The Fund addressed a growing need to provide early stage capital to developers to acquire sites for affordable and supportive housing.
As anyone who develops supportive housing these days knows, acquiring a site is half the battle. It’s difficult to imagine now, twelve years into the NYC Acquisition Fund, how the supportive housing community would have fared without it.
The NYC Acquisition Fund (the Fund) was spearheaded by Shaun Donovan, then HPD Commissioner, in 2006, along with LISC, Enterprise, Forsyth Street, and the Rockefeller Foundation. It addressed a growing need to provide early stage capital to developers to acquire sites for affordable and supportive housing. In the eighties and nineties, when supportive housing was born in New York, dilapidated SROs abounded and tax-foreclosed properties could be transferred to nonprofits for a dollar, but by 2006 these options had dried up and nonprofits were competing in the marketplace for privately owned sites.
One of the best features of the Fund is that it provides loans at 130% of the property’s value, allowing nonprofits to have additional capital for predevelopment expenses. Many banks stay away from these loans because of their risky nature, but defaults are almost unheard of with the Fund because of close collaboration with government partners, who are engaged in all aspects of the deal at each stage.
“The Fund’s structure was novel,” says Brian Segel, senior vice president at Forsyth Street. Assembling capital from public and private philanthropic sources allowed for flexibility and a variety of risk appetites.
Since its inception, the Fund has enabled the creation of 24 supportive housing residences, serving 1,701 special needs tenants and providing an additional 952 affordable apartments for the community.
Judi Kende, vice president and New York market leader, Enterprise Community Partners notes that in addition to providing much-need affordable homes, the Fund “enables mission-driven, nonprofit and minority and women-owned enterprises to compete with market-rate developers. It is a testament to what can be accomplished when private and public partners come together to improve the lives of New Yorkers”
According to Sam Marks, executive director of LISC NYC, the Fund is “designed to share risk across the public, private, and philanthropic sectors, has proven incredibly flexible, and continues even today to innovate in response to the city’s evolving challenges and strategic priorities.”