A new city-county revolving loan fund to bridge 'missing link' in construction financing
photo credit: (Credit: Marc Albert/KRCB)
A multi-million-dollar revolving loan fund for housing construction will likely move a bit closer to reality Tuesday evening, as Santa Rosa officials work on finalizing agreements.
If all goes smoothly, over the next four or so years, the funds should speed delivery of 400-500 housing units to Santa Rosa and elsewhere in Sonoma County.
Tuesday, Santa Rosa councilmembers were to consider transferring $10 million dollars in proceeds from a PG&E settlement to the recently-created Renewal Enterprise District...or RED. County officials are close to committing an equal amount.
According to Michelle Whitman, the district's executive director, developers face serious hurdles when seeking financing for bold local projects.
"We don't have comparable projects available to prove a project's value, and so commercial lenders are unable to provide a loan large enough to fully fund the project."
Whitman said developers can usually cobble together 90 percent of the financing, but then hit a wall. That's where RED's housing fund fits in. It would provide that last bit of financing, allowing construction to start.
"I think we've got traditional lenders that are being conservative, they've got cold feet, and they want some comps before they are going to stick their necks out."
As loans are repaid, the money would be loaned out again, funding new projects.
At the outset, Whitman says RED will likely fund a mix of affordable and market rate developments; both are needed after the Tubbs and Nuns fires consumed 5 percent of the county's housing units. Whitman says lending for affordable projects would likely increase in the future.