Developers in California have a new fund to help them with the acquisition costs of developing and preserving affordable housing in the state.
The $93 million Golden State Acquisition Fund (GSAF) can be accessed by for-profit and nonprofit developers and public agencies and used for both rental housing and homeownership opportunities.
The GSAF was seeded with an initial investment of $23 million from the California Department of Housing and Community Development (HCD) and is administered by the Low Income Investment Fund (LIIF). The state funds are being leveraged with additional capital from a consortium of seven Community Development Financial Institutions (CDFIs) which are all originating lenders for the fund.
The seed financing from HCD will serve as a 25 percent top loss for each GSAF loan, enabling the originating CDFI lenders to provide financing with favorable pricing and attractive terms, such as higher loan-to-value and longer terms. Also the program allows for a maximum project loan amount of nearly $14 million, a significant benefit to affordable housing preservation projects, which often require larger amounts of acquisition financing.
"Affordable housing developers are operating in a competitive, challenging market and have extremely limited access to public funds," said Brian Prater, senior vice president, strategic development and corporate affairs, at LIIF. "The GSAF program was created to help developers compete in today's environment to increase and preserve affordable housing for California's families."
Fund officials note that access to flexible and affordable capital for land and existing property acquisition is a major impediment to affordable housing development and preservation in the state.
Being able to access a sizable amount of financing will enable affordable housing developers to compete with other investors. This is particularly true of preservation transactions, which are becoming more common as many affordable housing developments face expiring federal subsidies, according to LIIF.
Originating lenders are Century Housing Corp., Corporation for Supportive Housing, EnterpriseCommunity Loan Fund, Local Initiatives Support Corp., LIIF, Northern California Community Loan Fun, and Rural Community Assistance Corp.