAT. WE LIKE TO DEFINE THE SCOPE OF WORK FOR THE
PROPOSED PROJECT. YOU MIGHT THINK THAT'S A VERY SIMPLE ELEMENTAL
THING. I CAN TELL YOU IN OUR OFFICE, WHEN WE'VE HAD
SO MANY MEETINGS, THE OWN OTHER'S REPRESENTATIVE MIGHT HAVE AN IDEA OF WHAT THE PROPOSED PROJECT
MIGHT BE, THE ARCHITECT MIGHT HAVE ANOTHER, THE MORTGAGE BANKER MIGHT HAVE A THIRD.
IF THIS ALL COMES OUT SOMETIMES AT OUR MEETING, YOU KNOW, THE PROPERTY THAT'S INCLUDED IN
THE COLLATERAL CAN BE COMPLETELY DIFFERENT IN THEIR MINDS.
IT ISN'T UNTIL THEY FINALLY GET TO OUR OFFICE THAT THEY REALIZE THAT THEY'RE TALKING ABOUT
THREE DIFFERENT PROJECTS, SO TO SPEAK. SO WE HAVE TO BE QUITE EXACT IN OUR OFFICE.
SO IT'S VERY IMPORTANT THAT YOU FIGURE OUT WHAT THE SCOPE OF THE PROJECT IS.
YOU KNOW, EVERYBODY'S OPINION. BELIEVE ME, IT CAN VARY AND IT CAN CHANGE.
BECAUSE YOU WANT TO EXCLUDE CERTAIN PROPERTIES FROM YOUR COLLATERAL AND H.U.D. HAS A TENDENCY
TO PUT MORE PROPERTIES IN THE COLLATERAL. BY THE TIME YOU GET TO OUR OFFICE, WE CERTAINLY
WOULD APPRECIATE KNOWING EXACTLY WHAT THE PROJECT IS GOING TO ENTAIL BECAUSE WE HAVE
TO LOOK AT IT ENVIRONMENTALLY. IF YOU DON'T GIVE US ALL THE INFORMATION WHEN
WE NEED IT, WE MIGHT EVEN HAVE TO COME BACK AND MAKE A SECOND TRIP.
WE DON'T WANT TO DO THAT. WHAT IS THE TOTAL DOLLAR VALUE OF THE PROPOSED
WORK? WHAT I DID WAS, I DEVELOPED A CHECKLIST AS
A CRUTCH FOR OUR STAFF TO USE WHEN THEY GO OUT.
WHAT HAPPENED WAS, THEY LIKED IT SO MUCH, THEY WANT TO USE IT ON ALL OF OUR 242 PROJECTS
TO WRITE THEIR SITE VISIT REPORT. WHAT I'M DOING AND WHAT I'M GIVING YOU AN
INCLINATION OF IS WHAT WE'RE GOING TO BE ASKING FOR.
WE DON'T INTEND TO INCUR THE HOSPITAL EXTRA COSTS, BUT WE HAVE TO HAVE A CERTAIN LEVEL
OF COMFORT IN OUR PROJECTS. WE HAVE TO RECOMMEND TO THE ACCOUNT EXECUTIVES
ON JEFF'S STAFF AND PAUL'S STAFF THAT WE ARE COMFORTABLE WITH MAKING A RECOMMENDATION OF
APPROVAL. SO THE MORE COMFORTABLE WE FEEL WE CAN MAKE
JEFF FEEL COMFORTABLE AND HE CAN GO FORWARD WITH THE PROJECT.
WE TAKE IT ONE STEP AT A TIME. WHAT ARE THE AGES OF THE EXISTING STRUCTURES?
HAS THE FACILITY ENDURED ANY UNUSUAL EVENTS SINCE THE ORIGINAL CONSTRUCTION?
WE'VE BEEN HAVING LOTS OF HURRICANES, TORNADOES, ET CETERA.
HAS IT DAMAGED THE HOSPITAL? IS THERE ANYTHING WE NEED TO KNOW ABOUT THAT?
WAS THE EXISTING HOSPITAL OF CERTAIN POOR CONSTRUCTION?
DON'T FORGET, WE'RE ARCHITECTS AND ENGINEERS, WE'RE INTO THIS.
WE SHOULD KNOW THE QUALITY OF MAINTENANCE OF THE EXISTING STRUCTURES.
WHEN WAS THE LAST PHASE 1 ENVIRONMENTAL STUDY COMPLETED?
WAS THERE EVER A GOOD CAPITAL EXPENDITURE PLAN FOR MAINTENANCE AND REPAIR OVER THE LAST
FIVE YEARS, THE NEXT FIVE YEARS? YOU KNOW, EVERY PROJECT IS DIFFERENT.
EVERY HOSPITAL GOES ABOUT BUSINESS A LITTLE BIT DIFFERENT FROM THE OTHER ONES.
WE CAN'T APPLY RULES ACROSS THE BOARD. WE NEED TO GET INTO THE DETAILS.
IS THERE A FACILITY MASTER PLAN? SOME FACILITIES DO A MASTER PLAN THAT'S RATHER
ELABORATE. SOME DON'T GET THAT INVOLVED.
BUT, YOU KNOW, IF THERE IS A PLAN, WE SHOULD DISCUSS IT.
WE SHOULD DISCUSS WHAT THE CURRENT PROJECT PLANS FOR AND WHAT THEIR PLANS ARE BEYOND
THAT POINT. WE'RE GOING TO CHECK THE CONDITION OF THE
ROOF. BECAUSE, YOU KNOW, THE BUILDING STRUCTURES
TO SOME PEOPLE IS NOT A VERY GLAMOROUS TOPIC OF CONVERSATION.
THEY'D RATHER JUST WORK ON MEDICAL ADVANCES OR THEY'RE MORE WORRIED ABOUT POLITICS OR
COMPETITION IN THE MARKETPLACE. WHAT IF YOUR ROOF IS LEAKING OVER YOUR SURGICAL
SUITE, OUT OF GOT YOURSELF A PROBLEM. A LOT OF PEOPLE DON'T FEEL THE ROOF IS A GLAMOROUS
ITEM, BUT IT CAN BE A SIGNIFICANT COST FACTOR FOR A HOSPITAL.
NUMBER 10 HERE ON SLIDE 112, YOU KNOW, WHAT ARE THE DIFFERENT STRUCTURAL SYSTEMS, MECHANICAL
SYSTEMS, ELECTRICAL SYSTEMS, PLUMBING. IT'S NOT GLAMOROUS TO MORTGAGE BANKERS, BUT
TO THE PEOPLE WHO LIVE THERE EVERY DAY AND WORK THERE, IT'S QUITE IMPORTANT.
WE NEED TO KNOW THE STATUS OF THE WARRANTIES ON MAJOR PIECES OF MECHANICAL EQUIPMENT, ET
CETERA. WE ONLY HAVE A CERTAIN AMOUNT OF TIME WHEN
WE GO OUT TO MAKE OUR INSPECTION. THIS SOUNDS LIKE WE'RE GOING TO GET IN DEPTH
STUDIES. WE'RE GOING TO SPEND WEEKS WITH YOU.
WE'RE NOT. WE'RE JUST GOING TO SPEND A FEW HOURS WITH
YOU. IF YOU KNOW WHAT'S IN THE BACK OF OUR MINDS
IN YOUR PROJECTS WHEN WE GO OUT, YOU CAN ADDRESS THE ITEMS AND THEN WE'LL BE COMFORTABLE.
IS THE HOSPITAL FOCUSING ON WORK THAT IS OF A CRITICAL NATURE OR ARE THEY JUST FOCUSING
ON ONE PIECE OF EXPANSION WHEN THE REST OF THE BUILDING IS FALLING APART.
DID THEY REALLY SET THEIR PRIORITIES STRAIGHT? WE CAN'T EXACTLY TELL THE HOSPITALS WHAT TO
DO. IN THE END, IT'S ULTIMATELY THEIR DECISION.
DID THEY GO ABOUT SETTING UP THEIR PROJECTS PROPERLY?
OR SHOULD THEY HAVE CONSIDERED SOMETHING ELSE PERHAPS?
YOU KNOW, THE BEST TIME TO DESIGN A HOSPITAL IS BEFORE YOU START CONSTRUCTION, AND IT'S
REALLY NOT GOOD TO CHANGE YOUR DESIGN WHEN YOU'RE IN THE MIDDLE OF CONSTRUCTION.
YET, WE SEE THAT FROM TIME TO TIME. THAT'S NOT THE WISEST THING.
IT'S OFTEN MORE EXPENSIVE, ESPECIALLY IF YOU HAVE TO RIP SOMETHING OUT THAT YOU ORIGINALLY
DESIGNED FOR SOME OTHER PURPOSE. WHAT IS THE STATUS OF THE FUNCTIONALITY OF
THE EXISTING SPACES CONSIDERING FUTURE NEEDS? CATEGORIZE THE PROPOSED WORK, DO WE HAVE LIFE
SAFETY ISSUES? ARE MOST OF THE PROBLEMS PROGRAMMATIC?
DO THEY ENTAIL FIXED EQUIPMENT OR IS THE MECHANICAL FALLING APART?
IS THE COST ESTIMATE REASONABLE? HOW WAS IT DEVELOPED?
YOU KNOW, A LOT OF TIMES CONTRACTORS GIVE OWNERS ESTIMATES THAT THEY LOW BALL.
WHEN IT COMES TIME TO GET THE GMC, WE FIND OUT THE PRICE GOES UP A COUPLE, $3 MILLION.
THE HOSPITAL SAYS, I DON'T KNOW WHERE I'M GOING TO GET THE MONEY FOR THIS.
IT'S VERY IMPORTANT TO GET A REALLY GOOD COST ESTIMATE.
HOW WILL THE WORK BE EXECUTED? ARE THERE PROPOSED CONTRACTS?
DOES THE HOSPITAL HAVE ADEQUATE STAFF TO OVERSEE THE WORK?
WE REQUIRE A OWNER'S REPRESENTATIVE ON ALL OF THE PROJECT, WHETHER THEY'RE SOMEBODY FROM
THE FACILITY STAFF OR WHETHER THEY GO OUT AND HIRE A SEPARATE OWN HE WERE'S REPRESENTATIVE
CONSULTANT. WHAT'S THE SCHEDULE OF WORK PLANNED?
WILL THERE BE PHASING NECESSARY? WILL PATIENT CARE BE INTERRUPTED?
ALL OF THESE THINGS YOU HAVE TO THINK ABOUT. OF COURSE NUMBER 18, THIS IS OUR BIG CHANCE
FOR ENERGY CONSERVATION MEASURES, SUSTAINABILITY AND GREEN DESIGN.
HAVE THESE THINGS BEEN CONSIDERED? WHY NOT?
HAVE THE HOSPITALS VISITED OTHER SITES WHERE THE LATEST TECHNICAL ADVANCES HAVE BEEN MADE
THAT MAYBE THEY COULD INCORPORATE INTO THEIR HOSPITAL?
HAS THE HOSPITAL REALLY PUT FORTH ENOUGH EFFORT TO N THIS PROPOSED PROJECT OR COULD THEY DO
BETTER? WHAT ARE THE CONDITIONS OF THE EXTERIOR OF
THE STRUCTURE? IS THE HOSPITAL ESTHETICALLY PLEASING?
DOES IT DRAW PEOPLE TO IT? IS IT ACCESSIBLE?
WOULD THE PROJECT BE BETTER OFF CONSIDERING A 242 PROJECT?
WE TALKED A LITTLE BIT ABOUT THAT THIS MORNING. HERE YOU'RE COMING IN FOR A SMALLER REFINANCING
PROJECT, BUT REALLY, SHOULD THIS BE A 242 PROJECT PERHAPS?
