Seattle Office of Economic Development - Financial Products for Development

Real Estate Financing

Introduction

The Office of Economic Development provides low interest loans for mid-sized and large mixed-use and commercial projects. Both for-profit and non-profit developers or community developers may be eligible.

OED funds projects that achieve significant public benefits including:

Creation of jobs;
Affordable housing that will support neighborhood businesses while helping to preserve a diverse economic base of residents; and
Redevelopment of abandoned or underutilized property that will contribute to the revitalization of the City’s business districts.

Real Estate Products

OED provides both short-term and long-term loans. Loans may be available for acquisition financing, construction bridge financing, and permanent financing. A summary of OED’s real estate products is described below:

	Section 108 Loan	Float Loan
Fund Source	HUD funds	Community Development Block Grant Funds (CDBG)
Eligible Uses	Site acquisition Development soft costs Construction costs (prevailing Davis/Bacon wage rates apply)	Site acquisition Development soft costs Construction costs (prevailing Davis/Bacon wage rates apply)
Goals	To create jobs benefiting low/moderate income individuals Affordable housing Revitalize business districts	To create jobs benefiting low/moderate income individuals Affordable housing Revitalize business districts
Interest Rate	Fixed via HUD public offering; or Floating (20 basis points above 90 day LIBOR, adjusted monthly: 5.56% as of December 2006)	1-2% fixed
Origination Fee	1% fee paid at closing	1% fee paid at closing
Security	Deed of trust and/or other security from borrower, with loan to value ratio not to exceed 80%.	Bank issued, on-demand, irrevocable letter of credit
Term	Up to 20 years	30 months

EXAMPLES OF REAL ESTATE FINANCING PROJECTS

1. Rainier Court – 3700 Rainier Ave S (Southeast Seattle)

OED provided a $2.5 million CDBG Float Loan to Southeast Effective Development (SEED), for acquisition of Phase 1 of the Rainier Court project. Phase 1 of the project (completed) includes 208 units of affordable senior housing and 9,000 square feet of ground floor commercial. Phase 1 is part of an overall 7 acre project that will revitalize an environmentally contaminated, underutilized area into a vibrant mixed use development, creating affordable housing (rental and home ownership) and jobs.

More information on the Rainier Court Project is available at http://www.seedseattle.org/development/current/index.htm

2. Cadillac Hotel – 2 nd and Jackson Street (Pioneer Square)

OED provided a $2.04 million Section 108 Loan to Historic Seattle, for acquisition of the Cadillac Hotel. The historic Cadillac Hotel suffered serious damage during the 2001 Nisqually Earthquake and needed significant repair. Upon completion of rehabilitation, the Cadillac Hotel became the new home of the Klondike Gold Rush National Historic Museum and also contains the regional headquarters of the National Park Service. The project received a National Trust for Historic Preservation Award in November, 2006.

More information on this project is available on the Historic Seattle website at
http://www.historicseattle.org/projects/cadillachotelbriefh.aspx

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