In the session “Financing Tools to Make Affordable Deals Pencil” at the 2024 ULI Housing Opportunity Conference, panelists shared a variety of tools and strategies designed to support the production of more affordable housing.
In his introduction to the panel, moderator David Steinwedell, president and CEO of Affordable Central Texas, said, “This is my fourth recession. With each challenge comes an opportunity, especially the potential to get pricing with added affordability.” Affordable Central Texas is the sponsor and investment manager of the $400 million Austin Housing Conservancy Fund.
Diversifying Multifamily Loan Programs
Kelly Boyer, president of Rose Community Capital (RCC), described the organization as a lender specializing in FHA-insured and USDA-guaranteed multifamily mortgages for new construction, rehab, urban infill, mixed-income, and workforce housing. Jonathan Rose Companies—well known for developing green, affordable, and mixed-income housing—acquired RCC in 2016 as part of its purchase of Forest City’s affordable housing business.
RCC has expanded its services from the Midwest to a national scope, and sought to diversify its lender offerings to support affordable housing development and preservation. For example, RCC has created a national bridge loan program for developers and owners to create and preserve affordable housing, with loans that provide borrowers time to apply for permanent financing and government subsidy programs.
Boyer said that patient capital is essential in RCC’s work. “Everything takes longer and costs more. Give yourself a long runway. That’s the biggest challenge: how long can you hold something to get it repositioned?”
Community Development Banking to Lift Low- and Moderate-Income Households
Katherine Groves, senior vice president and Texas market manager of community development banking for PNC Bank, shared her team’s efforts to strengthen low- and moderate-income communities in the state. PNC’s Community Development Banking team focuses on loans and investments that are eligible under the Community Reinvestment Act.
Groves said, “PNC has committed $10 million to support affordable housing in Austin through the Austin Housing Conservancy Fund—the fund’s largest investment to date—to fund the purchase and preservation of affordable multifamily properties.”
Launched in 2022, PNC Bank’s Community Benefits Plan has committed $88 billion in loans, investments, and other financial support for home lending, small business lending, community development financing, and charitable giving through 2025.
Investing in Housing Stability
Dillon Lorda, director and portfolio manager in AEW Private Equity Group with AEW Capital Management, is responsible for co-managing the AEW Essential Housing Fund (EHF). EHF targets modest rent growth, low resident turnover, and stable operating costs to provide durable, long-term cash flow for investors.
EHF’s strategic focus on investing in low- and moderate-income rental housing harnesses the benefits of an asset with both steadily inflation-adjusting revenue and 100 percent occupancy. “The best way to invest,” Lorda said, “is in a vehicle aligned with interests of the residents and long-term economic stability.”
The range of EHF investments includes rent-restricted housing—such as LIHTC and Section 8—naturally occurring affordable housing, single-family homes for rent, and manufactured housing.
Local Impact Through Collaborative Investments
Brian Allan “AJ” Jackson, president of JBG SMITH subsidiary LEO Impact Capital, leads an innovative platform that raises investment capital to create affordable workforce housing and increase economic mobility in well-resourced neighborhoods.
Jackson discussed the Washington Housing Initiative (WHI), a scalable, market-driven model funded by philanthropy and private investment. WHI is a partnership between Impact Pool, a social investment vehicle that provides low-cost loans to acquire and develop affordable workforce housing, and the Washington Housing Conservancy, a nonprofit that preserves affordable homes in the D.C. metro region. Through the end of 2022, Impact Pool had invested more than $65 million to acquire 2,565 housing units across seven properties.
Jackson noted that WHI mobilizes short-term capital and long-term affordability. “It’s essential,” he said, “to have a capital source that is flexible and can move at the speed of the market.”