IS THE WORK, ON THE OTHER HAND IS THE PROPOSED WORK IN THE 223F WHAT I'M TALKING ABOUT THE
PROPOSED CONSTRUCTION WORK REALLY NECESSARY IN THE 223F PROJECT OR MAYBE YOU SHOULDN'T
BOTHER WITH IT. YOU KNOW, YOU HAVE TO THINK ABOUT THIS WHEN
YOU'RE FIRST DEALING WITH DEVELOPING AN APPLICATION. WE WILL GET INVOLVED WITH YOU EARLY ON IF
WE CAN, IF YOU WANT US TO. PERHAPS WHEN WE WALK AROUND, WE MIGHT SEE
SOME WORK THAT SHOULD BE ADDED, AN ADDITION TO WHAT MIGHT HAVE TO BE CONSIDERED.
HOSPITAL MIGHT COMPLETELY FORGET ABOUT MAYBE THEY NEED AN ADDITIONAL EMERGENCY GENERATOR
OR THEY NEED REDUNDANCY IN A BOILER THAT THEY DIDN'T ANTICIPATE.
MAYBE THE COSTS WOULD GO UP. WE USE THE LATEST STANDARDS.
WHAT STANDARDS IS THE HOSPITAL USING TO DEVELOP THEIR DESIGN?
IS IT AN OLD STANDARD? PERHAPS THEY SHOULD USE THE LATEST CODES?
ARE THERE JOINT COMMISSION ON ACCREDITATION DEFICIENCIES OR DEFICIENCIES FROM THE LOCAL
BUILDING AUTHORITY THAT IS NEED TO BE RESOLVED? IF THIS IS THE CASE, HAS THIS BEEN CONSIDERED
IN THE WORK? DO WE HAVE DOUBLE BEDDED ROOMS?
DO WE HAVE SMALL SURGICAL SUITES? DO WE HAVE DEAD END CORRIDORS?
DO WE HAVE SPACES THAT ARE DANGEROUS FROM A LIFE SAFETY POINT OF VIEW?
ARE THERE STRUCTURAL DEFICIENCIES? ARE THERE COLUMN SPACES FAR ENOUGH APART FOR
MODERN NEEDS? THAT'S FREQUENTLY A PROBLEM IN MANY OF OUR
HOSPITALS, ESPECIALLY IN BIG CITIES. CAN WE MEASURE THE ENERGY SAVINGS OF THE PROPOSED
PROJECT? THIS IS THE HOSPITAL'S BIG CHANCE TO DO SOMETHING
THAT'S GOING TO LAST MANY YEARS IN THE FUTURE. IT'S VERY IMPORTANT THAT THEY GET IT RIGHT
THIS TIME AROUND. HAS THE COST BENEFIT ANALYSIS OR ANY OTHER
KIND OF STUDIES BEEN DONE FROM THE PROPOSED. SHARE THEM WITH US PLEASE.
WE'RE GOING TO HAVE THE O' STAFF PERSON. THEY'RE GOING TO HAVE TO WALK THE SITES AND
GET IN EVERYWHERE AND TAKE A LOOK AROUND. HAS THE HOSPITAL MADE ANY ENHANCEMENTS OVER
THE LAST FEW YEARS. FREQUENTLY HOSPITALS GROW IN SPURTS.
PLEASE ZANE TO US WHAT HAS BEEN DONE PLEASE EXPLAIN TO US WHAT HAS BEEN DONE?
ARE THERE PHOTOGRAPHS OF THE EXISTING FACILITY? WE FREQUENTLY CHECK OUT DATABASES TO VERIFY
ENVIRONMENTAL ISSUES THAT RELATES TO SPECIFIC ASSIGNMENTS.
HAS THE DATABASE CHANGED IN THE LAST COUPLE OF YEARS?
DOES THE FLOODPLAIN RELATE TO THE HOSPITAL OR IS THERE A NEW FLOOD PLAIN MAP?
SO MANY AREAS ARE REVISING THEIR FLOOD PLAINS. DO WE HAVE THE LATEST INFORMATION OR ARE WE
MISTAKEN? ARE THERE ANY ABOVE GROUND OR UNDERGROUND
STORAGE TANKS EITHER ON THE SITE OR IMMEDIATELY ADJACENT TO THE SITE?
ALL OF THESE THINGS APPLY TO THAT 4128. WE REALLY HAVE TO KNOW WHERE THEY POSE A PROBLEM.
THE SOONER WE GET INVOLVED, THE BETTER OFF WE ARE.
SOMETIMES IT MAY TAKE A LONG TIME TO RESOLVE THE MATTER AND MAYBE EVEN KILL THE PROJECT.
SO YOU SHOULD KNOW THIS. IT'S SAD TO SAY.
IF IT'S GOING KILL THE PROJECT, YOU'RE BETTER KNOWING IT RIGHT OFF THE BAT INSTEAD OF WASTING
TIME UNFORTUNATELY. ARE THERE ANY OUTSTANDING ENVIRONMENTAL CONDITIONS
FROM OLD ISSUES THAT NEED TO BE PROCESSED ON THE EXISTING HOSPITAL SITE?
WE'RE GOING TO HAVE TO HAVE A LICENSED ARCHITECT OR ENGINEER FOR THE PROPOSED WORK I ASSUME.
WILL A BUILDING PERMIT BE REQUIRED FOR THE PROPOSED WORK?
WE ASSUME THERE WILL BE A NEED FOR THAT. WHAT IS THE OUTCOME OF THE 4128?
WILL THERE BE CONDITIONS IN YOUR COMMITMENTS? WILL THE BUILDING PERMIT BE REQUIRED FOR THE
PROPOSED WORK? I GUESS THAT SUMS UP WHAT WE'RE LOOKING FOR.
WE'RE GOING TO DO QUITE A BIT WHEN WE GO OUT THERE AND KICK THOSE TIRES.
THAT'S JUST IN THE BACK OF OUR MINDS. BE PREPARED FOR THAT.
YOU KNOW, BECAUSE YOU CAME TO THE TRAINING TODAY, YOU HAVE A SNEAK PREVIEW OF THIS FORM.
YOU'RE AHEAD OF THE GAME AS OPPOSED TO OTHER PEOPLE WHO HAVE YET TO SEE THIS VIDEO ON OUR
WEBSITE. BUT I JUST THOUGHT I'D SHARE IT WITH YOU SO
YOU HAVE SOME INFORMATION FROM US. THE NEXT THING I'VE BEEN ASKED TO TALK ABOUT
IS THE NEW CONSTRUCTION GUIDE. OAE LIVES IN APPENDIX 8 OF
THE CONSTRUCTION GUIDE.
>> PART TWO IS OUR EVER FAMOUS 1
CONSTRUCTION MANAGEMENT GUIDE.
THOSE OF YOU WHO HAVE WORKED
WITH US YEARS AGO KNOW WE USED
TO HAVE THE GREEN BOOK, THE RED
BOOK, THE APRICOT COLORED BOOK
IN HHS AND WE USED TO GIVE HARD
COPIES TO EVERYBODY, THEN WE
CHANGED OVER TO THE ELECTRONIC
VERSIONS, AND WE HAD ONE
PROPOSED INTERIM GUIDE AND
ANOTHER YEAR ANOTHER GUIDE,
ANOTHER GUIDE.
YOU CAN CLEAN OUT YOUR CLOSETS
NOW.
IF YOU HAVE A GUIDE ONLY HARD
COPY, YOU CAN CHUCK IT AND YOU
HAVE ONE PLACE TO GO NOW.
I WISH YOU WOULD THROW OUT THE
OLD GUIDES BECAUSE WE HAVE A
TENDENCY TO GET THE OLD STUFF
THAT COMES BACK TO US.
PART THREE IS THE GUIDE FOR THE
DESIGNED BILL SERVICES WHICH
HAVE GREATLY CHANGED. FOR THOSE WHO MAY HAVE DONE WORK 2
ON DESIGNED BILL PROJECTS, WE
HAVE CHANGED THAT SECTION MOST
OF ALL.
AS A MATTER OF FACT, DESIGNED
BILLS WASN'T EVEN IN THE
HANDBOOK YEARS AGO.
IT'S SOMETHING NEW WE
INCORPORATED INTO THE PROGRAM.
THERE IS ALSO PART 4, THE
ENVIRONMENTAL REVIEW
REQUIREMENTS HAVE BEEN
INCORPORATED BECAUSE OUR OFFICE
NEVER WAS INVOLVED IN THAT
PORTION OF THE WORK BEFORE.
SO YOU HAVE ONE-TOP-SHOPPING FOR
OAE.
THE PART ONE, SLIDE 121, IS AN
OVERVIEW OF OUR CONSTRUCTION
PROCESS AND REQUIREMENTS.
NOW, MAYBE YOU ARE NOT
INTERESTED IN ALL OF THIS, BUT I
CAN ASSURE YOU THAT YOUR
ARCHITECTS AND ENGINEERS AND
YOUR CONTRACTORS AND OWNERS REPRESENTATIVES AND EVEN SOME OF 3
THE CLIENTS, THE OWNERS YOU
SERVE, THEY'RE VERY INTERESTED
IN KNOWING GREAT DETAILS, AND
THE ARCHITECTS, WHEN YOU GIVE
THEM A GUIDE LIKE THIS, THEY
COME IN WITH A MILLION QUESTIONS
AND INTERROGATE US TO DEATH.
SO I HOPE WE'VE SOLVED ALL OF
THE QUESTIONS ABOUT REDOING THE
GUIDE.
YOU KNOW WHAT HAPPENS WHEN YOU
WRITE A GUIDE, RIGHT?
SOMEBODY'S ALWAYS GOT SOMETHING
THEY FIND WHERE YOU CAN COME AND
IMPROVE THE GUIDE.
SO IF YOU'D LIKE US TO IMPROVE
THE GUIDE OR YOU DON'T
UNDERSTAND SOMETHING, WE'RE HERE
TO WORK WITH YOU AND EXPLAIN
THINGS TO YOU, SO WE'RE ALWAYS
OPEN TO HAVING DISCUSSIONS WITH
YOU.
SO IT EXPLAINS THE STEPS WE GO
THROUGH, THE SPECIFIC HUD REQUIREMENTS FOR THE PROGRAM. 4
WHAT WE DO FOR 242 IS SIMILAR TO
WHAT WE DO FOR 241, ET CETERA,
ET CETERA, ET CETERA, PRETTY
MUCH.
SO THAT'S ABOUT IT.
AND, NOW, THE MOST -- WE HAVE
THE SAM GUIDE, IT'S PRETTY MUCH
THE SAME.
THOSE OF YOU WHO HAVE WORKED
WITH US WITH THE SAM GUIDE IN
THE LAST FEW YEARS IS PRETTY
MUCH THE SAME.
IT'S THE MOST POPULAR FORM OF
CONSTRUCTION CONTRACT
METHODOLOGY.
FOR THOSE OF YOU UNFAMILIAR WITH
OUR GUIDE, PART A IN EXHIBITS
1-3, I'M ON PAGE 125 NOW, PART A
IS THE CONSULTATIVE PAGE FOR THE
CONSTRUCTION MANAGER AND PART B
IS A VERY IMPORTANT PART WHERE
YOUR CLIENTS WILL ASK, WHERE IS
YOUR SAM CONTRACT, YOUR
CONSTRUCTION FORMAT? IT'S IN PART B. 5
PERHAPS THE MOST IMPORTANT THING
THAT CHANGED IS THE PART 3, THE
GUIDE FOR PROJECT APPLICANTS FOR
DESIGNED BUILD SERVICES.
WE DON'T HAVE A DOLLAR LIMIT
ANYMORE FOR DESIGN BUILD.
WE HAD TO CHANGE THE FORM THAT
WAS USED, FORM OF CONTRACT.
WE USED THE AMERICAN INSTITUTE
OF ARCHITECTS CONTRACT BECAUSE
IT'S VERY POPULAR WITH THE
INDUSTRY.
THE ONE WE HAD BEFORE IS OUT OF
DATE.
WE CAN'T ZERO ROCKS THE
CONTRACTS BECAUSE IT'S ILLEGAL.
WHAT'S CURRENT IS THE
AIA-141-2004 EDITION WITH ITS
EXHIBITS.
