In another of those sporadic signs that keep the housing industry hopeful about its future, Kathryn G. Thompson Construction Co. said it has found the money to begin a major affordable-housing development here.
Most of the estimated $50 million in construction funding for the 445-unit project is expected to come from NationsBank, a Charlotte, N.C., commercial bank that has been an active housing lender in other markets but is making its first foray into California with this deal.
As much as 25%, however, could come from a special county bond fund earmarked for affordable homes, said Michael Rafferty, president of Thompson Construction.
The initial loan commitment from the two lenders is for $6 million to $8 million for the first 60 units, he said.
The one- and two-bedroom condominiums and townhomes in Aliso Viejo will be priced from $114,000 to $160,000.
Rafferty said the entire project qualifies as affordable housing under county guidelines that define such homes as those that can be purchased by buyers with incomes 80% or less of the prevailing median annual family income. With today’s median at $46,000, Thompson will be aiming at buyers with annual incomes of as much as $36,800. Only about 110 of the new units will be sold with income restrictions, though.
To build all 445 units could take from a year to three years: “It depends on the market,” Rafferty said.
Construction on the first phase is scheduled to begin in October. While there is no contract with NationsBank to finance the entire project, “the expectation is that they will be the lender,” Rafferty said.
The project’s financial history so far is a textbook example of how the marketplace has changed during a three-year recession made worse by the collapse of the nation’s savings and loan industry--once the major source of construction money.
Instead of borrowing from a California-based thrift, as was once the norm, Rafferty and Thompson Construction Chairman Kathryn G. Thompson negotiated with the Operating Engineers Union’s pension trust fund for the $20-million loan to purchase and develop the 17.5-acre site last year.
Kathryn Thompson’s Texas roots helped her open construction loan negotiations with NationsBank’s real estate division in Dallas. The company turned to local government for the rest of the money needed to put the deal together.
“Individuals and lending institutions located here in Southern California are still skeptical about the market,” Thompson said, “while those outside of Southern California are gaining confidence in it.”
The Aliso Viejo project--Thompson’s first since her company sold its remaining Laguna Audubon lots in that community last year to a partnership controlled by developer William Lyon--is on hilltop acreage above Wood Canyon, east of Alicia Parkway.
Rafferty said the company also is developing a tract of 96 single-family homes in Oceanside and is discussing a venture with officials of UC Irvine to build market-price housing on university-owned land.