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Rental Development

Primero Investment Fund Loan Program

MFA's Primero Loan Program is a flexible, low cost loan program created in 1993 to finance the development of affordable rental or special needs residential facilities that would be considered "high risk" by traditional lenders. The purpose of the program is to leverage other public and private funds and to expand the housing development capacity of New Mexico's nonprofit, tribal and public agency housing providers. The Primero Investment Fund has been broadened over the years to include the financing of all types of projects that cannot be accommodated by existing sources -- particularly the secondary market -- and to develop new delivery systems through nonprofit organizations and other institutions to increase affordable housing production.

Eligible Borrowers

Public and tribal agencies, for-profit and nonprofit sponsors are all eligible to apply for a Primero loan. Applicants must provide evidence of businesslike organizational operations, as well as experience in housing development or partnership with an experienced development team.

Eligible Projects and Programs

Funding may be approved for specific housing developments or for programs to be operated by agencies to meet local housing needs. Rental, owner occupied and special needs projects of any size maybe financed under this program during any stage of the development process. New construction, conversion and acquisition/rehabilitation projects may be financed.

Other Requirements

All projects and programs must be designed in a way that is responsive to clearly identified housing needs. Income and/or rent limits will apply to all projects and programs, but these will differ with the type of activity proposed. Applicants must deliver commitments from other sources of funds or provide evidence that such funding is unavailable.

Application Process

There are four different application packages for Primero Loan Program financing. Applicants should select the application most appropriate for the activity they are proposing.

  1. Pre-development Loan: - Funding for pre-development expenses such as environmental assessments, appraisals, title searches/insurance, architectural and engineering fees, market studies, etc., for which third party reports are generated.

  2. Development Loan: - Funding for the acquisition, construction, conversion or rehabilitation of multifamily rental projects.

  3. Forgivable Loans and Grants:  - (NO FUNDS CURRENTLY AVAILABLE.) Available to qualified developers to finance pre-development and development costs associated with permanent supportive housing development. The maximum Pre-development Grant award is $75,000 ($50,000 maximum for projects expecting to apply for LIHTC) and the maximum Development Grant award is $125,000. Funding for this initiative is provided by the state through the Behavioral Health Collaborative of New Mexico and Optum Health to provide supportive housing rental units and support services. Fifteen percent of the total number of units in the project must be permanent rental housing specifically designated for special needs households in which an individual or household member has an eligible long term disability. Tenants in supportive housing units must sign a standard residential lease with no imposed time limits to tenancy. Successful project applications will include a supportive service plan with a dedicated funding source and/or enter into a Memorandum of Understanding with a local lead agency. To utilize funds under this program, permanent supportive housing is further defined to exclude the following: transitional housing, group homes, residential treatment or any housing that has an imposed time limit to tenancy [example: housing that has an 18 month maximum stay to prepare an individual for independent living and/or another subsequent housing unit]. Please contact the Primero Investment Fund program manager to check the availability of grant funds prior to completing an application.

  4. Land Banking Loan: - A line of credit for the acquisition of property for the development of affordable housing projects. This opportunity is only available to qualifying nonprofit, public, and tribal housing development entities. Applicants must demonstrate a proven ability to process a piece of land through the development process, the ability to move quickly on development and a history of completed housing developments. They must also provide a business plan that supports housing development activities.

Applicants should provide all items listed on the appropriate application checklist. If all items cannot be provided at the time of application, applicants must indicate why and state when the requested information will be available.

Loan Terms

Development loans will be underwritten and structured according to sound lending practices. However, interest rates, which are typically below market rates, are at MFA's discretion. Primero loans are repaid through subsequent financing source, or, in some cases, through cash flow. Terms cannot exceed five years, but loans do not have to be amortized during their term. Loans are secured whenever possible, but they may be subordinated to other debt. The maximum loan amount is $1 million; availability of funds varies.

Priority Initiatives

MFA has established four funding priority initiatives designed to increase affordable housing development in underserved markets. Priority initiatives currently include: tribal housing, colonias housing, rehabilitation of homes occupied or soon-to-be occupied by income-eligible homeowners, and manufactured housing. Activities focused on these areas will receive funding priority. Applicants wishing to receive funding priority under one of these initiatives must complete the appropriate application as specified in the application process section above, and indicate on the application under which initiative they are seeking funding priority.

How To Apply

Application forms can be obtained from MFA and submitted at any time. Complete applications will normally be processed and decisioned within 60 days from receipt of a complete application package. All loans are reviewed by staff, and loans above a prescribed amount will be approved by MFA's Board of Directors. Discussions with staff are recommended prior to preparation of applications to identify appropriate application materials and make initial eligibility determinations.

Forms and Reference Materials

Primero Pre-Development Application & Checklist

Rental Development Application

Rental Development Schedules

Rental Development Checklist

Loan & Grant Omnibus Signature Page & Applicant Certification

Rental Loan Architect's & Owner Certification's (checklist item 9)

Environmental Conditions Statement (applicable to each of the above three programs)

2017 Rental Design Standards

2018 Rental Design Standards

Comparison of 2017 and 2018 Design Standards