July 25, 2024
A one-size-fits-all approach does not apply to the challenges around increasing housing supply in the U.S. But while myriad economic, social, and historical factors have helped create this "wicked problem," there are solutions — replicable, actionable methods that planners can take in their communities to alleviate the housing crisis.
Omaha, Nebraska, is an example of a place that's forging public-private partnerships and leveraging multiple layers of funding to both build and preserve affordable housing, according to a case study from the Housing Supply Accelerator Playbook. Research revealed a growing gap in the number of options available to support the metro area's economic growth. In response, and to implement that study's recommendations, Front Porch Investments (FPI) was formed — with $36 million in private seed funding — two years later. Then, in July 2022, Omaha received $112 million in federal money as part of the American Rescue Plan Act (ARPA).
Front Porch Investments reported in the spring of 2024 that it has raised more than $33 million since 2022, including $6.2 million in awards from the fourth cycle of its Development and Preservation (D&P) Fund. The FPI website notes that "more than 1,500 units of affordable housing will be developed or preserved through this partnership."
The single largest investment of those funds was a $20 million grant to FPI to accelerate production and preservation of affordable housing through the city's D&P Fund, which awards loans and grants twice annually in competitive cycles. FPI followed by matching that amount dollar-for-dollar with some of its seed funding, resulting in a combined total of $40 million. Later, Omaha received an additional $20 million in Section 108 funds from the U.S. Department of Housing and Urban Development (HUD).
FPI tries to create new and different ways to provide homes for people, says Jody Holston, FPI's executive director. The group focuses on funding projects and programs, advocating for housing equity, and leveraging partnerships in the community to strengthen the housing ecosystem. "It is [through] primarily a revolving loan fund, with more than 80 percent of funds awarded as either short- or long-term loans, and the remaining as grants to address valuation gaps and support planning grants to assess the housing needs of special populations — refugees and new Americans, youth exiting the foster care system, [or] adults with developmental disabilities," Holston says.
Both for-profit and nonprofit developers are eligible for the loans, and FPI is especially interested in supporting BIPOC (Black, Indigenous, and People of Color) and new and emerging developers, as well as others who may face barriers to acquiring traditional capital. The funding provides financing for the construction of new affordable housing, like mixed-income rental housing and a small number of affordable single-family homes for sale in areas near job centers or transit.
"It also provides financing to preserve and improve the quality of existing affordable rental housing, as well as affordable housing in deteriorating condition or at risk of conversion to market-rate," says Holston. The program also "provides predevelopment funding for acquisition, land preparation, and other early project costs in order to catalyze new projects in the pipeline," she says.
Real solutions for real places
Developing innovative finance solutions is one way planners, local officials, and other stakeholders are approaching the housing crisis. The Housing Supply Accelerator, a partnership of the American Planning Association (APA) and the National League of Cities, explores both the key drivers of the housing shortage and strategies to increase housing availability. In May, it introduced the Housing Supply Accelerator Playbook as a roadmap for navigating challenges in spurring housing development that relies on ideas being applied in real places, like Omaha.
Since 2022, Front Porch Investments has awarded nearly $40 million, preserving or catalyzing more than 1,500 affordable units in Omaha — and a sizable portion of this funding will continue to circulate in the community in perpetuity as loans are repaid and new awards are made. "Our easiest-to-measure goal is increasing affordable and mixed-income housing, making progress toward 18,000 additional affordable units needed in the city by 2030," Holston says.
"But measures of success will extend beyond the specific outputs to account for broader changes in our community that reflect greater cross-sector collaboration and more equitable access to wealth and wealth creation."
So far, the funded projects include adaptive reuse of a vacant nursing home as independent senior living; mixed-income, mixed-use developments; and investments in historic properties that had fallen into disrepair. The program has also developed open-source architectural designs and worked to increase language accessibility to help non-English speakers access affordable housing resources.
"The success of the first pilot round of funding and the four cycles in partnership with the City of Omaha have helped to support additional fundraising efforts," Holston says, noting that it also provided planning grants to explore the housing needs of special populations such as refugees, adults with developmental disabilities, and mothers experiencing homelessness. "FPI aims to capitalize the D&P Fund to $200 million in coming years by bringing together funding from the public sector and private sector, including private and corporate philanthropy, and investments from financial institutions and national funding sources in a sustainable model that will grow over time as loans are repaid and recycled. As the dollars circulating in the fund increase, the interest earned on the fund will sustain Front Porch's ongoing operations and sustainability."
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