IT REQUIRES AN OWNERS
REPRESENTATIVE THAT'S A LICENSED
ARCHITECT OR ENGINEER, AND IF
THE HOSPITAL DOESN'T -- IF THE
DESIGN BUILD FIRM DOES NOT WANT TO COMPETITIVELY BID OUT ITS 6
SUBCONTRACTS, THEN THE HOSPITAL
IS FORCED TO HIRE AN INDEPENDENT
COST ESTIMATOR.
BUT MY EXPERIENCE HAS ALWAYS
BEEN THE DESIGN BUILDERS BECAUSE
WANT 100% BID OUT THEIR
CONTRACTS, BUT IT GIVES THEM THE
OPTION HERE.
BECAUSE WE'RE RUNNING SHORT, I'M
NOT GOING INTO ALL OF THE
DETAILS HERE, BUT WHAT'S VERY
IMPORTANT IS THE NEXT PAGE, 127,
THE ADDENDUM FOR DESIGN BUILD.
IF THIS ADDENDUM IS NOT
INCORPORATED INTO A DESIGN BUILD
CONTRACT, WE WILL NOT APPROVE IT
BECAUSE THERE IS TAILORED JUST
FOR HUD.
DESIGN BUILDERS ARE VERY RISKY
OR RISKIER FORM OF CONSTRUCTION
CONTRACT, AND IF WE DON'T HAVE
WHAT'S INCLUDED IN THIS, WE
COULD HAVE TROUBLE, SO IT'S
REQUIRED. AND, SO, EVERYTHING ELSE IS 7
PRETTY WELL EXPLAINED HERE.
FOR PRE-COMMITMENT WORK, SITE
PREPARATION WORK, WE DO HAVE TO
HAVE THE ENVIRONMENTAL ANALYSIS
DONE EVEN FOR 223-F PROJECTS IF
YOU'RE GOING TO HAVE
CONSTRUCTION.
FINALLY, THE LAST PART IS
CONSTRUCTION GUIDE FOR
ENVIRONMENTAL REVIEW AND
REQUIREMENTS, AND I BELIEVE --
I'M NOT GOING TO GO INTO ALL OF
THIS, BUT WE WILL FILL OUT THE
4120A FORM.
YOUR CLIENTS' ENVIRONMENTAL
CONSULTANT DOESN'T HAVE TO FILL
OUT THE FORM.
JUST MAKE SURE THEY DO A GREAT
JOB WITH THE PHASE 1 AND 2 IF
THAT BECOMES NECESSARY.
CONTACT US EARLY.
MAKE SURE THAT ALL ENVIRONMENTAL
CONDITIONS ARE IDENTIFIED AS
SOON AS POSSIBLE. THAT SAVES YOUR TIME AND MONEY. 8
MAKE SURE THE ENVIRONMENTAL
CONSULTANTS HIRED ARE QUALIFIED.
IF MEDIATION HAS TO BE DONE,
WE'LL WORK THROUGH THAT WITH
YOU.
IF THE DESIGN HAS TO BE ADAPTED
TO CONFORM TO CERTAIN
ENVIRONMENTAL REQUIREMENTS, LIKE
YOU HAVE TO BEEF UP THE WINDOWS
BECAUSE OF NOISE OR WHATEVER, WE
MAKE SURE THAT IS DONE WHEN WE
REVIEW THE JOINT INVESTIGATION.
FINALLY, ON THE LAST PAGE, I
JUST WANT TO TELL YOU THAT
BECAUSE THE ENVIRONMENTAL
ANALYSIS GETS INVOLVED WITH SO
MANY COMPLICATED WORDS AND
ACRONYMS, WE HAVE PROVIDED A
GLOSSARY FOR ACRONYMS AT THE END
OF APPENDIX 8.
WE LOOK FORWARD TO WORKING WITH
YOU IN THE FUTURE.
THANK YOU.
[ APPLAUSE ] >> THANK YOU, TERESA. 9
YEAH, WHEN YOU GET INTO
CONSTRUCTION PROJECTS AT
HOSPITALS, OH, MY LORD, THE
STUFF THAT COMES UP.
YOU WOULDN'T BELIEVE IT.
I MEAN, THERE IS ENVIRONMENTAL,
THERE IS STUFF BURIED UNDER THE
GROUND YOU DIDN'T KNOW WAS
THERE, ANY NUMBER OF THINGS CAN
DERAIL PROJECTS.
I'D LIKE TO MOVE ON, IF WE
COULD.
MY NEXT SPEAKER IS BURT WHO IS
THE DIRECTOR OF PORTFOLIO
MANAGEMENT FOR ALL THE HOSPITALS
WITHIN THE PORTFOLIO YOU HERE AT
HUD.
I THINK IT'S IMPORTANT FOR US TO
SHARE WITH YOU IF WE COULD, FOR
JUST A COUPLE OF MINUTES, SOME
OF THE THINGS WE'VE LEARNED
ABOUT SOME OF THE HOSPITALS THAT
WE HAVE IN THE PORTFOLIO WHERE
WE HAVE GREAT HOSPITALS, WHAT MAKES THEM GREAT, WHEN WE HAVE 10
PROBLEMATIC ISSUES, WHAT THOSE
HOOK LIKE, WHAT THOSE CAUSES
MIGHT BE.
SO, IN MANY RESPECTS, WE'RE
THINKING WE'RE JUST TRYING TO BE
TRANSPARENT AND SHARE WITH YOU
THE GOOD, THE BAD, THE UGLY, THE
THINGS THAT TRIP US UP, THE
THINGS THAT YOU MIGHT NEED TO BE
AWARE OF AS LENDERS WHEN YOU
LOOK AT HOSPITALS, MAYBE THINGS
TO BE THINKING ABOUT.
YOU KNOW, IF YOU HAVE A
TRANSACTION YOU'RE THINKING
ABOUT BRINGING US, MAYBE
PROBLEMATIC ISSUES THE HOSPITAL
MIGHT STRUGGLE WITH THIS.
BURT, COME ON UP, THANK YOU.
>> WELL, GOOD AFTERNOON,
EVERYONE, AND WELCOME TO LENDER
TRAINING.
IT'S GRATIFYING TO SEE SOME OF
THE FOLKS I WORKED WITH IN THE
PAST AND A SPECIAL WELCOME TO THE NEW LENDERS. 11
WE LOOK FORWARD TO ESTABLISHING
A MUTUAL, LONG-TERM RELATIONSHIP
WITH YOU, OUR PARTNERS.
WITHIN PORTFOLIO MANAGEMENT,
AMONG THE MANY RESPONSIBILITIES
THAT WE WORK ON, THERE WAS A
SPECIAL TEAM PUT TOGETHER MANY
YEARS AGO CALLED THE HOSPITAL
TURNAROUND TEAM WITH THE SINGLE
GOAL OF PREVENTING CLAIMS.
THAT GROUP HAS BEEN SUCCESSFUL
AND, WORKING WITH YOU, WE HAVE
PREVENTED ANY CLAIMS WITHIN THE
LAST TWO YEARS.
[ APPLAUSE ]
LIKE ANY ACCOMPLISHMENT, IT'S
ALWAYS A TEAM EFFORT.
ALL OF OUR AEs AND ACCOUNT
EXECUTIVES ARE INVOLVED NOT ONLY
IN UNDERWRITING BUT IN ASSET
MANAGEMENT AND WE RELY HEAVILY
ON OUR LENDERS TO WORK WITH US
WITH TROUBLED HOSPITALS.
SO, YES, PLEASE TAKE A BOW BECAUSE IT'S TRULY A TEAM 12
EFFORT.
WHEN WE DO RUN INTO TROUBLED
FACILITIES, WE TRY TO LEARN FROM
THAT.
YOU'VE HEARD THE TERM, WE SAID
IT BEFORE, LESSONS LEARNED.
WHAT CAN WE TAKE AWAY FROM THAT
EXPERIENCE TO MAKE THIS PROGRAM
MORE EFFECTIVE?
WHAT HAS HAPPENED IN EITHER THE
UNDERWRITING OR ASSET MANAGEMENT
THAT HAS NOT WORKED WELL AND HOW
CAN WE INCORPORATE THESE LESSONS
BACK INTO ASSET MANAGEMENT
UNDERWRITING?
PAUL AND I WORK AS A TEAM,
WHETHER THERE ARE NEW
APPLICATIONS COMING IN THAT
MIGHT BE PROBLEMATIC, PAUL GIVES
ME A HEADS UP.
WE TALK ABOUT IT.
I GET INVOLVED.
WHEN I SEE THINGS ON THE ASSET
MANAGEMENT SIDE, I FEED THOSE BACK AND SAY HERE'S WHAT'S GOING 13
ON, KEEP OUR EYES ON THEM, AND
WE TRY TO INCORPORATE THAT.
WHAT I'D LIKE TO SHARE WITH YOU
ARE SOME OF THE COMMON
CHARACTERISTICS AND THEMES WE
HAVE FOUND IN SOME OF OUR
TROUBLED FACILITIES.
WITHOUT EQUIVOCATION, I CAN SAY,
FOR EVERY CLAIM THAT WE'VE HAD,
WE'VE HAD AN INEFFECTIVE BOARD.
MOODY'S NOW RANKS EVALUATION OF
THE BOARD AND MANAGEMENT AS ONE
OF THE MOST CRITICAL EVALUATIONS
THEY DO WHEN THEY RANK A
HOSPITAL OR HEALTH SYSTEM.
TAKING A LOOK AT NUMBER 2 AND
NUMBER 3.
WHEN YOU HAVE AN EFFECTIVE
BOARD, MANAGEMENT AND MEDICAL
STAFF, YOU USUALLY WILL HAVE A
WELL-RUN HOSPITAL THAT'S
ACHIEVING IT'S GOALS IN EVERY
WAY THAT YOU CAN MEASURE IT,
WHETHER YOU WANT TO LOOK AT RETURN ON INVESTMENT, QUALITY, 14
COMMUNITY BENEFIT, THEY ALL WORK
VERY WELL.
IF ONE OF THOSE AREAS IS OUT OF
SYNC, AND WE'VE SEEN IT, YOU CAN
HAVE PROBLEMS, AND ESPECIALLY
WITH THE MEDICAL STAFF, MANY
TIMES THEY'LL VOTE WITH THEIR
FEET AND, ALL OF A SUDDEN, A
FACILITY THAT WAS DOING WELL IS
STRUGGLING BECAUSE BUSINESS HAS
GONE ELSEWHERE.
ONE OF THE ITEMS THAT I THINK
SOME OF OUR STAFF ARE GETTING
SICK OF ME SAYING IS DO THEY
HAVE A STRATEGIC PLAN?
DO THEY HAVE A STRATEGIC PLAN?
YOU KNOW, IF YOU DON'T HAVE A
STRATEGIC PLAN, WHERE DO YOU
KNOW YOU'RE GOING?
WE HAVE FACILITIES IN THE
PORTFOLIO NOW THAT HAVE PLANS
GOING OUT FIVE, TEN, 15 YEARS.
THEY ARE GRASPING THE GROUP AND
SAYING, HERE'S WHERE WE WANT TO BE, HERE'S HOW WE'RE GOING TO 15
GROW, DESPITE ALL THE CUTS AND
REIMBURSEMENT, THE ACCOUNTABLE
CARE ORGANIZATIONS AND WHAT HAVE
YOU.
WHAT KIND OF MEDICAL STAFF DO WE
NEED TO RECRUIT?
ARE THEY GOING TO HAVE AN
ENDOWMENT OF XYZ DOLLARS TO
CARRY OUT THEIR PROGRAMS KNOWING
FULL WELL THEY'RE NOT GOING TO
GET REIMBURSED?
AND MORE IMPORTANTLY, HOW ABOUT
THAT BOARD AND MANAGEMENT
GROWTH?
HOW ABOUT GROWING MORE FOLKS SO
THEY CAN REPLACE THEM?
