Purpose of Program
In a regional partnership, DHCD has joined with select County governments to preserve affordable multifamily rental housing located in the path of growth brought on by the federal Base Realignment and Closure (BRAC) process, which will bring over 25,000 new households to the region beginning in 2011. The purpose of the MD-BRAC Preservation Loan Fund is to leverage DHCD, federal, local and private funds to preserve affordable rental housing by providing flexible, short-term (typically 12-24 months) loans to spur additional affordable rental housing preservation activities in the MD-BRAC geographic footprint. In certain circumstances, the Fund will provide guarantees and other forms of collateral to eligible projects.
The MD-BRAC Preservation Loan Fund is part of DHCD’s larger affordable rental housing preservation initiative funded in part by the John D. and Catherine T. MacArthur Foundation. The MacArthur Foundation’s support for this initiative is part of their
Window of Opportunity campaign, a $150 million, 10-year effort to preserve affordable rental homes across the nation. Maryland is one of only 12 states and cities to have been awarded funding under Window of Opportunity.
The MD-BRAC Preservation Loan Fund is made possible through the MacArthur Foundation’s $4 million Program Related Investment (PRI), and matching funds from DHCD and our BRAC County partners. The collective efforts of DHCD and its partners will ensure that rental housing preservation is a key element of the region’s response to the challenges and complexities of BRAC-related growth.
As of July 2015, the MD-BRAC Preservation Loan Fund is open to the following counties: Baltimore County, Harford County, Howard County, Montgomery County, and Prince George’s County. Affordable rental housing developments located in these counties have access to a pool of funding totaling approximately $5 million.
Projects eligible for financing must be existing multifamily rental housing with a demonstrated need for short-term financing. Multifamily rental housing may include apartment buildings, townhouses, single room occupancy (SRO) and shared housing facilities with five (5) or more units. The Fund’s definition of rental housing preservation is intentionally broad, and will extend to properties that will ultimately include all or only a portion of their units restricted to households at moderate and low income levels. Projects that do not currently meet affordability standards will be required to institute income and rent restrictions following receipt of the MD-BRAC Preservation Loan. Units must be restricted as affordable for a period of no less than 10 years. “Affordable” means rental housing with existing income or rent restrictions, or housing with rents that are affordable to households that earn up to 100% of County or Area Median Income, whichever is greater.
Summary of Financing Products
The MD-BRAC Preservation Loan Fund will provide a variety of flexible, short-term financing products for sponsors of affordable rental housing preservation developments. Over the lifetime of the Fund, it is anticipated that new products will be developed based upon borrower demands and changing economic realities.
All financing products provided by the Fund will be available to finance both assisted and un-assisted rental properties. This definition of preservation is intentionally broad, and will extend to properties that will ultimately include all or only a portion of their units restricted to households at moderate and low income levels.
The primary activity of the Fund is expected to be short-term (typically 12-24 months) loans that will be repaid by a long-term financing using DHCD and partner financial resources. In certain circumstances, it is expected that the Fund will provide guarantees and other forms of collateral to enable financial restructurings.
The Fund is designed to facilitate quick decision-making; the aim is to commit funding within 30 days of the receipt of a complete
application and close loans within 90 days. All loans must be approved by both DHCD and the County in which the project is located. In addition to normal underwriting standards, an emphasis will be placed on the proposed pay-off strategy for the loan. The maximum loan per project is the lesser of $1.5 million or 25% of the total fund balance at the time of application.
CONTACT: Tiwanda Moore, Program Manager
Multifamily Housing Development
Community Development Administration
Maryland Department of Housing and Community Development