NC Line of Credit supports MHCA’s major expansion of affordable developments in the Sacramento region

Share This Post

Rendering of MHCA’s Lavender Courtyard development

A new California financing program to support new construction with tax exempt bonds and 4% LIHTC (“super credits”) offers new opportunities for affordable developers like Mutual Housing of California (MHCA), which are expanding in its wake.

Because of the demand for affordable homes in the Sacramento region, MHCA has the goal of doubling its portfolio in the next seven years. They had secured some predevelopment funds for three new projects but given the accelerated timeframe to start construction upon receipt of an award, they requested a $1 million line of credit from NeighborWorks Capital.

“As we realized we needed access to predevelopment capital, we thought a CDFI would support our goals for growth,” said Holly Wunder Stiles, MHCA Director of Housing Development. “As we increase production, our demands for such resources is becoming greater. We need to expand our sources of predevelopment capital, and NeighborWorks Capital has been wonderfully responsive in providing what we need.”

The three projects will bring 218 one- to three-bedroom apartments at 20%-60% AMI ($17,260-$51,780) to the Sacramento region. Theyinclude Lavender Courtyard, 53 apartments for LGBTQ seniors, including 20 for homeless; Mutual on 5th Street, 38 apartments, including 17 for transition-age youth; and Mutual Housing on the Boulevard, 127 apartments, including 67 for formerly homeless families.

“We’re excited to help MHCA get these projects moving, and for NC’s financing to be an important tool for them to sustain a higher pace of development, even with the impacts of Covid-19,” said Steve Peelor, NC’s Chief Lending Officer. “We are especially glad to see that the California ‘super credits’ will get Lavender Courtyard under construction this year, as seniors are often hit hardest in an affordable housing crisis.”

The loan will be initially secured by the site of Mutual on Fifth Street in Davis, CA. When construction on that project gets underway, NC’s predevelopment funds will be repaid and the loan will continue as an unsecured revolving facility, with a cap of $500,000 funded for any specific future project.

Despite the disruptions from Covid-19, the three projects are moving ahead. “We have investors and lenders lined up, contractors selected, and plans going into the building department. Everything is proceeding, and we’re assuming we’ll start construction on Lavender Courtyard and Mutual on Fifth Street as planned in the fall,” Wunder Stiles said.

Lavender Courtyard

The LGBTQ community in Sacramento brought the idea for an LGBTQ senior community to MHCA, who located a long-time vacant half-acre corner site in midtown Sacramento that was a good location for serving the community’s seniors. The city council was interested in seeing that site redeveloped and is very supportive of the 53-apartment development. NeighborWorks Capital helped finance the acquisition through a $800,000 loan in 2015.

Sacramento has seen some of the highest rates of rent increase in the country, pricing out many, particularly seniors that have lived in the area for a long time. In addition, LGBTQ seniors can face discrimination in senior communities not specifically geared toward their needs, leaving many to feel unsafe and that they must go back in closet.

“We’re trying to create a safe and secure environment for seniors, with rents that are bucking the trend in the area,” Wunder Stiles said.

The project is supported by a $2.5 million grant from The Weinberg Foundation, and will have 20 apartments for homeless seniors, with supportive services provided by Lutheran Social Services of Northern California.

Mutual on Fifth Street

The Mutual on Fifth Street development is in Davis, a university town just outside of Sacramento with increasing rents, high volumes of student renters, and very low vacancy due to restricted development.

The city of Davis negotiated an inclusionary agreement with a developer creating market-rate student apartments to give MHCA just under an acre of land and $2 million toward the development, 38 apartments on a vacant acre. Apartments will be reserved for homeless families and 17 apartments will be reserved for youth aging out of foster care, with supportive services provided by Yolo County. Again, the city council is highly supportive of this project.

Mutual Housing on Boulevard

This large parcel in south Sacramento County was purchased with a loan from NeighborWorks Capital during the 2009 recession, and MHCA worked for several years to put together a financing package that would work for it. With Prop. 2, MHCA saw an opportunity to create a mixed community that will include 127 affordable apartments in seven buildings for families, with 67 apartments reserved for those coming directly out of homelessness, and 50 for people experiencing mental illnesses. Supportive services will be provided by County of Sacramento and Lutheran Social Services of Northern California.

Responding to COVID-19

MHCA is very committed to staying in touch with its residents throughout COVID, Wunder Stiles said. “It’s part of our core mission to create communities of belonging for our residents. Our response has been exemplary in that our Community Development Department has stepped up to ensure we continue to engage community.”

This includes a strong and active food delivery program for the food insecure, directly delivering food, and linking residents to food services. They have continued resident council meetings by Zoom and keeping in touch with residents to counteract isolation.

On the development side, construction is considered essential and is continuing. MHCA has one substantial renovation project on hold because it requires residents to move, Wunder Stiles said.

Additional Pipeline Projects

MHCA is also partnering with Habitat for Humanity on another development in south Sacramento. It also hopes to replicate in Williams, CA, its internationally recognized USDA farmworker home development in Woodland.


MHCA develops, operates, and advocates for affordable and sustainable housing and builds strong communities through resident participation and leadership development. The organization provides homes and resident leadership opportunities to more than 3,200 individuals and families and employs 71 full-time employees. They have hired two additional project managers since 2018. MHCA won the Rural Habitat Award in 2017, an international award recognizing its farm worker community in Woodland, CA. It is an accomplished sustainable developer, with several awards for its green development activities.

Subscribe To Our Newsletter

Stay up to date with NeighborWorks Capital

More To Explore

NeighborWorks Capital Partners with Climate United to Build National CDFI Channel for Greenhouse Gas Reduction Fund Multifamily Lending

We are thrilled that Climate United has been selected to receive nearly $7 billion of funding from the EPA’s Greenhouse Gas Reduction Fund (GGRF). NeighborWorks Capital is proud to partner with Climate United to build a national CDFI channel for GGRF multifamily lending and to engage in market building to ensure funds reach underserved communities.

Read More »