Bridging the Affordability Gap
June 15, 2017
So what’s exceptional about The Parks at Fig Garden deal in Fresno, California? For starters, it’s our first Bridge to Resyndication that’s converted from the Bridge Loan phase to the Freddie Mac tax-exempt loan (TEL). The deal allowed a nonprofit Borrower to buy the 366-unit property and make sure it stayed affordable for residents.
“Two critical aspects of this transaction made the difference between this housing being preserved as affordable housing for the long term versus being converted to market rate,” said Tim Leonhard, managing director of Affordable Housing at JLL, and the Parks at Fig lender. “First, speed of execution: The bridge funding helped the Borrower close quickly — so they didn’t lose out to conventional buyers with no interest in keeping the property affordable. And second, the buyer was able to eliminate interest rate risk by locking in the rate for permanent bond financing at the initial closing.”
The buyer, Community HousingWorks, is a California nonprofit that builds and owns affordable apartments and has done several deals with us. They were able to increase proceeds from $14.4 million at the bridge closing to $15.9 million at permanent financing conversion — more than a 10 percent increase. Rehab is expected to cost $45,000 per unit.
The apartment community remains affordable because of “the commitment of Freddie Mac and JLL to provide critical financial tools for affordable housing,” said Dave Gatzke, Community HousingWorks’s vice president of acquisitions.
The community houses residents whose incomes are at 50 to 60 percent of area median income. More than 200 residents have Section 8 housing vouchers.
Keeping this housing within reach means a great deal to the Parks at Fig community. One longtime resident, a single dad, is helping renovate the property. He was hired by the siding contractor which is re-siding more than half the development.
Residents have access to on-site services such as a daycare center. In addition to child care, the Parks at Fig community has a fitness center; tennis and basketball courts; and swimming pools.
Saving on Utilities
Another exceptional fact? The property features the largest Multifamily Affordable Solar Housing (MASH) installation of solar photovoltaics in California — resulting in an 80-90 percent reduction in electricity usage and significant savings for residents.
We created our Bridge to Resyndication offering in 2015 to help make more Targeted Affordable Housing deals possible. Leonhard, a member of Freddie Mac’s Seller/Servicer Advisory Council involved in product development, said “It’s amazing that Bridge went from discussion and concept to an initial closing in fewer than 90 days.”