Property Stabilization Investments

Property Stabilization Investments Instruction Guide

Last updated: December 3, 2025

Overview

Property Stabilization Investments (PSI) help address urgent threats to the financial viability of properties in the OHCS portfolio. These investments are designed to be a flexible tool of last resort, to be employed only when other resources and strategies have been exhausted.

Historically, a combination of prudent management, adequate reserves, and carefully planned rehabilitation (with or without additional subsidy) was able to keep properties operational and affordable throughout their term of affordability. With unprecedented increases in inflation, insurance, and other costs over the past five years, OHCS has recognized the urgent need for additional investment in some properties to support adequate coverage of debt service. In response, PSI has been updated to be a nimble, low-barrier tool to assist properties where these circumstances pose an imminent threat to an owner’s ability to maintain financial/operational stability and affordability without immediate intervention.

Additional information:  PSI FAQs.

Eligibility criteria

Primary eligibility requirements:

• The property is a multifamily affordable rental property already in the OHCS portfolio.
• The project is at risk of loss in the 2025-2027 biennium.
  
• Debt Coverage Ratio (DCR) has been <1.0 for 12+ consecutive months and the average DCR for the past 12 months is <1.0.
• DCR can reach >1.15 for five (5) years after stabilization investment. For projects that have no debt following the proposed investment, OHCS will evaluate applications based on the expense-to-income (E/I) ratio instead of DCR. The PSI subsidy requested should bring the properties without remaining debt to an E/I of no less than 77% for the first five years post-award. Where the E/I for a property without debt is higher than 87% (equivalent to a 1.15 DCR) and under 100%, they may proceed but are required to incorporate efforts within their Property Improvement Plan to reduce project operating costs and increase project revenue within 12 months of funding reservation. 
• Tenant rents will not need to be increased more than 5% per year for the next five (5) years with stabilization

Financial distress indicators (2 or more required)

• Property expense to income is >70% 
• Operating reserves below three (3) months expenses 
• Accounts payable are >120 days past due exceeding $25,000 
  
• Economic vacancy is >10% for 6+ months 
• Insurance or property tax delinquencies

Exclusions

• Projects with loan maturity <60 months, unless sponsor agrees to extend affordability by five (5) years if awarded funding 
• Sponsors in bankruptcy or insolvency proceedings 
• Properties already in foreclosure proceedings or with unresolved legal issues 
• Projects already condemned for public health reasons with no viable mitigation plan 
• PSI is not intended for capital improvement or major rehabilitation

OHCS reserves the right to delay or decline funding of projects with owners in bankruptcy proceedings, with open litigation, or where there are poor market conditions or other matters that the agency deems to create a risk that does not justify public investment.

Application process

Applications for PSI are submitted through OHCS’s Oregon Centralized Application (ORCA) Intake. After the Intake is reviewed, OHCS will open and assign a WorkCenter to applicants in the Procorem file share system. Applicants will complete a narrative and workbook, and upload required documents. OHCS staff will begin review of submitted application materials upon receipt of the $500 application fee and the applicant submitting all required materials.

Applications meeting standards will be advanced to either Finance Committee or Housing Stability Council based on approval thresholds. OHCS seeks Oregon Housing Stability Council for approval as required by OAR 813-005-0008, generally for awards over one million dollars. Once an award is approved, the project will be assigned to a Production Analyst to work toward financial closing.

Required submissions

Applicants are required to submit an application narrative, workbook, and required documents. Those documents include:

• Financial Reports: Owner audited financials, annual financial statements, trailing 12-month profit and loss (P&L), year-to-date P&L and balance sheet, and aging accounts receivables and payables. 
• Property-Specific Reports: Past 12-month rent roll, rolling vacancy report, past 6-month economic vacancy, property insurance and tax statements, and agreement to extend affordability if loan maturity is <5 years. 
• Lender Participation: Release of information, letter agreeing to accept buy-down and re-amortization, with non-binding term sheet, placement of property in forbearance during review period (max 120 days), and tax credit investor non-interference commitment (if applicable).

Structure

• PSI Terms: 0-1% loan up to 30 years, due at maturity, refinancing, resyndication, or end of affordability period. 
  
• Loan terms may not go longer than affordability restrictions; affordability restrictions may be extended at origination to allow for longer loan periods or upon maturity to allow for delayed repayment. 
• Requests for loan terms that extend beyond 30 years may be submitted to the assigned production analyst for review and consideration.
• Terms for projects with <60 months’ restriction at the time of loan also add five years of affordability.
• Lender Action: Reamortize remaining balance with a good faith effort to retain existing rate/term. 
• Target DCR: 1.15 minimum for at least five (5) years after stabilization investment. For projects that have no debt following the proposed investment, the PSI subsidy requested should bring the properties without remaining debt to an E/I of no less than 77% for the first five years post-award. Where the E/I for a property without debt is higher than 87% (equivalent to a 1.15 DCR) and under 100%, they may proceed but are required to incorporate efforts within their Property Improvement Plan to reduce project operating costs and increase project revenue within 12 months of funding reservation.
• Loan amount: Principal reduction needed to achieve 1.15 DCR based on current operating proforma.
• Evaluation or project restrictions: Evaluation of vacancy rates and tenant population requirements related to Area Median Income (AMI) and population targets to determine legal, impactful adjustments to improve property performance.
  

Investment limits

• Maximum per project: $2,000,000 or $25,000 per unit, whichever is less; within this cap:
  
• Up to $50,000 + $5,000 per unit can be used for repairs and deferred maintenance; and, 
• Up to $50,000 or 3% of the loan amount, whichever is less, can be used as an administrative fee.
  
• Portfolio maximum: $5,000,000 per sponsor across all projects. 
  

Performance monitoring and compliance

Ongoing requirements

• Financial Reporting: Annual operating statements and DCR calculations. 
• Rent Increases: Increases must not exceed 5% in any one year for five (5) years. 
• Affordability Compliance: Existing or modified restriction monitoring continues. 
• Asset Management: Ongoing consultation on the need to create and update a Property Improvement Plan (PIP).