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HOUSTON-A joint venture between a local developer and Harris County Housing Authority has obtained more than $10 million in construction financing for Waterside Court. The 118-unit affordable housing project is expected to break ground before the year ends.

Waterside Court is the second collaboration between Hettig/Kahn Development Corp. and the housing authority. “Equity for the property was raised through tax credits allocated by the federal and state governments and it’s fairly substantial,” says Don Hickey, principal with iCap Realty Advisors of the Woodlands, TX. The authority also is providing an additional $1.9 million in funding for the 24.6-acre project in the 500 block of West Road, which will deliver in late 2007.

Hickey tells GlobeSt.com that the affordable housing project requires a different loan structure than a typical multifamily financing project. “It can’t be valued in the same way. You’re building class A apartments, but they don’t have the same value or rent structure because they’re affordable housing,” he says, adding that debt for such projects generally depends on tax credits and other raised equity. Hickey’s company coordinated debt financing with Brian Stoker of iCap affiliate Amegy Bank.

Hickey declined to discuss specifics of the construction financing loan, but he adds that similar deals can carry a 17-year term, with the interest rate priced over the fixed rate costs of funds.

The iCap team had helped finance the partnership’s first project, the recently completed 100-unit senior housing Baybrook Park in Webster. “The developer is one of the premier developers of this type of property in the state,” Hickey says, “and we have a history with them. We know they do a first-class job.” Likewise, he says Waterside Court’s impact on the neighborhood was also an incentive. “What’s really cool about these types of projects is that they’re providing new housing in a lot of different neighborhoods. It’s something that revitalizes the neighborhoods,” he says.

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