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New Fund to Close the Gap in Historic Preservation Projects 
by Brad Schide, Connecticut Circuit Rider
The Connecticut Trust has unveiled a new financing program to help close the funding gap between rehab costs and conventionally available funding that plagues many preservation projects. In September, the Trust’s board approved the formation of the Historic Building Finance Fund (HBFF), to be operated in partnership with the Connecticut CDFI (Community Development Financial Institutions) Alliance, which will serve as loan originator, responsible for underwriting and administering HBFF funds on the Trust’s behalf. The program will begin with a small number of pilot projects, funded with approximately $100,000 from the Community Investment Act, which allocates money to the Trust for preservation activities.
The HBFF pilot program will provide gap funding for historic rehabilitation projects. Gap funding is defined as support to a project to: - make up the difference between rehabilitation costs and the after-rehabilitation market value of structures,
- help property owners qualify for a first mortgage to rehabilitate their property where they would not otherwise qualify, and
- provide capital not available through other sources to complete a historic rehabilitation.
HBFF will assist both nonprofit and private owners of historic properties containing from one to four residential units. Buildings may have ground floor retail or commercial spaces but must contain residential units in the upper floors and must be listed on the State or National Register of Historic Places. Rehabilitation work must comply with the Secretary of Interior’s Standards for Rehabilitation. The maximum loan per structure is $25,000, and loans will be forgivable by increments over a period of five years.
CDFI is an alliance of seven community development lending organizations: Community Capital Fund (Bridgeport), Connecticut Housing Investment Fund (Hartford and statewide), Greater New Haven Community Loan Fund (greater New Haven), Housing Development Fund (greater Stamford), Waterbury Housing Fund (greater Waterbury), Corporation for Supportive Housing (statewide) and Local Initiatives Support Corporation (statewide). With its experience and expertise in reviewing and managing loan programs, CDFI will help ensure that lenders chosen are qualified and that loan amounts are appropriate.
For the HBFF pilot, the Trust will identify projects for CDFI to underwrite. CDFI will review the owner’s credit, evaluate the capacity of the owner to complete the transaction or of the contractor to complete the rehabilitation, coordinate environmental and other financial requirements, and determine the appropriate amount of the loan, based on the available sources of funds the owner has in place. The Trust will review the plans to make sure that they conform to the Secretary’s Standards. Once committed, funding would be provided to the project at the construction closing, or when the project commences rehabilitation. The Trust hopes to begin processing the first loans in the first half of 2007.
For more information about the Historic Buildings Finance Fund, call Brad Schide at (860) 463-0193 or email him at bschidellc@aol.com.
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