Philadelphia Launches Affordable Black and Brown Loan Fund for Real Estate Developers | Local News


Philadelphia is preparing to launch a new city-backed loan fund aimed at increasing access to capital for black and brown developers building affordable homes in Philadelphia.

The Philadelphia Accelerator Fund, with municipal funding of approximately $ 11 million, will provide flexible funding to black and brown developers facing systematic barriers to traditional bank lending. A public-private partnership designed.

Modeled on the San Francisco Home Accelerator Fund, which provides loans to nonprofit and affordable real estate developers and allows them to compete with builders at market price to buy buildings and land, the idea is 2018. It was born from the discussions that took place. when creating the City Housing for Equity action. Greg Heller, vice president of community investment and fund manager at the Philadelphia Housing Development Corporation, said:

“We’ve heard time and time again that developers who are trying to build affordable housing and invest in their neighborhoods struggle to get money from banks and traditional funding sources. It was, ”Heller said.

Heller and his colleagues are currently working to raise an additional $ 30 million by the fall. Once this objective is achieved, the fund can begin to offer loan and investment opportunities. The fund aims to raise more than $ 100 million, produce 6,000 affordable housing units and mobilize more than $ 1 billion in total development costs over a five-year period.

City officials are agnostic about the types of housing financed by the fund, as long as some units in the project target below-market clients and require non-traditional financing. Any developer planning a house for sale, an apartment or an HLM can apply. Eligible projects can serve people earning up to 120% of the median income in the region. This represents approximately $ 73,000 for an individual.

Heller admitted that what is considered “affordable” is very restrictive

“In some areas we also had to build housing for workers, so we didn’t want to limit it completely,” Heller said, designing with a median income in smaller areas and risking an evacuation. He said that projects that serve a community will be prioritized.

Anthony Fullard, president of West Powelton Development Corporation, is a potential borrower to approach when launching the fund. He hopes this can help him carry out more ambitious projects and encourage other black developers to do the same. The fund provides advisory services to help businesses apply for loans and counseling to help them navigate the process.

Hrad’s focus was on housing, usually single-family homes, and his focus was always on black families. The acceleration loans will help him build mixed-income housing projects, he said.

“Developers like me spend a lot of time in the secondary market because they are not approved by traditional banks,” he said. “Usually these banks lend money to development companies that already have the money.”

Mr Hrad said his experience in the secondary market meant higher interest rates and higher costs if the project were to be extended.

Mo Rushdy, chairman of the fund’s board of directors and managing partner of real estate development firm The Riverwards Group, sees it as a way to make affordable housing construction more achievable for developers working in the private sector. Mentionned.

He also sees an opportunity, as Philadelphia has adopted a land disposal policy that allows non-competitive sales for development in at least 51% of affordable housing. Historically, affordable homes have been difficult to sell for private developers due to high construction costs and low profits.

“Through the law, the city has added another layer of support to push the private sector to get into affordable housing construction,” Rushdie said. “Well, if we don’t have accelerator funds, who would use this law? It would be a developer like me. [other] A regular suspect who offers affordable housing in the city. “

Rushdy sees the fund as a way to make it a competitive place, so that developers already in the neighborhood can take advantage of this opportunity.

“The message is that subsidized affordable housing is important, but not enough to meet our needs and more natural affordable housing. We need to focus our energy, our time, our money and our resources, ”Heller said.

The fund ranks applicants based on traditional values ​​such as creditworthiness and social impact, taking into account the extent to which the surrounding community may benefit from a particular project.

Philadelphia Launches Affordable Black and Brown Loan Fund for Real Estate Developers | Local News

Source Link Philadelphia Launches Affordable Black and Brown Loan Fund for Real Estate Developers | Local News

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