SOME OF THE OTHER ITEMS ON THERE
I THINK ARE FAIRLY
STRAIGHTFORWARD.
IF YOU LOOK AT LIQUIDITY, HOW
MANY DAYS' CASH DO YOU HAVE ON
HAND?
AND MORE IMPORTANTLY, IS IT
DECREASING OVER TIME? ARE THE BILLS GOING UP? 16
WHAT DOES THAT MEAN?
YOU COULD HAVE, AS WE'VE HAD IN
SOME OF OUR FACILITIES, THEY'VE
STARTED VENTURES, NON-HOSPITAL
VENTURES OR PHYSICIAN EMPLOYMENT
VENTURES THAT ARE LOSING MONEY.
NOW, DEPENDING ON HOW YOU DEFINE
THAT, AND THERE'S WAYS TO DO
THAT, THE QUESTION IS, WHEN YOU
TAKE ENTITY AS A WHOLE, IS IT
GETTING BETTER OR WORSE?
AND ONE OF -- THE VERY LAST ONE
LISTED THERE IS ALMOST A GIMME.
IF YOU SEE A LOT OF TURNOVER,
THERE IS AN ISSUE, AND IN ALMOST
EVERY EVENT WHERE WE'VE HAD
SERIOUS ISSUES WITH A FACILITY,
THERE IS AT LEAST BEEN A
TURNOVER OF ONE INDIVIDUAL,
EITHER THE CEO OR THE CFO.
WHEN YOU SEE THESE KIND OF
CHARACTERISTICS EITHER IN
UNDERWRITING OR THE ASSET
MANAGEMENT PHASE OR THE LIFE CYCLE OF THE FACILITY, PLEASE 17
BRING IT TO OUR ATTENTION.
WE WITHIN THE ASSET MANAGEMENT
GROUP, IF WE SEE THESE SORT OF
TRENDS GOING ON, WE'LL LET YOU
KNOW ABOUT IT AND, TOGETHER, IF
WE GET THERE EARLY ENOUGH, WE
CAN USUALLY PREVENT SERIOUS
PROBLEMS FROM HAPPENING.
THANK YOU VERY MUCH AND HAVE A
GOOD DAY.
[ APPLAUSE ]
>> WELL, I THOUGHT I WOULD JUST
TAKE A COUPLE OF MINUTES OF OUR
TIME THIS AFTERNOON, WE ARE
RUNNING LONG SO I WANT TO
SHORTEN A COUPLE OF SECTIONS,
BUT I WANTED TO HAVE MYSELF AND
PAUL AND KATHERINE FROM OUR RISK
MANAGEMENT GROUP TAKE A FEW
MINUTES AND TELL YOU A LITTLE
BIT ABOUT WHAT'S NEW AND GIVE
YOU OUTLINES OF WHAT OUR GROUP
SO I THINK I'M GOING TO GRAB A TABLE OVER HERE. 18
>> THIS IS PAUL AND KATHERINE
FROM RISK MANAGEMENT.
AN UPDATE FOR YOU FOLKS.
I WANTED TO PROVIDE YOU A SHORT
UPDATE OF SOME OF THE ACTIVITIES
WE HAVE BEEN DOING AS A TEAM,
REALLY.
I DON'T KNOW WHETHER YOU GUYS
KNOW IT OR NOT BUT THERE IS A
LOT OF CHANGE GOING ON WITHIN
HUD ITSELF.
HUD IS CHANGING THE WAY ITS DOES
BUSINESS AND SO IS THE OFFICE OF
HEALTHCARE PROGRAMS.
YOU KNOW, I ARRIVED IN JANUARY
AND I TOOK A LOOK AROUND AND
JUST TRIED TO BRING SORT OF THE
BANKER'S MENTALITY TO THE TABLE
TO FIND OUT, YOU KNOW, JUST WHAT
TYPE OF UNDERWRITING DO WE DO,
HOW IS IT BEING DONE, AND WE'VE
MADE A LOT OF IMPROVEMENTS TO
THAT PROCESS OVER THE PAST
COUPLE OF MONTHS. SO THINKING OF GOING A LITTLE 19
BIT BETTER WITH UNDERWRITING AND
STREAMLINING -- SORRY.
HERE COME MY NERVES AGAIN.
IT'S TOUGH, BUT I'LL TRY AND GET
THROUGH THAT.
SO ON THE UNDERWRITING SIDE,
WHAT WE DID WAS WE STREAMLINED
OUR UNDERWRITING DOCUMENT BY
FIRST TAKING A LOOK AT HOW THE
DEALS WERE BEING STRUCTURED.
SEEMS LIKE TO ME A LOT OF THE
INFORMATION WAS VOLUMINOUS.
THERE WERE ABOUT 50 PAGES IN
UNDERWRITING EVENTS AND NOW IT'S
5 OR 10 PAGES.
IT'S A LOT MORE EFFICIENT.
IN ADDITION, WE'VE SORT OF
BROUGHT OURSELVES INTO WHAT 232
HAS BEEN DOING WHICH IS
INTRODUCING THE LIEN PROCESS TO
OUR SHOP.
I DON'T KNOW IF ANY OF YOUR
LENDERS HAVE DONE WORK ON THE
232 SIDE FOR ASSISTED LIVING AND LONG-TERM CARE AND SKILLED 20
NURSING, BUT THEY'VE
DRAMATICALLY IMPROVED THE
PROCESSING TIMES FOR THOSE TYPES
OF TRANSACTIONS BY INSTITUTING A
LIEN PROCESS.
WE'RE DOING THE SAME ON THE 242
SIDE.
SO FAR, WE'RE EARLY INTO THAT
PROCESS, BUT WE ANTICIPATE
STREAM LINING OR PROCESS AND
BECOMING FASTER AND MORE
EFFICIENT AND HOW WE PROCESS AND
RECEIVE APPLICATIONS,
UNDERWRITE, APPROVE AND PUT OUT
COMMITMENTS.
SO THAT'S THE GOAL ON OUR SIDE
OF THE TABLE.
WE'RE ALSO WORKING ON GAINING
SOME NEW ELECTRONIC PLATFORMS.
UPON MY RIVAL, I NOTICED WE HAVE
A LOT OF OLD LEGACY PLATFORMS
INSIDE HUD.
17 YEARS OLD, SOME OF THESE
PLATFORMS. I'M SURPRISED I DON'T SEE A C 21
PROP WHEN I TURN THE THING ON.
BUT COMING FROM THE BANKING SIDE
OF THE WORLD, I KNOW EXACTLY
WHAT SOFTWARE IS TYPICALLY USED
BY BANKS AND FINANCIAL
INSTITUTIONS ACROSS AMERICA FOR
DOING FINANCIAL STATEMENT
ANALYSIS, AND WE'RE MOVING HEAD
LONG INTO GETTING THAT TYPE OF
PLATFORM IT'S CALLED HERE AT
HUD.
THERE ARE CHALLENGES, I AM
DEALING WITH THE U.S. GOVERNMENT
TO GET APPROVALS TO GET
SOFTWARE.
THERE IS A LOT OF NUANCES TO
THAT.
BUT BE THAT AS IT MAY, THE
AGAIN, IT'S ANOTHER ONE OF THE
CHANGES WE'RE MAKING WITHIN OUR
GROUP.
WE'RE ALSO WORKING ON A
PRE-APPLICATION TOOL THAT I
THINK YOU THE LENDERS ARE GOING TO LIKE A LOT. 22
IT'S NOT READY TO BE RELEASED TO
YOU JUST YET.
IT'S AN OUTFLOW FROM OUR WORK
WITH LIEN.
WHAT WE'RE GOING TO TRY AND DO
IS BECOME FAR MORE TRANSPARENT
TO YOU IN TERMS OF THE
PROBLEMATIC ISSUES WE SEE
ARISING FROM APPLICATIONS THAT
COME IN TO US.
THE GOAL WILL BE TO RELEASE TO
YOU AND PUT ON OUR WEB SITE
INFORMATION THAT TELLS YOU
SPECIFICALLY IF YOU'RE IN A RED
CATEGORY, A YELLOW OR A GREEN ON
A VARIETY AND HOST OF
INFORMATION THAT SOME OF IT IS
FINANCIAL, SOME OF IT IS
REGULATORY, SOME OF IT IS
STATUTORY, SOME OF IT IS JUST
COMMON SENSE, BUT, GENERALLY,
WHAT WE HOPE TO ACHIEVE IS TO
GIVE YOU ENOUGH INFORMATION THAT
ALLOWS YOU TO HAVE A PRETTY GOOD SENSE THAT IF YOU HAVE A 23
TRANSACTION AND WORK THROUGH THE
LIST, YOU WILL HAVE A VERY CLEAR
SENSE OF WHETHER THIS IS A
TRANSACTION HUD IS LIKELY TO
APPROVE.
NOT JUST MEETING THE BASIC
REGULATORY AND STATUTORY
REQUIREMENTS BUT FAR DEEPER THAN
THAT.
WE'VE ALSO INSTITUTED A VERY
DEEP PARTNERSHIP WITH OUR RISK
MANAGEMENT GROUP AND, FOR THAT,
I THOUGHT I WOULD HAVE KATHERINE
COME ON UP AND GIVE YOU AN
UPDATE OF WHAT HER WORLD DOES.
IN A WAY, FROM A BANKER'S
PERSPECTIVE, THIS IS LIKE THE
CREDIT DEPARTMENT VERSUS
PRODUCTION DEPARTMENT.
SO, KATHERINE, WHY DON'T YOU
INTRODUCE YOURSELF.
>> I'M KATHERINE COLLEEN, THE
CREDIT RISK OFFICER FOR THE
OFFICE OF RISK MANAGEMENT, AND I'M WORKING DIRECTLY WITH OHF. 24
I WOULD LIKE TO GIVE YOU A
LITTLE BACKGROUND ON FHA AND
IT'S COMMITMENT TO RISK
MANAGEMENT.
FHA MAINTAINS A DELICATE
BALANCE, MAKING SURE ITS
INSURANCE PROGRAMS ARE
SUFFICIENTLY CAPITALIZED,
BALANCING RISK WITH THE GOAL OF
ACHIEVING THE FHA'S MISSION
OBJECTIVES.
ONE WAY THEY ACHIEVE THIS IS
THROUGH SUPPORT OF ITS RISK
CULTURE.
NEXT SLIDE.
I'M NOT GOING TO GO THROUGH ALL
OF THIS.
IN SUMMARY, THIS SLIDE DESCRIBES
THE CORE RISK MANAGEMENT
ACTIVITIES FOR ORM, WHICH IS THE
OFFICE OF RISK MANAGEMENT, WHICH
WAS STARTED IN 2010, SO A
RELATIVELY NEW DEPARTMENT.
IN SUMMARY, WE COLLABORATE WITH EACH OF THE PROGRAM OFFICES. 25
WE DEFINE AND DEVELOP RISK
MANAGEMENT STRATEGIES,
PROCEDURES AND GOVERNANCE
POLICIES, AND THIS IS DONE FOR
ALL FHA PROGRAMS.
SINGLE FAMILY, MULTI-FAMILY AND
IN HEALTHCARE WE DO IT FOR BOTH
THE 232 AND THE 242 SIDE.
IN ADDITION TO MEETING
REGULATORY COMPLAINS, WE PROMOTE
A RISK-CONSCIOUS CLIMATE IN A
MANNER CONSISTENT WITH FHA'S
MISSION AND VISION.
THE GOVERNANCE PRINCIPLES.
KEY TAKEAWAY ON THIS IS IT'S A
COLLABORATIVE EFFORT BETWEEN
RISK MANAGEMENT AND ALL THE
PROGRAM OFFICES.
IN THIS CASE, OHF.
WE WORK CLOSELY WITH THE
HOSPITAL GROUP TO IDENTIFY
TRANSIENT ISSUES THAT ARE THEN
INCORPORATED INTO THE BUSINESS
POLICIES AND PROCEDURES. BUT TO BE CLEAR, OHF OWNS THE 26
UNDERWRITING AND ASSET
MANAGEMENT DECISIONS.
