The Pennsylvania Housing Finance Agency (PHFA) has launched a Developer Opportunity Fund to help promote the growth and financial capability of women- and minority-owned business enterprises and community developers who are building affordable housing within the state through the low-income housing tax credit (LIHTC) program.
Small developers often do not have sufficient liquidity or net worth to meet the demands of tax credit investors and must partner with larger developers or other third-party guarantors to meet the liquidity required by the investors. These developers may be required to pledge or forego a substantial amount of their developer fee, which may not allow them to gain the requisite capacity to develop independently, according to the agency.
PHFA hopes to achieve an initial funding level of $50 million. The expectation is that this would fund approximately 10 projects during the first five years of the pilot. PHFA is planning to provide additional funding, and it is seeking other sources of financial support.
“We have an opportunity to enhance our LIHTC program by encouraging the growth of smaller and newer developers who lack the experience and resources to be able to compete effectively,” said PHFA executive director and CEO Robin Wiessmann. “These firms are at a disadvantage because of limited experience and a lack of liquidity that hinders their growth. The Developer Opportunity Fund is aimed at helping these firms better compete to add more diversity and broader community representation in the construction of affordable rental housing.”
Officials said the public will benefit if more diversity is encouraged among affordable housing developers. Women-owned, minority-owned, and community developers bring unique and important perspectives that can benefit the design and construction of multifamily housing developments and help them better serve female and minority residents and communities of color. Additionally, boosting the participation of smaller and newer developers will enhance competition among developers and provide a broader diversity of perspectives on tax credit proposals.
Women and minority developers and community developers seeking to participate in the new Developer Opportunity Fund are encouraged to contact Jordan Laird at (717) 780-3843 or [email protected]. Larger and more established multifamily housing tax credit developers interested in serving as mentors for disadvantaged developers are also invited to contact Laird. Finally, investor partners are needed to fully fund this program to make it viable and sustainable.