NEW YORK The Goldman Sachs Group has
stepped up to fund several notable low-income housing tax
credit (LIHTC) transactions, a sign of the
company's growing community
The firm's increased
activities follow its recent conversion to a bank holding
company and the emergence of Goldman Sachs Bank, which has
meant a growing Community Reinvestment Act (CRA)
However, firm officials note that the company has been
active in community development for years.
The Goldman Sachs Urban Investment Group (UIG) dates
back to 2000 when it was formed to make principal
investments in minority-owned and/or urban companies and
“Essentially, our Urban
Investment Group is a double bottom-line real estate fund
targeting private equity investments in underserved areas,
focusing on emerging neighborhoods and emerging
developers,” says Dan Nissenbaum, COO of
the group. “This commenced
before the firm had a regulatory obligation like CRA as we
To date, UIG has committed $700 million to businesses
and projects nationally. Its investments have facilitated
the creation of more than 5,000 units of housing as well as
commercial and community space.
The corporation will do more in the wake of establishing
Goldman Sachs Bank USA at the end of last year.
“Since that time,
we've increased staffing in
this area and built out a community development finance
team,” says Nissenbaum.
“At a time when there is a
general contraction across the industry in lending and in
investments, particularly in the LIHTC,
we've actually been increasing
the volumes in our community reinvestment programs, and in
particular the LIHTC.”
The tax credit market continues to struggle as key
investors have left or reduced their activities.
UIG officials did not disclose how much they invest in
LIHTCs, but with new CRA requirements and increased
opportunities, the level of investment will be
significantly higher this year than in the past.
“Given that Goldman Sachs
Bank has maintained average assets of roughly $130 billion
to $140 billion, we're ramping
up a CRA program that's
commensurate with the size of the bank, so there will be a
significant expansion,” says Nissenbaum.
“Other areas of the firm, which
focus on tax-advantaged investments, are also making LIHTC
investments. Across the firm,
we're looking at primary
purchases and secondary-market
The group recently became the sole investor to fund a
major New York City-sponsored redevelopment that is
co-managed by the Local Initiatives Support Corp. and
Enterprise, according to officials. Responding to a
significant capital gap, UIG agreed to fully finance a
nearly $60 million equity fund via the purchase of
“Across the firm, we expect
to be involved in a significant number of LIHTC
transactions by the end of the year,”
says Nissenbaum. “We expect to
close somewhere between five and 10 deals on a direct
Goldman Sachs Bank, based on the
bank's footprint, will focus
the investment program in New York City, northern New
Jersey, and the Salt Lake City metropolitan area in
addition to federally designated disaster areas, including
the Gulf Coast. It recently made a $60 million investment
in the rebuilding of the C.J. Peete Apartments complex in
However, between UIG and other units in the company,
Goldman Sachs makes LIHTC investments nationally.
New post at NHC
Nissenbaum stepped into another role this
year—chairman of the National
Housing Conference (NHC).
leadership will continue to promote and propel key focus
areas, including, first and foremost, foreclosure
prevention and neighborhood
stabilization,” he says.
the issue of the day.”
In concert with other groups, NHC successfully advocated
for about $4 billion of federal funding for
post-foreclosure neighborhood stabilization efforts. In
addition, the organization is working to coordinate a
policy response to really address the issue of foreclosure
prevention, particularly looking at approaches to loan
A second issue will involve the reform of the secondary
got to get back to a place where the secondary market
serves the affordable housing industry whether
that's the government-sponsored
enterprises or the Federal Home Loan Banks or other
participants,” says Nissenbaum.
“We need to make sure the
mainstays remain in place, and that strong and sustainable
long-term capital sources exist to support state and local
On a third front, transit-oriented development and green
initiatives will continue to be important topics for NHC.
a crucial moment in time when we have a president who knows
the importance of these issues, a federal housing secretary
who is well steeped in affordable housing, and
financial-sector and banking regulators who want to promote
community reinvestment,” says Nissenbaum.
“That alignment provides us with
an important opportunity.”