The Community Development Trust announces $16 million joint venture to promote affordable housing in CaliforniaJune 16, 2017 3:18 pm
Original Source – PR Newswire
NEW YORK, Jan. 30, 2017 /PRNewswire/ — The Community Development Trust (CDT) and Southport Financial Services Inc. have announced a joint venture to purchase and improve three California apartment complexes for $16 million that comprise a combined total of 300 affordable housing units serving low-income families and senior citizens.
The properties acquired in the CDT-Southport partnership, all of which are affordable to families below 50 percent of the local area median income, include:
- Casa Del Sol, acquired in August 2016, was built in 1999 and consists of 81 units in the City of Hanford, is located in the south central region of the San Joaquin Valley and is the county seat of Kings County;
- Village Oaks, also acquired in August 2016, is a 116-unit apartment complex built in 1998 in the City of Victorville, located approximately 80 miles northeast of Los Angeles in San Bernardino County.
- East Linda Gardens, acquired in December 2016, is a 103-unit property built in 1999 for lower-income families in the City of Marysville, just outside of Yuba City and approximately 35 miles north of Sacramento in Yuba County.
The initial equity investment and the permanent financing for this now 300-unit portfolio will fund approximately $2.5 million (over $8,300 per unit) of rehabilitation and initial capital reserves. The partnership will help ensure that Casa Del Sol, Village Oaks and East Linda Gardens are preserved as high-quality affordable housing for the long term.
“CDT’s investment with Southport is part of our larger commitment to ensure long-term access to quality, safe and affordable housing in California and throughout the country,” said Brian Dowling, Senior Vice President of Community Investments at CDT.
“We were particularly attracted to this portfolio because it provided an opportunity to create long-term stability for badly needed affordable units that on average are affordable to families earning less than 43 percent of the area median income,” Dowling said.
Southport is a long-time CDT operating partner with over 15,000 units of affordable housing under ownership throughout the West Coast, Southeast, and Mid-Atlantic regions. CDT and Southport made an investment into a joint venture that will own and preserve the properties in conjunction with Trillium Housing Services, a non-profit housing and service provider.
“Our strategic partnership with CDT will help address the critical unmet need for affordable housing that exists throughout California,” said Sue Baker, Vice President of Southport Financial Services. “By providing families with quality housing and amenities that will help parents and their children to thrive, we help build better communities.”
As part of the most recent acquisition in December, CDT invested an additional $550,000 of equity into this joint venture with Southport to acquire East Linda Gardens, bringing the total equity to $1.8 million. Details are still being finalized, but CDT and Southport are committed to making significant improvements to the property that will help maintain its attractiveness for East Linda Gardens’ families and elderly residents, such as beautifying the landscaping and green spaces and upgrades to other amenities, Dowling said. Plans also call for repairing and repaving the parking lot, adding cane rails along exterior stairs to improve accessibility, and replacing some playground equipment for children.
Previously, Southport and CDT financed the acquisition of Casa Del Sol and Village Oaks with short-term acquisition bridge loans from Century Housing, a leading affordable housing lender in California. The joint venture expects to refinance the three properties under the FHA 223(f) loan program through Red Mortgage Capital during the first and second quarters of 2017.
In California, renter wages continue to fall short of housing costs, according to data included in the National Low Income Housing Coalition (NLIHC)’s “Out of Reach 2016” report. The fair market rent in California for a two-bedroom apartment is $1,487. The average renter in the state earns $19.22 per hour, NLIHC reports. But in order to afford this level of rent and utilities – without paying more than 30 percent of income on housing – a household must earn $4,955 monthly or $59,464 annually. Assuming a 40-hour work week, 52 weeks per year, this level of income translates into an hourly housing wage of $28.59 per hour – a shortfall of $9.37 per hour that makes finding affordable housing difficult.
No state has an adequate supply of housing for Extremely Low Income (ELI) renters and 20 states, including California, have fewer than the national average of 31 affordable and available units per every 100 ELI households, NLIHC research shows. In 2016, California had 21 affordable and available rental units for every 100 ELI renter households, which tied with Alaska and Arizona (after Nevada) as the second-worst nationally for states with the lowest supply relative to need.
The need for affordable housing in the Marysville area is particularly pressing. In 2014, the Joint Center for Housing Studies of Harvard University determined that approximately 11,000 renter households in Yuba County were cost burdened, meaning they live in substandard housing, overcrowded conditions, or pay too high a percentage of their incomes for housing. According to the Yuba County Housing Element, a local government study that analyzed current and future housing needs from 2014 through 2021, more than 15 percent of the county’s households were extremely low income, 15.7 percent were very low income, and 18.4 percent were low income.
“We are delighted to hear that East Linda Gardens will be preserved as much needed low-income housing and that no residents will be displaced from their homes,” said Laura Clauson Ferree of the California Rural Legal Assistance’s Marysville office, a legal aid organization that advocates for affordable housing in Yuba County.
“We also appreciate that CDT and Southport plan upgrades that will increase accessibility for seniors and those with disabilities, as well as improve the play area for families,” Ferree said. “Low-income Marysville residents deserve safe, affordable housing and we hope that other companies will invest in our community. Too many families and seniors are left living in dilapidated unsafe homes due to the lack of affordable housing options in our community.”
The Community Development Trust (CDT) is a national investor in affordable housing. Working with local, regional and national partners, CDT makes long-term equity investments and originates and acquires long-term mortgages. In its 18 years, CDT has invested over $1.25 billion in debt and equity capital to properties in 44 states and regions—helping to preserve and create over 40,000 units of affordable housing. CDT is a private real estate investment trust (REIT), a certified Community Development Financial Institution (CDFI), an approved Fannie Mae affordable housing lender and a member of the Federal Home Loan Bank of New York (FHLBNY). As a CDFI and private REIT with a social impact mission, CDT operates as a double-bottom-line organization by utilizing creative financial solutions to provide debt and equity capital to underserved real estate markets, all while seeking attractive returns for shareholders.