North Star Group, Inc.

19901 Quail Circle

Fairhope AL 36532

701-770-9118

michaelh@nsgia.com

Innovative Public Housing Partnership

The Serenity Village Model: Maximizing PHA Ownership with

HUD 221(d)(4) Financing

A Pioneering Approach to Aﬀordable Housing Development

Northstar Group has developed an innovative model for aﬀordable housing that enables Public

Housing Authorities to maintain signiﬁcant ownership while leveraging the advantages of HUD

221(d)(4) ﬁnancing—without the ownership dilution that comes with traditional tax credit

structures.

The Challenge

Public Housing Authorities face a diﬃcult choice in today's aﬀordable housing landscape:

1. Traditional Public Housing: Limited by capital constraints and aging infrastructure

2. Tax Credit Developments: Require selling majority ownership to investors (typically

retaining only 1%)

3. RAD Conversions: Often rely on tax credits that reduce public ownership interests

Our Solution: The Retained Ownership Model

Our pioneering approach primarily uses HUD's 221(d)(4) loan program to ﬁnance new

construction or substantial rehabilitation while enabling PHAs to maintain 30-45% ownership. We

can also adapt the structure to work with alternative ﬁnancing mechanisms:

● Section 202/811 Programs: For senior housing or housing for persons with disabilities

Funding Opportunities for Modular Housing and Decentralized Energy in Ukraine (2025)

● Private Activity Bonds: Tax-exempt bond ﬁnancing that can be tailored to maintain PHA

ownership

● HUD Multifamily Programs: Various other ﬁnancing options that can be structured to

preserve ownership

All ﬁnancing approaches provide these key beneﬁts:

● Signiﬁcant Retained Ownership: PHAs maintain meaningful control (30-45% ownership

stake)

● Non-Recourse Protection: Financing protects PHA assets with non-recourse debt

● Long-Term Public Control: Unlike LIHTC deals that transfer ownership, your authority

maintains inﬂuence for the long term

● Development Expertise: Our team handles the complex development process while you

maintain governance rights

● Operational Flexibility: Without tax credit restrictions, there's greater ﬂexibility in

operations

Serenity Village: A Model of Caring Design

Serenity Village exempliﬁes our human-centered approach to aﬀordable housing:

● Transit-Oriented Development: Water taxi connection to the nearby Medical Center

provides residents with eﬃcient transportation options that reduce commute times and

costs

● Food Security: On-site rain gardens and vegetable gardens produce approximately 30%

of residents' caloric needs, directly addressing food insecurity issues

● Wellness-Focused Design: Superior acoustic design, circadian lighting systems, and air

quality features create living spaces that promote physical and mental health

● Digital Inclusion: Broadband internet with AI companions provides information access,

reduces isolation, and oﬀers 24/7 support for residents

● Energy Eﬃciency: SIP construction reduces utility costs by 40-60%, making units more

aﬀordable to operate

● Emergency Systems: Advanced LoRaWAN emergency systems provide security and

peace of mind for residents

Key Financial Beneﬁts

________________________________________________

19901 Quail Circle

Fairhope AL 36532

701-770-9118

michaelh@nsgia.com

Funding Opportunities for Modular Housing and Decentralized Energy in Ukraine (2025)

● Proportional Cash Flow: Ongoing distributions based on ownership percentage

● Exit Proceeds: Signiﬁcant share of proceeds upon reﬁnance or disposition

● Pre-Development Support: Option for PHAs to fund or participate in pre-development

activities

Why This Model Is Unique

While the Low-Income Housing Tax Credit program is currently considered "the most important

resource for creating aﬀordable housing in the United States," it requires selling ownership to

investors. Most HUD 221(d)(4) ﬁnanced projects do not maintain signiﬁcant PHA ownership. Our

hybrid approach oﬀers the best of both worlds—the favorable ﬁnancing terms of HUD 221(d)(4)

with the public mission preservation of retained PHA ownership.

Implementation Timeline

1. Initial Consultation: We assess your portfolio and needs (2-4 weeks)

2. Memorandum of Understanding: Formalize partnership structure (4-6 weeks)

3. Pre-Development: Site planning, design, approvals (4-6 months)

4. Financing Application: HUD 221(d)(4) application process (4-5 months)

5. Construction: Typically 12-18 months

6. Stabilization: 3-6 months post-construction

Project Financial Overview (Serenity Villages Example)

● Total Development Cost: $20,268,780

● HUD 221(d)(4) Loan (90% LTV): $18,241,902

● Annual Cash Flow: Starting at $553,915 after debt service

● PHA Annual Cash Flow: $249,262 (45% share)

● Exit Value (Year 10): Approximately $27,350,000

Risk Mitigation

● Limited Downside: Non-recourse debt structure protects PHA assets

● Conservative Underwriting: 8.5% buﬀer allowance for changes

● Strong Market Demand: High-quality units in strategic locations maintain occupancy

● Experienced Team: Development team with proven track record in aﬀordable housing

________________________________________________

19901 Quail Circle

Fairhope AL 36532

701-770-9118

michaelh@nsgia.com

Funding Opportunities for Modular Housing and Decentralized Energy in Ukraine (2025)

Our Team

[SPACE FOR TEAM BIOS]

References and Resources

1. HUD USER, "Low-Income Housing Tax Credit (LIHTC)," U.S. Department of Housing and

Urban Development

2. Commercial Real Estate Loans, "HUD 221(d)(4) Loans"

3. HUD.gov, "Mortgage Insurance for Rental and Cooperative Housing: Section 221(d)(4)"

4. Shelterforce, "Can Residents Get More Out of Tax Credit Housing?"

5. Philadelphia Housing Authority, "Public Housing"

Northstar Group

19901 Quail Circle, Fairhope AL 36532

701-770-9118

michaelh@nsgia.com

This material does not constitute an oﬀer to sell or solicitation of an oﬀer to buy any securities.

This is for informational purposes only.

________________________________________________

19901 Quail Circle

Fairhope AL 36532

701-770-9118

michaelh@nsgia.com