Pineview Manor, a 49-unit rental development for low-income senior citizens in Payson, is one of 11 affordable housing projects under way across Arizona, thanks to a zero-interest loan from the Arizona Community Foundation’s Affordable Housing Fund.
Slated to begin work in June 2011, the project includes rehabilitation of an existing 29-unit development and construction of 20 new units for senior citizens with incomes below 60 percent of the Area Median Income. Located at 304 S. Clark Road in Payson, the development will include supportive services and reduced rents.
Pineview Manor is being developed by the nonprofit Foundation for Senior Living, which received a $75,000 recoverable grant from the ACF Affordable Housing Fund to help pay for predevelopment work, including archaeological studies required to secure building permits.
The Arizona Community Foundation and LISC-Phoenix created the ACF Affordable Housing Fund in 2007 to assist with development of affordable housing after the 2005 surge in home prices shut many Arizonans out of the housing market. In what is considered a creative use of philanthropic capital, the Fund makes zero-interest loans, also called recoverable grants, to nonprofit housing developers for the construction, refurbishment and/or repurposing a variety of types of housing for affordable use, in both rural and metropolitan areas. The loans are made during the predevelopment phase when the project’s feasibility is uncertain, making traditional lender financing all but impossible to obtain due to the high risk.
The loan is repaid to the Fund when lender or government financing is obtained for the project, typically within 24 to 36 months, creating a “recycling” of available charitable dollars to continually assist nonprofit developers and projects.
A key advantage of a fund built on philanthropic dollars is its flexibility. Originally envisioned as a way to fund the pre-development phase of new?construction projects, the mortgage crisis and onslaught of foreclosed housing inventory in recent years prompted the Community Foundation to adjust the Fund’s focus. Gifts made to the Fund were flexible enough to allow for acquisition and refurbishment in addition to new construction. A key focus of the Fund now is to take advantage of the large number of foreclosed homes in Arizona, rehabilitate them and resell them as affordable housing.
Banks, foundations, corporations, public utilities and private donors have contributed to the Fund to bring total gifts to $1,060,970.
Recoverable grant pools are used successfully around the country to support predevelopment costs associated with affordable housing projects, largely developed by the nonprofit sector. An obstacle emerges when nonprofit developers are unable to raise or provide the necessary up-front capital for a project, which can range from $25,000 to $400,000 or more. These expenses cover a number of needs, including earnest money and assistance for land acquisition, planning, conceptual drawings, environment, archaeological and market studies, initial engineering evaluations and other professional services.