The demand for affordable housing is as high as it’s ever been. According to a National Low Income Housing Coalition’s report, there is a national shortage of 7.3 million rental homes affordable and available to renters with extremely low incomes. So, what keeps so many affordable housing projects from being built?

Rob Likes, president of community development lending and investment for Cleveland-based KeyBank, knows why. He also knows how obstacles to construction can be overcome. His bank finances affordable housing nationwide, and it has helped get projects off the ground even in this challenging market environment. “We've been very fortunate to work with strong sponsors and partners, both nonprofit and for profit, who have the experience and resources to work through the major complexities to make projects pencil out and to bring them to fruition,” Likes says.

Anyone involved in construction will be all too familiar with the headwinds pushing against the affordable housing industry. Materials costs remain elevated, and qualified labor can be difficult to find. What’s more, interest rates are double what they were 15 months ago. All this “creates gaps in the capital stack, so it takes longer to put deals together,” Likes says.

The good news, he adds, “is that there is capital available in the industry.” But it requires “perseverance and experience” to know where to find that funding. As Likes notes, that requires creative thinking from project sponsors and bankers. In addition to bank loans, affordable housing projects can work with bankers to tap Fannie Mae, Freddie Mac, Federal Housing Administration, Department of Housing and Urban Development, and other sorts of private-placement options as well as debt capital and investor capital. There often also are housing funds available in various cities, counties, and states.

And, affordable housing projects are finding capital. An example is Keeler Park, a 526-unit project in Rochester, New York. Originally built in 1973, Keeler Park needed to be upgraded with new HVAC systems and other significant improvements. KeyBank provided a $61 million bridge loan to facilitate the sponsors’ acquisition of the property along with a $37.2 million equity bridge loan, a $52 million low-income housing tax credit (LIHTC) equity investment, a $68.4 million Fannie Mae MTEB (MBS as Tax-Exempt Bond Collateral) permanent loan and bond placement services for the 4% LIHTC transaction. The renovation, which is expected to be completed in December, will improve quality of living and keep Keeler Park affordable for its residents for the long term.

Another example is Southern Meadows, a development being built in Indianapolis. The 207-unit community will be home to low-income seniors and individuals with special needs. KeyBank provided a $33.1 million construction loan, a $13.4 million LIHTC equity Investment, and a $23 million Freddie Mac tax-exempt permanent loan. Southern Meadows is scheduled to be finished in the first quarter of 2024.

While funding is available, affordable housing developers still need determination and flexibility to make a project happen. “Sometimes projects may take a couple of months, sometimes they may take a couple of years,” Likes says. But even though some digging is necessary, the capital is there. So is the demand.

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