In Washington DC, when tenants decide to exercise their right to purchase their property, the race against the clock immediately begins.
To meet the deadlines for purchase, the tenants must perform a number of upfront due diligence activities. This requires tens of thousands of upfront dollars. For low income residents living in affordable properties, there are little to no funds available to cover these expenses. This exposes the tenants to insecurity and the potential loss of their housing.
To help meet these time sensitive needs, LISC is able to provide, flexible,
revolving loan funds that nonprofits can access quickly, so that when a tenants association is ready to act, the needed funds are available.
In 2005 LISC provided a $100,000 revolving loan to nonprofit developer Mi Casa, who is the development consultant to a number of tenant groups looking to purchase their apartments.
Mi Casa is using the dollars to cover the predevelopment costs, which can range from $20,000-$40,000. To date, Mi Casa has used the funds for three properties that will result in the preservation of 99 affordable units. According to Judy Meima, a project manager at Mi Casa, “there is a great need for early, flexible dollars. The timeline for tenant purchase projects is tight – by providing these funds, LISC has enabled Mi Casa to help the tenants gain a secure position.”
Meima also states that the revolving nature of the loan is key. “Once we pay back the funds that were drawn down, we can then recycle these dollars into new projects. Right now we are working with two additional tenants groups that need to act quickly. LISC funds will be used to help these tenants perform the required due diligence- such as the appraisal, environmental analysis and formulation of a development plan.”
We wish to thank the Morris and Gwendolyn Cafritz Foundation and the Annie E. Casey Foundation for their contributions to our Housing Equity Fund through which we are able to offer this product. With requests from tenants groups on the rise, we
continue to seek additional funds to supplement those contributions.
LISC intends to continue using this tool for Mi Casa and other nonprofit developers who need access to quick, upfront dollars.