NEW YORK—The Local Initiatives Support Corp. (LISC) has leveraged a $5 million grant from the federal Capital Magnet Fund to launch the Neighborhood Revitalization Loan Fund–an affordable housing loan pool designed to stimulate the development and preservation of multifamily rental housing for low-income residents.
Supported by a $19 million loan from Morgan Stanley, the new fund is expected to fuel $100 million in affordable housing development by providing the early financing and loan guarantees required by investors and construction lenders. The LISC fund will focus on low-income housing tax credit (LIHTC) projects.
The fund will be disbursed through 30 LISC urban programs around the country as well as Rural LISC.
The first loan closed in Chicago to provide $3.6 million to bridge local tax increment financing for Zapata Apartments, a new 61-unit development in the Logan Square neighborhood. Lack of full financing stalled the project for two years though it was championed by Bickerdike Redevelopment Corp., one of the city’s leading nonprofit developers.
Last fall, LISC was one of 23 organizations awarded $80 million in grants from the Capital Magnet Fund, which was created by the Housing and Economic Recovery Act of 2008 and managed by the Treasury’s Community Development Financial Institutions Fund. It aims to spur development of affordable rental housing and other community facilities as well as to attract significant private capital to the effort.
With its Capital Magnet grant, LISC laid the groundwork for its new fund, which will be used for predevelopment, acquisition, and construction loans. It will also provide liquidity and Sec. 8 guarantees, which enable developers to borrow adequate funds to complete and operate projects in an environment in which investors are uncertain about federal funding commitments, said LISC.
Development of affordable housing is central to LISC’s Building Sustainable Communities strategy. “It anchors communities,” said Michael Rubinger, LISC president and CEO, in a statement. “It also creates jobs, boosts nearby property values, expands local tax receipts, and supports the businesses in its vicinity–it also often results in large-scale revitalization. Particularly in this economic environment, it is vital.”
The new fund will help to push LIHTC projects forward, added Joe Hagan, president and CEO of the National Equity Fund, LISC’s LIHTC affiliate. “To say the LIHTC market has been up and down over the last few years is an understatement,” he said. “This new LISC fund will help put shovels in the ground, support developers that are critical to community revitalization, and move struggling families into decent, affordable homes.”
Noted Audrey Choi, managing director and head of Morgan Stanley’s Global Sustainable Finance group: “We are pleased to provide this focused capital to help LISC launch this fund and meet the needs of communities across the country. LISC has built an innovative program to mitigate the funding risks that have hindered development of the affordable housing sector. Morgan Stanley’s loan is the latest reflection of our commitment to support community development through targeted deployment of capital to areas in need.”