BNCLT is Among First Loan Recipients for the State's New Small Properties Acquisition Fund

Small Properties Acquisition Fund (SPAF): a streak of light that adds a new solution to the housing acquisition puzzle!

Let’s start from the beginning: When a small organization like BNCLT wants to acquire a property, one of the first things it needs to do is to figure out how much it will cost us.

Sale Price  +  Cost of Repairs  +  Soft costs  =  Total cost of development

Then, we need to figure out how we can pay for it! Typically, we find our money to cover these costs from the following buckets:

The loan amount for us is typically a lot lower than if we were doing market rate rents, because the lender sizes the loan based on our ability to pay it back. So since we keep our rents low (and permanently affordable), our loan is only as big as what we can pay back and cover in interest charges.

This means we need to get additional subsidy – in the form of a soft loan. A soft loan is treated as a loan with restrictions – in our case, the restrictions are tied to our promise to keep our properties affordable. As long as we don’t break the restrictions for the term of the loan, we won’t have to pay it back, and we are not charged interest. 

For our most recent purchases, we have been able to get a subsidy/soft loan from the City of Boston’s Acquisition Opportunity Program (AOP) to cover a portion of the total costs. But because we live in a red hot housing market, and we often buy buildings that have a lot of repair needs, the loan + soft loan/AOP still does not cover the full amount we need. So this is when we fundraise and find people who are willing and able to contribute large gifts to help us get to the finish line — this is the philanthropy bucket.

But even with these awesome tools and resources plus the astounding generosity of our supporters who believe in the CLT mission to purchase properties to be permanently affordable — we can’t always reach our finance goals to cover all the costs for any given project. For example, the subsidy source we count on has limitations – there’s only so much in the pot. So, we have to scratch our heads, and go back to the drawing table. Where else can we find the resources we need to buy properties, so that more people can stay in their homes and neighborhoods for decades to come?

Three years ago, members of the Greater Boston CLT Network and other allies across the Commonwealth called on the MA Legislature to create a state subsidy, similar in design to Boston’s Acquisition Opportunity Program, to insert additional public subsidy into small property acquisitions. And that’s how the Small Properties Acquisition Fund (SPAF) was born. The MA Legislature passed the creation of the Small Properties Acquisition Fund Pilot through the Economic Bond Bill of 2022 for $1 Million to be part of the Executive Office of Housing and Livable Communities, and to be administered by the Community Economic Development Assistance Corporation (CEDAC). We followed the Bill to its execution, and were thrilled to see the SPAF launched in the summer of 2024!

We are delighted to report that BNCLT applied for this Fund for the acquisition of 364 Harvard Street. We were exactly $200,000 short in our funding to cover the costs of acquisition and rehab, despite securing a public subsidy from AOP, a strong loan, and $130,000 gifts from donors! We still needed the missing $200,000. We were able to get a bridge loan (a short term loan that would be paid back through another source) from the new Greater Boston CLT Fund. In December 2024, we learned our loan application for SPAF was approved!   

This is a moment to raise our glasses and celebrate:

1. Our grassroots campaign to create a new, nimble source of public subsidy at the State level for small property acquisitions that didn’t previously exist!

2. Our ability to make use of this new funding source to purchase our beloved 364 Harvard Street, so that Shaunda, Yvette, and their families could join our CLT and have permanently affordable homes!

3. Our amazing supporters who contributed to this project to get us to the finish line!!

4. Making use of the new Greater Boston CLT Fund, which we have also been so excited to build with our peers. The bridge loan from the CLT Fund was exactly what we needed to make the project work while we waited for SPAF. We will now be able to pay this back so that it can be used again and again for new acquisitions for our CLT peers in Greater Boston.