Developer Ravello Holdings is making its first move into affordable housing in Los Angeles.
The local firm has secured $55 million in construction financing to build 118 housing units in Palmdale.
Merchants Capital funded the debt, which is split into two parts. Ravello and Merchants announced the news Friday.
It provided a $31.6 million, three-year construction loan and originated a $24 million Fannie Mae loan. The Fannie portion consists of a low-income housing tax credit, as well as a permanent loan that will eventually replace the construction financing.
Ravello’s project will include 81 units limited to residents earning no greater than 60 percent of the area median income, and 36 units restricted to residents earning no greater than 50 percent of the AMI. One unit is reserved for building staff.
The company bought multiple parcels for the site for $2.3 million in November, records show.
Two-bedroom units at the 50 percent AMI level will start at $1,178 per month, according to Ravello. Three-bedroom units at the same AMI will start at $1,351 a month.
Ravello and its development partners Ascenda Capital and WNC & Associates said California’s new housing density bonus legislation helped make the project a viable one, as did the Fannie financing. Under Assembly Bill 2345, developments with affordable units can benefit from relaxed zoning and design requirements, in addition to financial incentives.
Affordable construction has benefited from bond money. The L.A. City Council last month awarded $58.5 million in bond financing for two affordable housing projects — one in Winnetka and another in Boyle Heights.
Sawtell-based Ravello focuses on student and senior housing developments. CEO Phil Ram said the Palmdale project is an attempt to address L.A.’s “dire need” for affordable housing.
L.A. County is short around 500,000 affordable homes, according to a recent report.