WE'RE NOT THE BUSINESS OWNERS.
EVEN THOUGH WE HAVE A
SIGNIFICANT ROLE IN PROVIDING
INSIGHT AND AN INDEPENDENT VIEW.
IN SUMMARY, IT'S A COLLABORATIVE
EFFORT, WITH US BEING BROUGHT IN
EARLY IN THE PROCESS.
AND THIS IS IN BOTH THE
UNDERWRITING, PRE-APP, ANY KIND
OF PROCEDURES BEING DEVELOPED,
WE SEE IT AS A COLLABORATIVE
EFFORT TO TRY TO WORK TOGETHER.
TAKING RISK IS PART OF BEING IN
BUSINESS.
RISK MANAGEMENT IS NOT ABOUT
AVOIDING RISK.
IT'S ABOUT UNDERSTANDING AND
MANAGING THE RISK AS WELL AS
IDENTIFYING YOUR UPSIDE AND DOWN
SIDE.
ESPECIALLY THOSE ASSOCIATED WITH
TAIL RISK. SUCCESSFUL RISK MANAGEMENT 27
ALLOWS FOR BETTER BUSINESS
DECISIONS AND PROCESSES, NOT
BUREAUCRACY.
SO WE CAN SEE THE DEFINITION OF
TAILORED RISK.
A SUCCESSFUL RISK PROGRAM LOOKS
AT CREDIT, MARKET, OPERATIONAL,
REGULATORY RISKS.
HOSPITALS ARE FACING SOME
SIGNIFICANT CHALLENGES RIGHT NOW
WHICH IS PART OF REVIEWING AND
MANAGING THE RISK PROCESS.
THESE INCLUDE THE PATIENT
PROTECTION AFFORDABLE CARE ACT,
INCREASED CONSOLIDATION M&A
ACTIVITY, CHANGES IN STATE AND
MUNICIPAL REIMBURSEMENT AND ALSO
REVIEWING MACRO AND
MICROECONOMIC RISKS SPECIFIC TO
A HOSPITAL OR REGION.
OKAY.
KEY TO A SUCCESSFUL RISK CULTURE
IS FOUND IN VARIOUS CIRCLES,
SHOWING CONTINUOUS PROCESS BEING REVIEWED, REFINED AND UPDATED. 28
MAIN QUESTION, DOES THE CULTURE
SUPPORT THE RIGHT MINDSETS AND
BEHAVIORS.
FOR RISK CULTURE TO BE
SUCCESSFUL, IT NEEDS SUPPORT
FROM THE TOP.
WE HAVE THIS IN PLACE, FROM THE
COMMISSIONERS TO THE STAFF OF
RISK MANAGEMENT AND THE HOSPITAL
GROUPS, THIS IS IN PLACE.
SHARING RISK RELATED TARGETS
THROUGH COLLABORATION.
AGAIN, THIS IS IN PLACE RIGHT
NOW.
INVOLVEMENT IN THE CREDIT
COMMITTEE, AND THIS INCLUDES
BRINGING RISK MANAGEMENT IN
EARLY TO HELP FACILITATE A
SMOOTH AND TIMELY PROCESS.
THIS IS IN PLACE.
WE WORK WITH JEFF AND PAUL ON
THE PRE-APP.
I REVIEWED FEASIBILITY STUDIES,
THE CRTs. WE'RE BROUGHT IN EARLY SO WE CAN 29
BE PART OF THE PROCESS TO HELP
FACILITATE AND GET IT THROUGH.
THAT'S IT.
>> THANK YOU.
YOU KNOW, I THINK WHAT YOU'RE
GOING TO FIND WHEN YOU TALK WITH
HUD ON A GO-FORWARD BASIS IS
THAT YOU'RE GOING TO REALLY BE
TALKING TO US, REALLY, AS
BANKERS, YOU KNOW.
ALMOST THE SAME LANGUAGE YOU
SPEAK AT THIS POINT.
THAT CULTURE, I THINK, IS BEING
USHERED IN BY ME AND KATHERINE
AND PAUL'S HAD IT HIS WHOLE
LIFE, ACTUALLY, BUT THE TONE OF
WHAT WE TALK ABOUT, THE WAY WE
THINK ABOUT THE OPPORTUNITIES
THAT YOU'RE LOOKING AT, I THINK
WE'RE KIND OF COMING DOWN THE
SAME PATHWAY YOU ARE, SO I THINK
YOU WILL FIND OUR CONVERSATIONS
WILL BE VERY MUCH FOCUSED ON
WHO'S THE HOSPITAL, WHAT'S THE LOAN SIZE, WHAT'S THE DEBT 30
SERVICE COVERAGE GOING TO LOOK
LIKE, YOU KNOW, WHAT'S THE NEED,
LET'S TAKE A LOOK AT THE
PARAMETERS AND SEE IF IT FITS
WITHIN THE REGULATORY AND
STATUTORY CONSTRAINTS WE HAVE.
BUT WE'RE GOING TO BE FOCUSED
REALLY ON GAINING SPEED AND
EXECUTION.
I THINK THOSE ARE THE CRITICAL
FACTORS THAT I KNOW THE
MARKETPLACE WANTS.
YOU THE LENDERS WANT IT, THE
HOSPITALS WANT IT, WE WANT IT.
I LOOK AT THE PROGRAM AS ONE
THAT'S UNDERUTILIZED AND THAT IT
COULD BE FAR GREATER THAN IT IS
IF WE CAN SIMPLY BECOME MORE
EFFICIENT AND MOVE INTO A SPACE
THAT LOOKS AND WALKS AND TALKS
MUCH MORE LIKE A FINANCIAL
INSTITUTION WOULD, WHICH IS YOU
SEE AN OPPORTUNITY, YOU GET OUT
IN THE STREET, YOU TRY AND WIN THAT, YOU ISSUE A TERM SHEET, 31
WIN THE DEAL, UNDERWRITE THE
BOOK, YOU DISCLOSE, THAT'S THE
TONE THAT BELONGS WITHIN HUD AND
I'M TRYING TO ACHIEVE.
PAUL, YOU CAME UP AS WELL.
I KNOW YOU HAD A COUPLE OF
POINTS TO MAKE AS WELL.
>> YEAH, JUST A COUPLE OF
POINTS.
FIRST OF ALL, I WANTED TO THANK
BOTH OF YOU UP HERE.
I KNOW -- I THINK ROGER MILLER
AND ROGER LUKOFF (PHONETIC)
MIGHT BE MORE EXCITED THAN ME
ABOUT JEFF COMING ON.
I THINK THE CHANGES HE'S MAKING
AND ARE PLANNING ON MAKING ARE
GREAT FOR THE PROGRAM AND
INDUSTRY AND, OVER TIME, I THINK
EVERYONE'S GOING TO REALLY ENJOY
HAVING YOU ON BOARD.
WITH KATHERINE, YOU KNOW, TRULY
RISK MANAGEMENT IS A VALUE ADDED
AT THIS POINT. I APPRECIATE ALL YOU'RE DOING 32
FOR THE UNDERWRITING SIDE AND
HELPING US PARTICULARLY WITH,
YOU KNOW, WHAT WE'RE DOING
INTERNALLY WITH THE CREDIT
REPORT THAT JEFF MENTIONED AND
TRULY VALUE ADDED.
WHAT I WANTED TO TALK ABOUT VERY
BRIEFLY, YOU KNOW, THERE ARE A
FEW NATURAL SOURCES OF TENSION,
I THINK, BETWEEN HUD AND THE
INDUSTRY AND, YOU KNOW, WHEN
WE'RE DOING WHAT WE'RE DOING,
AND WE HAVE A MISSION, OF
COURSE, THAT YOU ALL AGREE WITH,
BUT, YOU KNOW, WE'RE ALSO VERY
CONCERNED, AS BURT POINTED OUT,
WITH HOW WELL OUR LOANS PERFORM
AND, YOU KNOW, WE DON'T LIKE
HAVING A SINGLE CLAIM AND, YOU
KNOW, SOME OF WHAT WE DO
REFLECTS THAT AND IT MIGHT NOT
BE APPARENT TO EVERYONE ELSE IN
THE INDUSTRY.
BUT AS FAR AS THE NATURAL SOURCES OF TENSION GO, I THINK I 33
DIVIDED INTO THREE CATEGORIES.
THERE IS THE PROCESS, POLICY,
REGS, STATUTE, INTERPRETATIONS
AND SORT OF THE CREDIT SIDE.
WITH THE PROCESS, JEFF HAS A LOT
OF GOOD IDEAS OF HOW TO IMPROVE
THAT.
OVER THE LAST FEW YEARS, WE HAVE
MADE SOME IMPROVEMENTS.
I THINK THE PROCESS IS MORE
SMOOTH AND PREDICTABLE NOW THAN
IT WAS JUST A FEW YEARS AGO.
THAT'S NOT TO SAY IT CAN'T BE
MADE MORE EFFICIENT.
THAT'S NOT TO SAY IT'S STILL --
IT'S TOO LONG RIGHT NOW, I
THINK.
YOU KNOW, SOME OF WHAT WE'RE
DOING AND PLANNING NOW SHOULD
HAVE FLEXIBILITY WITH
PRE-APPLICATION MEETINGS,
ALLOWING SOME ACCOMMODATIONS
WITH WHAT LEVEL OF FINANCIAL
FEASIBILITY STUDY THAT'S REQUIRED. 34
THESE THINGS SHOULD HELP WITH
PROCESSING TIME.
JEFF HAS MORE IDEAS TO IMPLEMENT
SOON.
SO WE REALLY WANT TO DO BETTER
WHEN IT COMES TO PROCESSING
TIMES AND MAKING THE PROCESS AS
SMOOTH AND PREDICTABLE AND SHORT
AS POSSIBLE.
ANOTHER SOURCE OF TENSION, AS I
CALLED IT, I THINK POLICY
INTERPRETATIONS, STATUTE REG,
THE TWO OF THEM WERE ON FULL
DISPLAY THIS AFTERNOON WITH CASH
EQUITY REQUIREMENT FOR 241s
AND THE OTHER ITEM.
YOU KNOW, WHEN ISSUES LIKE THAT
COME UP, GENERALLY -- AND THAT'S
THE CASE WITH THE TWO ISSUES
THAT CAME UP TODAY, WE HAVE A
GOOD GROUP OF PEOPLE WHO WE
BRING TOGETHER TO DISCUSS THE
ISSUES.
WE ALWAYS BRING IN LEGAL. J.B.'S OFTEN INVOLVED BECAUSE OF 35
HIS VAST KNOWLEDGE OF THE
PROGRAM, I'M INVOLVED, JEFF'S
INVOLVED, AND WE DO OUR BEST TO
COME UP WITH WHAT WE THINK IS A
FAIR, EQUITABLE SOLUTION, YOU
KNOW, ALL BASED ON WHAT'S IN THE
REGULATION, WHAT'S IN THE
STATUTE.
YOU KNOW, THAT'S NOT TO SAY WE
ALWAYS GET IT RIGHT.
YOU KNOW, I KNOW THAT INDUSTRY'S
GOING TO SEND US SOME COMMENTS
ON THE HANDBOOK, AND WE'RE HAPPY
TO LOOK AT THAT AND WE'RE VERY
INTERESTED IN WHAT YOU GUYS
THINK.
YOU KNOW, ON ALL THESE HANDBOOK
ITEMS, THERE'S 100 OF THEM IN
THE HANDBOOK AND EACH OF THEM
REQUIRED THOUGHT AND DISCUSSION
INTERNALLY, BUT THAT'S NOT TO
SAY WE GOT EVERYTHING RIGHT,
IT'S NOT TO SAY WE'RE NOT
WILLING TO RE-THINK SOME OF IT. SO WE LOOK FORWARD TO HEARING 36
COMMENTS ON THE HANDBOOK.
