KENTFIELD, CALIF. — If someone had told me that PEP Housing would be building a 13-unit seniors housing development here with 19 sources of funding on a parcel the size of a postage stamp (0.38 acres) and seven years in the making, I would have told them that was insanity. Kentfield, an affluent community with a median family income of $154,673 and a median home value of $907,300, is situated about 30 minutes north of San Francisco in Marin County.

Working with the county of Marin on a surplus piece of property obtained when an old hospital was redeveloped, PEP Housing went to work on a project that would have views of Mount Tamalpais, a living roof, and an idyllic suburban setting. Scheduled to finish construction in December, the $6.3 million Toussin Senior Apartments is Kentfield's first newly constructed affordable housing development.

Because the property will feature project-based Sec. 8 units, applicants will come from the Marin Housing Authority, which has more than 1,000 seniors on its waiting list for affordable housing and a wait of approximately 11 years.

The single biggest development challenge was securing and coordinating 19 layers of funding, including construction and bridge loans, from sources new to PEP Housing. I handled the myriad funding sources by working with two or three at a time, trying to eliminate some of the complexity. Multiple budget revisions for individual sources were necessary due to the complexity of the transaction. The timing of American Recovery and Reinvestment Act (ARRA) funds, which were used in the transaction, was an unknown element that required me to secure two bridge loans from the county of Marin.

PEP Housing's last completed development, a 58-unit seniors project, was half the work despite the fact that it was one of the first mixed-financing (Department of Housing and Urban Development Sec. 202 and 4 percent tax credits) deals in Northern California.

Trials of a small project

Building a project this size is generally not recommended. Rather than being easier, a small project is often much harder to put together than a large development. PEP Housing's sweet spot has been developing properties that have about 50 affordable units.

The size of Toussin Senior Apartments made the large number of financing sources necessary. One reason is because 13 units of cash flow don't allow for a large permanent loan. Additionally, the county had several small pots of money that required applications with different departments.

The project was also coming together at a time when equity offers for lowincome housing tax credits were lower than they had been, requiring us to assemble additional financing.

As the project nears completion, I can look back at several lessons learned. First, I recommend limiting the number of funding sources to 10 or fewer if at all possible. Working with multiple agencies to coordinate the financing is extremely challenging. If you do have a significant number of sources, consider taking them in at the end of the project. This reduces complex coordination issues. While there will be added construction loan interest costs, taking smaller sources in one lump sum at construction closing will save hours of staff time.

PEP Housing partnered with Burbank Housing and EAH, two other nonprofit affordable housing developers, in order to secure maximum points for the 9 percent tax credits in 2009. Merritt Community Capital is the syndicator and limited partner. Marin Community Foundation provided the construction loan and permanent fi- nancing.

Midstate Construction is the general contractor, and Robert W. Hayes, Architects, of Sausalito, Calif., designed the development.

Mary Stompe is executive director of PEP Housing, a Petaluma, Calif.–based nonprofit that has developed and manages 12 properties.