Housing Development Challenge
This program is now closed.
A Housing Development program has been designed to invite developers/contractors/landlords to submit proposals for new residential development projects on PEI including infrastructure. This loan program is intended to assist approved developers/contractors/landlords increase the housing inventory on PEI.
Applications are being accepted starting August 16th,2023 and closing September 29th, 2023.
Do I qualify?
For an applicant to be eligible for assistance, the following criteria must be met:
- Projects must have at least five units and tenants must be an arm’s length to the developer (cannot be developer’s family living in the development)
- Maximum Financing: The maximum funding available for a single development project is $6 million under this program.
- Mixed Interest Rates: In the new call for proposals, there's a provision for constructing higher value projects with mixed interest rates:
- If the project cost is $16 million, the first $6 million of the project cost qualifies for a 2% interest rate under the program.
- The remaining $10 million of the project cost will be financed through Finance PEI's interest rate, which is calculated as the cost of funds plus 2.5%.
This approach allows for a tiered interest rate structure, with a lower interest rate applied to a portion of the project cost and a different interest rate for the remaining portion.
- Maximum financing to each project will not exceed 90% of the construction value
- Must have previous industry experience as a contractor/landlord or developer.
Eligible Applicants include:
- Non-profits;
- Community based / service organizations;
- Private sector (applicants must be in good standing with the Province at the time of application);
- Previous developers are eligible to reapply for new projects (no refinancing of previously approved projects will be considered).
Eligible Activities:
- Construction of housing facilities (including related services for engineering and architecture); and
- Infrastructure for development of subdivision(s) in rural areas only (i.e. road, sewer and water).
Financing Criteria
- Maximum Financing: The maximum funding available for a single development project is $6 million under this program.
- Mixed Interest Rates: In the new call for proposals, there's a provision for constructing higher value projects with mixed interest rates:
- If the project cost is $16 million, the first $6 million of the project cost qualifies for a 2% interest rate under the program.
- The remaining $10 million of the project cost will be financed through Finance PEI's interest rate, which is calculated as the cost of funds plus 2.5%.
This approach allows for a tiered interest rate structure, with a lower interest rate applied to a portion of the project cost and a different interest rate for the remaining portion.
- The loans will bear interest at fixed rate of 2% per annum for a term of ten years and amortized over a period of 25 years.
- Loans will have an ‘interest only’ period of up to a maximum of 12 months (from 1st disbursement) during construction or the date of substantial completion.
- Loans are secured by (at a minimum):
- Promissory Note for the full amount of the loan
- Personal guarantees of the business owner(s)
- 1st collateral mortgages on the property(s)
- No application fee applies
How will applications be evaluated?
Similar to the first Housing Challenge program, Finance PEI will evaluate each application through a committee with a maximum of $50,000,000 ($20M designated to rural, $30M designated to urban) made available to this program.
Applicants will be required to provide a 1-2 page executive summary addressing the following (7) criteria points along with their projected monthly rents, breakdown on number of bedrooms, estimated monthly costs and any other pertinent information with respect to their project.
Developers/contractors will submit application for new housing projects which will be reviewed and evaluated by a committee using a point scoring grid marked out of 100. The following is a breakdown of the weighted scores for evaluation:
-
Timeframe to commence and complete construction - Max 10 pts
-
Carbon reduction footprint construction - Max 15 pts:
- EnergyStar® certified heating equipment (up to 5 pts)
- Solar Photovoltaic ("Solar PV") (up to 5 pts)
- Other (up to 5 pts)
-
Development location (projects that demonstrate the need for housing within an area will be prioritized) - Max 15 pts
- Letter of Support from local Municipality (up to 5 pts)
- Proximity to amenities (up to 5 pts)
- Highway access / Public road (up to 5 pts)
-
Lease/rental/ownership structure (projects that present creative leasing or ownership models will be prioritized) - Max 20 pts
- Affordability based on average monthly rent/unit (up to 15 pts)
- Other (up to 5 pts)
-
Design features of the property, including accessibility - Max 25 pts
- 20% of units are accessible units (up to 10 pts)
- Addresses local market demand (up to 10 pts)
- Other (up to 5pts)
-
Financial capability of the development and the developer/contractor - Max 10 pts
- 5+ years experience in construction industry (up to 5 pts)
- Financial feasibility of the project (up to 5 pts)
-
Other Project Strategic Benefits - Max 5 pts
Disbursements will require support provided by quotes/invoices through construction draws verified by signed architect/engineer letter. Upon approval, requests will be advanced less any required mechanic lien holdbacks. Any structural changes to facilities during renovations and/or construction must be approved by stamped Engineer drawings compliant with legislation on PEI.
The Province is committing $50,000,000 to this new program.
How do I apply?
Complete and submit an application to an account manager with Finance PEI.
Where can I find more information?
If you have any further questions, they may be directed to:
Jeff Ready, Director
Finance PEI
94 Euston Street, 2nd Floor
PO Box 1176 Charlottetown, PE
Phone: (902) 368-6435
Fax: (902) 368-6255
Email: jcready@gov.pe.ca