Demonstrating our commitment to preserving affordable housing through a new Enterprise investment
July 09, 2018
Our VP of Investments Catherine Godschalk recently wrote about the need for impact investors to take a more active role in addressing the affordable housing crisis in the U.S. (Dear Impact Investors: Consider Affordable Housing). She noted that housing is not just about a place to sleep, but is a critical element for improving employment, health, education outcomes and that while the affordability crisis has worsened, the capital that is needed to address the crisis remains scarce.
Calvert Impact Capital is dedicated to supporting affordable housing and creating thriving communities; almost 15% of our $377 million portfolio is invested in affordable housing funds, projects, financial intermediaries, and investors. One such investor is Enterprise Community Partners (ECP), a sophisticated provider of financing for affordable housing development, having invested $36 billion in communities across the country over its 35+ year history. We are proud to have lent to their affiliate, Enterprise Community Loan Fund (the Loan Fund), since 2005. We currently have a $10 million loan to the Loan Fund, which supports building and renovating affordable homes nationwide and other community development initiatives.
We recently expanded our support for affordable housing developers with a $3 million investment in the Enterprise Multifamily Opportunity Fund II, LLC, (the Fund) an acquisition and preservation fund managed and sponsored by ECP affiliates. Our investment in the $110 million Fund will support acquisition of existing affordable multifamily rental properties in the U.S. that are in danger of conversion to market-rate housing.
There is an acute need for the work the Fund is doing to address the shrinking supply of affordable housing in this country. For every new affordable home created, two are lost to deterioration, abandonment, or conversion to more expensive housing. The country’s largest affordable housing subsidy program for production of new units is the Low-Income Housing Tax Credit (LIHTC), which only creates an estimated 100,000 units each year. Meanwhile, we are losing approximately 240,00 units of affordable housing a year. Moreover, affordability restrictions on another 2.2 million affordable units of privately owned and federally assisted housing expire between 2015 and 2025 (Source: NHT – Enterprise Corp and Joint Center for Housing Studies of Harvard University (JCHS): "America's Rental Housing"), compounding this issue over the next decade.
Thus far, the Fund has acquired seven properties that preserve over 2,000 units of affordable housing from Washington state to Washington, DC and many states in between; and the plan is to acquire more properties over the coming two to three years. Housing is considered “affordable” if the resident spends less than 30% of their income on housing (Source). Over 80% of the units in these seven properties are affordable to families at or below the 60% area median income (AMI) level. For example, the 60% AMI level was $46,350 for a single adult and $66,200 for a family of four in Washington, DC in 2017 (Source).
One of the properties acquired by the Fund in Washington, DC.
The investments of the Fund will directly address the need to preserve our nation’s insufficient supply of affordable housing by acquiring and making operational improvements on already-constructed properties with low and moderate-income residents. The Fund is often lowering the ongoing operating costs of the property, making the property cheaper to operate over the long run and thereby enhancing affordability. In addition, the Fund will make targeted improvements on the properties including improving energy efficiency, enhancing indoor air quality, and preserving natural resources.
The Fund expands on the success of its predecessors, which preserved more than 8,000 affordable and workforce homes across 13 states. This second Fund will continue to meet the growing need for safe, stable, and quality affordable housing that provides residents with more than just a place to live, but the tools for success: easy access to transit, good jobs, education, and health care services.