Three Loans, Over $30,000,000 Invested

Century ended 2012 with three standout loans to three very deserving developers in Southern California:

-Treadstone Companies received $14,130,000 in bridge financing for Warwick Terrace Apartments; 108 units in Compton.

-Bromont Villas, 49 units in Sylmar, will be developed by Yoram Hassid thanks in part to Century’s $7,850,000 construction loan.

-LOMCO was awarded a $9,000,000 acquisition loan for the 162 unit senior development Huntington Concord.

Please visit our lending page to learn how Century can help finance your next project.

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Posted in acquisition loan, bridge loan, construction loan, loan closing, Uncategorized | Leave a comment

Some Cause for Celebration

Everyone knows about the “Fiscal Cliff,” which was probably more like a small hillock.  And by now, most folk know that Congress and the President figured out a last minute (actually, it was after the last minute, but who’s counting) compromise to avoid the tax increase components of the problem.  But the popular press has concentrated on the costs and benefits for individuals, families and big businesses.  There were some features in the H.R. 8, the American Taxpayer Relief Act of 2012 (ATRA), that will change some rules for developers of affordable housing as well.

Continue reading

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Times Article Spotlights Redevelopment Deadline Disputes

Los Angeles Times LogoLast week, the Los Angeles Times published a nice summary of the issues surrounding the deadline for handing redevelopment dollars back to the state.

Our own Tim O’Connell, senior director of policy and advocacy, provided a quote in reference to the diffulties facing affordable housing developers, saying “there’s a lot of uncertainty, and in the real estate development business, uncertainty is absolutely the worst thing you can have.”

You can find the entire article on the Los Angeles Times site.

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Small Area FMRs – What Will They Mean for Landlords?

The Small Area Fair Market Rent (SAFMR) program may have many effects on the subsidized housing landlords.  One of the desired outcomes may be that lower income tenants will have the opportunity to move to housing in higher cost neighborhoods.  However, another effect may be that landlords in lower cost neighborhoods will see a loss of income and become reluctant to rent to Housing Choice Voucher tenants.

Each year, HUD calculates and publishes Fair Market Rents (FMRs).  The FMRs are the basis for determining payments made to landlords on behalf of lower income tenants for a variety of programs, primarily the Housing Choice Voucher.  FMRs are set for an area, most often a county or metropolitan area, and represent the amount that would have to be paid for housing (including rent plus utilities) for privately owned, decent and safe rental housing with suitable amenities within the area.  The FMR is set so that most housing within the area, excluding luxury units, would be affordable to a tenant holding a Housing Choice Voucher.

However, because counties can be very large and diverse, especially in densely developed metropolitan areas, there are some neighborhoods where the FMR is much too low to allow Voucher holding tenants to rent, and in other neighborhoods, the FMR is more than the surrounding submarket rents.  In order to try to adjust the FMR system to these market areas, HUD has developed the Small Area FMR (SAFMR), publishing applicable rents for the Housing Choice Voucher (HCA) and Moderate Rehabilitation Single Room Occupancy programs on October 5, 2012.  Continue reading

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Is “Green” about the Environment or Money?

USA Today recently ran a series of articles, under the lead “GREEN INC. Environmentalism for Profit,” regarding the US Green Building Council and their LEED certification process.  LEED stands for Leadership in Energy and Environmental Design, and is a self-proclaimed “voluntary, consensus-based, market-driven program that provides third-party verification of green buildings.”  LEED standards come in four basic flavors: LEED Certified, LEED Silver, LEED Gold, and LEED Platinum.

The stories make several points of interest, among them that the LEED standard, while “voluntary” and entirely private, is required by more than 200 federal, state and local government agencies.  And many of them provide meaningful incentives for developers who achieve LEED ratings.  USA Today reports that the Palazzo Hotel and Casino in Las Vegas received a $27 million tax credit over 10 years due to Nevada’s delegation of the responsibility for determining who should get tax subsidies to the US Green Building Council.

