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Cascade: No. 62, Summer 2006

New Predevelopment Funds for Rental Housing Preservation

Nonprofits in Pennsylvania that plan to preserve affordable multifamily rental housing can apply for predevelopment assistance from two recently established loan funds. 

The Local Initiatives Support Corporation (LISC) and Pennsylvania Housing Finance Agency (PHFA) have established a $500,000 fund for use in Philadelphia, while the National Housing Trust Community Development Fund (NHTCDF) and PHFA have established a $1 million fund for use outside Philadelphia. Both LISC and NHTCDF, a national nonprofit intermediary based in Washington, D.C., can provide nonprofits with technical assistance. 

The two funds, which lend at below market rates, enable nonprofits to explore the financial feasibility of development that preserves the affordability of rental housing for low- and moderate-income individuals and families. Ultimately, nonprofits will use one of PHFA’s programs to acquire and rehabilitate rental housing or to rehabilitate rental housing they presently own.

Both loan funds can be used for such predevelopment costs as hiring consultants and paying for market studies and appraisals, environmental studies, deposits and options for site control, and architectural fees.

Brian L. Shull, senior development officer of PHFA, explained that preservation is generally defined as an infusion of capital that keeps housing affordable in markets where rents are escalating or where the affordable housing is at risk of conversion to market rate.

In the two loan funds, qualifying developments must meet one of four criteria: subsidized mortgages are at risk of prepayment and termination of use restrictions; project-based Section 8 contracts are expiring; 15-year compliance periods of low-income housing tax credit developments are expiring; and developments have been assisted under one of the previously mentioned programs and need rehabilitation to maintain compliance with required physical standards.

For information on the LISC-PHFA loan fund, contact Randy Belin at (215) 923-3801 or rbelin@liscnet.org.  For information on the NHT-PHFA fund, contact Brian L. Shull at (717) 780-3909 or bshull@phfa.org; www.phfa.org.

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