CalHFA to rebuild construction-lending capacity and align with new HDFC to speed affordable housing
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Summary
CalHFA leaders told the New Opportunities Committee they will prioritize rebuilding construction lending as a core, foundational product, coordinate closely with the newly formed Housing Development and Finance Committee (HDFC) and use pilots, CDFI partnerships and hires to manage risk before scaling programs.
CalHFA officials said Tuesday that restoring construction lending is a top priority and a prerequisite for launching more innovative multifamily financing tools.
At the New Opportunities Committee meeting, Catherine McFadden, CalHFA’s director of multifamily programs, said construction lending ‘‘is foundational’’ to the agency’s three‑year strategic plan and that the agency must invest in staffing, processes, technology and underwriting capacity before expanding new products. "Developing and launching a construction lending program is one of the major goals of our three‑year strategic plan," McFadden said.
Why it matters: construction financing often determines whether projects break ground. McFadden told the committee CalHFA offers long‑term taxable and tax‑exempt permanent loans, a mixed‑income program and a bond‑recycling tool, and that stronger construction lending will enable more efficient permanent financing and faster housing production.
How the program will work: McFadden said CalHFA intends to be a market‑gap filler and frequently act as a first‑lien construction lender when appropriate. "One of the things I want to see is our basic construction lending very much developed based on appropriate risk… with the goal over three years to lend on 50 percent of the private activity bond cap," she said. The agency plans stakeholder outreach, pilot projects and partnerships with entities such as community development financial institutions (CDFIs) to test products and build internal expertise.
Coordination with HDFC: McFadden described close coordination with the Housing Development and Finance Committee (HDFC) to streamline applications and reduce duplication across state entities. The committee discussed an HDFC aim of ‘‘one single application, one review process, and one award’’ to reduce borrower burden.
Board composition and governance: a committee member noted that HDFC will have three statutory board members and reported those will be Secretary Moss, Director Velasquez and the committee member who spoke (name as recorded in the meeting). The committee said that arrangement should help align state subsidy programs and CalHFA lending to accelerate delivery.
Staffing, pilots and risk management: McFadden said CalHFA will hire specialists in disbursement and credit analysis, use short‑term consultants and run pilots in partnership with CDFIs so staff can shadow originations and underwriting in real time. "It will take time… but in the meantime we’re looking to run pilots to get that training expertise quicker," she said.
Non–tax‑credit options and recent activity: McFadden highlighted other lending channels—workforce housing, preservation, bridge financing and 501(c)(3) bond financing—and noted the agency closed a large 501(c)(3) project the previous day. Committee members pressed for timely RFI results and asked staff to summarize respondent interest and proposed approaches.
Next steps: staff will return with RFI results and program guidelines, recruit needed hires and run pilots before broader rollouts. The committee will continue oversight as CalHFA builds capacity for construction lending and aligns tools with interagency partners.
