Like many parts of California, as the city of Temecula continues to grow – 15 percent, in fact, from 2010 to 2018. To address the resulting shortage of affordable homes, they created a new plan to address the affordable home shortage.
To help meet this need, network member Community HousingWorks (CHW), located in nearby San Diego, requested two loans for their new Las Haciendas development in Temecula: a $3.65 million land acquisition of two contiguous parcels on 2.8 acres, and a $1.2 million predevelopment loan with up to 105 percent LTV. The predevelopment budget includes standard predevelopment expenses, such as legal, architect/engineering, and tax-credit application related costs and fees. A first deed of trust on the 2.8 acres of unimproved land will secure the loan.
“Working with NeighborWorks Capital was an incredibly streamlined process backed by a strong team of origination, underwriting and closing professionals. In addition to the land acquisition financing, the predevelopment loan option allows us to draw down funds as we incur costs prior to construction close,” said Stephen Swiecicki, Acquisitions Manager for CHW.
We’ve provided five previous loans to CHW, including a $1.5 million site acquisition loan for North Park Senior Apartments, one of only seven LGBT-affirming home developments in the U.S.
“Neighborworks Capital offers acquisition financing, which we can couple with predevelopment financing. Our flexibility and policies allow us to provide additional financing that is partially secured by the property. For CHW, we were ultimately able to secure up to 105 percent of the property,” said Tamar Sarkisian, Senior Loan Officer with NeighborWorks Capital. “We want to help encourage our developers to get to the finish line.”
The Las Haciendas development will feature 77 total units, including 15 one-bedrooms, 39 two-bedrooms, and 23 three-bedrooms, with an AMI mix from 30-60 percent. The development will have sustainability features in its two, three-story buildings, plus a one-story, 2,300-square foot community center. The addition of the on-site services that CHW provides helps foster a sense of community. The project caters to large families and is near some of the best schools in the county.
“This development will ultimately give families the opportunity to live in an area with top rated schools and limited affordable housing options,” Swiecicki said.
Temecula is primarily a tourist destination, known for numerous wineries, golf courses, and resorts. Home affordability challenges are not new to the Temecula submarket; however, the growth has magnified them, and is projected to increase. Large swaths of the Temecula community have been home cost burdened for an extended period.
To address these challenges, the city’s new specific plan, which regulates the area, envisions a commercial corridor, medium-high density dwelling homes, office buildings, parks, and significant pedestrian connectivity. The area is served by several amenities. The City of Temecula has shown strong support for CHW’s development.
“CHW is very cutting edge with their projects, from sustainability, to being ahead of the curve with population types – they’re willing to be at the forefront, trailblazing for great projects,” Sarkisian said.
Temecula is the first city when you leave San Diego and enter southwestern Riverside County, a natural extension for CHW.
“It’s going to be a transformative project located within a newly adopted specific plan of the city, which we hope will be a catalyst for future development in the area,” Swiecicki said.
There is an affordable home shortage statewide in California, challenged by a lack of new construction relative to population growth, leading to low inventory and vacancy rates. These factors have increased apartment rents and home prices and increased market competition for developable apartment land and properties across most markets. Many existing owners are selling affordable apartments with lapsing income restrictions to buyers who can convert the complexes to more profitable market rate communities. Nearly 28,000 apartments (31 percent of the total rental assistance stock in the state) are at risk of losing affordability by 2020. These statewide issues are particularly evident in Temecula, which has experienced rapid growth.
CHW is an example of a network developer who is proactively undertaking actions recommended to help curtail this shortage, as also outlined in the Joint Center for Housing Studies of Harvard University’s report.
“Las Haciendas is a really great case in point, and CHW is a network member who’s actively trying to work with cities in areas outside their normal scope. It’s the CHWs of the world who do it first, and then everyone else can come in as understanding increases. Cities need to be more supportive, help proactively incentivize LIHTC and ease the way for affordable developments,” Sarkisian said.
About Community HousingWorks
Founded in 1988, Community HousingWorks is an experienced and highly competent property owner and manager, with a portfolio of more than 3,800 apartments throughout Southern California, with nearly 1,400 in development. They develop and renovate multifamily, affordable rental apartments in nearly 40 urban, suburban and rural communities in San Diego and across California. CHW is an exemplary-rated member of the NeighborWorks Network and one of the few affordable organizations to win ULI Awards. Their Solara development is the first fully solar project with no outside dependence on energy, and they are considered innovators in green development.