Affordable Housing
NMTCs Support Affordable Housing Across the US
The NMTC Program incentivizes CDEs to invest in affordable housing within low-income areas in an attempt to strengthen neighborhoods and communities. A low-income community is specified as an area with a poverty rate more than 20% or a median family income of less than 80% of an area’s median income. Following investment in these areas, home prices and residential lending generally increase due to encouragement from the NMTC investment. These benefits are also not isolated to affordable housing projects: NMTC investments of all kinds promote positive effects on housing markets within the desired area. According to an Urban Institute report published on April 28, 2021, $99 billion in NMTC allocations have been approved through 2025. Of the allocated amount, affordable residential projects have received less than $1 billion in investment but depend heavily on NMTC for completion (almost 70%).
The following projects provide examples of affordable housing investments within the NMTC program.
YMCA Supportive Housing
An Escondido apartment complex was renovated between 2019-2020 into a low-income housing opportunity for young adults and teenagers who are homeless. This YMCA project will create 25 apartments for roughly 46 people between the ages of 16 and 26 who will receive counseling and skills training. The affordable housing program expands on the Transitional Housing and Youth Development program and will hopefully support the YMCA’s efforts to end youth homelessness as well as provide support to young adults and teenagers who have experienced trauma, abuse, loss, and poverty, among other things. The estimated total project cost was $7,826,020, and NMTC investment from Civic Communities covered $6,700,000. Additionally, the YMCA project created 8 permanent jobs as well as 9 construction jobs.
Indianapolis Neighborhood Housing Partnership
The Housing Partnership Network invested $9 million in NMTC to construct 40 homes in Marion County in Indiana. This project combines prior financial investments from 2017 and the recent $9 million NMTC investment to construct these homes. The 40 homes will be built across 7 distressed neighborhoods with several vacant lots or abandoned homes and will be marketed to low and middle income homebuyers to aid them in purchasing homes that otherwise would not be financially feasible. 20 percent of the homes are marketed towards community members who earn 80% or less of the area’s median income and the additional homes will be marketed to community members who earn 120% or less of the area’s median income.
Clinica Tepeyac
Accion Opportunity Fund and Colorado Growth and Revitalization Fund invested a total of $17,110,000 in NMTC to fund a project estimated at $18,007,902 in Denver, CO. This investment into Clinica Tepeyac will fund the creation of 150 or more affordable housing units designed for people with incomes between 30 to 80% of the area’s median income. Additionally, the project will include a fresh food retailer. Overall, the project will create 76 permanent jobs, 116 construction jobs, and will be a federally qualified health center.
La Casa Norte 2
In 2017, Chicago Development Fund (CDF), IFF, and PNC invested $18,750,000 in NMTC to construct a mixed-use supportive housing and community wellness center. CDF invested $9.5 million to construct Pierce House, a LEED Silver certified project. This center consists of 25 units of permanent housing and other amenities such as a health center, food pantry, and soup kitchen. This project created 14 permanent jobs and 25 construction jobs.
El Camino Crossing
Housing Partnership Network and New Mexico Finance Authority invested a total of $8,000,000 in NMTC into a distressed area in Santa Fe, NM in 2017. The total project cost was $9,379,380. This project created 26 permanent jobs and 115 construction jobs. $5 million in NMTC was allocated to the Siler Road and Agua Fria area that was deemed a severely distressed census tract area to create 20 or more energy-efficient homes. A severely distressed census tract area must include a poverty rate greater than 30%, a median family income of 60% or less than the area’s median income, or an unemployment rate of 1.5 times the national average for the American Community Survey. The Siler Road and Agua Fria area has a poverty rate of 40.5%, a median family income of 39.8%, and an unemployment rate of up to 13.6, meaning this area met all three criteria for a severely distressed census tract area.
East Liberty Development, Inc. (ELDI)
ELDI received an investment of $7 million in NMTC from Pittsburgh Urban Initiatives to construct 26 affordable housing units in 2019. The total project cost was $17,647,059 and created 44 permanent jobs and 31 construction jobs. Of the 26 homes for sale, 18 of them were marketed and sold to families with incomes 80% of the area’s median income or less, and 8 homes were available to mixed income homebuyers. Additionally, new homeowners were provided with pre-purchase financial counseling to prepare them for the large financial commitment of buying a home. The hope for the project is to, not only provide opportunities for homeownership to members of the low-income community, but also to secure current and future financial stability and wealth for families and future generations.
The above projects showcase ways private and public investors can provide affordable housing within low-income communities. These projects respond differently to each community’s specific needs; however, all examples focus on rehabilitation and education to help community members advance further financially and socially.