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MHP loan helps Chelsea non-profit preserve 86 units

Posted on January 17, 2005

CHELSEA --- Using its ability to provide tax-credit financing to owners of smaller affordable rental housing developments, the Massachusetts Housing Partnership announced today that it will provide $7.3 million to Chelsea Neighborhood Housing Services (NHS) for the refinancing and renovation of 86 units of affordable rental housing.

MHP is providing $6.1 million in tax-credit financing and $1.25 million in low-interest, second-mortgage financing, $875,000 of it coming from Home Funders, a program designed to help borrowers offer more units to lower-income households.

The $7.3 million financing package will enable NHS to consolidate its first-mortgage financing from multiple lenders into one loan, at a lower overall interest rate. It will also allow it to make much-needed repairs and to continue to offer rental housing for lower-income families at a time when the median selling price of a condominium in the city has jumped to $229,000, up 15 percent in one year. The 86 units in NHS’ portfolio are scattered in 18 buildings throughout the city.

The $6.1 million in bond financing is being provided through the Massachusetts Tax-Exempt Credit for Housing Program (MATCH). Offered jointly by MHP and MassDevelopment, it combines MassDevelopment’s ability to raise money through bonds with MHP’s ability to bring in private-sector financing, in this case crucial letters of credit from Bank of America and the Federal Home Loan Bank. This credit enhancement allowed the bonds to be AAA-rated, providing the borrower with the lowest possible interest rate.

Since establishing the tax-exempt financing program two years ago, MHP and MassDevelopment have provided nearly $40 million for the financing of 845 affordable units.  Besides being used by owners of scattered-site housing to consolidate loans and lower debt, this financing has been used for properties previously financed under federal programs such as Section 202 and 236.