In March I posted a chart that showed how severe a shift has occurred since 2005 in the funding sources for 9% tax credit developments. Tax credit equity has decreased by one-third and public agency soft loans have doubled as a share of total development costs (TDC). CTCAC released its 2011 Annual Report last month, and the trend has continued. While the average TDC for the 121 awarded projects fell by 4.2% from 2010 to 2011, tax credit equity and public agency soft loans both declined less than 1% – the major decline was in commercial loans, and there was some new funding from “Tranche B” loans, backed by Section 8 rental subsidies.
% TDC 2005 2006 2007 2008 2009 2010 2011
Soft Loans 17.8% 14.7% 16.4% 21.2% 29.2% 39.8% 38.1%
TC Equity 67.5% 68.7% 64.2% 57.1% 50.5% 47.3% 46.7%
The chart above clearly shows the continuing trend, which will probably be evident through 2012 as well. The table above shows the percentage of TDC that soft loans and equity covered over the past seven years and how pronounced the trend toward public agency loans has been – more than doubling from 2007 to 2010! Continue reading
Rending by PSL Architects
American Communities broke ground on May 1st for The Serrano, a 44 apartment development for low-income families in Koreatown. Century provided a $1.9 million land acquisition loan to American Communities in December. This will be the seventh development that Century has financed for American Communities, and the fourth in Koreatown, joining Harvard Heights, The Hobart, and The Ardmore. Construction will be completed in the fall of 2013, and will be certified LEED Silver. Congratulations to American Communities and PSL Architects!
Two of Century’s largest clients, Meta Housing and AMCAL Multi-Housing, are featured in an article about mixed-income housing in the March/April 2012 issue of Urban Land. The author, Patricia Kirk, highlights several public-private ventures in Portland (OR), Austin, and especially Southern California, where public agencies financial assistance made vibrant communities with a range of income levels possible.
Meta Housing received financial help from the city of Tustin for Coventry Senior Apartments
When the Housing Bubble popped, and home sales and prices started dropping like a stone, Congress enacted the American Recovery and Reinvestment Act of 2009 (ARRA), a stimulus package to try to stem the growing recession. A big part of ARRA was a first-time homebuyers tax credit. This gave people buying their first home, or who had not been homeowners for three years, with a tax credit equal to 10 percent of the purchase price of the home, up to $8,000. Because California’s home prices are so much higher than those in other regions, the $8,000 cap was reached by almost all homebuyers here.
The tax credit was intended to spur home buying and stop the precipitous drop in home prices, which were plunging at almost 20 percent per year at the time. According to a report by the Government Accountability Office (GAO), about 2.3 million taxpayers took advantage of the credit, which cost $16.2 billion in direct tax expenditures.
So, what was the real effect? Did the credit do what Congress intended? And who really benefitted from that $16.2 billion? Continue reading
As one of only two nonbank CDFI members of the Federal Home Loan Bank of San Francisco, Century can access the FHLB’s credit, rather than cash, to assist affordable housing developers in innovative ways. Aszkenazy Development has started construction on 62 affordable apartments in the City of San Fernando thanks to an innovative credit enhancement provided by Century Housing. For San Fernando Community Housing Phase I, Century provided a $791,000 letter of credit backed by FHLBSF, that replaced a typical construction performance bond. The cost of such a bond can be prohibitive when a development is not very large. Continue reading
For the second time, Century and Bridge Housing partnered in a creative financing structure to close predevelopment financing on a publicly-owned site, this time with LAUSD under the Workforce Housing Joint-Use Program, on unused land at Gardena High School. As with the previous deal in Pasadena, Century’s $1,000,000 predevelopment loan is secured by a letter of credit, rather than a typical deed of trust in the development site. Bridge Housing, one of the largest affordable housing developers in California, will build Sage Apartments with 90 homes for families earning less than $57,000 a year.
Century closed our first loan with Palm Communities (fka Palm Desert Development Corp), an active affordable apartment builder in Riverside County, with a $900,000 predevelopment loan for Tres Lagos, a three-phase development which will provide 209 apartments for very-low income seniors in Wildomar (Riverside County). The 81-apartments in Phase 1 will be under construction later this year.
We all drive past empty corners every day. They used to be service stations (yes, Virginia, there was “service” once upon a time–uniformed men would wash your windscreen, check your tire pressure (and fill them up with air for free!), check your oil and coolant levels, and offer to top them off if they were low, and actually pump the fuel into your car for you, all without extra remuneration or expectation of a tip, and often they would give you some useful gift if you filled your tank–amazing to think about nowadays).
Now, these lots sit vacant, perhaps with some odd looking barrels and pipes and maybe some pumps to suck the polluted groundwater up into filters and storage tanks. Most of us wonder, “Why can’t something be done to use that site? It would be great for. . . .” And that is when we realize that these odd shaped, small lots on the corners of our streets, big boulevards and neighborhood lanes alike, don’t seem to have much commercial value. They are too small for most uses, and the location on corners, which was an advantage for service stations, creates traffic conflict issues for other uses. Continue reading
Everyone is familiar with the collapse of the Housing Bubble, even if we don’t all agree on what caused it. There seems to be a consensus that, like an alcoholic, the Housing Market will not begin to recover until it hits bottom and takes responsibility for its own future, instead of manipulating and cajoling others to support it. And most people realize that the Housing Market has not yet hit bottom–even though no one seems to know how far down the bottom really is. In California, the Housing Market has only fallen back to 2003 price levels, which were considered too high then.
When the Housing Market was higher than a kite, everyone was saying that the laws of economics were out of kilter, that housing was too expensive and regular working folk couldn’t afford to buy or even rent a place to live that was within their ability to pay.
Here in California the Housing Market was considered so far out of balance that, in 2002 and 2006, the voters approved Housing Bonds totaling $4 billion to pay for homeless shelters, affordable apartments, and to subsidize first-time homebuyers.
Today, many people are saying that housing is too cheap, despite all evidence to the contrary (more on that another time). Public agencies at all levels, financial institutions and the real estate industry are doing everything they can to enable the Housing Market to get high again. And they have come up with a remarkable tool to do that. Continue reading
The dissolution of California’s redevelopment agencies has caused great consternation about how apartment developments that are deeply affordable will get financed, as RDA’s annually contributed several hundred million dollars to create or preserve several thousand affordable apartments. CTCAC reported that in 2011 in the competitive 9% LIHTC rounds, 63 of 101 (62%) awarded projects included RDA financing. With those funds no longer available, how much will development decline in 2012 and 2013? The average RDA loan was $5.8 million, 32% of the total cost of a development in 2011 – how can a project happen with 1/3 of its funding is goes missing?