More than $55 million in financing has been secured for the development of Maison’s Palmdale, an affordable housing development under construction in Palmdale, California.
The property is the first in the state to be developed under recently passed legislation that allows for greater lot-size density, according to project partners.
To finance the development, the St. Paul, Minnesota, office of Merchants Capital secured a $31.6 million Merchants Bank of Indiana construction loan and $24 million in permanent financing through a 4% low-income housing tax credit (LIHTC) Fannie Mae forward commitment and Fannie Mae permanent loan. The financing deal included both a taxable and tax-exempt component. WNC is the LIHTC syndicator.
Situated approximately 40 miles north of downtown Los Angeles, Maison’s Palmdale is comprised of 118 detached housing units featuring three- and two-bedroom units. The three-bedroom units include a two-car garage for residents, while the two-bedroom units have access to designated off-street parking spaces.
Maison’s Palmdale will have 36 units restricted to residents earning no greater than 50% of the area median income (AMI) and 81 units for residents earning no more than 60% AMI. One unit is reserved as the manager’s unit. Additionally, all units are under a land-use restrictive agreement with no release provisions.
“Ravello is very excited to work with industry best-in-class partners Merchants Capital and WNC to provide affordable, single-family dwellings to the local community,” said Phil Ram, CEO of Ravello Holdings, the project developer. "The California dream was built on the ability of working families to live and thrive in comfortable homes. We are thankful our legislators and the city of Palmdale have enabled us to be the first to provide detached affordable homes to Californians in a generation.”
This development is unique because it will provide residents with a private backyard, a private entrance, and shared amenities at an affordable price, added Matt Avital, principal at Ascenda Capital, developer partner.
“By capitalizing on the new zoning laws, we were able to maximize the development, bringing even more affordable housing options to such a desirable living area,” said Marsha Goff, executive vice president at Merchants Capital’s St. Paul office. “We are grateful to have had the opportunity to work as a partner on this development, and we are excited to see continued growth in the affordable housing market across the state of California.”
Maison’s Palmdale benefits from SB 330, the Housing Crisis Act of 2019, state legislation that made a number of changes to help speed up housing construction and create more affordable housing, according to officials.
Another partner in the deal is Stifel, the bond underwriter.
“The rate on the permanent loan was locked through an issuance of tax-exempt and taxable bonds offered by the California Public Finance Authority,” said Gary Brandt, managing director at Stifel. “When the project is completed, the proceeds from the permanent loan will refinance the construction loan. The securities were well received by the market due to the credit quality provided by the Fannie Mae-backed permanent mortgage as well as the affordable housing attributes of the project, which are important to our institutional investors that are regional banks.”