World News: 20:41 GMT Tuesday 3rd December 2019. [Freddie Mac via Globe Newswire via SPi World News]
MCLEAN, Va., Dec. 03, 2019 (GLOBE NEWSWIRE) -- (OTCQB: FMCC) released a Duty to Serve detailing how unique financing structures allowed for affordable rents in the high-cost metro areas of Honolulu, Hawaii; San Jose, California; and Portland, Oregon. The three properties studied are in high opportunity areas, which offer unique social and economic benefits to residents but are often constrained by high land and construction costs, lack of buildable land and zoning restrictions.
“Improving access to affordable housing in high opportunity areas can be especially difficult,” said Steve Guggenmos, vice president of Multifamily Research and Modeling at Freddie Mac. “The case studies we analyzed in our new report show that a diverse capital stack and an array of community stakeholders are often essential to success. We hope the lessons from these properties can be applied in other markets as well.”
Freddie Mac’s research highlights the success of Kalani Gardens in Mililani, Hawaii. Located 20 miles north of Honolulu, residents of this property have access to excellent schools and convenient access to major roads leading to Honolulu and the military bases in Oahu. In order to provide affordable housing in this high-income area, the property required multiple layers of subsidy, including Low-Income Housing Tax Credits (LIHTC), Section 8 and Section 236. The average rent on this property in 2019 ($1,187) is nearly half the average market rent ($2,208), per RealPage. Income limits and rental-increase restrictions ensure this property remains affordable regardless of market rate rent growth.
Freddie Mac’s research highlights affordability at Studio 819 Apartments in Mountain View, California where rents are between $768 to $1,153 – substantially lower than the market rent in this submarket of $2,419. To maintain low rents, the property relies on an array of federal tax credits and subsidies, soft debt from the City of Mountain View, and a loan from a Community Development Financial Institution (CDFI).
A success story in this market is Teal Point where average rents are $873 compared with the submarket average of $1,242, per RealPage. Teal Pointe is in Clark County, Washington where total employment growth has outpaced the national average by a substantial margin (15.7% compared with 7.5%) and a robust public transportation system allows residents to easily commute to Portland, Oregon. Teal Pointe was the first property to receive financing from Freddie Mac’s mezzanine funding pilot program, which has since ended. As a result of that financing and a LIHTC investment, Teal Pointe did not need to rely on city funding, freeing up local funding for other affordable housing investments. Details for each of the case studies are available in the white paper, titled “Affordable Housing in High Opportunity Areas”. The research is part of Freddie Mac’s three-year Duty to Serve plan to increase rental and homeownership opportunities in historically underserved markets throughout the nation.
Freddie Mac Multifamily is the nation's multifamily housing finance leader. Historically, more than 90% of the eligible rental units we fund are affordable to families with low-to-moderate incomes earning up to 120% of area median income.
Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we've made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at , Twitter and Freddie Mac's blog .
Globe Newswire: 20:41 GMT Tuesday 3rd December 2019
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