You may have read that Citigroup recently entered into a settlement agreement with the Justice Department to resolve federal and state claims related to pre-2009 sales of Residential Mortgage Backed Securities. As part of the settlement Citi has structured a subordinate loan program (the “Program”) designed to address funding gaps associated with the construction or acquisition and rehabilitation of affordable multifamily housing rental projects. Affordable multifamily projects, for the purpose of the Program are projects that would qualify for either 4% or 9% Low Income Housing Tax Credits. Depending on the specifics of the project Citi’s subordinate loans will be structured and funded much like any other subordinate loan, e.g. loans would bear below market interest rates and be payable only from available cash flow. A Program fact sheet can be found here:
Citi Affordable Housing Subordinate Loan Program Description (pdf)
Small Area Difficult to Development Area (SDDA) List (xls)
The settlement established certain programmatic priorities that Citi must achieve. As a consequence Citi is soliciting indications of interest from its clients and colleagues and will rank the responses received based on those priorities.
I - The highest priority project will have the follow characteristics:
- It will be located in what is defined as a Small Area Difficult to Development Area (SDDA), which is a HUD concept. These tend to be the higher income zip codes in metropolitan areas. A list of all the zip codes that fall under the 2014 SDDA designation can be found on Citi’s web site.
- The project’s occupancy is not age restricted.
- At least 40% of the total number of affordable units in the project will include two or more bedrooms, and/or, at least 10% of the total number of affordable units will include three or more bedrooms.
- The project is located in California, New York, Illinois, Massachusetts, Delaware, Washington DC or Florida.
- Within this category, additional preference will be given to projects in the major metropolitan MSAs in those states and the District of Columbia.
II - The second highest priority project will include each of the above characteristics except for #4
III - The third highest priority project will include each of the above characteristics except for #3 and #4
IV - The lowest priority project will be an affordable project that does not fall into any of the above categories
Within each priority group we will rank projects based on the amount of subsidy requested per unit, with the lowest amount of subsidy on a per unit basis ranked more highly.
This will be an “open window” application process. We expect demand for the Program to be heavy. As there is limited capacity we encourage you to call your Citi Community Capital banker to discuss potential projects as soon as possible. Contact information and additional Program information is posted to the Citi Community Capital web site. Please do not hesitate to contact us with further questions.
We offer the most comprehensive services and products for non-profit and for-profit affordable housing developments, charter schools and healthcare facilities. Citi provides an array of responsible lending solutions, including pre-development loans, construction financing and permanent financing.