Preservation of Affordable Multifamily Housing

This Just In...OCC's Districts Report on New Opportunities for Banks

Northeastern District

KeepSpace Communities Initiative

Rhode Island Housing, the state affordable housing agency, recently introduced a KeepSpace Communities Initiative to address affordable housing needs in the state. The initiative is a sustainable housing development program designed to encourage the creation of environmentally friendly, mixed-use and mixed-income communities. Rhode Island Housing dedicated $10 million to this initiative. This investment will be combined with other funding programs and serve as a mechanism to help spur funding of potential developments.

Rhode Island Housing is seeking proposals for up to five models of KeepSpace Communities that increase the supply of affordable homes, are ecologically based and economically sound, and promote alternative transportation and energy and water resources conservation. The funded developments will serve as models for future projects. The initiative is designed to encourage partnerships among developers, government agencies, nonprofits, and funders in creating affordable and economically sustainable communities throughout Rhode Island.

For more information about the KeepSpace Communities Initiative, e-mail Joe Voccio at Rhode Island Housing or call him at (401) 457-1284 or e-mail Tony A’Vant or call him at (401) 457-1103.

New Funds for Affordable Housing in New Jersey

New affordable housing will be developed throughout New Jersey as a result of a partnership between two state agencies. In a joint effort, the New Jersey Department of Community Affairs and the Housing and Mortgage Finance Agency will award more than $54 million in affordable housing funds to local developers. The statewide Balanced Housing/Home Express program contributed $39 million, and $15 million will come from the federal LIHTC program. The award is expected to attract $136 million in investment capital. Through this effort, 12 communities across the state will receive support for the creation of 723 affordable rental housing units and the preservation of 339 units.

The New Jersey communities to receive the funding include Camden, Deptford, East Orange, Evesham, Franklin Township, Gloucester Township, Hoboken, Jersey City, Long Branch, Passaic, Plainfield, and Toms River. Both for-profit and nonprofit developers will participate in constructing or preserving housing in these areas.

For more information, visit New Jersey's Housing and Mortgage Finance Agency or call (609) 278-7400.

Central District

The Chicago Community Loan Fund is a nonprofit and certified community development financial institution serving the Chicago metropolitan area. It provides loans for affordable housing projects. Recent investments include:

• Three loans totaling more than $1 million for an affordable housing project in a Chicago suburb and a mixed-income development and a mixed-use project in two Chicago neighborhoods.
  
  
• A $500,000 predevelopment loan to a partnership headed by nonprofit developer Turnstone Development with the purchase of the Caroline Apartments, a rental building in Riverdale, Illinois, a suburb of Chicago. The building will be rehabbed and converted to 50 units of affordable rental housing. The fund is co-lending with a bank on this project.
  
  
• A $250,000 construction loan to the nonprofit People’s Community Development Association of Chicago for a 12-unit mixed income condominium development in the East Garfield Park neighborhood of Chicago.
  
  
• A $295,000 predevelopment loan to the nonprofit Back of the Yards Neighborhood Council (BYNC) for a new mixed-use building in the Brighton Park neighborhood that will consist of 60 affordable rental units for seniors, a daycare center, a community center, and office space for BYNC.

The fund has more than $17 million in assets. Since its inception in 1991, the fund has made more than 130 loans totaling approximately $25 million. The fund also provides technical assistance to prospective nonprofit borrowers, beginning with a regular series of one-day, intensive “Project Readiness” workshops. Banks can assist the fund by (1) referring to the fund’s prospective borrowers that do not meet conventional credit criteria; (2) participating in structured fund financing packages; and (3) providing grants and in-kind donations to the fund.

For more information, visit the Chicago Community Loan Fund or contact Calvin Holmes at (312) 252-0440.

Cornering the Market on Innovative Rental Opportunities

Cornerstone Community Loan Fund was founded in 1986 to provide a means for people to support economic justice and opportunity in Greater Cincinnati and Northern Kentucky. The fund has expanded its scope to create conditions for low-wage families to develop ownership skills and economic assets. Through the Cornerstone Renter Equity program, the working poor can move from renting to investing in housing and financial assets. Cornerstone organizes and trains groups of households to cooperatively take on the care and management of their housing in exchange for “equity credits.” Households earn equity credits each month that rent is paid on time, when they participate in the resident organization and when they perform routine maintenance responsibilities. The credits can be converted to a cash payment through Cornerstone after five years.

Through this program, residents benefit from gaining both ownership skills and financial equity. Participating property owners benefit from reduced operating costs and turnover, plus higher long-term property value. The community becomes more stable as residents take greater interest in their housing and neighborhood. Cornerstone is currently seeking additional financial institutions to invest in the fund by lending to it at below-market interest rates.

For further information, please visit the Cornerstone Community Loan Fund or e-mail Margery Spinney or call her at (513) 369-0114.

Southern District

Rural Economic Development Opportunities

Rural Texas may soon benefit from more jobs, greater economic opportunities, an increased tax base, and a higher quality of life through an innovative housing program tied directly to job creation in rural communities. The Texas Department of Housing and Community Affairs has released a $5 million Notice of Funding Availability (NOFA) for a new rental housing development program. The program is designed to develop affordable rental housing for low-income Texans with rural economic development projects that have been recently developed or are currently under development. These funds are available through a special allocation from the federal Home Investment Partnerships (HOME) program.

Organizations and persons that are interested in applying for funds may need bank partners to complete the development financing because funds made available under this program will provide only a portion of development costs. Eligible applicants include nonprofit housing organizations, public housing authorities, sole proprietors, and local government agencies that are seeking to develop affordable rental housing in nonparticipating jurisdictions as designated by HUD. Funds must be tied to the creation of new or expanded job opportunities currently in development or created within the previous 18 months at the time the application is submitted. Only housing developments that employ at least 10 new positions will be considered, and employment sites must be located no more than 20 miles from the proposed housing development. Applications for funding must provide evidence of a definite and long-term employment commitment from the employer.

