Housing Partnership Network's lending arm in action
Real estate development isn't for the faint of heart. Add in the complexities of developing real estate that's affordable to lower and middle income community members, and you'll find yourself among the truly dauntless. Such is the case with the nonprofit developers who make up the bulk of HPN's membership, who not only work with traditional financing to develop new properties, but also navigate tax credits, government subsidies and philanthropic contributions to build equity to develop large scale properties in the communities they serve.
When the team at BRIDGE Housing Corporation developed the concept for RiverPlace Parcel 3 and won the right to purchase the land from the city of Portland Oregon, they had an uphill climb to find funds. Their project is ambitious, a mixed-income, mixed-used development with 203 affordable housing units, and 177 market rate units over 2 properties. But big projects come with big price tags before the building even begins, and in this case, BRIDGE was facing nearly $8 million in predevelopment costs before the property was even acquired. In addition to looking into tax credits, tax increment financing loans, and a land grant from the city to defray some of the predevelopment costs, BRIDGE needed an additional loan to bridge the closing of the construction financing, and looked to HPN for support.
As a CDFI, HPN provides a number of lending products and investment support for HPN members and collaborations made up of HPN members. In this instance, BRIDGE called on the support of the Housing Partnership Fund, a CDFI in its own right within HPN's lending services, which works to fill financing gaps for members, usually through 3 year enterprise loans that can be reused by a member over the term of the loan for a number of projects. But the BRIDGE project was big enough that they weren't looking for a standard HPF loan. Instead, working with HPN's lending team, BRIDGE received a $2.5 million unsecured loan intended specifically for RiverPlace. HPN provided $2 million of the funding, and brought in another HPN member and CDFI to participate for the remaining $.5 million. The City and BRIDGE itself are providing the additional funds needed to meet the predevelopment budget.
"In this era of scarce resources and unprecedented demand for housing, developers need every tool in the box," said Cynthia Parker, BRIDGE Housing President and CEO. "The Housing Partnership Fund provided a flexible layer of financing that will allow RiverPlace to move forward and bring hundreds of mixed-income apartments to Portland.”
"Our focus is on leveraging the strength of our members to provide these kinds of unsecured loans," Katie Rodriguez, VP of Lending at HPN, said of the project. "There's risk related to BRIDGE securing the layered financing they need to close on construction, but the benefit of lending to our members is our firsthand knowledge of their financial strength and excellent track records."
And the benefit to the community is increasing the odds for projects like RiverPlace to proceed, especially in areas like Portland, where smartly planned projects that incorporate mixed-income housing and retail space enable the city to meet its objectives to house and employ lower income community members as the population continues to rise.