Arbor Commercial Mortgage LLC of Uniondale, NY is funding the project under its FHA 221(d)(4) product line. The initial phase of the financing is an 18-month construction loan, according Schatzi Melick, the FHA regional director who originated the loan. When the project is completed, the construction loan will convert to a fully amortizing 38-year structure.
Arbor utilized a Ginnie Mae mortgage-backed security to provide credit enhancement for the fixed-rate, tax-exempt and taxable bonds which carry a blended note rate of 5.91%. The financing structure also involved a Tax Allocation District loan and grant, along with a bridge loan from Bank of America. The loan-to-cost ratio is 76%.
"This was a very complex transaction with multiple layers of debt structure that was made possible and viable through the enhancement of the 221(d)(4) program which gave the bonds a AAA rating and a favorable interest rate," Melick says.
The allocation of tax-exempt bonds came from the city's Urban Residential Finance Authority. The project 370-372 Northside Dr. calls for 85% of the units to be set aside for tenants eligible for low-income housing tax credits.
The principle entities within the development partnership are Southeast Capital Partners LLC and Bethursday Development Corp., a for-profit development entity of the Bethel Northside Baptist Church.
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