Housing Resources

Community Development Financial Institutions (CDFI)

A CDFI is a unique entity established to provide credit, financial services, and other services to under-served markets or populations. Under the general definition of a community development financial institution as set forth by the Community Development Financial Institutions Fund at the U.S. Department of the Treasury, a CDFI has a primary mission of community development, serves a target market, is a financing entity, also provides development services, remains accountable to its community, and is a non-government entity.

Nationwide, over 1000 CDFIs serve economically distressed communities by providing credit, capital and financial services that are often unavailable from mainstream financial institutions. CDFIs have loaned and invested over billions in our nation’s most distressed communities. Even better, their loans and investments have leveraged billions more dollars from the private sector for development activities in low wealth communities across the nation.

While there are numerous organizations certified as CDFIs by the CDFI Fund, it is believed that there are thousands of financial institutions serving the needs of low-income people or communities in the U.S., but either have not applied for CDFI status or have otherwise not been able to fulfill all of the requirements for formal CDFI certification.

A CDFI may take one of several different forms: community development bank, community development credit union, community development loan fund (including microloan funds), or community development venture capital company. For more information, go to: http://www.cdfifund.gov/awardees/db/index.asp.

Foundations and corporations

Funding from foundations and corporations are primarily used as “gap fillers” or for special projects. One of the most useful websites for researching foundations and other private grant makers in the supportive housing field is the “Foundation Center”. Users can locate specific funders, research for sector, and with a subscription, have access to the complete foundation directory. More information may be found at http://foundationcenter.org/.

Local Housing Trust Funds

Local Housing Trust funds generally represent a particular county or community and might be nonprofit organizations that provide a funding vehicle that helps bridge the ‘affordability gap’ by partnering with the private, public and non-profit sectors to raise new financial resources to support affordable community housing. Check with your local county on the availability of these funds.

Housing and Community Development

http://housing.hcd.ca.gov/

HCD administers more than 20 programs that award loans and grants for the construction, acquisition, rehabilitation and preservation of affordable rental and ownership housing, homeless shelters and transitional housing, public facilities and infrastructure, and the development of jobs for lower income workers. The Multi-Family Housing Program assists the new construction, rehabilitation and preservation of permanent and transitional rental housing for lower income households. Provides deferred payment loans with 55 year loan terms.

Eligible Activities include new construction, rehabilitation, or acquisition and rehabilitation of permanent or transitional rental housing, and the conversion of nonresidential structures to rental housing. Projects are not eligible if construction has commenced as of the application date, or if they are receiving 9 percent federal low income housing tax credits.

MHP funds will be provided for post-construction permanent financing only. Eligible costs include the cost of child care, after-school care and social service facilities integrally linked to the assisted housing units; real property acquisition; refinancing to retain affordable rents; necessary on-site and off-site improvements; reasonable fees and consulting costs; and capitalized reserves.

Eligible applicants include local public entities, for-profit and nonprofit corporations, limited equity housing cooperatives, individuals, Indian reservations and Rancherias, and limited partnerships in which an eligible applicant or an affiliate of an applicant is a general partner. Applicants or their principals must have successfully developed at least one affordable housing project.  Projects of rental housing development must contain 5 or more Units, a single-family house is considered to be one Unit.

California Housing Finance Agency (Cal HFA)

http://www.calhfa.ca.gov/

Homeownership

The mission of the Homeownership Division is to provide affordable housing opportunities to low and moderate income first-time home-buyers.  This is accomplished by offering low, fixed interest rate mortgage products, along with down payment and closing cost assistance.  CalHFA is not a direct lender; their mortgage products are offered through private lenders who have been approved by our Agency. To find a lender in your area, visit http://www.calhfa.ca.gov/ homeownership/, click on ‘approved lenders’.

CalHFA’s Multifamily Finance Programs provide permanent financing for the acquisition, rehabilitation and preservation of existing rental housing, as well as the new construction of rental housing. CalHFA-financed affordable units are targeted to low and moderate income families and individuals in California.

Multifamily Programs
Permanent Financing Program

The Permanent Financing Program provides permanent loans for new multifamily construction, acquisition and rehabilitation of existing multifamily housing projects. Applicants may be for-profit, non-profit, and public agency sponsors.  Funding is available for new construction or acquisition and/or rehabilitation.

Loan amounts:

• A minimum 110 percent debt service coverage ratio for new construction;
• A minimum of 115 percent for acquisition, and/or rehabilitation of existing multifamily housing projects;
• Lesser of 90 percent of restricted value or 80 percent of development costs
• Fees : ( subject to change);
• Application Fee: $500, due at time of application;
• Loan Fee: 0.75 percent of the loan amount, due prior to the CalHFA Board Meeting;
• (Permanent loan fee reduced to 0.25 percent when combined with CalHFA construction loan financing).

Acquisition Finance Program

The Acquisition Finance Program (“Acquisition”) is designed to facilitate the acquisition of at-risk affordable housing developments and provide low cost funding to preserve the affordability status of existing government-assisted projects deemed at risk.

