To address the affordable housing crisis our nation faces, the Low Income Investment Fund (LIIF), Stewards of Affordable Housing for the Future (SAHF) and National Affordable Housing Trust (NAHT) recognized it would take a broad collective effort to re-imagine and change the long-standing approaches, policies and systems that reinforce persistent inequities in low-income and Black and Latino communities.
In 2020, the three organizations formed a joint venture that operates as a nimble alliance committed to raising $1 billion over the first five years to build and preserve 10,000 affordable homes across the country.
To achieve this goal, the partners are providing housing developers with innovative capital solutions, promoting racial equity within the sector and advocating for policies that create equitable and opportunity-rich communities. Within the first year of the women-led endeavor, the partners have:
- Deployed $202 million in housing investments
- Created or improved 4,500 housing units
- Launched the over $95 million Black Developer Capital Initiative (BDCI)
Building Equity with Innovative Capital Solutions
The national conversation around our affordable housing shortage reflects a growing understanding that housing is deeply connected to broader economic and social justice issues. Internal conversations among staff, and with partners and borrowers in the sector, spurred the development of the BDCI. LIIF and NAHT realized a definitive need for financing products that would help shift the affordable housing development field to be more diverse and inclusive.
The BDCI includes products aimed specifically at supporting the growth of Black-led affordable housing developers: a Line of Credit product led by LIIF and supported by Bank of America and Wells Fargo, and an NAHT-led Low Income Housing Tax Credit (LIHTC) Equity Fund, supported by Goldman Sachs. Unlike other products commonly offered by our sector, this initiative is pushing the capital partners to reexamine the traditional emphasis on sponsor liquidity and net worth – which benefits those with generational wealth – over experience and demonstrated industry success.
Laurel Street Development, led by Dionne Nelson a Charlotte, NC-based affordable housing developer, received a $3 million revolving line of credit from LIIF and led the first project closed with the LIHTC Equity Fund. The line of credit provides Laurel Street with flexible enterprise-level capital, which has been particularly important during the business disruptions caused by the pandemic. The LIHTC investment allocated $17.4 million for the construction of an 80-unit housing development in Rome, GA, that will also include an educational facility and a community farm. Through the BDCI, LIIF, NAHT and their investment partners aim to direct capital at a scale that will enable Black-led housing development firms to grow their businesses.
An Alliance for Systems Change
The joint venture has given our organizations greater opportunity to support broader, more holistic approaches to affordable housing development. For example, the partners are working toward systems change by advocating for policies that better respond to community needs, such as the proposed Community Restoration and Revitalization Fund (CRRF). This proposed $3 billion HUD grant program is explicitly intended to invest in civic infrastructure and affordable housing as a more holistic response to the unique housing, social and economic needs of a community.
Over several decades of community development experience, LIIF, SAHF and NAHT have learned that affordable housing is a necessary foundation for neighborhood stability but is insufficient on its own to truly dismantle systemic inequities or advance opportunity. Returning power and agency to economically distressed communities must include investing in the neighborhood’s civic infrastructure, including resident services, parks and green spaces, community centers, Main Streets and more.
Our organizations have long been working to realize this vision. SAHF member The Community Builders (TCB) has led comprehensive neighborhood revitalization efforts, like the Avondale Town Center in Cincinnati, OH, which will transform a disinvested retail strip mall into a vibrant hub with locally owned businesses and essential services, such as a health clinic, child care program and 119 units of mixed-income housing. The redevelopment will also include a home for the Urban League of Greater Southwest Ohio’s Center for Social Justice, which will serve 12 counties with programs to address systemic racism through advocacy and policy reform and serve as a hub for community members and organizations. LIIF provided $1.9 million in financing for the project. TCB was among the more than 100 signatories of a letter to Congress advocating for funding CRRF to support projects like this one.
To accelerate our work in more neighborhoods, federal funding sources must be designed to intentionally direct resources to build out the connective tissue between people and places. The proposed CRRF would provide more streamlined and dedicated resources to support community-led redevelopment projects—a shift from more traditional top-down developments. It also presents an opportunity to explore innovative approaches that integrate affordable housing and civic infrastructure. The joint venture partners recognize that integrating health and social services with housing is key to creating equitable and opportunity-rich communities. For example, the co-location of early care and education centers with affordable housing is one opportunity emerging among the partners.
In addition, the joint venture partners are aligned in federal advocacy efforts to fix two critical affordable housing preservation issues and protect residents and long-term affordability in the Low Income Housing Tax Credit program: clarifying nonprofits’ Right of First Refusal for properties they have developed and fixing the Qualified Contracts provision in the LIHTC program. Currently, these provisions result in too many affordable homes being prematurely converted to market rate housing. Our organizations have joined with other housing stakeholders to advocate for federal policy changes that strengthen our nation’s ability to preserve sorely needed affordable homes.
The nation continues to face an affordable housing crisis, but the heightened social, health and economic challenges of the past few years have also spurred a new openness to change, innovation and collaboration in the sector. In one year, the joint venture among LIIF, NAHT and SAHF has yielded new products, investments and key lessons for the organizations. As true allies, the three organizations are committed to taking advantage of this moment to push for equity, opportunity and well-being for every community.