Housing Services:
Non-Profit Predevelopment Loan

Purpose

Non-Profit Predevelopment Loans are designed to fund technical and professional services necessary to explore project feasibility of housing serving Low or Moderate Income Households, or Mixed-Use or Mixed Income housing developments which include housing units meeting the affordability requirements. This product is not intended to fund the purchase of property, except for option payments to hold property.

Product Description

The Predevelopment Loan Program is a partnership between the Portland Development Commission (PDC) and the Enterprise Community Partners Inc. (Enterprise) that provides funds to Eligible Non-Profit Organizations for predevelopment activities such as obtaining site control, initial design and financing work, environmental evaluation and appraisals.

The following are some general product characteristics. Please note that a more detailed description of some of the following is provided in the Product Specific portion of this chapter.

Loan Maximum:
Funding Source 1: First $25,000 from PDC, next $10,000–$25,000 from Enterprise Community Partners, Inc.; both interest-free.

Funding Source 2: Additional interest bearing funding of $100,000–$115,000 that could fund a combined maximum predevelopment loan up to $150,000 subject to Enterprise Community Loan Fund, Inc.'s approval.

Interest Rate:
PDC/Enterprise Community Partners, Inc. at 0% on first $35,000–$50,000 and unsecured.

Loan to Value (LTV): Not Applicable
Debt Coverage Ratio (DCR): No applicable minimum

Loan Amounts: Up to $150,000 per project or as approved by Enterprise & PDC

Term: 24 months or close of construction loan, whichever is earlier

Repayment: Interest accrues on Enterprise Loan Fund, Inc.'s portion of loan until the entire loan is repaid at the closing of the construction loan or loan maturity.

Other Terms: The Enterpise Loan Fund, Inc.s portion of the predevelopment loan is secured by a first position deed of trust.

Minimum Qualifications

1. The project must be located in the City of Portland.
2. This product is available to Eligible Non-Profit Organizations.
3. Proposed projects include rental housing affordable to Low Income Households, For-Sale Housing affordable to households earning less than 100% MFI, or Mixed-Use or Mixed-Income projects which include units that meet the above affordability requirements.

Contacts

For more information or to request an application, please contact the Predevelopment Fund Manager, at the Enterprise Community Partners Inc., 520 SW 6th Avenue, Suite 700, Portland, OR 97204-1554, telephone: 503-553-5647.

Product Specific Guidelines

Eligible Project Sponsors: Eligible Non-Profit Organizations that are developing housing are eligible to apply for predevelopment funds.

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 that include units that meet the above affordability are eligible to apply for predevelopment funds.

Repayment: The predevelopment loan is due and payable at the earlier of two dates: the closing of a PDC or other construction loan or 24 months from the date of the loan.

Security: PDC and Enterprise Community Partners, Inc. funds are unsecured. If the Project Sponsor has title to the property, the Enterprise Community Loan Foundation, Inc.'s portion of predevelopment loan is secured with a first deed of trust or other collateral as approved by the Enterprise Community Loan Foundation, Inc. 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 Enterprise, with a period of time sufficient to complete purchase financing, must be executed prior to closing.

If a proposed project is not able to move forward to construction, and funds are unavailable from the sale of property of completed feasibility work, the PDC portion may be forgiven. However, the project sponsor will be required to deliver to PDC all documents, studies, working papers or other elements of work product developed, in whole or in part, with the use of predevelopment loan funds.

Eligible costs: Eligible costs include, but are not limited to, the following:

1. Obtaining site control
2. Geo-technical studies
3. Level 1 environmental
4. Topographical site survey
5. Architectural services
6. Land division
7. Appraisal
8. An approved portion of development consultant services

Reporting Requirements: During the period in which any amount of predevelopment loan remains outstanding, a Project Sponsor must prepare and submit status reports detailing the progression of the project to Enterprise.

Documentation: Enterprise and the Project Sponsor must execute a Predevelopment Loan Agreement. The project sponsor also must submit all due diligence documents.

How to Access Funds

1. Intake: The Project Sponsor contacts the Predevelopment Fund Manager at Enterprise. The Enterprise Fund Manager coordinates information intake and meeting(s) with the applicant, enterprise and the PDC staff. Predevelopment applications may be submitted anytime during the year. 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 PDC to determine whether; (1) funds are available for the proposed project; (2) the project is consistent with city goals; and (3) the level of risk for the project is acceptable. If the PDC and Enterprise approve the application, Enterprise proceeds toward a loan commitment.
3. Commitment: The Enterprise team and PDC staff work with the applicant to develop a budget, scope of work and schedule of activities that meet the terms of the PDC/Enterprise Predevelopment Loan Agreement. In addition, they agree on a disbursement schedule.
4. Loan Closing: Once the PDC and Enterprise approve the loan, Enterprise works with the Project Sponsor to close the loan. Loan documents for the PDC and the Enterprise portions of the loan are executed by the Project Sponsor and the Enterprise. The PDC is not a signatory. The Project Sponsor submits due diligence documents relative to their loan request and standard corporate documents to Enterprise.
5. Disbursement: Disbursements are made upon review of invoices or other evidence of costs incurred. Enterprise makes disbursements directly to the Project Sponsor and all disbursements from Enterprise 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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