NHPF Industry Report
A Closer Look at the New Realities: Financing Beyond LIHTC
“It’s radical common sense. There is a great need for affordable housing in communities across the country. Public-private partnerships can bring together mission-aligned institutions looking to leverage their assets for good with those with the expertise or capital needed to make development happen. When done right, the result is affordable housing that meets community needs.”
—DAVID BOWERS, VICE PRESIDENT, MID-ATLANTIC MARKET & SENIOR ADVISOR, FAITH-BASED DEVELOPMENT INITIATIVE, ENTERPRISE COMMUNITY PARTNERS
A 2024 report from the Federal Reserve Bank of Atlanta found that public-private partnerships in housing finance can reduce the cost of capital by up to 25%, making it a critical tool for affordable housing development. FINANCING APPROACHES The data reveals an increasing demand for diverse financing options like equity crowdfunding that allow individuals to invest in real estate projects, including affordable housing, in exchange for equity. Additionally, Blockchain and tokenization enable fractional ownership of real estate assets, allowing investors to buy and sell shares of affordable housing properties easily. Private-public partnerships (PPP) are also becoming more common, allowing diverse private sector actors and resources, from financial groups to religious institutions, to be leveraged for public good. One of the most effective ways to address the increasing cost of building has been through the acceptance of YIGBY (Yes in God’s Backyard) projects which combine the resources of faith-based institutions and experienced developers to create housing on land an institution already owns. The presence of an established church or other house of worship, can often help tip the scales for funders who are considering. As of 2024, faith-based organizations have developed around 1,800 affordable housing units, primarily in the Mid-Atlantic region supported by initiatives like Enterprise Community Partners’ Faith-Based Development Initiative (FBDI). An additional 2,200 units are currently in the projected pipeline in the Mid-Atlantic, with these projects often involving partnerships where congregations use underutilized land to address the housing crisis. Survey respondents also ranked highly the idea of completely rebuilding existing but dated affordable housing properties, tearing down the old, and constructing anew. The average age of housing today is 40 years, with much of it sub-standard. This “recycling” approach is a perfect example of doing more with less. New and improved layouts can lead to increasing units, more efficient energy-efficient building systems, and more green space for residents. Additionally, revenue bond programs and social impact bonds (SIBs) provide alternative financing methods that align with the growing demand for credit flexibility. These methods are crucial as property demand continues to rise, pushing prices up and challenging developers to balance essential amenities with affordability.
4 • THE NHP FOUNDATION 2024 SYMPOSIUM: INDUSTRY REPORT
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