CIC’s Fund Pool Will Rehabilitate 10,000 Affordable Rental Units in Chicago
- Mar 22, 2010
Chicago–At a time when many financial institutions are curtailing credit and neighborhoods are ravaged by an epidemic of foreclosures, a local nonprofit managed to provide a lending pool of up to $400 million over the next five years to resuscitate the area’s ailing market for affordable housing.
Chicago based Community Investment Corporation (CIC) will fund rehabilitation of 10,000 affordable rental units – enough to house 25,000 people – primarily in low- and moderate- income areas of the region where credit is scarce.
“In many of the neighborhoods where we lend, we are the only game in town,” says CIC president Jack Markowski. “Direct credit from other institutions, whether they are large multinational banks or smaller community lenders, has been in short supply. But our history proves that lending in these communities has been and will continue to be good business.”
The $400 million revolving loan fund pools in capital supplied by 40 institutional investors, including Bank of America, J.P. Morgan Chase, Citibank, Northern Trust and Harris Bank. The fund provides a lending stream to borrowers who rehab affordable housing in buildings with six or more units. Investors receive returns when the loans are repaid.
Since 1984, CIC has used this financing model to support the rehab of 42,000 units of affordable housing – enough to accommodate 100,000 people. Yields for investors have averaged 6.8 percent over the last 20 years. Loans from the new funding pool will be designated for borrowers rehabilitating affordable multifamily rental housing in Cook, DuPage, Kane, Lake, McHenry and Will Counties.
CIC not only extends a loan for a property, but its staff also evaluates the physical rehabilitation and property management practices to ensure the quality of the housing it finances and to protect the interests of its investors. In fact, CIC staff helps borrowers select contractors and finalize budgets, and it provides property management training to improve the skills of its borrowers. The organization conducts inspections of every property in the organization’s portfolio annually for the full duration of a loan.
“CIC provides vital capital for multifamily housing,” says Kris Jurmu, Senior Vice President of Bank of America. “They have local experience with the neighborhoods, the submarkets, the lots, and the buildings. We are pleased to provide funding to support this effort, because of CIC’s financial strength, market knowledge, and their proven track record in the area of affordable housing.”