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Resourceful Relationships Open Doors for Financing Affordable Projects
Close public and private partnerships are instrumental in expanding opportunities in financing. Almaden Apartments in San Jose, Calif., Pillars Finalist for the Most Creative Financing of an Affordable Apartment Community, stepped outside of conventional financing tactics to develop a 100% affordable apartment community in one of the nation's most expensive housing markets.
 Developed by MacFarlane Costa Housing Partners, this 226-unit family apartment community provides high quality affordable housing to working households with income at 50%-60% of area median. The community includes one-, two-, and three-bedroom apartments with monthly rents ranging from $952 to $1,586. This is compared to market-rate rents averaging from $2,400 to more than $2,700.
The success of the project was based on close public and private partnerships, between the city, the development firm, and nonprofit partners. The effort from each investor thwarted delays and obstacles stemming from financing challenges and changing market conditions. The development team bided time while waiting for land values and market conditions to improve until construction was feasible. The strategically layered financing plan consisted of:
|
Invested Amount |
Source |
|
$27.6 Million |
Predevelopment Loan (provided by the developer) |
|
$8 Million |
Bridge Loan |
|
$6.3 Million |
Land Loan (all of the above carried for 6 years from initial land acquisition in 2001) |
|
$31.3 Million |
Tax Exempt Bonds (exemption from project bonding limit required) |
|
$20 Million |
4% Tax Credit Equity |
|
$ 13.8 Million |
City of San Jose |
|
$2.3 Million |
Developer Note |
|
$4.9 Million |
Developer Loan to Partnership |
 The community contributes to a larger redevelopment effort on the part of the city, as it was built on five acres of land that required extensive environmental remediation due to its former industrial and commercial uses. The city of San Jose was a major investor, and was sold on the proposal for a 100% affordable project that would maintain condo design objectives. Almaden Apartments represents one of the fastest lease-ups in market history — 100% of the units were leased in two months time.
 Providing a sense of place and community to blighted areas is a key component to target investors with such goals. Land was donated to the city from this project for a neighborhood park directly adjoining the property. The community features a clubhouse, computer learning center with free on-site computer classes, fitness and business centers, pool and spa, laundry rooms, and ample parking. Public transit and a light rail station are in close proximity, as well as schools and recreational facilities. The project was designed to exceed market rate standards, featuring classic contemporary garden-style architecture, with below-podium secured parking, while still appearing to be built on grade from all exterior views.
Planning, partnerships, and patience allow for successful developments in even the most expensive housing markets.
For more financing tips, tune in to this months Multifamily Webinar, FHA – A Viable Alternative In Today’s Multifamily Lending Market on April 22. Register today!
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