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Preservation Acquisition Loan

With the help of private capital, VCC and National Housing Trust Community Development Fund (NHTCDF) have created a $30 million site acquisition loan pool to preserve and improve affordable rental homes in the Commonwealth. The Preservation Acquisition Loan (PAL) will provide flexible bridge financing (2-3 years) so affordable housing providers can acquire and hold affordable properties while they secure long-term financing.

Approximately one-third of Virginians currently rent their homes and nearly all Virginians are renters at some point in their lives. Yet, the supply of affordable rental units is on the decline. According to Harvard University's Joint Center for Housing Studies, from 1995 to 2005, the nation lost 1.4 million apartments that rent for $600 or less because they were converted to higher priced rentals, federal subsidies waned, or aging properties deteriorated.

Over the next five years, contracts on more than 17,000 project-based Section 8 units in Virginia will expire, giving owners an opportunity to opt out of the program or sell to market rate developers. Additionally, Virginia has more than 10,000 Section 515 rural housing units. Many owners of these properties are interested in selling due to market forces.

The Preservation Acquisition Loan (PAL) brings together public, private, and non-profit partners to stem the loss of affordable rental homes. Funders include:

  • Bank of America
  • SunTrust
  • Virginia Department of Housing & Community Development
  • Virginia Housing Development Authority
  • Wachovia

Click here to view complete product information.

Click here to learn about the Virginia Housing Preservation Symposium.

In the News:

Private Money Creates $30M Bridge Loan Fund

Multi-housing News Published: June 10, 2008
By Anuradha Kher, Online News Editor

Fund to Preserve Affordable Housing

The Roanoke Times, Published: June 13, 2008

By Tonia Moxley, Staff Writer

Partners:

 

 

 

 

 

 

Product Information

Loan Amounts

Minimum: $100,000
Maximum: $4,000,000

Rate Structure

7% - Subject to change based on market conditions and risk analysis

Maturity Terms

Loans may be extended for up to 36 months on an interest only basis during the LIHTC and grant application or approval waiting period

Collateral

1st or 2nd deed of trust

Fees Charged

Origination 1 to 2% depending on transaction size and complexity

Application Fee

$1,500 to cover origination and coordination

Late Payment Fees

5% to a maximum of $250 after the 10th day

Prepayment Penalty

None

Loan-to-Value Guidelines

Generally 10% equity required, up to 100% loan-to-value available based on risk analysis

Guarantees

Property owners, principals, partners or majority stockholders generally required, parent organization required, if applicable

Environmental

Phase 1 environmental study required, Phase 2 study may be required based on Phase 1 findings. Remediation required.

Acceptable Equity

Existing equity or enhanced equity appreciation based on preliminary appraisal