MTC Affordable Housing Loan Program Expands Financing Options


Photo: MTC

For buying and keeping

Agency aims to attract more borrowers to more Bay Area communities

The Metropolitan Transportation Commission (MTC) recently announced new underwriting guidelines for its four-year-old Bay Area Preservation Pilot Loan Fund, which is designed to help nonprofit real estate developers and community land trusts finance the acquisition and preservation of existing multi-family properties that are affordable to low- and middle-income tenants and located in areas with high-frequency public transit service. Revisions to the $49 million revolving loan fund include a lower leverage ratio requirement and the allowance of up to $6 million for designation as long-term debt forgivable.

The goal of the new underwriting rules is to attract more borrowers by funding loans faster for a more diverse set of properties in a more diverse set of Bay Area communities. All loans funded through the Preservation Pilot to date have been used to fund the borrowers’ purchase of rental properties in Oakland. MTC last year approved policy revisions for the Bay Area Preservation Pilot Project designed to make these funds more accessible to property buyers throughout the Bay Area, including those in communities that do not have not from their own local preservation funds; properties in which tenants face a high risk of displacement or are home to families with children, the elderly, people of color, people with disabilities, people with very low incomes and people with language barriers; and potential buyers working closely with existing tenants.

Nonprofit developers and joint venture partnerships can tap into the Preservation Pilot Fund for loans with terms of up to 10 years to purchase unsubsidized apartment buildings of at least four units. Rents for at least 75% of the units should be considered affordable for households whose annual income does not exceed 80% of the area median. Borrowers can also use loan proceeds to fund an operating reserve for the acquired property and to carry out life safety upgrades and other rehabilitation works.

MTC created the Bay Area Preservation Pilot in 2018 with a commitment of $10 million supplemented by an additional $39 million from program managers Enterprise Community Loan Fund (ECLF) and Low Income Investment Fund (LIIF). Loans are granted on a first-come, first-served basis. Prospective borrowers are encouraged to contact Enterprise and/or LIIF directly to apply. More details on the Bay Area Preservation Pilot Fund can be found on the MTC website at https://mtc.ca.gov/BAPP.

MTC is the regional transportation planning, financing, and coordinating agency for the nine San Francisco Bay Area counties. ECLF has invested more than $2.3 billion and mobilized more than $21 billion in additional capital to create or preserve more than 127,000 affordable housing units for low-income households nationwide. The San Francisco-based LIIF has provided more than $3 billion in funding and technical assistance and has mobilized an additional $13 billion to provide some 2.4 million low-income people across the country with housing stability and community services.

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