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CalHFA approves loan increase for Shiloh Terrace after contractor abandonment and cost overruns
Summary
The board approved resolution 2603 raising the permanent loan for Shiloh Terrace (Windsor) to address a $7.3 million construction cost increase after the general contractor abandoned the project at roughly 90% completion; local funds and deferred developer fee also help close the gap.
CalHFA’s board voted to approve a permanent loan increase for Shiloh Terrace, a 134-unit new-construction family project in Windsor, Sonoma County, after staff reported significant construction disruptions and cost increases.
Catherine McFadden, CalHFA’s director of multifamily programs, said Shiloh Terrace — awarded under the 2021 mixed-income program — experienced redesign and off-site storm drainage work, utility conflicts and a general contractor that abandoned the project at about 90% completion in March 2025. Those issues, combined with higher construction loan interest and reduced tax-credit equity due to delivery delays, produced a roughly $7.3 million cost increase and about $1 million reduction in equity. The developer requested raising the permanent loan to $33.5 million, a $6.4 million increase over the original approval; staff said the permanent loan remains within CalHFA’s DCR and LTV standards and that the conversion is anticipated in April 2026.
Board members pressed for greater transparency about the LLC that holds project ownership and whether developer fee deferrals or similar concessions were being used to close the gap. One director urged disclosure of managing members in future reports; McFadden said staff can provide those names going forward. Another director raised concerns that tax-credit rents have risen faster than household incomes, increasing rent-burden risk for tenants. McFadden responded that rent escalation since initial underwriting has supported added permanent debt but acknowledged the board should consider program-level tools to address affordability.
A representative for the developer described site-specific PV scope increases and unforeseen utility conflicts as major drivers of the overrun and said a new general contractor is completing off-site work to reach certificate-of-occupancy; McFadden noted the construction inspector had verified completed work and that wages had been paid despite contractor departure, while other disputes remain under resolution.
After no public comment, a motion and second were called and the board approved resolution 2603 by roll call. Staff said Sonoma County provided $600,000, the developer deferred about $1.2 million in additional fee, and approximately $1.0 million in net operating income helped support the adjusted capital stack.