YOU KNOW, WITH THE CREDIT RISK
TOLERANCE, YOU KNOW, RISK
TOLERANCE IS ALWAYS GOING TO BE
A SUBJECT OF TENSION, I THINK,
BETWEEN HUD AND THE INDUSTRY,
WHAT SORTS OF DEALS WE'RE
WILLING TO DO, YOU KNOW, WHAT AN
ACCEPTABLE LEVEL OF RISK FOR HUD
IS.
YOU KNOW, I THINK -- PLEASE
UNDERSTAND THAT, YOU KNOW, AS
BURT SAID, THERE ARE LESSONS
LEARNED IN UNDERWRITING AND IN
ASSET MANAGEMENT AND THOSE FEED
BACK INTO WHAT WE DO AND IT
AFFECTS WHAT OUR RISK TOLERANCE
IS.
SO A DEAL DONE TWO MONTHS AGO OR
SIX MONTHS AGO MAY NOT BE DOABLE
TODAY BECAUSE OF WHAT WE LEARNED
ON THE ASSET MANAGEMENT SIDE AND
THE UNDERWRITING SIDE.
BUT UNDERSTANDING WE'RE ALWAYS GOING TO HAVE DIFFERENT IDEAS 37
ABOUT WHAT SORT OF RISK
TOLERANCE HUD SHOULD HAVE, ONE
THING WE KNOW WE NEED TO DO
BETTER AND JEFF TOUCHED ON THIS,
IS COMMUNICATING WHAT SORT OF --
WHAT OUR PARAMETERS ARE.
YOU KNOW, A GOOD EXAMPLE WOULD
BE, YOU KNOW, HOW LOW CAN A
DAY'S CASH ON HAND RATIO GO
BEFORE WE'RE GETTER HEARTBURN
ABOUT IT AND THAT'S WHAT WE'RE
DOING AS PART OF THE LIEN
PROCESS.
IN THE FUTURE, WE SHOULD BE
BETTER ABLE TO COMMUNICATE WHAT
THE INDUSTRY IS ASKING FOR, AND
THOSE ARE THE DEALS, WHAT IS HUD
DOING AND WHAT DO WE WANT TO
SEE.
I THINK UNDER JEFF'S LEADERSHIP
AND WITH MY AND KATHERINE'S
HELP, WE'LL BE ABLE TO GET
CLOSER TO THAT.
>> THANKS, PAUL. THE LONG AND SHORT OF IT IS, IF 38
THERE IS A TRANSACTION AND
YOU'RE LOOKING AT IT -- YOU
KNOW, WE'RE BANKERS AND FINANCE
PEOPLE AND SO ARE YOU.
IF YOU LOOK AT IT AND GO, WOW,
THAT'S A PRETTY SKETCHY DEAL,
CHANCES ARE WE'RE GOING TO THINK
ABOUT THE SAME ABOUT IT AS WELL.
SO I WOULD ENCOURAGE YOU TO GO
OUT INTO THE MARKETPLACE AND,
LISTEN, WE'RE GOING TO DO OUR
PART TO MAKE SURE THAT THE
PROGRAM IS MORE ATTRACTIVE FOR
HOSPITALS TO USE.
I MEAN, I UNDERSTAND YOU'RE
ALMOST THE SALES FORCE OF THE
PRODUCT THAT'S HERE.
WHEN YOU SPEAK WITH HOSPITALS,
THEY SOMETIMES HAVE A NATURAL
PROCLIVITY TO SAY, OH, DON'T
MAKE ME GO DOWN THE HUD HIGHWAY!
AND WE KNOW THAT.
MY GOAL REALLY IS TO MAKE SURE
THE PLATFORM AND MY SPEED AND ACCURACY ARE BUILT HERE SO THAT 39
WHEN WE SAY WE CAN DELIVER
SOMETHING FOR YOU VERY QUICKLY,
VERY EFFICIENTLY AND REPEAT THAT
OVER AND OVER AND OVER, THEN YOU
WILL BE ABLE TO TRUST THAT WE
CAN DO IT.
SO THAT'S MY COMMITMENT TO YOU.
WITH THAT, WE'RE GOING TO OPEN
UP THE QUESTION AND ANSWER
SESSION.
WE HAVE A HARD STOP AT 4:00 FOR
OUR BROADCAST, SO WE HAVE TO
PRESS ON TO DO THAT.
SO AT THIS POINT, WE'LL OPEN IT
UP FOR QUESTIONS.
IF I COULD HAVE SOME OF THE
FOLKS THAT WERE PRESENTING TODAY
COME UP AND JOIN US.
I THINK J.B., A FEW OTHERS.
PLEASE, IF YOU HAVE QUESTIONS,
GO TO THE MICROPHONES AND WE'LL
SEE IF WE CAN'T ADDRESS ANY OF
THAT.
HERE COMES J.B. WHO ELSE DO WE HAVE FOR Q&A? 40
KELLY, COULD YOU COME UP FOR A
MINUTE?
KELLY'S, LIKE, NO!
[ LAUGHTER ]
OUR FIRST QUESTION.
HI.
>> HI.
>> HOW ARE YOU?
I SEE WELLS FARGO.
IS OUR MIC UP?
>> ONE IS JUST A POINT.
ON CONSTRUCTION TRANSACTIONS
WHERE YOU MAKE THE COMMENT THAT
HE HAS TO GO IN BEFORE ANY DEBT,
IF WE DO A TRANSACTION, IT'S
IMPORTANT YOU LET US DO A
$50,000 COMPONENT TO LOCK IN THE
GINNIE MAE RATE.
WE HAVE TO DELIVER THE FIRST
GINNIE MAE CLC.
IF IT'S A MILLION, WE'LL DO A
$50,000 GINNIE MAE.
>> I'M WONDERING WHO WOULD BEST
BE ABLE TO ADDRESS A GINNIE MAE QUESTION. 41
>> THE INTEREST RATE WILL KILL
US.
THE OTHER QUESTION ON THE 223F,
YOU MAKE THE COMMENT ANY DEBT
ASSOCIATED WITH A CONSTRUCTION
PROJECT HAS TO BE AT LEAST TWO
YEARS OLD.
IS THERE A THRESHOLD OR ANY
DEBT?
>> YEAH, I THINK IT'S EITHER IN
THE REG OR THE HANDBOOK, I THINK
THE HANDBOOK THAT KIND OF TALKS
ABOUT WE'RE NOT LOOKING AT MINOR
REPAIRS EVERY HOSPITAL IS ALWAYS
DOING, CONSTRUCTION.
WE'RE TALKING ABOUT ACTUAL HARD
STRUCTURES.
>> BRICK AND MORTAR.
>> YEAH, ACTUALLY BIG STRUCTURES
THAT ARE CONSTRUCTED AND NOT,
YOU KNOW, THE ROOF REPLACEMENT
OR, YOU KNOW, THE THINGS THAT
HAPPEN IN HOSPITALS CONTINUALLY.
>> SO IF YOU HAVE DEBT ASSOCIATED WITH A SMALL PROJECT, 42
THAT CAN BE PAID OFF THROUGH A
223F?
>> I BELIEVE SO.
>> THANKS.
>> NEXT QUESTION.
OTHERS?
I KNOW WE ALSO GOT QUESTIONS
ONLINE.
WE'LL GET TO THOSE IN MINUTE.
I'D FIRST LIKE TO DO THOSE IN
THE ROOM.
STEP UP.
YOUR NAME, PLEASE?
>> PRISCILLA HAROLD.
I HAVE A QUESTION ABOUT THE 242
RECENT PROGRAM WHERE THERE'S 20%
CONSTRUCTION PIECE TO IT.
THE WAY THAT I READ THE NEW
HANDBOOK, IT APPEARS THAT YOU
HAVE THE OPTION OF DOING SOME
FORM OF DRAW ON THAT 20%.
DOES THAT MEAN YOU WOULD TREAT
THE REFINANCE ALMOST LIKE AN
INITIAL ENDORSEMENT, DO DRAWS ON THAT 20% AND THEN A FINAL 43
ENDORSEMENT?
IT WASN'T VERY CLEAR HOW THAT
20% CONSTRUCTION PIECE WORKED IN
THE PROCESS.
>> YES.
>> WELL, IT'S ACTUALLY, JUST SO
WE'RE CLEAR, LESS THAN 20% FOR
223F.
AND IT CAN BE SET UP, IF IT'S A
BIG ENOUGH PROJECT THAT'S STILL
MEETING THAT THRESHOLD, I THINK
IT CAN BE SET UP AS AN INITIAL
FINAL BUT I'M NOT NECESSARILY
SURE THAT'S THE WAY MOST WILL BE
DONE.
>> MOST WILL BE JUST DONE AS A
SINGLE ENDORSEMENT.
>> THANK YOU.
>> YEAH, BUT YOU ACTUALLY HAVE A
PLACE ON THE FORM WHERE YOU CAN
CHECK OFF IF THE PROJECT WAS
SUBSTANTIAL ENOUGH AND WAS GOING
TO TAKE A LONG ENOUGH TIME THAT
YOU COULD APPLY FOR INSURANCE UPON ADVANCES, BUT IN MOST CASES 44
WE WOULD ANTICIPATE THERE WILL
BE INSURANCE UPON COMPLETION.
>> THANK YOU.
>> SURE, YOU'RE WELCOME.
OTHERS?
STEP RIGHT UP.
>> NICHOLSON FROM KANE BROTHERS.
ELIGIBLE DEBT INCLUDES DEBT THAT
AROSE FROM AN ACQUISITION, I
JUST WANTED TO BE SURE, IS THAT
SUBJECT TO THE TWO-YEAR RULE,
ALSO?
WE'RE LOOKING AT A FAIR NUMBER
OF Fs RIGHT NOW AND SOME OF
THE HOSPITALS HAVE BEEN BOUGHT
RECENTLY AND WE'RE WORKING WITH
SOME FOR-PROFITS AND WE'VE YET
TO DETERMINE WHEN THEY BOUGHT
THEM.
WE'LL GET TO THAT, BUT I WANT TO
BE SURE THAT THE DEFINITION OF
DEBT CAPITAL INCLUDES DEBT THAT
AROSE FROM ACQUISITIONS AND IF
THAT'S INDEED SUBJECT TO THE TWO-YEAR RULE. 45
>> JOHN, COULD YOU COME UP AND
GRAB A MIC SO WE CAN ALL HEAR
YOU?
>> (INAUDIBLE).
>> RIGHT.
I UNDERSTAND.
YEP.
FOLLOWING ON THAT, I KNOW 232,
RECENTLY WE GOT THE RULING WHEN
WE DO A 223F AND SUBSEQUENTLY A
241, THE 241 DOESN'T BRING WITH
IT A DAVIS-BACON.
>> FOR 223F, THERE IS NO
DAVIS-BACON REQUIREMENT BECAUSE
YOU'RE BELOW THAT CONSTRUCTION
THRESHOLD.
>> BUT A SUBSEQUENT 241 ON TOP
OF THE F, LET'S SAY THREE YEARS
DOWN THE ROAD, WOULD THAT --
>> 241 IS ABSOLUTELY SUBJECT TO
DAVIS-BACON.
IS THAT YOUR QUESTION?
I'M CONFUSED.
>> (INAUDIBLE). >> OH, OKAY. 46
SO THAT'S THE DIFFERENT.
>> RIGHT, BECAUSE WE LOOK AT 241
AS TYPICALLY A CONSTRUCTION
PROJECT.
>> RIGHT, OKAY.
>> BILL MULLIGAN WITH ZIGLAR.
DEBT SERVICES TO PERCENT OF
REVENUE, YOU PICKED THE 3.4%.
I WAS CURIOUS ABOUT THE
BENCHMARK OF 3.4.
>> IT WAS BASED ON AN ANALYSIS
OF PORTFOLIO AT THE TIME.
I THINK THAT WAS A MEDIAN OF ALL
THE PORTFOLIO HOSPITALS.
SO WE DIDN'T PICK IT OUT OF THIN
AIR.
THANKFULLY.
IT WAS BASED ON THE PORTFOLIO.
>> I'M FROM LOVE FUNDING.
