The Making of Affordable Charlotte
Ally Financial, Bank of America and Barings, three of Charlotte’s largest financial corporations, are the latest organizations to join efforts to create more affordable housing in the booming metro.
Charlotte continues to be one of the most appealing multifamily markets in the country. The metro’s long-established financial centers continue to prompt housing demand. According to Yardi Matrix data, out of the 5,861 units that came online in the metro in 2018, roughly 85 percent catered to the Lifestyle segment, putting pressure on low-income residents. Last year, median home values reached a new cycle peak, just a few dollars shy of the $200,000 mark.
The City Council’s new housing framework found that the metro needs 24,000 more units for residents earning 50 percent or less of the median income in order to meet demand. Local authorities have taken small steps to encourage the construction and preservation of more affordable housing units. Last year, voters approved the sale of $50 million in municipal bonds to be put into the local housing trust fund. The Foundation for the Carolinas intends to match the city’s public investment with another $50 million.
“Foundation For The Carolinas’ seminal report on economic opportunity, entitled Leading on Opportunity, identified affordable housing as a critical strategy for upward mobility. … We at the foundation are thrilled to raise $50 million from philanthropic sources and partner with the City of Charlotte, which now holds $50 million in voter-approved housing bonds,” said Foundation For The Carolinas President & CEO Michael Marsicano, for Multi-Housing News.
Several companies have already joined the organization’s efforts. Crescent Communities announced a $2 million land donation within its latest development, The River District. The parcel will be used for the construction of affordable housing units. Three of Charlotte’s largest financial corporations—Ally Financial, Bank of America and Barings—revealed a combined investment of $70.8 million in affordable housing in the city and surrounding area. The initiative marks the largest private-sector commitment to affordable housing in Charlotte’s history and is broken down in four components:
- $50 million in below-market loans to finance affordable housing developments, which is equivalent to a $1 million grant per year for the next 15 years
- $11 million invested in the newly proposed Housing Opportunity Investment Fund, which will assess affordable housing projects and find financing to execute viable projects
- $2.5 million allocated to economic mobility programming and grants over the next five years
- $7.3 million worth of land donated to make affordable housing possible, particularly in Uptown Charlotte
The loans, which represent the largest portion of the investment, will be priced as much as two percent below market rate, potentially saving affordable housing developers $1 million every year over the next 15 years. The newly created fund will be managed by the city’s Local Initiatives Support Corp., which is part of a national corporation.