Special Needs Finance Program

The Special Needs Financing Program offers low interest rate financing for the development of rental housing to serve a broad range of special needs tenants in need of supportive services. Loan types include new construction, acquisition/rehabilitation, or permanent financing. Developers must use CalHFA construction financing or CalHFA Preservation/Acquisition financing to use the Special Needs Financing Program.

Tax-Exempt Bridge Financing Program

The Tax-Exempt Bridge Financing Program offers tax-exempt bridge loans for projects receiving 4 percent tax credits at an amount necessary to ensure the award of tax credits. The combined amount of the permanent and bridge loans cannot exceed 85 percent of investment value.

The Predevelopment Finance Program

Provides low-cost funding to cover the predevelopment costs associated with affordable rental projects that will have permanent CalHFA financing.

Construction Loan Tax-Exempt Program

To provide construction loans for multifamily projects at competitive rates and terms. The construction loan may be converted to a CalHFA permanent loan.  CalHFA’s objective is to provide a one-stop shop (Construction to Perm) to borrowers in order to simplify the financing process. Through the CalHFA one-stop process the borrower will also realize cost savings such as no bond issuance cost or legal fees.

Mental Health Services Act Housing Program (MHSA)

Jointly administered by the California Department of Mental Health and the California Housing Finance Agency on behalf of counties, the Mental Health Services Act (MHSA) Housing Program offers permanent financing and capitalized operating subsidies for the development of permanent supportive housing, including both rental and shared housing, to serve persons with serious mental illness and their families who are homeless or at risk of homelessness.  MHSA Housing Program funds will be allocated for the development, acquisition, construction, and/or rehabilitation of permanent supportive housing.

Low Income Housing Tax Credit Program (LIHTC)

In 1986, Congress created the federal low income housing tax credit to encourage private investment in the acquisition, rehab and construction of low income rental housing.  Because high housing costs in California make it difficult, even with federal credits, to produce affordable rental housing, the Legislature in 1987 created a state low income housing tax credit program to supplement the federal credit.

The state credit is essentially identical to the federal credit, both are allocated by the Tax Credit Allocation Committee and state credits are only available to projects receiving federal credits. 20 percent of federal credits are reserved for rural areas and 10 percent for non-profit sponsors. To compete for the credit, rental housing developments have to reserve units at affordable rents to households at or below 46 percent of area median income. The targeted units must be reserved for the target population for 55 years.

There is a cap of about $40 million annually on the amount of federal credits allocated to California. The state ceiling was $35 million per year until two years ago and had never been increased for inflation. The state ceiling was permanently raised to $50 million per year by AB 1626 (Torlakson), signed into law by Governor Davis in February of 2000.

The federal tax credit provides a subsidy over ten years towards the cost of producing a unit. Developers sell these tax benefits to investors for their present market value to provide up-front capital to build the units. Intense competition for credits has increased their yield of equity from 54 cents on the dollar in ’93, to about 70 cents today. State credits provide a subsidy over four years but the present value is similarly discounted. Even with combined state and federal credits, additional subsidies are usually needed to make developments financially feasible. Credits can be used to fund the hard and soft costs (excluding land costs) of the acquisition, rehab or new construction of rental housing

Community Development Block Grant (CDBG)

A HUD program that provides states and eligible cities and urban counties (called entitlement communities) with annual direct grants that they can use to revitalize neighborhoods, expand housing and economic opportunities, and improve community facilities and services, principally to benefit low and moderate income people.  Not solely earmarked for housing.

The Home Investment Partnership Program (HOME)

The largest Federal block grant to state and local governments designed exclusively to create affordable housing for low income households.  Under this program, HUD provides grants to states and larger municipalities (called ‘participating jurisdictions’ or ‘pjs’) by a formula based on population.  To qualify for the funds, jurisdictions must prepare consolidated housing plans for HUD’s review and approval.  Specific uses of the money are up to the pj, based on the approved plan, but the funds are generally to build, buy and/or rehabilitate affordable housing or to provide rental assistance to low income people.

Housing Tax Credits

A federal program known as the Low-Income Housing Tax Credits or LIHTC) that gives corporate investors a direct financial incentive to invest equity in the development and operation of affordable housing for low income people.  Under this program, Congress allocates a fixed amount of tax credits annually to every state through the US department of Treasury.  States in turn award the tax credits to qualified projects, based partly on IRS Regulations and partly on State Allocation Plans approved by the Department of Treasury.  Sponsors of projects that are selected may then sell (or syndicate) their tax credit allocation to qualified investors.  The investors “purchase” their share of tax credits by paying money into a limited partnership that becomes the legal owner of the project although it is still managed by the sponsoring nonprofit organization.  In exchange, the investor can subtract an annual amount from their tax bill, that together with other benefit of ownership, more than compensates them for their investment.

Section 202

A HUD program for the elderly that provides capital advances to finance the construction and rehabilitation of supportive housing for very low income people aged 62 and over.  The program also provides rent subsidies for the projects.

Section 8

A Federal rental assistance program providing a rent voucher or certificate to low income people or families who pay 30 percent of their income toward rent.

Section 811

A Federal construction-subsidy program that provides grants to non-profit organizations to build or rehabilitate rental housing with supportive services to people with disabilities.  The program also provides Section 8 vouchers for qualified tenants.