Public-private alliances key to fixing affordable housing

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Public-private alliances key to fixing affordable housing | Opinion

Joe Huber and Luke Blocher Opinion contributors

Published 2:54 p.m. ET Aug. 13, 2023

Editor’s note: This is the first of three columns by the Cincinnati Development Fund addressing Cincinnati’s affordable housing crisis.

Cincinnati and Hamilton County leaders have prioritized affordable housing through commitments to a program called the Affordable Housing Leverage Fund, managed by the Cincinnati Development Fund. So what exactly is the Cincinnati Development Fund, and what are we doing with these funds?

Cincinnati Development Fund is a community development financial institution or, in simpler terms, a non-profit bank. Unlike a traditional bank that takes deposits and then lends money out, we raise funds from different sources (government, philanthropic and corporate) and then connect those funds to the people and places not served by the private banking market. We’ve been doing this for nearly 40 years to help kickstart neighborhood revitalization, support non-profit facilities, and provide working capital to Black, female and non-profit developers and contractors.

That’s why we raised our hand when the community focused on housing affordability. Our idea was simple: If we know keeping rents or home prices affordable will create construction funding gaps, and we know the resources to fill those gaps are limited and spread out, let’s put as many of those funds as possible in a place already set up to pool funding and match it with housing projects. So, in 2020, the Cincinnati Development Fund established the Affordable Housing Leverage Fund to build a “one-stop shop” for affordable housing developers.

That first year plus, Cincinnati Development Fund made 13 loans of $6 million into projects delivering 233 affordable units. We also started fundraising. The city of Cincinnati jumpstarted things by committing the existing and recurring sources in its Affordable Housing Trust Fund to the Cincinnati Development Fund in 2021, together with a loan pool of federal dollars. In early 2022, Mayor Aftab Pureval and Cincinnati City Council added the recurring source of up to $5 million of the annual budget surplus and $5 million of the city’s federal American Rescue Plan Act award.

Hamilton County commissioners Alicia Reece, Denise Driehaus and Stephanie Dumas then truly validated the regional concept through the commitment of $33.5 million of the county’s American Rescue Plan Act award later in 2022. These commitments of grant dollars (funds we can pass on as grants or forgivable loans) work in combination with the nearly $30 million in loan dollars Cincinnati Development Fund has raised from private, philanthropic and federal government sources (funds we can loan out at below-market interest rates) to make up the full Affordable Housing Leverage Fund program.

At the same time Cincinnati Development Fund was getting access to most of these funds in late 2022, the affordable housing industry was facing what one industry veteran called “a pretty bleak picture.” Long-rising construction costs collided with exploding interest rates to increase costs 30% in just two years and threaten all development, even projects ready to break ground. Our initial strategy has been ensuring these “shovel-ready” projects didn’t die on the vine. We are doing this while also leaning in on the fundamentals that guide all of Cincinnati Development Fund’s work: professional underwriting to assess both the need and viability of the project; the knowledge and relationships built over decades embedded in Cincinnati community development; and a view of borrowers as partners whose success we are invested in.

Guided by this strategy, Cincinnati Development Fund has, since late 2022, committed roughly $19.5 million of these public funds to projects set to deliver 422 new income-restricted units, and preserve 144 more. Consistent with the premise that funding goes farther together than alone, many of these project gaps were filled by combinations of city and county dollars and other Affordable Housing Leverage Fund loan funds.

This is a start. The challenge of building affordable housing is multi-faceted and requires a comprehensive response from the public and private sectors.

Joe Huber is president and CEO of the Cincinnati Development Fund. Luke Blocher is chief strategy officer and general counsel for the Cincinnati Development Fund.