FFTC Makes $5 Million Program-Related Investment to Kickstart Charlotte Housing Opportunity Investment Fund
Affordable housing is a critical component for fostering upward mobility and creating vibrant communities. Yet, Mecklenburg County currently faces a deficit of 30,000 affordable housing units, and nearly half of its residents are cost-burdened – meaning housing costs exceed 30 percent of income.
To address the affordable housing shortage, Foundation For The Carolinas kickstarted a new privately financed Charlotte Housing Opportunity Investment Fund with a $5 million program-related investment, the largest of its kind in FFTC’s history.
The announcement followed the City of Charlotte’s placement of a $50 million bond referendum to dramatically boost its publicly financed Housing Trust Fund. The referendum was overwhelmingly approved by voters in November 2018. The Foundation's goal is to match the City's public investment with $50 million from the private sector.
The Charlotte Housing Opportunity Investment Fund will aim to lessen the growing affordability gap to develop housing that serves residents in a range of incomes – including moderate, low and extremely low-earning households. Local Initiatives Support Corporation, also known as LISC, will hold and manage the Charlotte Housing Opportunity Investment Fund, which will work in tandem with the City’s trust fund.
The $5 million commitment was made as a program-related investment, or PRI, versus a traditional grant. A PRI is a mission-related investment in the community in lieu of conventional investment vehicles, and that garners a low-yield return. FFTC’s investment is contingent upon the passage of the bond referendum.
“By making a program-related investment instead of a traditional grant, we – and others in the philanthropic community – can participate at a more significant financial level,” said Todd Mansfield, FFTC governing board chair.
A number of companies have since joined the Foundation's effort. Examples include:
- Crescent Communities announced a $2 million donation of land in its latest development – The River District in west Charlotte – for the construction of affordable housing.
- Wells Fargo pledged $20 million in support of increasing affordable housing in Charlotte, including a $5 million donation to the Charlotte Housing Opportunity Investment Fund.
- Bank of America, Barings and Ally announced a combined $70 million in land donations, grants and reduced lending for developers. $11 million of the investment was pledged to the Charlotte Housing Opportunity Investment Fund.
- BB&T, SunTrust and SunTrust Foundation contributed a combined $10 million to the fund, as well as an additional $20 million in other housing support.
- Atrium Health committed $10 million to the fund, and Fifth Third Bank added $3 million. In addition, Fifth Third Bank pledged an additional $7 million outside the fund in planned investments and loan initiatives to increase accessibility to affordable housing.
- David and Scott Brooks, owners of Brooks Sandwich House, donated three-acres of privately owned family land, which will be used to create 18-24 townhomes for homeownership through Habitat for Humanity.
The fund now stands at $44 million – 88 percent toward its $50 million goal – with an additional $104 million in private sector support outside the fund. In total – including the $50 million from the public sector and a $25 million pledge from LISC – $223 million in public and private sectors funds have been committed to support affordable housing since May 2018.
FFTC is also developing additional paths for others to participate in the effort, such as a mechanism for fundholders to invest in the Charlotte Housing Opportunity Investment Fund, and potentially using its subsidiary – Community Real Property Holdings, Inc. – to create a land bank to boost affordable housing.
Increasing access to affordable housing was a key recommendation in 2017’s Leading on Opportunity report. The hope is by leading the way, other members of the private sector will follow.
“We’ve seen tremendous progress since the report was released last year,” said Michael Marsicano, president and CEO of FFTC. “In addition to the City’s proposed bond referendum, the County has approved a budget increase to expand access to preschool. Now it’s time for the private and foundation sectors to step up. We are certain others will join us.”
Learn more about Leading On Opportunity and read the full report.