FROM 223 --
[ LAUGHTER ]
>> THANK YOU!
GOT ME!
FOR 223F, THERE'S A LOT OF DETAILED GUIDANCE ABOUT HOW IT 47
PLAYS OUT IN REFINANCE
TRANSACTIONS, BUT, OF COURSE,
THE STATUTE AND THE REGULATIONS
SAY THAT IT'S ALSO ELIGIBLE TO
BE USED IN PURCHASED
TRANSACTIONS.
I WONDERED IF YOU COULD ADDRESS
YOUR THINKING, EVEN IF IT HASN'T
ALL BEEN FINALIZED OR
CRYSTALLIZED IS HOW IT CAN BE
USED TO SUPPORT A PURCHASE.
GIVEN THE FACT IF A HOSPITAL
PURCHASE OPPORTUNITY BECOMES
AVAILABLE, THE PURCHASER HAS TO
GENERALLY MOVE, YOU KNOW, FAIRLY
QUICKLY TO EXECUTE THEIR
PURCHASE, BUT, GIVEN, YOU KNOW,
THE POSSIBILITY OF, SAY, 120-DAY
REVIEW PROCESS OR EVEN A 90-DAY
REVIEW PROCESS, THAT MIGHT NOT
ALWAYS WORK.
SO I GUESS THE FIRST QUESTION IS
COULD THE PURCHASER TAKE OUT A
BRIDGE LOAN AND THEN COULD THAT BE REFINANCED, AND THAT WOULD BE 48
TREATED AS A REFINANCE RATHER
THAN A PURCHASE?
THEN THE SECOND QUESTION WOULD
BE, IN THE NUMBER OF FOR-PROFIT
HOSPITAL SITUATIONS, THE
HOSPITAL OPERATOR IS ACTUALLY
LEASING THE HOSPITAL BUT BUILT
INTO THE LEASE MAY BE A
PROVISION AT A CERTAIN POINT IN
TIME AND BASED ON CERTAIN
FORMULAS THEY CAN REQUIRE THE
HOSPITAL.
WHAT WOULD THAT BE SINCE THEY
HAVE A LEASE RELATIONSHIP WITH
THE ACTUAL OWNER, BUT, SECOND,
IF THERE'S A FORMULA BUILT INTO
THE LEASE FOR DETERMINING THE
PURCHASE PRICE, WOULD THAT BE
RECOGNIZED BY HUD AS A
LEGITIMATE PURCHASE PRICE?
>> WELL, YOU'VE EXCEEDED THE
LIMIT ON QUESTIONS.
[ LAUGHTER ]
YEAH, IN A GENERAL SENSE, I'LL TRY AND ADDRESS SOME OF YOUR 49
POINTS AND, GUYS, PLEASE JUMP IN
WITH YOUR THOUGHTS AS WELL.
THE 232F WITH REGARDS TO
ACQUISITION AND FINANCING, IN
TERMS OF ACQUISITION FINANCING,
IT PROBABLY NEEDS DEEPER
SCRUTINY ON OUR PART TO
UNDERSTAND EXACTLY WHAT AREAS
WE'RE COMFORTABLE WITH USING IT
FOR THAT.
EVERY FINANCE TRANSACTION IS
GOING TO BE CONSIDERED BY BIG
UNDERWRITING QUESTIONS THAT
REALLY DRIVE AN APPETITE LEVEL
ON OUR SIDE TO REALLY
UNDERSTAND, YOU KNOW, WHAT'S
BEING PURCHASED.
FOR AN EXAMPLE, IF YOU HAVE A
FAIRLY SIZABLE HOSPITAL SYSTEM
THAT WANT TO DO SORT OF A
HUD-ENDORSED TRANSACTION FOR
PICKING UP THEIR NINTH HOSPITAL
AND ADDING IT TO THEIR SYSTEM,
YOU KNOW, THAT'S PROBABLY A PRETTY STRONG TRANSACTION, 50
RIGHT?
THERE IS A BIG PARENT INVOLVED
WITH DEEP POCKETS AND GREAT CASH
FLOW.
I THINK WE'D FEEL PRETTY
COMFORTABLE DIVING IN AND
WORKING SHOULDER TO SHOULDER TO
SORT THAT OUT.
BUT HIGHLY-LEVERAGED,
THINLY-CAPITALIZED TRANSACTIONS
BETWEEN PARTNERS FINANCIALLY
HAVING VERY DIFFICULT TIMES,
STRETCH DEALS, STORY CREDITS,
CALL THEM WHAT YOU LIKE, THOSE
ARE GOING TO BE TOUGHER FOR YOU
AS LENDERS AND US AS MORTGAGE
INSURERS.
SO I DON'T KNOW IF ANYONE HAS
ANY ADDITIONAL THOUGHTS ON WHAT
THEY THINK OF HOW WE'RE GOING TO
APPROACH THIS BUT THAT WAS MY
GENERAL THOUGHT, WHEN I FIRST
THOUGHT ABOUT ACQUISITION
FINANCING, YOU KNOW, WE ENSURE MORTGAGES FOR HOSPITALS. 51
WE ARE LESS M&A EXPERTS THAN
MORTGAGE INSURANCE PROVIDERS.
THOUGHTS FROM THE GROUP?
>> MY THOUGHTS WERE THERE COULD
BE A CONSTRUCTION PROJECT OR
HARD COST AND IT WOULD BE LESS
THAN 20%, GO 223F.
MORE THAN 20%, GO 242.
WITH RESPECT TO THAT, IN TERMS
OF WHEN YOU'VE GOT MORE DETAIL
THERE, MY THOUGHTS WERE, BOY,
ANSWERING THAT ON THE FLY
WITHOUT THE ACTUAL FACTS AND
CIRCUMSTANCES OF THE CASE, THAT
GETS REALLY TOUGH IN HERE IN
TERMS OF HOW TO SAY -- I THINK
WE WOULD HAVE TO DEAL WITH THAT
ALMOST ON A CASE-BY-CASE BASIS,
DEPENDING ON THE ACTUAL FACTS
AND CIRCUMSTANCES, AND I WOULD
SAY CALL US EARLY, DON'T CALL US
LATE.
>> NO ELEVENTH-HOUR CALLS.
>> MATT ASKED ME THIS QUESTION BEFORE AND I COULDN'T REMEMBER 52
AND COME UP WITH A REASON WHY WE
WOULDN'T BE ABLE TO DO SAY A
BRIDGE FINANCING AND REFINANCE
THAT WITH THE 223F, BUT I'LL
LOOK AT LEGAL COUNSEL AND POLICY
EXPERT IN THE FRONT ROW HERE TO
SEE IF THEY CAN COME UP WITH A
REASON WHY WE WOULDN'T BE ABLE
TO DO THAT.
>> YEAH, I THINK WE SHOULD JUST
TAKE THIS OFFLINE AT THIS POINT
BECAUSE I DON'T WANT TO SAY
SOMETHING THAT'S INCORRECT.
>> I KNOW WE HAVE SOME ONLINE
QUESTIONS WE'D LIKE TO GET TO.
ANY MORE QUESTIONS FROM THE
FLOOR BEFORE WE GET TO SOME
ONLINE QUESTIONS?
CAN YOU READ THOSE OUT FOR US,
FOLKS?
SEE WHAT KIND OF QUESTIONS CAME
IN.
>> SURE.
ACTUALLY, WE'VE GOT A COUPLE RELATED TO BRIDGE FINANCING. 53
SO WE'LL HAVE TO REVISIT THAT
QUICKLY FOR THOSE QUESTIONING.
ALSO, HERE'S ONE FROM RED
CAPITAL QUESTIONING.
AN ACQUISITION PRICE WILL BE
BASED ON A COMBINATION OF INCOME
CAPITALIZATION OR MULTIPLE SALES
COMPARABLES.
REPLACEMENT COST WILL NOT BE A
FACTOR IN DETERMINING THE
REPLACEMENT PRICE AND SUCH COST
WILL USUALLY BE MUCH LOWER THAN
PRICE PAID/FAIR MARKET VALUE.
AN APPRAISAL WILL SUPPORT THIS.
WHAT VALUE WILL BE USED IN
CALCULATING LTV CONSTRAINTS IN A
223F FOR ACQUISITIONS, UTILIZING
REPLACEMENT COSTS RATHER THAN
PURCHASE PRICE OR FAIR MARKET
VALUE, WILL MAKE 223F
ACQUISITION LOANS NEARLY
IMPOSSIBLE.
>> THIS PROGRAM UNDER STATUTE IS
A REPLACEMENT COST PROGRAM AND, BECAUSE IT'S A REPLACEMENT COST 54
PROGRAM, IN CALCULATING THE
LOAN-TO-VALUE, WE ARE RESTRICTED
TO THAT.
NOW, THEY MAY PAY MORE.
YOU MAY PAY MORE FOR WORK IN
PLACE, YOU MAY PAY MORE BECAUSE
THERE ARE ACCOUNTS RECEIVABLES
THAT ARE PART OF THE DEAL, THERE
ARE ALL SORTS OF THINGS AND
THAT'S GOING TO END UP BEING
ADDITIONAL CASH EQUITY THEY'RE
GOING TO HAVE TO PUT IN TO PLAY.
BUT A HANDBOOK AND THE
APPLICANT'S GUIDE IS VERY CLEAR.
WITH RESPECT TO THAT, IT'S GOING
TO END UP BEING THE LOWER OF THE
VALUE OR THE CASH PRICE, AND
IT'S GOING TO BE LIMITED TO 90%
OF THAT.
>> MOVING ON, HOW DOES HUD LOOK
AT THE REPLACEMENT HOSPITAL
VERSUS THE NEW START-UP
HOSPITAL?
ARE THERE MAIN DIFFERENCES OR SIMILARITIES? 55
IS THE REPLACEMENT HOSPITAL
CONSIDERED SLIGHTLY LESS RISKY
IN THE EYES OF HUD?
>> WE TEND TO LOOK AT
REPLACEMENT HOSPITALS AS
HOSPITALS THAT HAVE AN EXISTING
OPERATION IN A LOCATION ON A
CAMPUS AND THAT IT'S PROBABLY A
VERY OLD FACILITY, 40 YEARS OLD,
35 YEARS OLD, AND IT NEEDS
BASICALLY A SUBSTANTIAL IF NOT
COMPLETE REBUILD.
FROM MY PERSPECTIVE, THAT NEW
HOSPITAL IS BUILT WHILE THE OLD
HOSPITAL CONTINUES ITS OPERATION
AND THEN OPERATIONS ARE SEGUED
OVER TO THE NEW FACILITY AND THE
OLD FACILITY IS EITHER
MOTHBALLED, RECYCLED INTO AN
OFFICE SPACE OR STORAGE.
IN MY MIND, THAT IS A
REPLACEMENT HOSPITAL.
EVEN IF THAT HOSPITAL HAPPENS TO
BE LOCATED MAYBE A TENTH OF A MILE OR A QUARTER A MILE AWAY OR 56
WITHIN A VERY REASONABLE CLOSE
AREA, THAT, TO ME, IS STILL A
REPLACEMENT HOSPITAL.
I THINK, WHEN YOU TALK ABOUT
STARTUP HOSPITALS, YOU'RE
TALKING ABOUT A HOSPITAL THAT
HAS NEVER EXISTED IN A
PARTICULAR FOOTPRINT.
YOU'RE TALKING ABOUT A HOSPITAL
THAT WILL NEED TO START FROM
SCRATCH.
IT WILL NEED MEDICARE OR
MEDICAID PROVIDER NUMBERS.
IT WILL NEED TO HIRE DOCTORS.
IT WILL NEED TO GET UTILIZATION
FROM OTHER PROVIDERS IN THE
COMMUNITY PROVIDING HEALTHCARE
IN THE COMMUNITY CURRENTLY.
THOSE ARE MY DEFINITIONS OF WHAT
A STARTUP HOSPITAL WOULD BE
VERSUS WHAT AN EXISTING
REPLACEMENT HOSPITAL WOULD LOOK
LIKE.
