Love Funding closed a $6.75 million loan to finance new construction and substantial rehabilitation at Central Park Towers, a Section 8 affordable apartment community in Elgin, Illinois. Love Funding Midwest Regional Director Bruce Gerhart secured the loan through HUD’s Rental Assistance Demonstration (RAD) Program, which was introduced by the agency in 2014 to help preserve and upgrade at-risk public and assisted housing. The financing is being supplemented with 9% Low-Income Housing Tax Credits (LIHTCs) and Illinois Affordable Housing Tax Credit (IAHTC) funds.
The non-recourse financing, which locks in a low interest rate for a 40-year term, enabled the current owner, the Housing Authority of Elgin, to substantially renovate the project’s existing 11-story building and construct a new six-story structure on an adjacent lot. Once finished, Central Park Towers will have 104 LIHTC units in the existing building that will be subsidized through Section 8 project-based vouchers, and 60 units in the new structure, of which 46 will offer rental assistance.
Love Funding is among a handful of national lenders with RAD experience. Under RAD, public housing authorities can apply to HUD to convert current federal funding received for public housing to project-based Section 8 vouchers with 20-year contracts. By having a guaranteed rental stream, these agencies can now access private capital in the form of 9% or 4% LIHTCs. They can also tap private debt, which housing authorities have never been able to use for public housing.