A new public private partnership plans to direct $75 million in private capital to affordable housing in Detroit, launching with an initial capitalization of $48 million.
City of Detroit officials and leaders from Local Initiatives Support Corp. and JPMorgan Chase celebrated the launch on Tuesday. The Detroit Housing for the Future Fund is anchored by a $15 million commitment from JPMorgan and a $10 million guarantee from The Kresge Foundation.
The fund aims to address housing instability in the city by filling the funding gap that limits developers’ ability to preserve and create affordable housing. Developers often have difficulty bridging this gap between redevelopment costs and the income they will receive from tenants. The fund will provide developers and owners streamlined access to financial tools that are designed to address housing challenges in Detroit.
“We’ve seen the mass displacement of longtime, lower-income residents that occurred in places like Washington, D.C., Brooklyn, Philadelphia and others because as they redeveloped, they didn’t have a plan to preserve affordability and protect these residents,” says Detroit Mayor Mike Duggan. “What you’re seeing here today is a historic commitment by the city and its partners to make sure we are building a city where Detroiters of all income levels can afford to live in any neighborhood they wish.”
The fund represents the privately funded portion of the larger affordable housing initiative announced as part of the city’s Affordable Multifamily Housing Strategy in 2018. The city made a $50 million commitment as part of the initiative and has committed $12.2 million to date into the development of 424 units of affordable housing. The Affordable Housing Leverage Fund also includes the goal of directing $75 million in investment through the Michigan State Housing Development Authority.
JPMorgan’s commitment includes $12.5 million in low-cost loans and a $2.5 million philanthropic investment. An additional $15.5 million in low-interest lending has been committed by Flagstar Bank, Citizens Bank, and First Independence Bank.
“Housing is foundational to Detroit’s revitalization, yet access to quality, affordable housing is out of reach for too many residents, particularly black Detroiters,” says Peter Scher, head of corporate responsibility at JPMorgan.
“We are proud to work with Mayor Duggan and LISC to address the serious challenges of affordability and unlock opportunity for more Detroiters as part of our $200 million commitment to Detroit’s recovery. We hope our investment will bring other organizations to the table to invest in this city’s future.”
The Kresge Foundation has committed a loan guarantee of $10 million. Previously announced commitments totaling $17.5 million were made by Blue Cross Blue Shield of Michigan, Fifth Third Bank, Flagstar Bank, TCF/Chemical Bank, Ford Motor Co., Penske Corp., and Huntington Bank.
Since 2014, JPMorgan Chase has committed $200 million to Detroit’s economic comeback and helping black Detroiters achieve economic mobility. It has helped boost minority-owned small businesses, create and preserve affordable housing, and improve access to home ownership and job training.
The new fund will be managed by Local Initiatives Support Corp., which for more than 30 years has been dedicated to helping revitalize the city’s neighborhoods by working with local leaders to invest in housing, health, education, public safety, and employment. The organization is part of the Local Initiatives Support Corp. network, the largest nonprofit community development financial institution in the U.S.
“Affordable housing is essential for creating vibrant communities that are home for Detroiters of all walks of life,” says Tahirih Ziegler, executive director of Local Initiatives Support Corp. Detroit. “The affordable housing shortage is one of the biggest issues facing our city right now, and the time to address it is now. We are incredibly thankful to the corporate partners who stepped up to help us and answered our call as we work together to make a better, more equitable Detroit.”
The Duggan administration aims to preserve 10,000 units of existing affordable housing and develop 2,000 units of new affordable housing.
“Housing is a foundation for stability in a person’s life,” says Julie Schneider, deputy director of the Housing and Revitalization Department, who has led the development of the fund.
“Ensuring that Detroiters have access to housing that is quality, safe and affordable is one of our department’s biggest goals. The Detroit Housing for the Future Fund will be a key piece to tackling inequality and housing instability in our city. I would like to thank LISC and the fund’s corporate givers for helping us work toward a better Detroit for all Detroiters.”