Eden Housing has closed on the financing for Walnut Grove Senior, a 50-unit affordable housing development that uses a unique “step-in-the-shoes” structure that allowed for expedited project development while using few public resources, according to project officials.
The development is the inclusionary affordable housing component of North 40, a new mixed-use neighborhood by SummerHill Homes and Grosvenor in Los Gatos, California. The first phase features 320 residential units, open space, and 66,000 square feet of commercial space. Walnut Grove Senior is co-located with The Junction market hall space, which will include a variety of retail and restaurant amenities in a walkable, mixed-use environment for senior residents and members of the larger community.
“Walnut Grove was a uniquely structured project that required the right financial partners. We were able to work with Merritt [Community Capital Corp.] and East West Bank on this creative ‘step-in-the-shoes’ transaction, where Eden purchased a nearly complete building from SummerHill just days before placing the building into service,” said Andrea Osgood, Eden’s senior vice president of development. “This critical inclusionary component of the larger development certainly did not fit the typical affordable housing deal mold, but our partners at Merritt and East West Bank were flexible and creative—and we are grateful to bring housing to seniors in Silicon Valley who often struggle to find affordable housing on their fixed incomes.”
Eden Housing and SummerHill worked as partners on the project’s design, development, and entitlement, with SummerHill constructing the building to near completion until Eden Housing acquired the finished project immediately prior to being placed in service. This allowed for lease-up and occupancy of the project to start shortly after the low-income housing tax credit (LIHTC) financing closed.
The project was financed without the assistance of state or local funding, utilizing only 9% LIHTCs, according to officials.
Merritt has been working with Eden for nearly a year to structure this unique transaction. To secure proprietary funding, Merritt worked with its partners at East West Bank, who made an equity investment in Walnut Grove Senior. East West Bank also provided construction bridge and permanent debt financing for Eden’s acquisition of the project.
Merritt, a nonprofit LIHTC syndicator, provided $17.7 million in tax credit equity capital to Eden for the development.Originally conceived in 1999 as part of a specific plan, North 40 went through 20 years of planning processes, a lawsuit, a council rejection, and finally approval in 2018.
The project contains 50 one-bedroom units to be rented to senior households older than 55 earning between 30% and 50% of the area median income.