Growing income inequality is an outcome of a full spectrum of social and economic forces. Federal agencies have increased investment in affordable housing through enacted and proposed legislation over the past several years, but despite the impactful shifts from local, state, and federal government there is still a need for additional capital sources and creative programs in the market.
The growing affordable housing crisis despite shifts in legislation begs the question, what can be done to create and preserve more Affordable housing in the United States? The answer comes in many forms including new incentives for multifamily borrowers. Last year Fannie Mae introduced a new program, Sponsor-Initiated Affordability (SIA), to aid in solving the growing crisis.
SIA aims to preserve naturally occurring affordable housing (NOAH) and workforce housing by encouraging property owners to enter into a voluntary agreement to restrict rent and incomes for residents living in conventional workforce housing. There are many benefits including flexible and very competitive loan terms, competitive pricing, certainty of execution and in many instances the support of socially responsible investor community. Berkadia had the opportunity to partner on a deal that utilized SIA alongside our partners Amazon, Fannie Mae, and Lincoln Avenue Capital on Cityside Huntington Metro Apartments. Cityside is an existing 569-unit market rate multifamily development which will be converted to a 100% affordable restricted asset.
This conversion of a high-cost market rate asset into an affordable asset along with the infusion of capital upgrades would not have been possible without the public/private partnership of Fannie Mae, Amazon, and Lincoln Avenue Capital. Fannie Mae’s attractive financing terms coupled with Amazon’s attractive investment terms allowed Lincoln Avenue Capital to successfully acquire this asset and repurpose it to address the dire need for affordable housing in Alexandria.
There has never been a more exciting or more important time to invest in Affordable Housing. There’s massive demand for affordable housing nationwide, which means new opportunities for financing innovation and new needs for additional affordable housing must be fulfilled. There’s also a real sense of urgency and commitment galvanizing players across the industry to pursue innovative solutions that will result in affordable and safe housing communities across the country. This extends to developers, lawmakers, real estate professionals and beyond. It’s a tall order, but this work is essential to the well-being of communities.
-Tim Leonhard, Senior Managing Director, Berkadia Affordable Housing