For Rural Communities Creating Affordable Housing
HAC -Housing Assistant Council is a national nonprofit organization that helps build homes and communities across America. HAC is certified as a Community Development Financial Institution (CDFI) by the U.S. Treasury Department, the Housing Assistance Council has offered low-cost rural housing development loans for over 40 years.
HAC makes short-term loans at below market interest rates to local nonprofits, for profits and government entities developing affordable housing for low-income, rural residents. HAC’s loans enable borrowers to acquire land, pay architectural and environmental fees and cover other costs that arise before construction loans are available. HAC balances careful underwriting and meaningful collateral with flexibility and an understanding that a rural community’s best potential housing developer may begin without significant housing development experience.
The Housing Assistance Council (HAC) operates a revolving loan fund that provides vital capital to rural housing developers: community-based, nonprofit organizations, housing development corporations, self- help housing sponsors, farm worker organizations, for-profit developers, cooperatives, Indian tribes, public agencies, units of local government, and public utility districts. HAC funds help these organizations take the steps necessary to improve housing and living standards for rural, low- and very low-income households, such as the creation of subdivisions and new single- or multi-family housing units, preservation of existing USDA RD 515 and 514 units, rehabilitation of existing affordable housing units, implementation of green building/healthy home design and construction techniques, and improved water and wastewater disposal systems in rural communities.
The Housing Assistance Council’s loan fund provides low-cost financing to developers of affordable housing in rural communities nationwide. Funds are currently available to non-profit organizations and public entities as low as 4.75% interest (higher rates may apply to for-profit borrowers) with a 1.0% loan fee; borrowers are responsible for closing costs. The standard loan term is one to five years, but HAC can offer longer terms as needed. Loan amounts may not exceed available collateral. Loans must be repayable from the cash flow and/or construction and permanent financing for the project.
HAC provides financing to affordable housing projects at all stages of development, including:
Pre-Development
Loan funds are available for predevelopment expenses associated with the development or preservation of affordable housing. Eligible uses include land options, down payments, architectural and engineering fees, site surveys, soil tests, market studies, appraisals, environmental engineering studies, archeological clearances, legal expenses and other soft costs, and transaction costs related to site acquisition and early stages of development. Maximum loan term is two years.
Site Acquisition
Loan funds are available for acquisition and related costs for the development of affordable housing. Eligible uses are option payments, escrow payments, land or building purchase, legal expenses associated with site acquisition and other reasonable closing costs. Maximum loan term is five years.
Site Development
HAC loan funds may finance site development expenses associated with affordable single-family and multi-family development including self-help housing. Eligible expenses are impact and permit fees, engineering surveys/fees, clearing and grading, wells, septic/water, sewer installation, utility hook-ups, streets, curbs, sidewalks, legal expenses for site development.
Construction
Loan funds may finance unit construction costs of affordable housing developments. Eligible expenses are construction materials and labor, inspection fees, legal costs, title and recording fees and other soft costs incurred during construction. All fees incurred by HAC, including legal costs, hiring of a local construction inspector, title and recording fees, will be charged to the borrower and, if necessary, financed by the HAC loan. Maximum loan term is three years (depending on the project needs).
Multi-Project Line Of Credit
HAC will provide flexible, revolving capital to meet project financing needs for affordable housing developers with multiple projects in their pipeline usually for predevelopment and/or acquisition expenses. Loans are repaid from each project’s construction closing.
Mini Permanent
HAC provides longer term loans to be repaid from project operations (5-7 year term; amortizing on the shortest schedule feasible, up to 20 years)
Preservation
HAC’s Preservation Revolving Loan Fund (PRLF) provides borrowers needed capital to preserve and rehabilitate existing United States Department of Agriculture, Rural Housing Service (USDA RHS) Section 514 and, 515 multi-family properties. Loan funds may finance short- or long-term costs of preservation, repayment, and rehabilitation of existing USDA RHS Section 514 and 515 properties. PRLF loans may have a term up to 20 years but may be structured with an amortization period up to 30 years.
Self Help Forgivable Loans
HAC provides loan funds and forgivable loans of up to $15,000 per unit throughout the U.S. Department of Housing and Urban Development’s (HUD) Self-Help Homeownership Opportunity Program (SHOP) to nonprofit self-help housing providers for land acquisition and infrastructure improvements for the development of self-help units. Organizations must ensure that the homebuyer family’s household income is 80% or below the area median income and that they contribute a significant amount of sweat equity towards the construction of the dwelling. Forgivable loan funds are made available through an annual competitive application process. SHOP funds are at 0% interest. Up to 90% of the award is forgivable when the borrower has satisfied the terms and conditions of the program. The forgivable portion may become a grant for the group to establish its own revolving loan fund for future site acquisition and development of self-help housing or to provide direct subsidies to participating homebuyer families. SHOP funds are subject to HUD Environmental Review, WaterSense, and OSHA regulations. If you have never received HAC SHOP funds before, please contact the HAC loan fund staff to be included on HAC’s SHOP announcement list.
Zero% Self-Help Housing Site Acquisition And Development Loans
HAC makes 0% loans, up to $15,000 per unit, for SHOP-eligible expenses on self-help projects when forgivable loan funds are not available or awarded or additional loan funds are needed. These loans are not forgivable but are available on extremely favorable terms.
Application Process
If you are interested in applying for HAC loan funds or are seeking additional information regarding applicant or project eligibility please contact Kristin Blum, Senior Loan Officer, at 207-596-0033 or kristin@ruralhome.org, or Eileen Neely, Director of Lending, at 202-869-2363 or eileen@ruralhome.org.
For questions or information on the competitive SHOP financing, please contact Carlos Muralles, carlos@ruralhome.org, 202-869-2446
Photo Courtesy: American Tiny House
Note: I have confirmed with Eileen Neely, the Director Of Lending with HAC that loans for tiny homes on a foundation and wheels could be eligible for the loans. The loans are for the developers only, not the consumer.
HAC Loan Fund Terms and Products 2020
Tiny House Alliance USA Editor
The Future Of Tiny Is Now!
Janet Thome Founder And President
janet@tinyhouseallianceusa.org
509 345 2013