LAKEPORT— The Collier Avenue Affording housing project moved ahead Friday in Lakeport, during a special meeting of the Lake County Board of Supervisors.
Sponsored by the Behavioral Health Services and Housing Commission and financed through Low-Income Housing Tax Credits (LIHTCs), JPMorgan Chase Bank (construction loan), Department of Developmental Services, Tri Counties Bank and the California Department of Housing and Community Development (No Place Like Home program), Collier Avenue Apartments is a new construction, an affordable housing development, consisting of 40 units, including one manager’s unit. LIHTCs are the predominant form of financing affordable housing in the United States.
According to Behavioral Health Program Manager Elise Jones, that is a commonly used method of financing these projects. “To maximize the benefits of those credits, the project will be owned by a limited partnership, which is Collier Avenue Associates. The California Department of Housing Community Development has awarded the project funds from the No Place Like Home program (about $7 million.) There’s a competitive allocation of about $6.4 million comprised of $2.8 million for capital improvements and about $3.5 million for capital operatives to subsidy reserved funds,” she said.
Rural Communities Housing Development Corporation (RCHDC) is an experienced developer with a successful track record of more than 45 years of history of structuring, financing, constructing and operating affordable housing projects using LIHTCs. RCHDC is an expert at ensuring regulations and compliance obligations are satisfied for a multitude of federal, state, and local regulations.
“This project cannot be used for anything other than low-income and sub-permanent supportive housing. It will hopefully start in March or the beginning of April and continue on through mid-summer. The leasing process is anticipated to begin in August, where we’re filling up those units,” Jones said.
Project Monitoring and Risk Management
“A big concern here, and rightly so, is the monitoring of the project. The inherent risk in any construction project is something that we can closely monitor. The project funders do impose rigorous standards for underwriting the deal and developing the project. They require the borrower to satisfy certain standards for expenditures, building construction, housing condition and occupancy of the units,” Jones said.
The two main state agencies that will monitor compliance are the California Tax Credit Allocation Committee (TCAC) and the California Department of Housing and Community Development (HCD). TCAC conducted a highly competitive application process before awarding the LIHTCs to RCHDC for the project, imposing certain cost limitations and ensuring only high-quality, shovel-ready projects with long-term financial viability receive awards of public funds. TCAC and HCD will each record regulatory agreements on the property to ensure it is used for affordable housing and that it complies with income restrictions, maintenance and reporting obligations.
Merritt Community Capital is the project’s tax credit investor and the limited partner of the borrower. Merritt is an experienced investor in affordable housing transactions and will work closely with RCHDC to monitor the project through construction, conversion to permanent financing, lease-up and property management operations to ensure funding is used appropriately and target populations are served.
JPMorgan Chase Bank is the construction lender and has partnered with RCHDC on numerous affordable projects. Likewise, the bank has strict underwriting standards to ensure it is lending to responsible developers for successful projects and that the borrower complies with strict reporting and operating standards.
“They’re not going to invest in a project that isn’t viable. JPMorgan Chase is providing a construction loan in the amount of almost $17 million. That is a recourse loan, to be repaid with limited partner capital contributions,” Jones said.
