MTC Loan Program Expands Funding Options For Purchase and Preservation of Affordable Housing
The Metropolitan Transportation Commission (MTC) today announced new underwriting guidelines for its four-year-old Bay Area Preservation Pilot loan fund, which is designed to help nonprofit housing developers and community land trusts finance the acquisition and preservation of existing multifamily properties that are affordable for lower- and moderate-income renters and located in areas with high-frequency transit service. Revisions to the $49 million revolving loan fund include a lower leveraging-ratio requirement and the allocation of up to $6 million for designation as forgivable long-term debt.
The goal of the new underwriting rules is to attract more borrowers by funding loans more quickly 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 finance the borrowers’ purchase of rental properties in Oakland. MTC last year approved policy revisions for the Bay Area Preservation Pilot designed to make these funds more accessible to buyers of properties throughout the Bay Area, including those in communities that don’t have their own local preservation funds; properties in which tenants face a high risk of displacement or house families with children, seniors, people of color, people with disabilities, people with extremely low-incomes and people with language barriers; and prospective buyers working in close partnership with existing tenants.
Nonprofit developers and joint venture partnerships can tap the Preservation Pilot fund for loans with terms as long as 10 years to buy nonsubsidized apartment buildings with at least four units. Rents for at least 75 percent of the units must be considered affordable for households whose annual income is no more than 80 percent of the area median. Borrowers also can use the loan proceeds to fund an operating reserve for the acquired property, and to perform life safety upgrades and other rehabilitation work.
MTC established the Bay Area Preservation Pilot in 2018 with a $10 million commitment supplemented by an additional $39 million from program managers Enterprise Community Loan Fund (ECLF) and Low Income Investment Fund (LIIF). Loans are originated 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 may 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-county San Francisco Bay Area. ECLF has invested more than $2.3 billion and leveraged over $21 billion in additional capital to create or preserve more than 127,000 housing units affordable for lower-income households nationwide. San Francisco-based LIIF has provided over $3 billion of financing and technical assistance and leveraged another $13 billion to provide some 2.4 million lower-income people around the country with stable housing and community services.