Low-Interest Loan for Rehabilitation Despite the current incentives offered by the statute, property owners are not likely to rush into a contract that limits their profits over the long-term, particularly in a strong housing market. While the City has no additional resources to incentivize them further, it can mobilize its political capital to encourage the formation of a loan by outside lenders to fund moderate to major renovations for Section 236 eligible properties. Community Development Financial Institutions (CDFIs) serve an important role in this regard. CDFIs receive access to funds through the U.S. Department of the Treasury and lend to distressed neighborhoods for the purposes of promoting community revitalization. Two prominent CDFIs in the Oakland area that could be engaged to create a fund for renovations are Enterprise Community Partners and the Bay Area Local Initiatives Support Corporation. For reasons discussed above, properties that are ideal for Section 236 tax exemptions are moderate sized buildings (5 to 50 units) that already rent to income tenants at or below the levels required by the statute. Such properties are likely to be in need of at least a minimum level of improvements before the nonprofit can assume any liabilities under the new arrangement. As a result of recent Dodd-Frank legislation, lenders are restricted from extending second mortgages to consumers against a property. By targeting the loan to the nonprofit, lenders can extend additional financing to the building by securing it to the lease rather than the property itself. In this way, the loan will fund renovations
Low-Interest Loan for Rehabilitation Despite the current incentives offered by the statute, property owners are not likely to rush into a contract that limits their profits over the long-term, particularly in a strong housing market. While the City has no additional resources to incentivize them further, it can mobilize its political capital to encourage the formation of a loan by outside lenders to fund moderate to major renovations for Section 236 eligible properties. Community Development Financial Institutions (CDFIs) serve an important role in this regard. CDFIs receive access to funds through the U.S. Department of the Treasury and lend to distressed neighborhoods for the purposes of promoting community revitalization. Two prominent CDFIs in the Oakland area that could be engaged to create a fund for renovations are Enterprise Community Partners and the Bay Area Local Initiatives Support Corporation. For reasons discussed above, properties that are ideal for Section 236 tax exemptions are moderate sized buildings (5 to 50 units) that already rent to tenants at or below the levels required by the statute. Such properties are likely to be in need of at least a minimum level of improvements before the nonprofit can assume any liabilities under the new arrangement. As a result of recent Dodd-Frank legislation, lenders are restricted from extending second mortgages to consumers against a property. By targeting the loan to the nonprofit, lenders can extend additional financing to the building by securing it to the lease rather than the property itself. In this way, the loan will fund renovations income
Section-236-HAMILTON-Final-thesis-with-revisions.docx