It should be remembered that the US Green Building Council does not have a complete monopoly over environmentally friendly construction standards.  Many states, including California, have adopted “green building codes, and there is at least one other private organization, Build It Green, has a program of rating developments.  Build It Green’s GreenPoint rating system also provides certification of residential developments, and is also used for marketing purposes.

California also has a statewide standard in the CALGreen Code, adopted in 2010, which sets minimum construction standards with a goal of reducing the overall carbon output to the environment.  This is one part of the state’s efforts to reduce greenhouse gas emissions from all sources, mandated by AB 32, a state law which mandates rolling back greenhouse gas emissions to 1990 levels by the year 2020.  The CALGreen Code has both mandatory and optional provisions, which are implemented at the local level by city and county building codes.  In the case of Los Angeles, for example, the local building code incorporated essentially all of the CALGreen Code standards and essentially replaced the LEED-based standards with the new state code, while applying them more broadly than CALGreen required.  Several other cities also have adopted local codes stronger than the CALGreen minimum requirements, including San Francisco and San Jose.

The tone of the USA Today articles was somewhat disparaging toward the US Green Building Council standards.  The articles questioned how the LEED standards were created, are administered and the methods used by developers to receive certification.  Regardless of those factors, the question now is whether the LEED certification matters any more?  Or has it reverted to its origins–a marketing tool?

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Posted in housing policy, sustainability, Uncategorized | Leave a comment

Building Livable Communities – the Annual Housing, Transportation & Jobs Summit

On October 4, the Los Angeles Business Council hosted the 2012 Mayoral Housing, Transportation and Jobs Summit at UCLA. For over a decade now, the LABC has been organizing these discussions of issues with elected officials, business leaders and members of the community.

The report released at this year’s Summit, Building Livable Communities: Enhancing Economic Competitiveness in Los Angeles, describes how rising rents, a shortage of new residential development and still inflated home prices that remain well beyond the reach of middle-income families in Los Angeles County are causing a widening affordability gap for Southern California residents.

Failing to adequately address the problem will cause Los Angeles to become far less attractive to current and future employers, and less competitive against other metropolitan areas where quality and affordable workforce housing is in far greater supply.  Of the large metropolitan areas discussed, only New York and San Francisco had less affordable housing.

“The vast majority of housing units in the County are unaffordable to the typical worker. With housing production 40 percent below target levels, the problem will only grow when you factor in the laws of supply and demand,” said Paul Habibi, the lead author of the report and a professor of real estate at the UCLA Anderson School of Management. Continue reading

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Clean Air, Green Jobs – - and Affordable Housing?

Governor Brown signed two bills which will provide direction as Cap and Trade revenue investment decisions are made in coming years.  SB 535 (State Senator Kevin de León) and AB 1532 (Assembly Speaker John Pérez) create a framework for the state’s investment strategy for the funds which will be generated under the terms of California’s Global Warming Solutions Act (AB 32).  SB 535 requires that a minimum of 10% of the investments of from the Greenhouse Gas Reduction Fund be targeted to identified neighborhoods, with one-quarter of the investment required to demonstrate a benefit to those communities.

AB 1532, creates the Greenhouse Gas Reduction Fund to hold the revenues from the Cap and Trade auction, and sets up a public process for development of investment plans, hearings, annual reporting and active oversight of the expenditure of those revenues.  AB 1532 specifies 7 categories of investment for the Greenhouse Gas Reduction Fund, among them, “sustainable infrastructure projects, including transportation and housing.”  With estimates of first year revenues in the $1 billion range, having access to this capital should be good news for housing developers, especially those who depend on subsides to produce below market rate housing, in light of the loss of redevelopment funding and exhaustion of the Housing Bond funds from Propositions 46 (2002) and 1C (2006).

But, will housing developers really get access to that capital in meaningful ways, or will the funds be invested in other activities?  And should the funds be invested in housing, instead of other areas which would result in greater reduction in greenhouse gas emissions? Continue reading

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Posted in housing policy, new programs, transit-oriented | 2 Comments

When Will Rent Payments Go Electronic? And Should They?

