Low Income Housing Tax Credit (LIHTC) Predevelopment Finance

The Concessionary Debt LIHTC Predevelopment Finance program provides predevelopment loans to eligible for-profit and nonprofit entities, local governments including housing authorities, and tribal governments to finance feasibility expenses of affordable multifamily rental housing developed with federal Low Income Housing Tax Credits. 

Please note: Funding for predevelopment will be limited for the initial program year.

09-28-2023

Program Benefits	• Predevelopment loans available for projects utilizing federal Low Income Housing Tax Credits   • Below-market interest rates
Eligible Borrowers	• For-profits   • Nonprofits   • Governmental entities, including housing authorities  • Tribal governments
Eligible Projects	Developments that utilize Low Income Housing Tax Credits
Program Allocation	15% to 35% of Affordable Housing Financing Fund (AHFF) allocation
Area Median Incomes (AMIs) Served	• 60% average AMI for all restricted units
Program Limits	Maximum predevelopment loan to a project is $750,000
Minimum Debt Financing	No minimum
Interest Rates and Fees	• 3% fixed rate    • Standard loan closing costs
Loan Repayment	• Interest-only payments • Principal due at earlier of close of construction loan or stated maturity date • Terms up to 36 months
Collateral	Predevelopment loans will be unsecured with recourse guaranties required from the borrower.
Affordability Restrictions	None in addition to LIHTC requirements
Priorities	• High-density housing  • Mixed-income housing  • Environmental sustainability

Concessionary Debt Process and Timeline

Starting September 18th, applications will be accepted for the Concessionary Debt Multifamily Finance, LIHTC Gap Finance, and LIHTC Predevelopment Finance programs established by Proposition 123. CHFA received 38 applications representing more than $113M in funding requests (PDF). Following the application period, selections will be announced in January 2024.

The application window has closed for the LIHTC Predevelopment program.

Application Timeline:

September 18, 2023	CHFA will begin accepting applications.
October 9, 2023	Application submission period will end at 11:59pm MT.
January 2024	CHFA will announce projects selected to receive Concessionary Debt funds.