Notice of Funding Opportunity:

Predevelopment Loan Fund

November 2023

Funding Purpose: 

The Predevelopment Loan fund has been created to facilitate development of high quality affordable multifamily rental housing by providing technical assistance and below-market financing for typical predevelopment expenses.

Eligibility Criteria:

501(c) 3 non-profit organizations, for-profit companies, and public entities including local governments and redevelopment and housing authorities are eligible. The organization must operate in the Commonwealth of Virginia. Preference is given to entities that have closed at least one transaction with Virginia Housing and show at least two years of successful payment history.

Program Parameters:

Organizations must provide a clear project description for a multifamily REACH eligible development.  Predevelopment Loans will be unsecured for a 36 month term. The loan may not be used toward general operating expenses, developer fees and activities not connected with the creation and preservation of affordable housing. Applications must specify the sources and uses of funds.

Eligible Predevelopment Loan Amounts are as follows:

Statewide
* Projects under $5 million in total development costs are eligible up to $100,000.
* Projects between $5 million and $20 million in total development costs are eligible up to $250,000.
* Projects over $20 million in total development costs are eligible up to $500,000.
High Cost Areas
* Projects under $5 million in total development costs are eligible up to $250,000.
* Projects between $5 million and $20 million in total development costs are eligible up to $500,000.
* Projects over $20 million in total development costs are eligible up to $750,000.

Eligible applicants are considered throughout the program year. 

Click the handbook link below for a detailed explanation of the expenses allowed under this funding opportunity, disbursement and reporting requirements.

Application Process:

Due to funding availability, applications are reviewed on a first-come, first-served basis.  All final applications are reviewed monthly by an internal committee.

A Strategic Housing Initiatives program administrator is available to assist applicants with completing the application and performing due diligence associated with obtaining a Virginia Housing loan.  Before submitting an application, contact Luke Tate, Strategic Housing Officer, at (804) 343-5778. 

 Application Requirements:

• Predevelopment Loan Application and attachments
• Evidence of good standing from the Virginia State Corporation Commission
• Audited Financial Statements from two (2) most recent fiscal years and year-to-date financials
• Conceptual Pro forma Analysis with Proposed Sources and Uses.
• Evidence of local jurisdiction support (if applicable)
• Status of development approvals
• Evidence of site control
• Description of the Proposed Development Team or Partners
• Proposed Development Timeline
• Copies of pertinent contracts or agreements (e.g. partnership agreements, appraisal, market study, architectural and engineering reports, etc.)
• Site Plans
• Documentation supporting affordable housing
• Documentation of proposed interim and permanent financing
• Wiring instructions for the financial institution of the borrower. Include the name, phone number, and email address of the point of contact.
• If a non-profit organization, a copy of the organization’s 501(c)3 IRS tax exemption letter

Approval

Once submitted, if a loan is approved, applicants will receive a loan commitment and loan closing documents. Disbursement of loan funds will be made via wire transfer at loan closing.  The borrower will receive an initial package from Virginia Housing Multifamily Servicing once the loan is disbursed. This package will include information on how to access the borrower’s portal to obtain financial information at any time.

Restrictions:

• General operating expenses, developer’s fees, and activities not connected with the creation or preservation of affordable housing are not eligible for funding.
• Architectural and engineering reports must be focused on developing a physical program for a structure or parcel of land. The site specific study must define all the details with how to install, fix, and apply all the materials, equipment, and structure of the building. The description of the works must be refined into specification documents which, together with the detailed scale graphic documents, form the basis of the design. 
• Funds may not be used for the Virginia Housing Tax Credit Application or the Tax Credit Reservation Fee. 
• The planned development site must be identified before an application can be submitted.
• Funds may not be used to pay for activities currently funded by another funding source. 
• Legal fees covered must occur at least twelve (12) months before construction or permanent loan closing. For example, fees as a result of closing, such as but not limited to, closing fees and title insurance are not eligible. 
• Consultants receiving funds pursuant to this grant may in no way have an existing relationship (current employment, contractual or voluntary) with the organization during the term of this grant. 
• Organizations can have a maximum of two outstanding predevelopment loans at a time.
• Predevelopment loans are capped at approved amount and not eligible for increases over the loan term.