There have been several op-eds and articles about a bill passed by the California State Legislature and signed by the Governor that prohibits landlords and property management firms from requiring tenants to pay their rent electronically (SB 1055, Lieu).  The bill was sponsored by the Coalition for Economic Survival and Western Center for Law and Poverty.

The bill originated with a notice from Jones and Jones Management Group, a family-owned property owner-management firm with three dozen properties in the Los Angeles area.  In September 2011, Jones and Jones informed their tenants that all future rent payments would have to be made by electronic funds transfer–that is, payments would have to be made “online.”

Some residents balked, either because they did not have accounts that would permit them to pay online, or they did not want to make their payments this way.    It was reported about one tenant that “the 87-year-old refused, saying that she had been a victim of identity theft and was advised by her bank not to pay rent this way.”

Jones and Jones refused to accept checks, and served tenants who would not pay electronically with eviction notices.

SB 1055, amends state law in two ways:  first, a landlord may not require tenants to pay rent or security deposits in cash, and second, if a landlord offers the option of payments online, they must also accept other forms of payment.  That is, the landlord may not limit payments to cash or electronic transfer, but must accept checks, money orders and other forms of payment.

Why does this matter?  Continue reading

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Posted in landlord/tenant | 1 Comment

Has the Granny Flat Finally Arrived — as the Graduate Flat?

Lennar, a well-known and fairly traditional home builder active in California, made the news recently because they are offering a new product in their Crescent Heights at Sky Ranch subdivision in Santee, a suburban city east of San Diego.  One of the three models offered incorporates what they are calling their NextGen, Home Within a Home.  Essentially, this is a studio apartment, with a separate one-car garage, included within the same structure as a fairly standard 4-bedroom (plus ‘Bonus Room’), 3-bath, 2-car garage suburban home.  The studio unit has its own separate entrance from the outside, kitchenette and space for a stacked washer and dryer.

The home is priced at $610,000, and has about 3,650 sq.ft. in total, or about $167/sq.ft.  For the San Diego market, it is in about the middle of the price range.

Is there a market for this “new” type of home?  Lennar seems to think so, and the national press has been talking about the demand for multigenerational housing for some time.  CNN Money wrote about it in April 2012, a year ago, the New York Times pointed out that it was a new trend a year before that, a recently published book, Together Again, notes articles going back to at least 2005 on their promotional website, AARP has a whole blog site dedicated to the issue.  It has been discussed in various “learned journals” (I happen to like the article in New Geography). Continue reading

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Posted in elements of design, families, housing policy, market conditions, new programs | 2 Comments

Is There a Two-tiered Mortgage Market Based on Race?

Red-lining has long been a topic of concern in the housing industry.  I have known people who actually saw the maps in bank offices, with the big red line surrounding minority neighborhoods on it, or the predominantly minority Census Tracts colored red.

Red-lining was a very real and pervasive problem until Congress stepped in with the Home Mortgage Disclosure Act (HMDA) and the Community Reinvestment Act (CRA), and bank regulators began to impose sanctions on mortgage lenders who demonstrated bias in their lending practices.

No doubt, there are still banks and mortgage brokers who have not gotten the message, and there is still bias in out society, in home mortgages as well as other areas.  But I was surprised to see the news articles about a recent study that seemed to show that not only was racial bias still practiced, but that Black and Latino borrowers were being broadly discriminated against in major American cities.  This study, produced by the California Reinvestment Coalition (CRC), Empire Justice Center, Massachusetts Affordable Housing Alliance (MAHA), Neighborhood Economic Development Advocacy Project (NEDAP), Ohio Fair Lending Coalition, Reinvestment Partners, and Woodstock Institute, reviewed HMDA data for 2010 and compared conventional and government-backed prime mortgage lending in seven cities, based on borrowers’ race and ethnicity, and the racial and ethnic composition of neighborhoods.

Then I read the report itself.   Continue reading

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Posted in housing policy, market conditions, mortgage-default-foreclosure | 1 Comment