A new fund aims to attract $100 million to assist nonprofit developers preserve and renovate low-income housing tax credit (LIHTC) properties in underserved markets.
To help make the program work, the John D. and Catherine T. MacArthur Foundation is providing a $20 million guaranty.
“This innovative approach, which brings together major financial institutions, philanthropy, and the federal government, shows that we can mobilize the capital needed to save thousands of at-risk affordable rental homes, even in difficult economic times,” said Debra Schwartz, MacArthur’s director of program-related investments in a statement. “Much more needs to be done, but this model offers one creative way forward.”
As part of the partnership, The National Affordable Housing Trust (NAHT) and Cornerstone Real Estate Advisors, LLC, recently closed a LIHTC investment fund. Investors in the fund include JPMorgan Chase, Massachusetts Mutual Life Insurance Co., MetLife, and United Bank.
Fund supporters noted that many LIHTC investors are focused on major markets and new construction projects, causing some preservation projects to stall, especially in smaller, rural communities.
The new fund is widening the range of rental housing projects that mainstream investors will support.
MacArthur’s financial support helps address investor concerns regarding construction and lease-up risks as well as the funding of certain federal subsidy programs.
The fund will support nonprofit developers acquiring and renovating hundreds of existing affordable apartments in five states. These projects include:
- Nicollet Towers, a landmark building occupied by more than 300 low-income seniors and families in Minneapolis. Volunteers of America will renovate the development to include new energy-efficient features. A groundbreaking event is scheduled for Dec. 15.
- Southwood Apartments, a 100-unit affordable rental property in Oklahoma City. In addition to energy-efficiency upgrades, a new wireless emergency call system will be installed. This is another Volunteers of America project.
- Millard Manor in Omaha, Neb., which will be expanded to provide more homes for low-income seniors. The project is being renovated and managed by Good Samaritan Society.
- Renaissance Senior Apartments. a 100-year-old property in downtown Toledo, Ohio. National Church Residences will renovate and manage the 53 rental apartments. A groundbreaking is set for Dec. 14.
Fund officials have also identified properties in Findlay and Highland Hills, Ohio, and Leominster, Mass.
MacArthur’s loan guarantee is part of the foundation’s $150 million rental housing preservation initiative, “Window of Opportunity.”