Housing Services:
Non-Profit Acquisition Financing Loan

Purpose

Acquisition loans are designed to fund acquisition of property and other activities necessary to take title to property or to cover a portion of the contract purchase of property intended for development of housing serving low- or moderate-Income households, and mixed-use or mixed-income rental housing developments.

Product Description

The Acquisition Financing Loan Program is a partnership between the Portland Development Commission (PDC) and the Enterprise Foundation (Enterprise) to provide funds to non-profit affordable housing organizations and the Housing Authority of Portland for property acquisition.

Enterprise makes loans directly to qualified Project Sponsors through its Acquisition Loan Program. If, however, Enterprise determines that a particular acquisition loan poses significant risk of default or the loan is a significant financial investment, Enterprise may make its loan approval contingent on a repayment guarantee from PDC. If the guarantee is requested, the PDC evaluates the project and provides final approval for the loan. The PDC guarantee obligates the PDC to repay Enterprise for a portion of losses in the event the Project Sponsor defaults on the loan.

The following are some general product characteristics of the Acquisition Loan Program. Please note that a more detailed description of some of the following are provided in the Product Specific portion of this section.

Loan Amount: Based on LTV as determined by Enterprise

Interest Rate: Generally 6%

Loan to Value (LTV): Generally not to exceed 100% LTV

Debt Coverage Ratio (DCR): No applicable minimum

Repayment: deferred until end of loan term

Term: 24 months or close of construction financing, whichever is less

Minimum Qualifications

1. The property must be located in the City of Portland.
2. This product is available to Eligible Non-Profit Organizations.

Contacts

Parties interested in the Acquisition Financing Loan Program should contact the Fund Manager, at the Enterprise Foundation, 1020 SW Taylor Street, Suite 800, Portland, Oregon 97205, telephone: 503-223-4848.

Product Specific Guidelines

Eligible Project Sponsors: Eligible Non-Profit may apply for acquisition financing.

Eligible Projects: Proposed projects that include rental housing affordable to Low Income Households (earning at or below 60% MFI), For-Sale Housing affordable to Moderate income Households (earning at or below 100% MFI), or Mixed-Use or Mixed-Income projects which include units that meet the above affordability are eligible to apply for acquisition loan funds.

Maximum Loan Amount: Enterprise Foundation makes loan guarantees up to the value of the property plus allowable predevelopment expenses.

Interest Rate: A 6% interest, which is deferred until repayment, accrues on the loan. Interest accrues on loan until entire principal and interest is repaid at closing of construction loan.

Loan to Value: Generally up to 100% plus the allowable predevelopment expenses, as approved by Enterprise and, if applicable, PDC.

Debt Coverage Ratio: Not Applicable

Repayment: The loan is due and payable at the earlier of the closing of (1) a PDC or other construction loan or, (2) 24 months from the date of the loan.

Eligible costs: Eligible costs include, but are not limited to, costs reasonable and necessary to take title to property, to fund a portion of the contract purchase of property and to complete approved feasibility and predevelopment work. Site control costs including option payments are also an eligible use of loan funds.

Security: If the Project Sponsor has title to the property, the loan is secured with a First Deed of Trust. (A form is available from Enterprise.) If the Project Sponsor does not have title to the property, site control in the form of an executed purchase agreement, or other evidence of site control acceptable to the Enterprise Foundation, with a period of time sufficient to complete purchase financing, must be executed prior to closing.

Documentation: The Project Sponsor must execute documents with Enterprise, including a loan guarantee agreement, note and other documents required by the specifics of each transaction. The Project Sponsor must also submit all due diligence documents requested by the Enterprise Foundation or PDC.

Reporting Requirements: During the period that any amount of the acquisition financing loan remains outstanding, the Project Sponsor must prepare and submit status reports that detail the progress toward close of construction financing and project development.

How to Access Funds

1. Intake: The Project Sponsor contacts the fund manager at the Enterprise. The Fund Manager coordinates information intake and meeting(s) with the Project Sponsor, the Enterprise and PDC staff. Loan guarantee requests may be submitted any time during the year to the Enterprise foundation. Allow two weeks for review and response after a COMPLETED application is submitted.
2. Application: The Project Sponsor submits an application and budget to Enterprise. The Fund Manager works with the Project Sponsor to determine the amount of the loan, eligible uses of funds and whether a PDC guarantee is required. If a PDC guarantee is necessary, the Fund Manager works with the PDC to determine whether the project is consistent with City goals and the level of risk for the project is acceptable. If Enterprise (and PDC, if applicable) approve the application, Enterprise issues a Commitment Letter to the project sponsor.
3. Loan Approval/Commitment: The Enterprise team and PDC staff (if PDC is guaranteeing the loan) work with the applicant to develop a budget, scope of work and schedule of activities which meet the terms of the PDC/Enterprise loan guarantee agreement. In addition, a disbursement schedule is established. Once Enterprise (and, if applicable, PDC) approves the loan and agrees on the above issues, Enterprise works with the Project Sponsor to close the loan.
4. Loan Closing: The Project Sponsor and Enterprise execute loan documents. The PDC is not a signatory. The Project Sponsor is required to submit due diligence documents relative to their loan request and standard corporate documents. Generally, loans close in conjunction with the property acquisition. (Note: a separate agreement between the PDC and Enterprise secures the PDC guarantee.)
5. Disbursement: Additional disbursements are made upon review of invoices or other evidence of costs incurred. All disbursements from the Enterprise Foundation to the Project Sponsor occur no more than once per month.
6. Completion: At time of repayment (after 24 months or at close of construction financing) all principal and all accrued interest is due and payable.

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