Last week, USDA RHS 538 Guaranteed Rural Rental Housing Program (GRRHP) construction and permanent loan for the Village Green II property in Sonoma, California. Burbank Housing Development Corporation, a nonprofit affordable housing organization from Santa Rosa, is the developer and owner. Village Green II is an existing 34 unit senior community located near downtown Sonoma. Village Green II was originally built in 1982 and will undergo a substantial rehabilitation including improved accessibility. Units will be affordable to seniors and disabled residents with incomes at or below 60% of area median income. 28 units will have Rural Development (RD) Project Rental Assistance and 5 units will have HUD Project Based HAP Assistance.
Total development costs for the Village Green II rehabilitation are $13.2 million. Other sources besides the RHS 538 loan, are 9% LIHTC equity to be syndicated by Enterprise Housing Credit Investments and a grant from Sonoma County. The original RD 515 loan has been transferred to the new ownership entity. The combination of the 538 and 515 programs is a creative way to make significant capital improvements to the units while preserving a property’s rental assistance and affordability. In this situation, the federal RD 515 loan subordinates to the private 538 private GRRH loan. For Village Green II, the RHS 538/515 acquisition-transfer-assumption process took a short six months which was crucial in a time of rising construction costs and interest rates.
“Rural Development (RD) and the entire development and financing team were able to expedite a complicated transaction. This allowed Burbank Housing to get the proceeds it needed to preserve and improve 34 units of a rural development affordable senior housing in the North Bay region.” said Bob Morton, Senior Originator and Director of RHS Programs at BWE.
For more information on Village Green II or RHS lending, please email Bob at Bob.Morton@bwe.com.