Bank of America Merrill Lynch was picked to provide roughly $770 million in financing to community-based nonprofit owners for a major public housing initiative in San Francisco, Maria Barry, the bank’s community development executive, told Commercial Observer.
The bank was chosen by the city’s government, the San Francisco Housing Authority and the various developers involved to finance the preservation and rehabilitation of 1,400 public housing units in the city—an effort that falls under the Department of Housing and Urban Development’s Rental Assistance Demonstration program.
“My team worked so hard and I give them all the credit,” Ms. Barry said in an interview over the phone. “Up until the deadline, they really thought through how to put together a financing package to accomplish what the city was looking for, but also add value from our firm’s perspective and expertise.”
Bank of America will work with Freddie Mac to provide funding for the RAD project. The bank reached out to the GSE because of the complementary permanent financing they could offer in addition to Bank of America’s debt and equity investments, Ms. Barry noted.
“Freddie Mac is a leader in providing financing for HUD’s RAD program and we are pleased to work with Bank of America Merrill Lynch to provide almost $100 million under our direct purchase of tax-exempt loan offering to support the city of San Francisco’s efforts to transform its public housing stock,” David Leopold, Freddie Mac Multifamily’s vice president of affordable housing production, said in prepared remarks. “The result will be improved housing quality for more than 1,400 San Franciscans.”
The debt and equity from Bank of America will cover 15 projects in San Francisco’s Chinatown, Tenderloin, Mission District, Bernal Heights, SoMa, North Beach, Lower Pacific Heights, Duboce Triangle, Richmond District, Hunters Point, Forest Hill Extension, Civic Center, Western Addition and NoPa. Improvements to the units will include building system, roof, exterior and energy efficiency upgrades.
The financing will include approximately $350 million in construction financing, approximately $300 million in low-income housing tax credit equity, $20 million in subordinated, forgivable debt, $5 million in pre-development loans as $2.2 million to provide services to residents. The bank also provided Enterprise Community Partners, another lender involved in the project, $500,000 to assist the RAD developers.
“The significant resources provided by Bank of America Merrill Lynch and Freddie Mac will mean that thousands of public housing tenants will soon see the transformative rehabilitation of their homes they’ve been hoping for over years, even decades,” Olson Lee, director of San Francisco’s Mayor’s Office of Housing and Community Development, said in prepared remarks.
In 2014, the bank lent more than $3.2 billion in debt and equity to create more than 13,000 housing units—12,500 of which were affordable—for at-risk groups across the U.S.
“We have individuals who really understand the affordable housing business and are very solutions oriented and so this was the perfect opportunity to be involved with a transformation project in a really important city that has a huge need for affordable housing,” Ms. Barry told CO.
Construction for San Francisco’s affordable housing rehabilitation project will begin by November 1, 2015 and is slated for completion between August 2016 and April 2017.