January 9, 2023-OAKLAND, CA
Congratulations to Eden Housing on the financing closing for Walnut Grove Senior, a new construction development in Los Gatos, in Silicon Valley. The project contains 50 one-bedroom units to be rented to senior households over age 55 earning 30 – 50% of the area median income (AMI). The area has experienced years of housing cost pressures due to its location near major job hubs in Silicon Valley, where there is a deficit of nearly 55,000 available units affordable to very low-income households.1
Walnut Grove Senior is an inclusionary affordable housing component of North 40, a new mixed-use neighborhood developed by SummerHill Homes and Grosvenor. North 40 brings a variety of much-needed housing options to residents of Los Gatos and Santa Clara County. The project is the centerpiece of a new neighborhood in North 40’s first phase, which includes 320 residential units, open space, and 66,000 square feet of commercial space. Walnut Grove Senior is co-located with The Junction market hall space, which will include a variety of dynamic retail and restaurant amenities in a walkable, mixed-use environment for senior residents and members of the larger community.
“Walnut Grove was a uniquely structured project that required the right financial partners. We were able to work with Merritt and East West Bank on this creative “step-in-the-shoes” transaction where Eden purchased a nearly complete building from SummerHill just days before placing the building into service,” shared Andrea Osgood, Eden’s Senior Vice President of Development. “This critical inclusionary component of the larger development, certainly did not fit the typical affordable housing deal mold, but our partners at Merritt and East West Bank were flexible and creative – and we are grateful to bring housing to seniors in Silicon Valley who often struggle to find affordable housing on their fixed incomes.”
Walnut Grove Senior was financed through an innovative “step in the shoes” structure that allowed for expedited project delivery while using fewer public resources than a typical affordable housing project in the Bay Area. Using this structure, Eden Housing and SummerHill worked as partners on the project’s design, development, and entitlement, with SummerHill constructing the building to near completion until Eden Housing acquired the finished project immediately prior to placed in service. This allowed for lease-up and occupancy of the project to start shortly after the tax credit financing closed.
The project was financed without the assistance of state or local funding, utilizing only 9% federal low-income housing tax credits (LIHTCs). Merritt has been working with Eden for nearly a year to structure this unique transaction. To secure proprietary funding, we worked with our partners at East West Bank, who made an equity investment in Walnut Grove Senior, marking our third Proprietary fund closed in the calendar year 2022. East West Bank also provided construction bridge and permanent debt financing for Eden’s acquisition of the project.
“At East West Bank, investing in the communities we serve is part of our mission. We are pleased to work on this project with Eden, one of the state’s strongest developers, and Merritt, a committed, mission-oriented partner in California. This is an example of how East West engages in creative solutions to bring desperately needed affordable housing to Silicon Valley,” said Keith Kishiyama, SVP – Director of Corporate Finance with East West Bank.
Originally conceived in 1999 as part of a specific plan, North 40 went through 20 years of planning processes, a lawsuit, a council rejection, and finally approval in 2018. The approval of this project was a celebrated victory for affordable housing in Los Gatos.
Merritt Community Capital Corporation is proud to provide $17.7 million in tax credit equity capital to Eden for this impactful project that showcases our partners’ ability to provide and execute on complex financing solutions to increase California’s supply of affordable housing. Merritt is proud to continue our long-term relationship with Eden Housing on this project by providing an equity investment backed by a team dedicated to the organization’s non-profit mission.
Contact David Dologite – Director of Acquisitions to learn about Merritt’s equity solutions for your project.
About Merritt Community Capital Corporation
Merritt Community Capital Corporation is a nonprofit dedicated to our mission to provide equity capital for affordable housing exclusively to California. We do this by partnering with mission-aligned affordable housing developers throughout the state to ensure the most critical communities are developed and maintained for low-income residents. Since 1989, Merritt has created and/or preserved 11,000 affordable homes, through investing over $1.2 billion in 26 separate funds, providing housing for over 29,700 people.