Impact of Affordable Housing Opportunity Fund - Leeland Tenants Association

The first Montgomery County AHOF loan was provided to help preserve affordable housing for the Leeland Tenants Association, which rallied stakeholders at all levels to support the effort. The City of Takoma Park, Montgomery County, the State of Maryland, local lenders, technical assistance providers, and private capital all came together to make the acquisition a success.

Here's the story: 

Property Sale : In 2021, tenants in the 15-unit apartment building at 112 Lee Avenue, Takoma Park received notice of the owner’s intention to sell the property. The City of Takoma Park, along with technical assistance provided by Mi Casa, Inc., worked with the Leeland Tenants Association to leverage the City of Takoma Park’s Tenant Opportunity to Purchase (TOPL) law to establish their opportunity to purchase it. In August 2021, the tenants formed the Leeland Tenants Association; voted to purchase the property and convert into a limited-equity coop; and, exercised their right to purchase the property under the TOPL law.  That law gives tenants a specified amount of time to match a third-party purchase contract that the landlord has accepted. 

Deposit : In the majority of property purchases, the potential buyer must provide an Earnest Money Deposit (EMD) within a certain number of days of signing the Purchase Sale Agreement (PSA) to secure its position as the intended buyer. Tenant associations often seek a loan to finance the EMD, as an amount of money in the thousands of dollars can be a large sum for a group of tenants, particularly with a short timeframe. Such loans must deployed rapidly, in a matter of weeks and sometimes days.  In December 2021, the Leeland Tenants Association contacted National Housing Trust, a nationally-focused community development financial institution, and requested an Earnest Money Deposit (EMD) loan in preparation for signing the Purchase Sale Agreement. Note: NHT is one of the only providers of TOPL EMD loans in the region; this loan would be the smallest in NHT’s history and represented the expansion of its EMD Loan program outside of D.C.  

Purchase Sale Agreement :  At the beginning of 2022, the tenant association signed the Purchase Sale Agreement. NHT provided the Earned Money Deposit loan shortly thereafter.

Feasibility Studies, Funding Sources and Legal Structure : In March 2022, the Leeland Tenants Association, with the continued support of Mi Casa, began engaging local governments and lenders to provide financing for the acquisition and rehabilitation of the property. The team worked determinedly for months to complete feasibility studies, identify funding sources, and put the legal structure in place for a smooth ownership transition. 

Capital Lending : In late Summer 2022, the acquisition closed successfully and the Leeland Tenants Association, which now owns the property, will continue to work with its support team to successfully transition to a limited-equity cooperative and seek renovation and permanent financing.

  • City First Enterprises (CFE), a DC-based CDFI and lender, committed to providing a senior acquisition loan that would cover 90% of the total acquisition cost. Due to NHT’s involvement since the start, and the desire to see a successful acquisition, NHT purchased a portion of the senior loan.
  • Through its Affordable Housing Opportunity Fund, Montgomery County committed to providing a subordinate acquisition loan. The County’s and NHT’s partnership in deploying AHOF funds is expected to result in $20 million deployed for affordable housing acquisitions in Montgomery County.
  • Through support from the City of Takoma Park, the Tenant Association was awarded a grant from the Maryland Department of Housing and Community Development’s State Revitalization Program. However, the funding would not be available by the closing deadline. Therefore, the tenant association had to find an alternative source of funds for the near-term.
  • To fill the remaining gap, the tenant association reached out to its support network and received a private loan from patrons who are not only supporters of the acquisition, but also supporters of the local art programs of which many of the tenants are members.

Closing on the Property :  In late 2022, the acquisition closed successfully and the Leeland Tenants Association, which now owns the property, will continue to work with its support team to successfully transition to a limited-equity cooperative and seek renovation and permanent financing.