CalHFA cuts rates for rental projects

In an attempt to increase the supply of affordable housing, a state agency on Thursday reduced a key interest rate for construction financing of apartments.

The California Housing Finance Agency dropped the interest rate on 30-year loans for rental projects from 5.80 percent to 5.55 percent.

This funding is available to both for-profit and nonprofit developers.

"By lowering these interest rates, CalHFA encourages builders and developers to create more affordable rental housing," Theresa Parker, CalHFA executive director, said in a statement. "These lower interest rates and other new programs will give affordable housing developers more financing options to meet the housing needs of Californians."

The program is one of many options the Agency's multifamily division is developing to encourage growth in the number of affordable rental housing units statewide.

CalHFA has a variety of loan programs to aid first-time buyers.

The agency was created in 1975 with the goal of helping more Californians live in a home they can afford.

It's multifamily division has invested more than $2 billion in the the construction and refurbishing of 36,000 affordable rental housing units to assist very-low- and low-income Californians.

Program Director Edwin Gibson said the loans are attractive because of the agency's access to a lower cost of funds.

"Our credit rating makes us able to attract low-cost bond funds and we pass that on in our financing," he said.

The program is also designed to work with the tax credit program administered by the state Treasurer's Office.

The developers sell tax credits to investors, who get an equity stake in the project and become limited partners.

And there is usually lots of competition for the funds.

"There is a limited supply of tax credits allocated to states, and it's based on population. So there is a limit to how many credits are available," he said.