To give people an idea of how these projects work, in this blog I want to give you a breakdown of a project done by the South Worcester Neighborhood Improvement Corp (SWNIC), of which I am a board member. Here is a general breakdown of the finances of the Cambridge/Hacker Street project, and is quite similar to how the other projects are done.
My numbers may not be to the penny, but they will give a fair an accurate portrayal of the finances. In total, the cost to build these 12 owner occupied units was $2,050,000 broken out as follow:
- BankNorth Conventional Loan $1,400,000 in first position
- City, State, Federal Grants $650,000 (HOME, CDBG Funds, etc)
Keep in mind these grants (650,000) do not have to be repaid if a certain number of the 12 units (forgot the number-think 9?) were sold to low-mod income home-owners. In other words all you really need to break-even is to raise $1,400,000 from the proceeds, not the $2,050,000.
Problem is that only three units have sold for about $340,000 (TOTAL PROCEEDS FROM THE 3 SALES), which has lowered the BankNorth loan to approximately $1,060,000. SWNIC has no money to pay the interest on this loan and now Holy Cross, the co-signor on BankNorth loan, has been paying the interest on the loan, which is not a small number.
In total to date, $2,050,000 has been invested, of which $650,000 is our tax money, into Cambridge/Hacker Street and three owner-occupied units have been produced.
Next blog over the week-end following up on this.