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Federal Home Loan Bank of Chicago (FHLBC) Affordable Housing Program (AHP)

Cinnaire Lending, our nonprofit lending division, joined the FHLBC in 2015 because of their interest in having more CDFI members. As a member of FHLBC, we are able to take advantage of any products offered by them. One program we use is AHP for rental projects, which is a program that awards a grant subsidy of up to $850,000.00 through a competitive application process. The project does not have to be in the FHLBC’s district of Illinois or Wisconsin to apply, but projects within the district do have a competitive advantage. AHP is gap funding for affordable rental projects and dovetails well with the Low Income Housing Tax Credit (LIHTC) program. We have been able to use AHP as a tool to generate new business, solve problems for existing deals already in underwriting with us and reinforce relationships with our long-term clients.

As a FHLBC member, we are allowed to submit an AHP grant subsidy application on behalf of the developer (sponsor). Due to the wide array of financing products available with Cinnaire’s CDFI diversified structure, we are able to put sponsors in a position to qualify for Member Financial Participation (MFP) points on their AHP applications (financing size requirements apply). We are able to provide this benefit to sponsors through equity as a syndicator of tax credits and/or debt (long-term and/or short-term) through Cinnaire Lending. Many FHLBC members can only provide one of the two due to their organizational structure. With Cinnaire, whether we are the sponsor’s debt partner or equity partner, they are eligible for MFP points that can make a significant difference within a highly competitive grant program. As a member sponsor for an AHP application, Cinnaire Lending provides technical assistance, guiding the application process for the sponsor while providing valuable feedback regarding eligibility, scoring questions and strategy. We have enjoyed early success in the program, securing the third most AHP subsidy dollars in our first year. We were funded on over 50 percent of our applications in 2015 and anticipate over 75 percent in 2016.

The AHP grant subsidy is a pass-through of subsidy from member to sponsor (usually the developer or co-developer) who then uses the subsidy toward “buying it, building it, or rehabilitating it.” As long as the developer remains in compliance for 15 years, there is no obligation to repay the subsidy and restrictions placed on the project through the program no longer apply. If there is a non-curable event of non-compliance during the compliance period that triggers a recapture of the subsidy, the sponsor or member may be responsible for repaying the entire subsidy amount. For AHP rental projects, FHLBC monitors compliance and allows 42 months from the date of the award for a project to reach Project Completion. For LIHTC projects, once a Project Completion Report (PCR) is generated the FHLBC relies on the compliance and monitoring of the Housing Finance Agency (HFA) that issued the LIHTCs for the remainder of the compliance period.