For more information on NOFA and this new initiative, download this PDF, e-mail Skip Beaird or call him at (512) 475-0908.

Alabama Asset Building Coalition

The Alabama Asset Building Coalition is a partnership among federal, state, and local governmental agencies, nonprofit organizations, and the corporate community. Through the use of Individual Development Account (IDA) programs, the 41-member coalition enables Alabamians to develop assets that support generational wealth building and self-sufficiency. Currently, the coalition sponsors IDA program activity in Blount, Colbert, Etowah, Jefferson, Mobile, St. Clair, Shelby, Sumter, and Walker counties. During 2008, expansion is expected to include Uniontown, Auburn, and Montgomery.

The United Way of Central Alabama is fiscal sponsor and lead agency for the coalition’s $1.7 million Assets for Independence initiative for working families to open IDAs. These matched savings accounts accelerate earned income savings for first-time homeownership, post-secondary education, or small business capitalization. In only one year, 40 participants have opened IDA accounts, two families have purchased homes, and one person has paid for post-secondary education. The coalition offers financial literacy education as part of the IDA programs so people can make informed decisions when borrowing, spending, saving, or investing money. The coalition also provides free income tax assistance preparation to help accelerate IDA savings.

All local matching IDA funds are held in reserve until the qualifying asset or service is purchased and only then disbursed to the vendor. In addition, UWCA handles all the administrative responsibility. Banks may be eligible to receive CRA investment test credit by contributing matching funds and/or service test credit by holding the saver’s account.

E-mail DeForrest Brown or call him at (205) 458-2056, or e-mail Shirley Worthington or call her at (205) 458-2073 for details on how to become involved.

Small Business Investment Opportunity

Plexus Fund I is a Small Business Association-licensed “debenture” small business investment company (SBIC) formed in 2005 with offices in Charlotte and Raleigh, North Carolina. Plexus Fund I’s five principals worked together since 1995 at a predecessor investment fund, making Plexus Fund I a first-time fund managed by experienced industry professionals with a proven track record of providing not only capital but also strategic advice and counsel to its portfolio clients. Plexus provides patient capital to lower middle market companies experiencing rapid growth, to private companies making acquisitions, and to support strong management teams participating in recapitalization transactions. Plexus typically invests up to $5 million per transaction and looks for companies with a sustainable competitive advantage led by strong management teams. Clients generate more than $10 million in revenue and $1 million in cash flow. Plexus will participate in financing transactions of up to $25 million as a non-control investor.

While Plexus Fund I is closed to new investors, the principals plan to accept investors into Plexus Fund II in the near term. Fund II is also expected to be a licensed debenture SBIC with the same CRA credit opportunity for banks, with limited partner investment commitments expected to range from $500,000 to $5 million. A bank’s investment in a Plexus Fund may be a “qualified investment” for CRA purposes.

Call Bob Anders at (704) 927-6246 or visit Plexus.

Western District

Century Housing

Century Housing has provided affordable housing financing, technical assistance, and residential supportive services in Southern California for more than 25 years. Originally established by a 1979 consent decree as part of the I-105 (Century) Freeway, the Century Freeway Housing Program supported the financing and construction of more than 3,700 homes. In 1995, the organization was privatized and became Century Housing. It expanded its services to provide other life-enriching programs for project residents, including job training, homeless services, seniors and wellness programs, and tutorial services. Century Housing has participated in the creation of more than 12,000 units and $330 million in financing for low- and moderate-income (LMI) persons and families.

Century has spurred development by creating and administering loan pools both directly and through Century Community Development (CCDI), its CDFI subsidiary. Century’s loan pools have generated more than $125 million in financing for 49 projects in Los Angeles and Orange counties. Investors have included financial institutions and foundations.

Century Community Lending Company (CCLC) is another subsidiary of Century Housing. It is a $50 million fund that closed in 2006. It provides rehab/construction loans to small project (2-12 units) owners and developers. The fund is modeled on New York’s Community Preservation Corporation Fund. It is a “one stop shop” for affordable housing developers and owners.

CCDI closed its first $15 million loan pool, the Century Community Development Investment Fund, in 2005, with 18 small and midsized banks participating. Its second fund is scheduled to close later this year.

Century has a goal of reaching $200 million in investment commitments in its funds within the next few years.

For more information, call Stephen Peelor at (310) 642-2034 or visit Century Housing.

Low Income Housing Institute’s Community Development Lending Opportunities

The Low Income Housing Institute (LIHI) was created in 1991 to develop and manage low-income housing throughout the Puget Sound region of Washington. In 1994, the Fremont Public Association of Seattle merged its housing development with the institute, creating one of the largest and most active low-income housing organizations in Washington. Working with 35 private and public funding partners, the institute raised more than $260 million in capital, which has supported the development of more than 3,000 units of housing for low-income families. Currently, the institute owns or manages 48 properties containing more than 1,600 housing units for low-income families, individuals, seniors, people with disabilities, and women and children at risk. The institute’s support services provide case management, financial literacy, technology training, referral services, and youth programs to help its residents achieve stability and security in their lives.

The institute is currently developing 13 new projects that will provide nearly 450 housing units and community services for low-income families. The institute periodically seeks private and public funding in the form of loans and grants to support its housing projects.

For additional information, call Sharon Lee, the organization’s director, at (206) 443-9935 or visit LIHI.

OCC's Community Affairs Department