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Kresge joins Detroit’s largest-ever affordable housing fund with JPMorgan Chase, LISC & others

Detroit, Housing, Social Investment Practice

Detroit Housing for the Future Fund launches with $48M, goal is $75M

Mayor Mike Duggan joined Kresge Detroit Program Managing Director Wendy Lewis Jackson and leaders from Local Initiatives Support Corporation (LISC) and JPMorgan Chase today to celebrate the launch of the Detroit Housing for the Future Fund (DHFF), a public-private partnership aimed at directing $75 million in private capital to affordable housing in Detroit. The Detroit Housing for the Future Fund launches with an initial capitalization of $48 million, anchored by a $15 million commitment from JPMorgan Chase and a $10 million guarantee from The Kresge Foundation.

The DHFF aims to address housing instability in the city by filling the funding gap that limits developers’ ability to preserve and create much-needed affordable housing. Developers often have difficulty bridging the funding gap between redevelopment costs and the income they will receive from tenants. This fund will provide developers and owners of affordable housing with streamlined access to financial tools that are specifically designed to address housing challenges in Detroit neighborhoods.

The DHFF encourages the preservation of regulated and naturally occurring affordable housing units throughout the City and the development of new mixed-income and affordable housing in targeted multi-family housing areas. The fund will primarily finance housing that is affordable to households at or below 60 percent of area median income (AMI) but will give priority to projects with lower incomes in order to direct the funds where the need is greatest. For example, 60% of AMI for an individual is $33,000, and $47,100 for a family of four.

“We’ve seen the mass displacement of longtime, lower-income residents that occurred in places like Washington, DC, Brooklyn, Philadelphia and others because as they redeveloped, they didn’t have a plan to preserve affordability and protect these residents,” said 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.”

This 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 of Detroit made a $50 million commitment as part of the initiative and has committed $12 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.

$48 Million committed, goal is $75M

JPMorgan Chase announced a commitment of $15 million to the fund, including $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. 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, from boosting minority-owned small businesses, creating and preserving affordable housing and improving access to homeownership and job training to prepare residents for the future of work.

Developers can go to www.detroithousingforthefuturefund.org to apply or learn more about the fund.

A guarantee is a philanthropic tool that allows more traditional investors to enter into a deal that has a high level of perceived or real risk. The guarantee mitigates some of that risk; in this case, if the fund experiences losses, Kresge’s guarantee will be activated and cover those losses, up to $10 million. This is one tool of Kresge’s Social Investment Practice, which uses non-grant forms of capital to achieve Kresge’s programmatic goals. It partnered with the Detroit Program, which seeks to advance equitable recovery in the city and its neighborhoods.

“When housing is affordable, every Detroiter benefits,” said Lewis Jackson.

See the full press release here. 

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