Caleb Clapp is a housing developer in the Boston area who would like to do well by doing good. He is succeeding, but it hasn't been easy.
His latest project, the renovation of three buildings that will house AIDS victims, has just gotten off the ground.
It has involved financial dealings with the Federal Deposit Insurance Corp., the Federal Home Loan Bank of Boston, two Boston banks, the Massachusetts Government Land Bank, a private trust management company, and the City of Boston.
The project demonstrates the extraordinary complexity involved in assembling lenders for even relatively small social projects.
The first unit, Sheila Daniels House in Roxbury, houses 11 mothers with HIV-infected children.
A second building in Roxbury will have three two-bedroom and three three-bedroom apartments for families affected by AIDS but with no history of drug abuse.
A third unit, in another part of Boston, will have 10 studio apartments for individuals with AIDS. Support services will be on the premises at all three locations.
Fannie Mae has put in $1.8 million of equity financing, for which it has received a 99% interest as limited partner. it is getting $275,000 a year in tax credits for 10 years.
The general partner, with 1% equity, is Mr. Clapp's Renwood Cos., which guided the project through the tangled financing web. "We are private developers who have gotten focused on special-needs housing," he explains.
The three buildings involved were originally bought by Renwood for a low-income project, with financing from Blackstone Bank and Trust, a Boston bank that failed during the construction phase.
Renwood was able to negotiate a low-cost settlement with the Federal Deposit Insurance Corp. after it changed the project to special-needs housing.
Mr. Clapp says the FDIC is now out of the picture because that debt has been replaced with an $825,000 construction loan from Wainright Bank of Boston, which is also providing a bridge loan.
"Wainright is one of the few banks in the area that lends money to projects such as this. They've found that it's good business, and the default rate is much lower on this kind of project."
The biggest permanent financing is from the Massachusetts Government Land Bank, which has provided a 7% 15-year fixed-rate mortgage of $750,000, without recourse.
"They are a quasi-government agency that has not done special-needs housing before, and they used this project to formulate their special-needs procedures," says Mr. Clapp.
The City of Boston also allocated about $400,000 in federal community development block grants "in the form of a soft second mortgage that gets paid only when cash flow is available," Mr. Clapp explains. "Some portion is forgiven after 10 years."
The other source of permanent funding is Winslow, Welch & Forbes, a Boston-based private trust management firm, which provided a $75,000 second mortgage.
The project also got a $1 00,000 award from the Federal Home Loan Bank of Boston through the sponsorship of Boston Private Bank and Trust Co.
After 15 years, ownership of the project will revert to the nonprofit social agencies that will be servicing each of the buildings.