Borrower Spotlight: LIIF and the Importance of Keeping Homes Affordable

Calvert Impact and the Low Income Investment Fund (LIIF) have cultivated a strong partnership since the early 2000s. Most recently, we’ve continued to support LIIF through the Keeping Homes Affordable facility. The program builds on the success of LIIF's previous work through the Fund to Preserve Affordable Communities (FPAC) I and II. Calvert Impact’s Community Investment Note® portfolio was previously invested in FPAC II, which fully deployed.

Introduction to Keeping Homes Affordable

LIIF is a nonprofit community development financial institution (CDFI) founded in 1984 that focuses on mobilizing capital to create more equitable opportunities for people, particularly communities of color. As part of their work to advance this mission, LIIF manages and serves as the lead lender for Keeping Homes Affordable (KHA), a $50 million national affordable housing preservation financing facility. The program’s impact goals include preserving and recapitalizing existing affordable multifamily housing, facilitating the acquisition of multifamily affordable housing properties by qualified operators, and making physical improvements and renovations to properties to benefit both owners and tenants. KHA offers flexible lending terms to help affordable housing developers compete with private market-rate buyers by offering developers up to 5-year, below market interest rates, and up to 100% Loan-to-Value (LTV). Since market-rate housing is more lucrative than affordable housing, there is a need for below-market rates and higher LTV. Calvert Impact provided a $35 million commitment in senior financing for KHA, enabling LIIF to extend more flexible acquisition financing for affordable housing developers. Kevin Fanfoni, Investments Director at Calvert Impact said of LIIF and the KHA facility, “LIIF uses its expertise and national lending platform to help fill a critical gap in the affordable housing financing ecosystem, through KHA – Calvert Impact is proud to collaborate with such an innovative and trusted partner like LIIF.”

Combating housing displacement in Atlanta, Georgia

Housing displacement is a widespread crisis across the US and is particularly acute in the US South. Many residents can no longer afford to stay in their homes and neighborhoods due to rising housing costs and expiring rent restrictions. According to the National Low Income Housing Coalition, the US has a shortage of 7.3 million rental homes that are affordable to extremely low income (ELI) renters, with only 33 affordable units available for every 100 ELI households. ELI renters are defined by incomes at or below either the federal poverty guideline or 30% of the area median income (AMI), whichever is higher.

Historically underinvested neighborhoods in Atlanta, Georgia are experiencing ongoing displacement including the area surrounding the Oxford Villages Townhomes, one of the properties in the KHA portfolio. The community is a resident-led cooperative built in 1974 and includes 188 units of 100% affordable homes for low-income families. Resident-led cooperatives are a unique form of home ownership as the nonprofit cooperative corporation holds the title to the housing units and is directly responsible for the financial obligations related to the operational expenses of the development. The members of the cooperative support the corporation through occupancy agreements, which eliminate their responsibility as individual mortgagors and allow the residents to vote on how the corporation conducts business, as well as participate on the cooperative’s board. KHA’s financing will enable the property to repay existing debt, undertake rehabilitation and maintenance projects, and line up a long-term financing solution to keep the entire complex affordable.

Fifth Ward Community Redevelopment Corporation’s preservation efforts in Houston, Texas

Fifth Ward Community Redevelopment Corporation (CRC) is located in Houston, Texas and led by CEO, Kathy Flanagan Payton. Their projects include real estate development of new single-family houses, multi-family rentals, commercial development, and land acquisition.

Photo courtesy of Jarmese Apartments

The firm received a loan from KHA which allowed them to renovate the Jarmese Apartments, a 70-unit complex and naturally occurring affordable housing property (NOAH). NOAH properties are apartments that are rented at affordable monthly rents and not subsidized by the Low-Income Housing Tax Credit program. Adding to the affordability of the Jarmese property, over 75% of the property’s residents use tenant-based housing vouchers which increase housing options for low-income families. The apartment complex offers many co-benefits to tenants including proximity to a health clinic and access to housing counselors who provide financial services and other resources. While many Houston neighborhoods are gentrifying rapidly, this property helps protect residents from rising costs, allowing them to stay in their homes and communities. Fifth Ward CRC also supports their customers through the Homeownership Promotion and Preservation program, which provides financial counseling, coaching, and education to the residents of Houston and Harris County.

Speaking about the facility, CEO of the Fifth Ward CRC Kathy Flanagan Payton said, "I'm excited that this endeavor [KHA] gives me an opportunity to level the playing field and have access to the capital we need to redevelop our community." Payton is an active member in the Growing Diverse Housing Developers (GDHD) program, a long-term commitment from Wells Fargo to promote equitable housing solutions by supporting experienced development firms led by people of color. Kathy Flanagan describes affordable housing as “Equity, Opportunity, and Foundation. I hope that as people achieve the dream of homeownership and affordable housing that they can recognize that they’ve been treated equitably, they have access and opportunity to achieve it through rental or purchase housing, and that it builds the foundation for their future.”

Learn more about Kathy Flanagan’s story and her impactful work in LIIF’s 2022 GDHD Cohort interview.

We are proud to partner with LIIF to preserve affordable housing across the US south and support communities of color. Learn more about KHA’s properties in their profile on our website and stay tuned for more updates on the impact of the facility.