Success Story: Community Housing Capital

Introduction – Calvert Impact's history with Community Housing Capital

Community Housing Capital (CHC) is a Community Development Financial Institution (CDFI) with a mission to finance the creation and preservation of affordable housing across the United States. CHC lends patient, flexible capital to affordable housing developers, offering financing to fill needs across a project’s lifecycle, from early-stage predevelopment and acquisition lines of credit to construction loans and long-term, 30-year multifamily permanent mortgages. CHC’s housing developer partners are part of NeighborWorks® America, a network of nonprofit affordable housing developers, all of which have strong community development practices, including financial counseling and coaching, training, and resident engagement, and collaboration.

Calvert Impact began lending to CHC in 2011, a time that CHC’s President & CEO Cindy Holler describes as “an inflection point.” For the decade prior, CHC had utilized mostly secured financing to lend to their housing developer partners – meaning the financing was tied to the specific underlying properties, which restricted their ability to grow and offer more efficient financing to their housing developer partners. They found it difficult to raise flexible, unsecured financing – which would allow them to more quickly respond to community needs wherever they are – until they approached Calvert Impact.

How did our loan have an impact at Community Housing Capital and the communities they serve?

Calvert Impact initially lent CHC $2 million in unsecured financing, which gradually increased to $7 million by 2022. We also arranged a syndicated unsecured facility for CHC, raising capital from other lenders on CHC’s behalf and allowing them to focus on their lending and impact in communities. Unsecured financing is important as it allows CHC to offer financing for the predevelopment stage of a project, which is critical to getting a project off the ground.

CHC enables the nonprofit NeighborWorks® developers to compete with for-profit developers to acquire properties where they otherwise might not be able to submit a bid. For example, in 2014 CHC provided a $3 million loan to their partner DHIC to acquire Washington Terrace in Raleigh, North Carolina, which was in foreclosure at the time. This quick and flexible capital helped DHIC preserve crucial affordable housing in a rapidly changing East Raleigh neighborhood. You can read more about how CHC has supported DHIC and the residents of Raleigh on our blog.

Our capital helped CHC to better serve their customers and their communities. It also helped CHC raise additional capital, which they needed to help meet their housing developer partners’ “insatiable need for capital.” As Cindy Holler explained, “Calvert Impact’s brand and reputation helped us demonstrate to other banks that they could also offer us this kind of financing.” CHC was able to build up a track record using our facility, which enabled them to raise a larger unsecured bank facility a few years later to expand their work and refinance our facility.

With financing from Community Housing Capital, Community HousingWorks’ (CHW) Keeler Court has brought 71 new affordable homes and community-wide transit improvements to San Diego’s Southcrest neighborhood. The property delivers needed studios, one, two and three-bedroom homes for households earning up to 60% area-median income (AMI).  Seven units are reserved for formerly homeless veterans supported by vouchers. Keeler Court is also the first San Diego development to receive funding from the state Affordable Housing and Sustainable Communities (AHSC) program, which supports affordable housing and transportation infrastructure projects to create healthy communities.  As part of the funding, CHW in partnership with the San Diego government will construct new bike lanes and purchase two low-emission buses for the local transit agency.

The development was recently recognized as new construction project of the year by the San Diego Housing Federation, and features a large community space, where residents have access to a range of services targeting financial fitness and next generation success. In addition to the AHSC funds, the $40M development utilized low-income housing tax credits, Federal Home Loan Bank Affordable Housing Program (AHP) Grants and bonds.  Community Housing Capital was the sponsor of the AHP grant through the Federal Home Loan Bank of Atlanta, and also provided an equity bridge loan of $1.3M.

How does CHC impact the US housing markets overall?

The scale CHC has achieved, bolstered by new financing from larger traditional lenders, also enabled CHC to enter the CDFI Fund’s New Markets Tax Credit (NMTC) program that incentivizes community development and economic growth using tax credits that attract private investment to distressed communities. CHC has devised a model for leveraging the program to support their clients in building and rehabbing much-needed single-family housing across the US, cultivating new homeowners through homeownership training and access to affordable properties. CHC’s use of the NMTC program to support affordable housing is unique, as the program is typically used to support small business lending.

Single-family homeownership is a critical path to wealth generation. CHC’s model of leveraging the NMTC program is effective in reaching low-income families and people of color who otherwise could not afford to purchase their own home, particularly due to rapidly rising housing prices across the US. As Holler puts it, “This is the main way we can make homeownership affordable for people of color, especially families in low-income communities.”

We are excited to see CHC leverage the NMTC program to make homeownership achievable for low-income families across the country.

How impact measurement and management (IMM) supports CHC in achieving their mission

CHC is on the forefront of IMM in the community development sector. Over the past few years, they have worked with Pacific Community Ventures (PCV) and BlueMark – two expert impact consultancy firms – to improve upon their IMM systems, including focusing on key performance indicators, implementing an impact rating system that integrates gender and racial equity components, and gathering resident stories and feedback directly from the NeighborWorks regional groups. CHC often speaks on industry panels to share their progress on IMM, in the hopes that other CDFIs replicate their work. CHC and PCV also released a Case Study on their work to design an effective IMM system. CHC’s former Director of Impact Angie Waddell said in the case study, “We knew we had to have an IMM system in place that aligns with impact investors’ objectives and stood up to scrutiny. Our dollars do more than create housing units, and conversations with other potential funders are starting to evolve since PCV’s first phase of work. It’s been a game changer when it comes to development. We are optimistic that this work will help CHC continue to play a more impactful role in the communities where the organization invests.”

What we can learn from Community Housing Capital’s success

• Unsecured financing is critical for affordable housing lenders to meet the needs of their developer partners operating in communities, who require flexible capital in the early stages of a project to respond to opportunities quickly.
• Impact investors like Calvert Impact can play an outsized role in lending to affordable housing funds and developers on an unsecured basis, serving as a stamp of approval for other lenders and enabling scale and demonstration of a model that will then attract additional capital.
• Robust IMM practices are an asset to affordable housing lenders, in both attracting capital and ensuring impact intentions translate to impact achievements.

We are pleased to share in Community Housing Capital’s success and continue to explore opportunities to work with CHC on single-family housing and potentially on NMTC transactions; in fact, we have already participated with CHC on a single-family housing fund in New Jersey. We look forward to continuing to work with CHC to make affordable, single-family housing accessible to all.

Want more affordable housing content? Check out, "Dear Impact Investors: Consider Affordable Housing."