With the affordable housing crisis across the U.S., JPMorgan Chase spent 2021 deploying considerable resources to finance the construction, rehabilitation and preservation of housing for low- and middle-income renters. Partner Insights spoke with Alice Carr, head of community development banking for JPMorgan Chase, about the firm’s 2021 efforts in this area, and its plans for 2022.
Commercial Observer: Give us an overview of JPMorgan Chase’s affordable housing efforts in 2021.
Alice Carr: Community Development Banking deployed almost $5 billion to communities across the country, and $4 billion of that was focused on affordable housing lending. The other $1 billion was invested in community development financial institutions, or CDFIs, as well as New Markets Tax Credit Program equity that focuses on catalytic development projects in distressed communities. That $5 billion is the most capital we’ve ever deployed in one year, and we did it in a remote work environment due to the pandemic.
What would you say was JPMorgan Chase’s greatest triumph in affordable housing last year?
That would be our large commitment to New York City, specifically the New York City Housing Authority, in helping them reposition large portions of their public housing. We closed two very large projects with NYCHA in Brooklyn. The debt on those projects totaled about $700 million, of which we funded $500 million. We also brought in Historic Tax Credit funding to get those projects done, which was a new and innovative way to finance the renovation of public housing. No deal is too large or too complex for JPMorgan Chase, and this really exemplified that.
What were some impacts of JPMorgan Chase’s recent racial equity efforts?
We created a special purpose credit program in our New Markets Tax Credit investing product. My group assessed that there are certain projects within the NMTC product that hit directly on racial equity— they’re either Black-led, Black-owned and/or Black-serving. We wanted to identify and intentionally focus on those types of deals as a way to advance racial equity. Through that initiative, we have already deployed nearly $200 million of tax credit financing for NMTC projects that hit at the heart of racial equity.
In addition, we committed to do more within our CDFI lending portfolio — to bring low-cost capital to CDFIs, and to focus on CDFIs that have racial equity at heart. We funded a number of high-impact racial equity funds that serve small businesses, minority developers and affordable housing.
How important has Low-Income Housing Tax Credit (LIHTC) been to JPMorgan Chase’s efforts?
LIHTC is the main way that new affordable housing units get created across the country. At a time when we’re losing affordable housing at a pretty rapid rate, creating new housing is crucial. This is a program with bipartisan support, and because of that, it is constantly being expanded. We anticipate seeing additional LIHTC support in 2022. Even with expansion, it remains a scarce resource. There isn’t enough to go around to finance what’s needed to close the affordable housing gap.
Give us an overview of last year’s general U.S. affordable housing landscape.
In 2021, we saw a worsening national housing crisis. The pandemic has only exacerbated the housing problem for people earning lower incomes, and I think everybody has acknowledged that housing, especially in this current environment, is crucial to health.
But we’ve also seen states and municipalities come out with additional resources to expand affordable housing. In California, the state used its federal pandemic reserve funds to create the California Housing Accelerator program, which fills the gap of where LIHTC would have been in projects that were shovel-ready, but did not win the competitive round for Bonds/LIHTC in 2021. State funds will take the place of those tax credits, and they can move forward on a huge portion of their affordable housing projects.
How did the involvement of players outside the conventional commercial real estate industry, such as companies in tech and entertainment, affect the affordable housing market? And what do you think the long-term impact will be?
We have seen some tech companies provide large sums of short-term capital to help secure properties where they have offices, and also bring in smaller gap-filler funds for housing projects. They’re being innovative. We’ve seen hospitals with land and equity talking about wanting to build affordable housing near their hospitals for their workers. But hospitals aren’t typically developers. So, it’s figuring out, how do you pair them with the right partner to get the housing built, and then what sort of capital can we bring to the table in the form of construction and term lending. There are a number of innovative models out there, and it’s great seeing so many people taking an interest in creating attainable housing for all.
What are JPMorgan Chase’s affordable housing goals and plans for 2022?
After our record-breaking 2021, we’re off and running to continue growing our platform. We’ll do more LIHTC. We’ll continue to grow and strengthen our team. We’re adding bankers in additional markets to broaden our national coverage. We’ll create internal efficiencies to handle even larger pipelines. We’ll bring our innovative capital solutions to the table to fill the gap when LIHTC is not involved. And we’ll continue to ramp up our Historic Tax Credit investing platform — part of our success in 2021 that we expect to remain extremely useful in 2022.
Also, there’s a green component with Historic Tax Credit — the element of saving older buildings versus tearing them down and building new ones. We fully support not only saving old gems, but also the environmental component of historic renovation. And we’ll also continue to build our off-balance sheet, or OBS, platform, which is another important tool for affordable housing development. We invested resources to bring on business leaders with strong industry expertise to get our Fannie Mae license up and running in a way that it hadn’t been previously. And 2021 was successful for our OBS platform. But we’ll continue to grow so that we have this expanded tool kit for our clients.
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