Finding a Financing Solution in a Challenging Market

The model of blended housing – combining affordable rental units with housing that provides onsite supportive services for people with mental health concerns – is one that is highly effective in breaking down an expensive and destructive cycle of institutionalization, as well as promoting a connection between tenants as neighbors and friends.

When Community Access, a pioneering nonprofit housing developer founded in 1974, located a site on Bryant Avenue in the Bronx for its latest development, it faced a serious challenge. The New York Acquisition Loan Fund, a principal source of early-stage capital for affordable and supportive housing in New York City, had suspended its lending activities due to the pandemic. Other lenders, unsettled by the cuts in public subsidy programs, also hesitated to lend. An added, ongoing challenge is the competitive New York real estate market. Community Access, like many nonprofit developers, runs the risk of losing potential purchase opportunities to for-profit builders, who can generally buy buildings at higher prices than mission-driven developers.

Despite the difficult conditions, Leviticus chose not to shut down its predevelopment and acquisition lending for affordable and supportive housing developments in New York City. Instead, mindful of the tremendous need for these projects, we adjusted our underwriting—prudently—and continued to pursue opportunities to lend to financially strong nonprofits that we believe are well positioned to deliver a successful project.

Our $3.65 million acquisition and predevelopment loan to Community Access for the project in the Bronx is an excellent example of our flexible approach. The four-year term exceeded our three-year maximum for predevelopment and acquisition loans, but our confidence in the development team allowed us to extend the loan maturity.

The result was a win for all involved. Community Access will develop 62 units on the site, with more than 50% of the housing set aside as supportive housing for homeless individuals with serious mental illness and homeless seniors needing help with daily living.