AND, FOLKS, I DON'T KNOW IF YOU DISAGREE WITH THOSE THOUGHTS. 57
>> SIMPLY BASED ON THE FACT THAT
WE REQUIRE INITIAL OPERATING
CAPITAL INCOME FOR STARTUP AND
DON'T REQUIRE THAT FOR A
REPLACEMENT HOSPITAL,
NECESSARILY, ARE REASONS WE
CONSIDER STARTUPS MORE OF A
RISKY PROPOSITION.
>> IT'S TRUE.
WHEN IT COMES TO A STARTUP
BUSINESS OF ANY NATURE -- LET'S
FORGET ABOUT HOSPITALS FOR A
SECOND.
IF YOU'RE STARTING UP A NEW
COMPANY, YOU KNOW, IT'S A RISKY
YOU KNOW, A LOT OF COMPANIES
FAIL AND VENTURE CAPITALIST
COMPANIES ARE OUT THERE FOR A
REASON BECAUSE THEY TAKE ON
THESE BIG RISK OF THESE STARTUP
COMPANIES THAT HAVE HUGE STARTUP
RISKS AND THERE'S NO GUARANTEE
OF RISK, VERSUS A REPLACEMENT HOSPITAL THAT HAS DOCTORS AND 58
NURSES AND PATIENT FLOW AND
YEARS OF HISTORY TO IT, THE
MANAGEMENT TEAM ISN'T CHANGING,
THEY ARE A VERY WELL-KNOWN
GROUP.
SO, YOU KNOW, THE RISKS ARE VERY
DIFFERENT AND I THINK ALL OF US
AS LENDERS UNDERSTAND THE
DIFFERENCES BETWEEN THE TWO.
WHAT'S OUR NEXT QUESTION?
>> IS TERESA STILL HERE?
THEY LEFT, BUT WE HAVE A
QUESTION ASKING IF THAT
CHECKLIST SHE RAN THROUGH FOR
SITE VISITS WOULD BE MADE
AVAILABLE IN A MORE
USER-FRIENDLY FORMAT?
AND I'M SURE WE COULD DO THAT.
>> SURE WE COULD.
WE'RE ALL ABOUT BEING
TRANSPARENT.
IF THERE'S AN ASK TO PUT
SOMETHING UP ON OUR WEB SITE,
WE'RE HAPPY TO DO IT. AS OFTEN AS I CAN, I'D LIKE TO 59
SHOW EVERYONE IN THE LENDING
COMMUNITY JUST WHAT WE DO, HOW
WE DO IT.
THE MORE INFORMATION YOU HAVE,
THE MORE KNOWLEDGE YOU HAVE
ABOUT HOW WE LOOK AT THINGS
HERE, THE EASIER IT WILL BE FOR
YOU TO GO, OKAY, THEY'RE GOING
TO LOOK AT THIS THIS WAY, AND IF
THAT'S THE CASE, THEN I HAVE NO,
YOU KNOW, REASON TO KEEP CHASING
THIS DEAL BECAUSE IT'S NOT GOING
TO WORK.
SO IT WILL HELP YOU WASTE LESS
TIME ON TRANSACTIONS THAT WON'T
WORK FOR YOU OR FOR US AND,
AGAIN, IT WILL ALSO HIGH LIGHT
THE SPACES AND PLACES PROBABLY
BEST SUITED FOR TRANSACTIONS FOR
BOTH OF US.
SO I'M HERE TO HELP ALL OF YOU
TRY AND GET THOSE DEALS DONE.
ANYTHING ELSE?
>> YEAH, RELATED TO INSURANCE REQUIREMENTS THAT WE WENT 60
THROUGH EARLIER, THE QUESTION IS
WILL OHF BE REQUIRING THAT
EXISTING HOSPITAL CUSTOMERS MEET
THE REQUIREMENTS OF POLICY
RENEWAL OR ARE THOSE
REQUIREMENTS IN PLACE FOR NEW
LOANS ONLY?
FOR PORTFOLIO FACILITIES.
>> WHAT INSURANCE ARE WE
SPEAKING OF HERE SPECIFICALLY?
>> THE PROPERTY AND CASUALTY AND
MALPRACTICE INSURANCE
REQUIREMENTS FOR HOSPITAL
APPLICANTS.
>> WHY WOULD YOU LET THAT LAPS?
>> I DON'T THINK WE CAN
TECHNICALLY REQUIRE ANY MORE
THAN WHAT'S WRITTEN IN THE
COVENANTS, BUT AS LENDERS I'M
SURE YOU COULD LEAN ON YOUR
HOSPITALS A LITTLE BIT AND WE
MIGHT AS WELL IF WE SEE A
PARTICULAR RISK OUT THERE, BUT I
DON'T KNOW WE CAN FORCEFULLY REQUIRE ANYTHING MORE THAN 61
WHAT'S IN THE COVENANTS OR
HANDBOOK.
WHAT DO YOU THINK?
>> I BELIEVE IN THE CONTEXT,
THEY'RE ASKING US TO MAKE AN
EXCEPTION.
>> THE LENDER CAN, UNDER THE
MORTGAGE, I'M SURE THERE IS
INSURANCE REQUIREMENTS TO KEEP
THE PROPERTY INSURED AND THE
MORTGAGE, SO THAT WOULD BE UP TO
THE LENDER.
>> THE PHYSICAL PROPERTY IS IN A
WRECK, THAT'S IN THERE AND
THAT'S ALREADY REQUIRED TO BE
HAD, BUT IN TERMS OF THE
ADDITIONAL INSURANCE
REQUIREMENTS THAT HAVE COME OUT,
IF THE HOSPITAL IS ASKING US TO
GRANT PERMISSION TO DO
SOMETHING, WE COULD CONSIDER IT
AND IT WOULD DEPEND ON THE FACTS
AND CIRCUMSTANCES IF WE FELT IT
WAS WARRANTED. >> WE'RE GOING TO HAVE TO WRAP 62
UP.
I'D LIKE TO HAVE ROGER LUKOFF
(PHONETIC) COME TO THE PLATFORM.
>> ON BEHALF OF THE COMMUNITY, I
WANT TO THANK YOU FOR THE WORK
AND THE HANDBOOK.
IT WAS VERY HELPFUL.
THERE WILL BE MORE DISCUSSIONS.
I WANTED TO MAKE SURE SOMEONE
THANKED YOU PUBLICLY.
>> THANK YOU.
THANK YOU VERY MUCH.
[ APPLAUSE ]
>> THAT WAS AN EXCELLENT SEGUE
BECAUSE ONE OF THE THINGS WE'RE
PROUD OF THAT'S BEEN ESTABLISHED
FOR MANY YEARS WITH ROGER MILLER
IS WORKING WITH STAKEHOLDERS.
THAT IS A PROGRAM THAT'S BEEN IN
THE NATIONAL HOUSING ACT SINCE
1968 AND WE'RE READY TO TAKE FOR
IT ANOTHER 50 YEARS AS WELL.
A COUPLE OF CLOSING REMARKS AND
HOPEFULLY YOU CAN JOIN US, WE'RE GOING TO MEET AT MANDARIN 63
ORIENTAL FOR A RECEPTION
AFTERWARDS, BUT THERE ARE SOME
COMMON THEMES HERE THROUGHOUT
THE DAYS.
THERE HAS BEEN A LOT OF
INFORMATION.
OBVIOUSLY, PLEASE FEEL FREE TO
FOLLOW UP WITH THE INDIVIDUALS
YOU HEARD FROM.
REALLY GREAT APPRECIATION FOR
JEFF PULLING THIS TOGETHER.
LITERALLY, THE FIRST DAY HE GOT
HERE, I SAID, BY THE WAY, THIS
SUMMER, WE NEED TO HAVE LENDER
TRAINING ON THE F PROGRAM AND I
REALLY THINK WE ACCOMPLISHED
GETTING THE MESSAGE ACROSS TO
THE PEOPLE HERE AND TO THOSE OF
YOU ONLINE.
WHAT DO WE NEED TO WALK AWAY
WITH HERE?
I KNOW A LOT OF PEOPLE HERE HAVE
WORKED WITH THE 232 PROGRAM
WHICH WE'RE VERY PROUD OF, BUT THE BIG DIFFERENCE IS THERE IS 64
NO CUE FOR THE F PROGRAM IN 242,
AND WE LOOK FORWARD TO REALLY
WORKING WITH YOU SO THAT YOU CAN
MOVE FORWARD THESE APPLICATIONS
IN A TIMELY BASIS.
AS A FORMER HEALTHCARE
EXECUTIVE, I CAN TELL YOU, ONE
OF THE TOP THREE THINGS ON EVERY
HOSPITAL EXECUTIVE'S MIND IS
ACCESS TO CAPITAL.
THIS IS A PROGRAM THAT WAS
APPROVED SO THAT, IN FACT, WE
CAN MEET THAT NEED IN THE
MARKETPLACE AMONG THE 5500
HOSPITALS THROUGHOUT THE
COUNTRY.
THE SECOND PIECE HERE IS
ESSENTIALLY THAT THE INDIVIDUALS
YOU HEARD FROM TODAY, I MEAN,
THE LINES OF COMMUNICATION ARE
OPEN.
WE MENTIONED JEFF, PAUL WITH HIS
UNDERWRITING STAFF, TERESA HAD
TO HURRY BACK SO SHE'LL BE IN THE OFFICE EARLY TOMORROW 65
MORNING IN NEW YORK, BUT THEY'RE
THERE.
THE ONE PERSON YOU REALLY DON'T
WANT TO TALK TO, HE DID A
TERRIFIC JOB TODAY, BUT BURT
MIRACHE IS SOMEBODY WHO HAS TO
COME IN WHEN THERE'S A
TURNAROUND TO TAKE PLACE.
SO, YOU KNOW, WE LOVE BURT, BUT
WE WANT YOU TO FOCUS ON THE
UNDERWRITING, WE WANT YOU TO BE
ABLE TO BRING SUCCESSFUL DEALS
THROUGH THE DOOR AS ROGER MILLER
LIKES TO SAY.
FINALLY, I HAVE AN ADVERTISEMENT
BECAUSE, YOU KNOW, WE FOCUS ON
THE HOSPITALS, THERE'S BEEN A
COUPLE OF COMMENTS ABOUT WORKING
WITH HEALTHCARE SYSTEMS WHICH
JEFF JUST MENTIONED ARE
ATTRACTIVE TO OUR PORTFOLIO, AND
WE'RE WORKING ON WAYS TO WORK
WITH THOSE HEALTHCARE SYSTEMS.
AS A MATTER OF FACT, FOR THOSE OF YOU WHO WATCH OUR POSTINGS 66
CLOSELY, YESTERDAY, WE HAVE
POSTED A HEALTHCARE SYSTEM'S
ADVISOR FOR THE OFFICE OF
HEALTHCARE PROGRAMS, AND THIS IS
SPECIFICALLY SOMEBODY WHO CAN
HELP US WORK WITH HEALTHCARE
SYSTEMS.
SO WE'RE LOOKING FOR PEOPLE
THROUGHOUT THE COUNTRY.
WE ARE PROUD OF THE FACT WE HAD
A VERY SUCCESSFUL NATIONAL
SEARCH TO GET JEFF TO LEAVE THE
BEAUTIFUL STATE OF OREGON.
WE HOPE TO BE SUCCESSFUL WITH
THAT SEARCH AS WELL.
ANY IDEAS THAT YOU HAVE, PLEASE
LET THEM KNOW.
THERE'S A TWO-WEEK WINDOW RIGHT
NOW FOR THAT PARTICULAR POSTING.
SO THANK YOU AGAIN, EVERYBODY.
WE HOPE TO TALK TO YOU
AFTERWARDS.
BUT FOR THOSE OF YOU ONLINE,
WE'RE GOING TO END RIGHT NOW. BUT THANKS AGAIN. 67
[ APPLAUSE ]
[ END OF EVENT ]