Per Montgomery County:
For Immediate Release: Thursday, March 31, 2022
Today, Montgomery County announced the opening of the Affordable Housing Opportunity Fund (AHOF), a dedicated pool of $14 million of revolving County funds to combine with private lending for short-term loans to acquire and preserve affordable housing. The National Housing Trust Community Development Fund (NHTCDF) was selected as the AHOF fund manager. NHTCDF is a Community Development Financial Institution (CDFI) dedicated to creating and preserving affordable homes. As fund manager, NHTCDF will coordinate applications from developers and arrange private capital to combine with Montgomery County funds to respond rapidly to opportunities.
NHTCDF is now accepting applications for AHOF financing from affordable housing developers seeking to acquire properties to preserve affordability and protect tenants from displacement.
“Montgomery County could lose up to 11,000 Naturally Occurring Affordable Housing apartment units by 2030, and too often affordable housing developers lose the chance to preserve these units because they can’t access quick, short-term financing.” said County Executive Marc Elrich. “To avoid losing affordable housing and protect tenants from displacement, we are providing developers the critical, readily available funding to acquire properties if they preserve affordability. This fund provides necessary capital for developers to bid competitively and provide current renters opportunity to remain in their community at affordable rents. This is an important and proactive strategy to ensure that more Montgomery County households avoid paying rents that are more than 50%-60% of their total incomes. Montgomery County residents should never have to choose between paying rent and buying food, medicines, or clothing for their families. Unless we can create more affordable housing options, too many are having to make these unthinkable choices and that is unacceptable.”
The AHOF provides advantageous terms and standardized processing and pricing to support competing with market rate developers on cost of capital and timely execution. Funds are for properties at risk of loss of affordability, especially in transit corridor areas such as the Purple Line. The three-year short-term financing from the AHOF will enable developers to acquire properties quickly, providing sufficient time for the developer to position the property for longer-term affordability. Applications will include plans for refinancing that will ensure long-term affordability and repay the AHOF Fund.
The AHOF provides an important complement to the County’s Housing Initiative Fund for long-term loan funds focused on producing and preserving affordable housing. The recent budget recommendations submitted by the County Executive included $100 million of new funding for capital investments in long-term preservation of affordable housing.
“We are leveling the playing field by creating the Affordable Housing Opportunity Fund: Some affordable housing developers have ready access to capital, whereas there are others who don’t have the same access to the capital,” said Aseem K. Nigam, director of the Department of Housing and Community Affairs (DHCA). “The AHOF now addresses that by providing ready capital to acquire for-sale properties before they are lost to developers who will rent at market rates, often causing displacement of tenants. The process will be competitive and efficient: It will include funds, documents and supports for acquiring properties quickly, and provide sufficient time to arrange long-term financing.”
NHTCDF as fund manager will ensure County funds are matched at least 3:1 with private lending and will coordinate additional funding and resources to leverage the County’s $14 million in AHOF funds.
“NHTCDF is thrilled to partner with Montgomery County to bring this important new resource to the market,” said Josh Earn, Managing Director of Lending and Innovation. “We specialize in providing the early-stage catalytic capital affordable housing developers need to be successful and the AHOF will deliver the type of financing our borrowers in the County can’t find anywhere else.”
Basic loan terms and application process information are available at NHTCDF and DHCA websites. Developers should send loan inquiries to Kladé Hare at [email protected] with subject line, “AHOF Loan Inquiry” or call 202-333-8921 ext. 131.
Montgomery County is applying every available policy tool and financial resource to help reduce housing cost burdens by increasing the number of affordable, rent-regulated housing units; providing rent supports; and, preserving current affordable housing while protecting tenants from displacement.
For more information, see the DHCA Annual Report.
# # #