When the expiring tax credit building was on the market, the developer and fund were able to purchase the building within sixty days and retain affordability. Of the $8 million fund investment, only $2 million came from the public sector, a public subsidy per unit of $8,400. While preserving affordability is the goal of the Fund, by investing in each property as equity the Fund is repaid by rents at the property and has a vested interest in ensuring rents are stable or increase. Unlike properties preserved with the Low-Income Housing Tax Credit, buildings purchased through the Fund typically do not feature extensive or costly rehabilitations. The affordability restriction on the property targets affordability at 60% AMI, however rents are not set in stone. With Fund approval through an annual business planning process, rents at the property can float up to cover the costs to operate the property or cover the cost of improvements.
Example Building: Bloomington & Brooklyn Center
Building Capital Stack:
Building Details: • Units: 239 •
Fund Financing Private Sources ($6M)
Purchase Timeline: 60 days
• Affordability: 60% AMI for 15 years with ability to float • Operating Partner: Aeon • Public Subsidy Per Unit: $8,400
NOAH Impact Fund ($8M)
Public Sources ($2M)
• Operating partner purchases building with 10% equity representing 3% of purchase price • Paired with Freddie Mac loan product designed for NOAH preservation featuring favorable interest rates, LTV, and term.