The Puerto Rico Housing Finance Authority (“PRHFA”), in partnership with Citi Community Capital, a department of Citigroup’s (“Citi”) Municipal Securities Division, has created a revolving loan fund that will provide capital for the construction of for-sale single- and multifamily-homes for low and moderate income residents of Puerto Rico. The Puerto Rico Community Development Fund, a subsidiary of the PRHFA, will utilize its 2009 New Markets Tax Credit (“NMTC”) allocation for the transaction. CBO Financial acted as financial advisor to the PRHFA in securing the NMTC allocation, placing the equity, and structuring the fund.
“The PRHFA team has worked on this transaction for 3 long years,” said PRHFA Executive Director George Joyner. “To the best of our knowledge, the use of NMTC to create a revolving construction loan fund is unique for this program,” he indicated. “We hope this transaction serves as an example for other NMTC recipients, so they too will use their NMTC creatively and not accept the dictum ‘it has never been done’ as the final word on any challenge they may face.”
The creation of the Fund fills a void created by the lack of existing traditional financing sources in the construction lending market in Puerto Rico. According to Estudios Técnicos, a leading economic, marketing strategies and planning consulting firm based in Puerto Rico, this void has created a considerable pent up demand of approximately 10,000 for-sale units annually to low-income individuals. The Fund’s activity will be targeted to disadvantaged communities of higher economic distress, namely those with poverty rates in excess of 30% and unemployment rates at least 1.5 times the national average.
The creation of the Puerto Rico Community Development Fund was jointly announced by Puerto Rico Governor Luis G. Fortuño and Citi North America Chief Executive Officer, Bill Mills, during a meeting held at La Fortaleza. “As a result of this transaction, hundreds of Puerto Rican families will be able to realize their dream of owning their own home,” Gov. Fortuño said. “This is another example of the kind of constructive public-private partnership that has been a hallmark of our administration, and that can serve as a model for other jurisdictions throughout the Nation.”