Private developers may not be aware of financing help for affordable housing and community economic development that’s available through the Massachusetts Housing Investment Corporation (MHIC).
Founded in 1990 by a group of leading financial institutions in collaboration with community leaders, MHIC provides capital that would not otherwise be available to the market. MHIC offers its services to both nonprofit and for-profit sponsors and developers.
As of Dec. 31, 2011 MHIC had raised over $1.6 billion of private capital.
As a housing and/or commercial real estate developer/sponsor, MHIC deploys four primary programs to deliver capital to underserved markets:
- Lending: MHIC manages a lending subsidiary with approximately $60 million of funds. Loans are made primarily for property acquisition and/or construction in conjunction with affordable housing. More than $535 million has been lent to over 175 projects. Recent examples include a $7.8 million construction loan to First Resources Corp. in Springfield for the City View Commons II property, and a $3.9 million construction loan for the Holcroft Homes Phase One development in Beverly sponsored by the North Shore YMCA.
Foreclosure Prevention: Through its Neighborhood Stabilization Loan Program initiative begun in 2009, MHIC provides financing to pre-approved borrowers throughout Massachusetts for both the timely acquisition of distressed properties to avoid foreclosure, and for construction needs to return such properties to productive use as either rental or for-sale housing stock. More than $50 million has been lent to 28 borrowers covering 127 properties that have preserved over 451 units. Recent closings include $834,525 lent to Codman Square CDC in Boston to preserve and renovate 13 units, and $1.9 million lent to Main South CDC in Worcester to preserve and renovate 33 units.
- Housing Tax Credits: Since its founding, MHIC has been an active syndicator of Low-Income Housing Tax Credits (LIHTC) sold to corporations in return for equity capital invested in multi-family rental properties throughout Massachusetts that help meet the critical need for quality affordable housing. A wide variety of tenant populations are targeted, ranging from families to seniors to special needs. MHIC works closely with real estate developer/sponsors in their applications to various funding agencies and the Massachusetts Department of Housing and Community Development (DHCD) – the agency which allocates the awards of
housing tax credits in periodic statewide applications. MHIC is a recognized leader in understanding how to navigate and manage this complex process. Housing tax credits are often combined with the sale of federal and/or state historic credits. MHIC has closed more than 185 tax credit housing partnerships that have created or preserved more than 10,400 housing units. Recent closings include $2.9 million in federal housing credits syndicated for the Central House SRO renovation in Cambridge sponsored by Caritas Communities, and $7.8 million in federal housing credits and federal historic credits syndicated for the 142 Water St. property in Leominster sponsored by Twin Cities CDC.
- New Markets Tax Credits: Begun in 2000, the New Markets Tax Credit (NMTC) program has had tremendous impact in stimulating non-housing economic development in qualifying distressed locations. Unlike the housing credits, MHIC itself applies to the allocating agency in Washington each year to receive an allocation of NMTCs. Through nine rounds to date, MHIC has received eight allocations totaling $612 million, making it one of the most successful recipient organizations in the country. MHIC characterizes its NMTC investments into four broad categories: business loans and manufacturing; commercial real estate and downtown revitalization; community health services; and nonprofits providing community
services. Broadly speaking, New Markets credits can represent approximately 20 percent of the capital requirements of a project (more if used in conjunction with historic credits). MHIC will consider NMTC investments throughout all six New England states, with the primary market again being Massachusetts. New Markets Tax Credits are also often combined with the sale of federal and state historic tax credits. To date MHIC has closed 51 NMTC projects. Two recent closings that will have far-reaching community impact are the sale of $5.35 million in credits for the new construction of the 225 Center St. project in Boston sponsored by The Community Builders, and the sale of $16.98 million in credits for the much needed renovation of the Holyoke Public Library sponsored by Holyoke Public Library.
Peter Sargent is director of capital development at Massachusetts Housing Investment Corporation (MHIC). Email: sargent@mhic.com
