$16M in housing renovations planned in Fountain Hill

Lafayette Ambassador Bank gave $320,000 to Valley Housing Development Corp. of Emmaus to help fund $16 million in construction renovations to The Mills, a 113-unit affordable housing community in Fountain Hill.

The development costs for the project total nearly $16 million, said David Buches, community investment manager at FHL Bank of Pittsburgh.

Harkins Builders Inc., which has an office in Media, will be the construction firm handling the project, which is expected to bring a significant amount of construction jobs to the site if, as expected, renovations begin next year.

Besides the grant, the project needs tax credits and a loan for it to happen this year.

Through an agency, Valley Housing has applied for 10 years of tax credits. It also is seeking a 30-year zero-percent interest loan to finance the renovations.

The project will refinance and preserve the low-income housing property for people 55 and older and for people with special needs, adding safety and accessibility improvements, maintenance and efficiency enhancements.

Federal Home Loan Bank Pittsburgh made the announcement at a news conference Wednesday at Lafayette Ambassador’s corporate services office in Bethlehem.

Lafayette Ambassador applied to FHL Bank Pittsburgh for the Affordable Housing Program grant on behalf of Valley Housing, and the money will then flow through Lafayette Ambassador to Valley Housing, Buches said.

“This award will be used for our largest project,” said Joseph Schupp, senior vice president Community Reinvestment Act initiatives and community development officer for Valley Housing Development Corp. “Without this …, this project may not have been possible.”

FHL Bank awards funds for affordable housing projects throughout its three-state outreach of Pennsylvania, Delaware and West Virginia, Buches said.

FHL Bank Pittsburgh is a congressionally chartered cooperative of local financial institutions. Each year, FHL Bank sets aside 10 percent of its net income for affordable housing program grants, which are awarded to project sponsors on a competitive basis. The affordable housing projects are funded by the earnings of the banks that are members of this cooperative, Buches said.

Last year, FHL Bank Pittsburgh made $15 million in affordable housing investments; this year, it set aside $23 million, Buches said.

The grant application process will open again in June with applications due in August and awards distributed in December. Awards can be given to any organization that has an affordable housing project in the three states that FHL Bank covers, Buches said.

“The only requirement is that they partner with one of our member banks,” Buches said. “One of the benefits of their membership is that they can access these funds for affordable housing.”

The maximum grant amount for each organization is $500,000.

Valley Housing’s $320,000 award fills a significant gap in funding, Buches said.

“If they didn’t have the $320,000 to plug that gap, then the project wouldn’t be moving forward,” Buches said.

ROUNDTABLE

Prior to the award announcement, Lafayette Ambassador Bank hosted an informal roundtable discussion with FHL Bank Pittsburgh and a group of financial services and housing leaders focused on the partnerships that FHL Bank Pittsburgh has in this Congressional district. They also discussed the power of public/private partnerships in achieving affordable housing goals.

“We work closely with FHL Bank of Pittsburgh,” said U.S. Rep. Charlie Dent, who was among the participants in the roundtable. “We have the not-for-profit sector, we have FHL Bank, as well as all local financial institutions.”

These organizations have been talking to members of Congress about maintaining the low-income housing tax credit, Dent said.

“They are very much concerned about that being maintained,” Dent said. “I expect it to be maintained going forward.”

Tax credits are crucial to making affordable housing projects happen.

COMPETITIVE EDGE

The FHL Bank Pittsburgh award to Valley Housing is a large financing piece, according to Brandon Johnson, a consultant with Mullin & Lonergan Associates Inc. in Camp Hill.

“It gives the project a competitive edge and fills gaps in financing that wouldn’t have been filled any other way,” Johnson said. “There are limited resources, and they are increasingly limited.”

Mullin & Lonergan helps craft the deal for the applicant and with the various steps in getting to closing, Johnson said.

Representing Valley Housing, Mullin & Lonergan has applied to the Pennsylvania Housing Finance Authority for $1.2 million in annual federal low-income housing tax credits which last 10 years, and a zero percent interest, 30-year loan, Johnson said.

These tax credits would translate to $11.4 million in equity that gets raised from the sale of the tax credits when an investor buys into the partnership, he added.

The PHFA received 103 applications this year, and about 30 to 40 are funded, he said.

Johnson said he should find out if the award is accepted by May 14.

If the project gets the tax credit award on May 14, the transaction could close by December and construction on the project could start June 2016.

With a 12-month construction schedule, the rehabilitation of The Mills would occur with the residents still in place, Johnson said.

Source: LVB