
Enterprise Community Partners has announced the closing of a $190 million low-income housing tax credit (LIHTC) fund designed specifically to support economic mobility with a focus on racial equity.
The Equitable Upward Mobility Fund (EUMF) aims to help create more than 900 homes and support nearly 2,500 residents. With commitments from American Express, Comerica, Fifth Third, First Republic, JPMorgan Chase, and U.S. Bank, the fund builds on Equitable Path Forward, Enterprise’s five-year, $3.5 billion initiative to help dismantle the legacy of racism in housing.
“When investors make intentional choices about the businesses and communities they support, they can make a real difference in people’s lives. That’s the idea behind the Equitable Upward Mobility Fund,” says Scott Hoekman, president of Enterprise’s housing credit investments business. “We can leverage the LIHTC, our best tool for creating and preserving affordable homes, to invest in developers of color and create homes that support long-term economic mobility for residents.”
Enterprise has been working on the fund for more than a year.
The company and other LIHTC syndicators have long invested in developments that meet community needs by providing housing and services for low-income families, seniors, and people who have been homeless. But, the EUMF is the first of its kind for Enterprise as it develops new concepts and identifies new criteria for identifying social impact, according to Hoekman.
Projects in the fund had to meet one or more of a selection criteria identified by Enterprise. These included sponsorship by a developer of color, use of an evidence-based program model supporting upward mobility, or a location that’s in a high-opportunity neighborhood or a neighborhood experiencing targeted redevelopment.
About 10 projects are in the fund, and all but one have a BIPOC sponsor, notes Hoekman, adding that some projects met more than one criteria.
The fund also contains a resident services reserve, funded by both investors and Enterprise, that will be used to fund services designed in cooperation with developers and tailored to facilitate upward mobility for residents, such as financial literacy classes, increased digital access, emergency savings programs, job training, and after-school programs.
Two properties that are emblematic of the EUMF’s investments are Fourteen02 South Park, a new mixed-use apartment community in Madison, Wisconsin, and the Larchmere Homes, the new construction of 30 affordable lease-to-purchase homes in Cleveland.
Fourteen02 South Park will provide 150 affordable apartments to Madison families earning between 30% and 60% of the area median income (AMI). The property is located in an area with an upward mobility rate that ranks in the top third of census tracts nationally. Based on data from Opportunity Insights (located at Harvard), low-income children raised in similar neighborhoods are more likely to experience upward economic mobility in the long term. Additionally, the project’s sponsors, Rule Enterprises and Movin’ Out, are Black- and women-led, respectively. Because the deal leverages Enterprise’s Standby Guarantee, a credit enhancement tool that helps unlock access to capital for BIPOC developers whose balance sheets do not meet traditional investor requirements, the sponsors were able to bring stronger liquidity as a guarantor, and as a result share more equally in the economics of the deal.
The Larchmere Homes is the new construction of 30 single-family homes that will be leased, with the option to purchase at a discounted rate, to Cleveland families earning 60% of the AMI. Residents will have access to services that include financial and homeownership counseling. Located in a neighborhood with primarily BIPOC residents, Larchmere Homes is being developed by CHN Housing Partners (CHN), which utilizes an evidence-based upward mobility program: Nearly 90% of residents in CHN’s lease-to-purchase model choose to buy their homes and become homeowners, and 98% of those families are successful in their homes.