We have a loan where proceeds will be used to provide funding for a new Senior community development project. According to the development plan, the project is subject to Inclusionary Housing Ordinance where at least 15% of all units in residential projects must be inclusionary units that will be made available at affordable rents or affordable sales prices. According to the IHO, all new for-sale residential projects consisting of 2 or more dwelling units located within the city are required to restrict 15% of the dwelling units for sale at affordable sales prices to “moderate income households”.

Our project will have 48 (of 320) affordable for-sale units for moderate income households. However, the ordinance defines “moderate income household” as a household with a gross annual household income between 81% and 120% of AMI. This is different than the CRA definition of moderate income.

From the CRA Guide:
Income level. Income levels include: • Low income, which means an individual income that is less than 50 percent of the area median income, or a median family income that is less than 50 percent, in the case of a geography; • Moderate income, which means an individual income that is at least 50 percent and less than 80 percent of the area median income, or a median family income that is at least 50 and less than 80 percent, in the case of a geography;

Could this loan qualify as community development affordable housing for low- or moderate-income individuals (where we would use the pro rata dollar amount based on the 15% restricted units)? My thought is no, but wanted to get other thoughts. It’s a little confusing because the project is a Senior community and the development plan mentions affordable, BMR, and moderate income throughout, but I think it really comes down to how CRA defines affordable housing to low or moderate income individuals.

Thoughts are very much appreciated!