Affordable Housing Financing Options
As one of the largest affordable housing developers in California, KDF Communities brings a successful track record and strong balance sheet to each situation. Consequently, KDF continues to be a preferred borrower of lending institutions and is able to secure financing at the most favorable terms.
Since 1997, KDF Communities has closed 44 affordable housing transactions with various lending and investment companies. These projects were financed with over $525 million of tax-exempt bonds and taxable debt and over $235 million of tax credit equity. We have worked with some of the largest and best known lenders and investors in the industry including Bank of America, JER Hudson, Centerline, Citibank, East/West Bank, GMAC, Union Bank, US Bank and Wells Fargo.
Construction and Permanent Financing
The type of financing chosen for a project depends heavily on the product type selected (rental, for-sale, senior or family), the desired level of affordability and the type of funding available at the time. Identifying a financing plan with the right mix of affordability and certainty of execution requires a comprehensive analysis of benefits and drawbacks of the many different funding sources available. The KDF team has closed transactions with the following affordable housing financing sources:
- Tax-Exempt Bonds
- 4% Low-Income Housing Tax Credits
- 9% Low-Income Housing Tax Credits
- Multi-Family Housing (MHP) Program Funds
- New Markets Tax Credits
- Redevelopment Agency Funds
- HOME funds
- CDBG funds
- HEART Funds
- AHP Funds
- HUD – Interest Reduction Payments (IRP)
Financing in Today’s Environment
The availability and cost of financing for the development of affordable housing has changed significantly in recent years. Tax credit pricing related to the sale of low-income housing tax credits has dropped 30-40% from the peak. While debt is still relatively inexpensive in historical terms, lender spreads have increased sharply over the last several years and the overall cost of debt is approximately 100 basis points higher than in 2007. Having closed 44 affordable housing transactions since 1997 and maintaining a strong balance sheet, KDF Communities has the track record to attract lenders and equity investors in our affordable housing developments even in this difficult financing market. As indicated in the Case Studies section, KDF also has the financial experience and ingenuity to determine the most favorable financing structure for an affordable housing development.