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CalHFA board approves $42.6 million permanent loan for Sky Castle adaptive-reuse project in downtown L.A.
Summary
The California Housing Finance Agency board approved a permanent first‑lien loan commitment of $42.6 million (plus a $4 million subordinate loan) for Sky Castle phase 1, an adaptive reuse of the former L.A. World Trade Center that will create roughly 241 units with 239 affordable homes targeting 30–80% of AMI.
The California Housing Finance Agency on Thursday approved a permanent loan commitment for Sky Castle phase 1, an adaptive‑reuse conversion of the former L.A. World Trade Center in downtown Los Angeles.
Catherine McFadden, CalHFA’s director of multifamily programs, told the board the action would enable a $42,600,000 first‑lien permanent loan and a $4,000,000 subordinate MIP loan. McFadden described phase 1 as approximately 241 units concentrated on the concourse levels, of which 239 are affordable and target households between roughly 30% and 80% of area median income (AMI), with the project’s average targeting about 60% AMI. She said construction is expected to begin in August 2026 with completion targeted for February 2029 and noted the CDLAC closing deadline is September 2.
McFadden highlighted the financing stack—CDLAC tax‑exempt bonds, federal tax credits, equity and a seller carryback—and said Citibank will serve as the construction lender and Raymond James as the equity investor. The team reported a per‑unit cost of about $443,000 and a per‑bedroom cost of about $352,000, figures the development team attributed to reuse of existing systems and lower impact fees in Los Angeles. “This conversion is bringing over 500 affordable units to Downtown L.A.,” McFadden said, adding the project preserves a mid‑century artwork and uses an air‑rights subdivision to allow two independent financing stacks.
Garrett Lee, president of Jameson Properties (the sponsor on behalf of Arden Development), said the parking airspace is separately owned but that up to roughly 700 vacant stalls are available and the current owner is willing to discount rates and provide concessions to support lease‑up. Lee also described his firm’s conversion track record and defended the project’s contingency and elevator work plan when questioned by board members.
Board members raised questions about utilities, elevator conditions and the deferred developer fee; McFadden said the exit analysis shows an estimated $2.5 million residual on the MIP loan in year 14–17 that the promissory note and refinance proceeds are expected to address. After board discussion and no public comment, the board moved, seconded and approved Resolution 26‑20 authorizing the loan commitment.
The board vote was recorded by roll call and the chair announced that Resolution 26‑20 passed. The project team said the financing and permit schedule will guide next steps and staff offered to coordinate site tours during construction.
Next steps: finalize CDLAC and bond transactions by the September CDLAC deadline, proceed with contractor procurement and initiate the construction timeline that targets an August 2026 start.
