KeyBank Provides $18.1 Million of Financing for the Construction of New Affordable Single Family Homes in Cleveland

Rhea-AI Summary

KeyBank CDLI invests $10.2 million in Henrietta Homes, a development of 40 lease-to-purchase affordable homes in Cleveland, Ohio, targeting low to moderate-income families.

Insights

Market Research Analyst

The investment by KeyBank Community Development Lending and Investment (CDLI) into the Henrietta Homes project is a strategic move that reflects a broader trend in the financial sector towards community development and socially responsible investments. As a market research analyst, it's important to note that such projects can have a ripple effect on local economies, potentially increasing property values, creating construction jobs and stimulating economic activity in the Hough neighborhood of Cleveland, Ohio.

From a market perspective, the focus on affordable housing can also serve as a catalyst for attracting further investments into the area. The utilization of Federal Low-Income Housing Tax Credits (LIHTC) Equity and various funding sources showcases a comprehensive approach to financing that could serve as a model for similar developments. The potential for these homes to transition from lease-to-purchase offers a unique pathway for residents to gain homeownership, which could, in turn, contribute to the stability and growth of the community.

Financial Analyst

Analyzing the financial structure of the Henrietta Homes development, the combination of tax credit equity, construction loans and soft funding sources is noteworthy. The $10.2 million in LIHTC equity investment is significant, as it not only provides upfront capital but also offers investors a reduction in federal tax liability, which can enhance the project’s attractiveness to stakeholders. The Section 8 project-based vouchers are a critical component, ensuring long-term affordability for a portion of the units.

For investors, the project's financial mix could suggest a mitigated risk profile due to the diverse sources of funding and the involvement of established community organizations like the Famicos Foundation. Moreover, the proximity to major healthcare institutions like the Cleveland Clinic may increase the desirability of the homes, potentially leading to higher occupancy rates and financial stability for the development.

Sustainability Expert

The commitment to Enterprise Green Communities standards indicates an emphasis on sustainability and energy efficiency, which are increasingly important to consumers and investors alike. Building homes to these standards can lead to long-term cost savings for residents through reduced utility bills and it can also enhance the marketability of the homes. The focus on green building practices aligns with growing environmental concerns and can contribute to the overall sustainability of the neighborhood.

The project's potential impact on the environment is multifaceted, including the use of energy-efficient appliances and the construction of homes with unfinished basements and detached garages, which can reduce the carbon footprint. By promoting sustainable living, Henrietta Homes could set a precedent for future residential developments and attract residents who are conscious of their environmental impact.

Henrietta Homes will consist of 40 lease-to-purchase homes in the Hough neighborhood

CLEVELAND, OH / ACCESSWIRE / February 9, 2024 / KeyBank Community Development Lending and Investment (CDLI) invested $10.2 million of 4% Federal LIHTC Equity and provided a $7.9 million construction loan to finance the development of Henrietta Homes. The development will consist of 40 lease-to-purchase (LTP) affordable single-family homes, to be built on vacant land throughout the Hough neighborhood of Cleveland, Ohio.

Henrietta Homes will target family households with incomes between 30% and 60% of area median income ("AMI"). The development will be partially subsidized, of which eight homes will be supported by a 20-year Section 8 project-based vouchers ("PBV") provided through Cuyahoga Metro Housing Authority. Additional soft funding sources include $1.6 million from City of Cleveland Housing Trust Funds, a $450,000 Cuyahoga County HOME loan, and a $1.25 million equity bridge loan through Ohio Housing Finance Agency's Housing Development Loan program. The project is a culmination of community planning efforts and will complement investments to revitalize the Hough neighborhood.

The Famicos Foundation is the sponsor for Henrietta Homes. The Famicos Foundation is one of Northeast Ohio's largest nonprofit community development corporations, and its mission is to improve the quality of life in greater Cleveland through neighborhood revitalization, affordable housing, and integrated social services.

Henrietta Homes new construction will consist of 36 two story three bedrooms homes with an unfinished basement and detached 1.5 car garage, as well as four three-bedroom one story homes with an attached 2-car garage (no basement level). The project will be built to meet Enterprise Green Communities standards to ensure energy and cost efficiencies for the tenant to maintain. Amenities include a private yard, full appliance package with dishwasher, washer, and dryer hook-ups, and in-unit alarms.

The homes will be available to lease during a 15 -year period, and at year 16, residents will have an opportunity to purchase the home at an affordable price. Famicos will prepare tenants to transition into homeownership by providing financial training and homeownership counseling during the 15-year leasing period.

The development is close to public transportation and within two miles from the Cleveland Clinic and University Hospitals main campuses. Henrietta Homes is also located near grocery stores, numerous restaurants, and schools.

Derek Reed and Kory Clark of KeyBank CDLI structured the tax credit equity and debt financing for the transaction.

About KeyBank Community Development Lending and Investment

KeyBank Community Development Lending and Investment (CDLI) finances projects that stabilize and revitalize communities across all 50 states. As one of the top affordable housing capital providers in the country, KeyBank's platform brings together construction, acquisition, bridge-to-re-syndication, and preservation loans, as well as lines of credit, Agency and HUD permanent mortgage executions, and equity investments for low-income housing projects, especially Low-Income Housing Tax Credit (LIHTC) financing. KeyBank has earned 10 consecutive "Outstanding" ratings on the Community Reinvestment Act exam, from the Office of the Comptroller of the Currency, making it the first U.S. national bank among the 25 largest to do so since the Act's passage in 1977.

About KeyCorp

KeyCorp's roots trace back nearly 200 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies, with assets of approximately $188 billion at December 31, 2023. Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of approximately 1,000 branches and approximately 1,300 ATMs. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications, and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.

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Contact Info:
Spokesperson: KeyBank
Website: https://www.3blmedia.com/profiles/keybank
Email: info@3blmedia.com

SOURCE: KeyBank

View the original press release on accesswire.com

FAQ

What is the investment made by KeyBank CDLI in Henrietta Homes?

KeyBank CDLI invested $10.2 million of 4% Federal LIHTC Equity and provided a $7.9 million construction loan for the development of Henrietta Homes.

How many homes will be built in Henrietta Homes?

Henrietta Homes will consist of 40 lease-to-purchase affordable single-family homes.

What income range does Henrietta Homes target?

Henrietta Homes targets family households with incomes between 30% and 60% of the area median income.

Who is the sponsor for Henrietta Homes?

The Famicos Foundation is the sponsor for Henrietta Homes, a nonprofit community development corporation.

What amenities will be provided in Henrietta Homes?

Amenities in Henrietta Homes include private yards, full appliance packages, in-unit alarms, and energy-efficient construction.

How long will the homes be available for lease in Henrietta Homes?

The homes will be available for lease during a 15-year period, with an opportunity for residents to purchase the home at an affordable price after 16 years.

Who structured the tax credit equity and debt financing for Henrietta Homes?

Derek Reed and Kory Clark of KeyBank CDLI structured the tax credit equity and debt financing for Henrietta Homes.