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MAKING A DIFFERENCE : Banking on Low-Income Housing

March 18, 1995

Builders of housing for people with the lowest incomes--typically nonprofit groups and government organizations--can have a tough time getting financing. The Low-Income Housing Fund was created in 1984 to increase the amount of capital available for such projects at affordable rates and terms and to increase the participation of conventional lenders in low-income communities.

The fund has become one of the largest non-governmental sources of low-income housing loans in the country, with offices in San Francisco, New York and, since January, 1990, Los Angeles. The fund's loan officers and program managers link developers to conventional financial market sources and offer direct services with an array of programs that provide loans, loan packaging, interest-rate subsidies and mortgage guarantees. The result has been housing for thousands of elderly people, veterans, single parent families, farmworkers, people with AIDS, mentally and physically disabled people, single individuals and recovering substance abusers.

A DECADE OF SUCCESS

Number of housing units financed nationwide: 10,212

Total capital made available: $93.4 million

Number of loan transactions: 436

Number of loan write- offs: 3

How the Fund Serves Southern California

More than 70 low-income projects in Southern California have received assistance from the Low Income Housing Fund's programs for predevelopment work such as feasibility studies, site acquisition, construction, rehabilitation and refinancing. Among them are:

West Hollywood Community Development Corp., West Hollywood

Loan Amount and Source: $200,000 from the Revolving Loan Fund, a direct loan program of the Low Income Housing Fund that has assisted 8,073 units with more than $31 million

Activity Funded: predevelopment costs to build a 41-unit intergenerational housing complex for low-income seniors and families

Status: project completed and loan repaid

*

A Community of Friends, Los Angeles

Loan Amount and Source: $433,000 from the Southern California Mortgage Banking Pool, a mortgage banking program of the Low Income Housing Fund which allows private lenders to pool funds for affordable housing developments. The pool and four similar ones in California and New York have loaned $10.8 million to fund 576 units.

Activity Funded: predevelopment costs for 48-unit housing complex for low income individuals and the chronically mentally ill

Status: loan approved and project in progress

*

Community Corp. of Santa Monica

Loan Amount and Source: $200,000 loan from Bank of America negotiated, structured and packaged by the fund as part of its loan packaging program, which has assisted 2,405 units with $54.7 million in loans

Activity Funded: rehabilition of a 32-unit low-income housing development

Status: project completed and loan repaid

A BANKER'S PERSPECTIVE

"Public-private partnerships are really the only way we've successfully found (to be part of meeting California's housing needs for the low-income population.) Besides the financial resources they bring to the table, the fund has got some of the best and brightest minds in the country available to solve some of the financing dilemmas we face.

"The payoff for us is many fold. Community-based organizations are substantial employers of talented people doing lots of development work. Hopefully, the financing we do on projects helps us to (establish) banking relationships with them. The Low-Income Housing Fund looks out for the best interest of their investors. We've increased our relationship with them at every opportunity we've had."

MIKE MANTLE, President of Bank of America Community Development Bank

TO GET INVOLVED

Call (213) 627-9611.

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