Pima County is preparing to give a $900,000 no-interest loan to the Primavera Foundation for a South Tucson housing project.
The 30-year repayment plan calls for no payments for 10 years, then annual payments of $22,500. A $450,000 balloon payment is due in the last year.
Primavera CEO Peggy Hutchison said her organization is raising private money through a capital campaign to repay the loan and another loan for the project, and will have paid off a good portion of the loan before it's time to make the balloon payment.
Rents paid at Las Abuelitas Family Housing Project, 440 E. 26th St. in South Tucson, also will help pay off the loan, Deputy County Administrator Hank Atha said.
The interest-free and deferred payments will allow Primavera to gather the money for the payments, he said.
The Board of Supervisors is set to approve the loan at its Tuesday meeting.
The 12-apartment complex is under construction on two-thirds of an acre of land donated by the county last year. It will open in August and be home to low-income grandparents raising grandchildren.
The no-interest loan money, which comes from the federal Home Investment Partnerships Program and passes through the county, will pay for five of the apartments.
The total project cost is about $3.6 million, Hutchison said.
A combination of private and public money makes it possible, she said.
"We don't think the government should pay for it all, and we don't think private dollars can cover the cost," she said.
Most of the funding comes from tax dollars filtered through various programs.
Besides the $900,000 Home Investment Partnerships loan, the project also received $1 million in federal Neighborhood Stabilization funding that passed through Pima County and a $148,000 grant from NeighborWorks America, a quasi-governmental agency.
Primavera also has a three-year loan of $1.6 million from NeighborWorks Capital, a loan fund for NeighborWorks America.
Hutchison said she is grateful for the community's generosity, but added that taxpayers are getting a good deal, too.
That's because the cost to taxpayers would be much higher if the children were in foster care rather than in the care of their grandparents, she said.
"The return on investment is so huge you can't measure it," she said. "And it makes a huge difference in the lives of grandparents."
Five apartments will be for families earning less than half of the area's median income, a limit of $27,000 for a family of three.
Seven apartments will be for families earning less than 80 percent of the area's median income, up to $43,200 for a family of three.
The tenants will pay rents between $560 and $840 a month, depending on the family's circumstances, and will pay minimal utility bills due to energy-efficient features of the complex, Hutchison said.
The average rent price for multifamily apartments in Tucson is about $630.
Contact reporter Becky Pallack at email@example.com or 573-4346. On Twitter @BeckyPallack.