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Los Angeles, Banks Make Available $100M Fund for Predevelopment, Acquisitions
Published: July 22, 2008
By Anuradha Kher, Online News Editor
Los Angeles--The first multimillion-dollar financing tool for the creation and preservation of affordable housing in Los Angeles has recently been unveiled. The New Generation Fund is a $100 million predevelopment and acquisition fund created through a partnership of the city of Los Angeles and a consortium of banks, financial institutions, foundations and community development financial institutions (CDFIs).
The fund is designed to combat homelessness and reduce the housing burden on poor and working families by offering affordable housing developers early-stage financing for properties intended for low- and moderate- income residents.
“Housing is a cornerstone of prosperity in our nation and Los Angeles is committed to creating an affordable housing supply that meets the needs of our community,” says Los Angeles Mayor Antonio Villaraigosa. “The $100 million New Generation Fund will go a long way toward helping us realize this ambitious goal. I am proud that the city stepped forward with its initial commitment of $10 million to leverage private capital in the creation of this creative financing tool.”
Citi, Wachovia, Enterprise Community Loan Fund, Merrill Lynch, MetLife and HSBC have contributed a combined total of $100 million to the fund, which is expected to grow up to $150 million by next summer. The city of Los Angeles, the Ahmanson Foundation, California Community Foundation and Weingart Foundation are providing credit enhancements totaling nearly $14 million.
Enterprise Community Investment Inc. is the fund’s owner and New York-based Forsyth Advisors will manage the daily administration of the fund, with the California Community Reinvestment Corp. providing local support for vested parties.
“Having invested resources and built local development capacity in Los Angeles for more than 10 years, Enterprise understands the unique housing needs of the Southland—homes that are affordable, environmentally sustainable and accessible to places of employment,” says Doris Koo, president and CEO of Enterprise Community Partners. “We are excited to partner with the City of Los Angeles and other funders to tackle the local shortage of affordable housing.”
The New Generation Fund is expected to offer early-stage capital with flexible underwriting and expedited processing. Developers will be able to borrow up to $10 million per project, at 130 percent loan-to-value (LTV) for non-profit organizations and 95 percent LTV for for-profit developers.
In order to apply for a loan, potential borrowers approach one of five underwriting lenders: Enterprise Community Loan Fund, Low Income Investment Fund, Local Initiatives Support Corp., Century Housing or Corporation for Supportive Housing.
