Unique financingstructure helps farmworkers put down roots

Medford, Ore. –Lilac Meadow Apartments is the first project of its kind in Oregon to blend farm-labor housing funded by the U.S. Department of Agriculture’s Rural Development program (RD) with a low-income housing tax credit (LIHTC) project. When farm-labor families are no longer eligible for housing in the RD units, they can rent a unit in the LIHTC section.

CASA of Oregon developed both types of housing as an $11.1 million project on contiguous tax lots, with all units appearing identical. The newly constructed complex offers 14 one-bedroom units, 42 two-bedroom units, 22 three-bedroom units and four four-bedroom units. Residents cannot earn more than 50% of the area median income.

Forty of the apartments were subsidized largely by a $2.3 million grant and a $1.7 million loan from the RD Secs. 514/516 Farm Labor Housing Loan and Grant program. Washington Mutual, South Valley Bank and Evergreen Bank also provided $1.3 million in equity for the state farmworker tax credits. Tenants – many of whom will be migrant and seasonal workers – will pay not more than 30% of their income for rent.

The remaining 42 apartments were funded primarily with $4 million in 9% LIHTC equity provided by the Enterprise Social Investment Corp. A preference for these units is given to residents who no longer qualify for the RD-funded farmworker housing.

“If a resident has a career advancement opportunity that takes them out of the fields, they are no longer eligible for housing funded by the RD program,” said Betty McRoberts, director of development for the Housing Authority of Jackson County, which owns Lilac Meadow. “However, now instead of having to move into market-rate housing – which they still may not be able to afford – they can rent a tax credit unit. This will allow residents to keep their children in the same schools and otherwise maintain their community ties.”

Also helping to meet the development costs were an $879,819 permanent loan from the lending consortium Network for Oregon Affordable Housing (NOAH), a $244,620 grant from the Federal Home Loan Bank of Seattle’s Affordable Housing Program, $450,000 in HOME funds from the Oregon Housing and Community Services Department, $200,000 from the Oregon Housing Development Grant Trust Fund, and $75,000 in Oregon HELP funds. Wells Fargo provided a $3.4 million construction loan.

“The NOAH loan’s terms are 20 years, amortized for 30 years at 7% interest,” said McRoberts. “However, the project was awarded Oregon lender tax credits, which reduce the interest on the loan to 3% as long as the savings are passed on to the tenants in the form of reduced rents.”

Lilac Meadow Apartments features a community building, which will host social activities and educational opportunities, and two playgrounds. The property is within walking distance of a school and shopping and is near public transportation, a park and bike paths.

The infill site was difficult to develop because the vacant land stretched alongside Interstate 5. The developer had to bring in 900 feet of paved road and 2,000 feet of water and sewer lines in addition to constructing a sound wall to buffer freeway noise.

Completed in February, Lilac Meadow has been embraced by the community.

“All of the units have been leased except for units reserved for seasonal workers, whose picking season has yet to start,” said McRoberts. “Our development has prompted adjacent owners to develop market-rate apartments and a subdivision of 60 single-family houses. It feels good to not only provide housing for some of the hardest-working people in our community but to also be a catalyst for improving the entire neighborhood.”