B of A Will Lend $50 Million to Build Affordable Housing

Bank of America said Wednesday that it will lend at least $50 million a year to developers who build affordable housing for low-income families throughout California.

The commitment by the San Francisco-based bank follows nearly a year of discussions with community organizations led by an ad hoc coalition called the California Reinvestment Committee.

B of A will provide loans for construction, acquisition and intermediate-term financing to housing developers who will be selected by working with community organizations. The bank said loan terms will be negotiated individually and that some are expected to be made at below-market rates. The bank also said it will consider reducing fees in some cases.

Eligible projects will include multifamily facilities, mobile homes and single-family homes. The bank said a significant amount of the money will go to projects for individuals and families with incomes at 50% or less of their area’s median income.

A bank spokesman said most of the money is expected to go to nonprofit developers, although he said other builders will not be excluded. He said the bank has no estimate of how many units will be financed with the $50 million because the mix of projects has not been determined.

Donald A. Mullane, a B of A executive vice president, said the program marks the first time the bank has announced a specific target amount for direct lending to affordable-housing projects. He said loans will start at $250,000 but that the bank will aim for larger projects because they produce more units of affordable housing.

Alan Baldwin, director of the Orange County Community Housing Corp., a nonprofit developer, was unimpressed by the B of A announcement.

“The interest rate is the key,” he said. “I don’t know of a nonprofit in the state that can’t get conventional market-rate financing.

“But it is below-market rates and reduced fees that make the homes affordable. They are not really doing anything if they are not loaning that money at below the market.”

Baldwin’s organization builds rental units and is developing a 28-unit project in Garden Grove.

But Sylvia Martinez of the California Reinvestment Committee praised the bank’s decision and said it sets a standard for the financial community. “What is notable about this commitment is that the Bank of America views itself in partnership with the community,” she said. “It has been very difficult to get conventional financing for affordable housing.”

The Greenlining Coalition, which represents 18 minority, consumer and civil rights groups, said it is not satisfied with the scope of the B of A plan.

In a letter to bank executives Wednesday, the organization called on the state’s biggest bank to allocate more money for affordable-housing loans and to take steps to loan more money to inner-city minorities, to promote women and members of minorities, and to expand charitable donations to the poor and minorities.

The demands from the coalition, which has been talking with B of A executives for several months, parallel an agreement reached last year with Union Bank to expand lending programs for low-income families and to promote more minority workers and women. The Union Bank agreement came at a time when the bank was being acquired by California First Bank.