Three of Charlotte’s largest financial corporations are planning to invest more than $70 million to increase the affordable housing stock in the city and its surrounding areas.
Ally Financial, Bank of America and Barings announced the investment Tuesday morning. According to the companies, the investment breaks down into four main components:
$11 million that will go toward the newly proposed Housing Opportunity Investment Fund — a private sector fund that will oversee some of the affordable housing projects. The city is hoping to raise $50 million of private money for this fund to match the $50 million in housing bonds that were approved by voters last November. The city has already raised $21 million in private funds, with Tuesday’s investment coupling with $10 million pledged by the Foundation for the Carolinas and Wells Fargo.
The private fund will be managed by Local Initiatives Support Corporations, or LISC, a New York-based nonprofit hired by the city.
The bulk of the investment is $50 million in below-market loans to developers building affordable units. The banks say the loans — priced at as much as 2 percent below market rate — will save developers $1 million every year over the next 15 years. The companies say this incentive will help facilitate the building of new units and increase the city’s affordable housing stock.
The companies will also donate $2.5 million to economic mobility programs and grants, and make a donation of $7.25 million worth of land in uptown Charlotte to build affordable units — bringing the total investment made by the three financial companies to $70.75 million.
In a council meeting Monday night, city officials said existing affordable housing proposals would eat up the $50 million in voter-approved bond money — highlighting the need for private investment. Charlotte Mayor Vi Lyles said Ally, BofA and Barings' investment is an example of how the private sector must partner with the city to meet Charlotte’s 24,000-unit affordable housing shortfall.
“I hope today’s announcement encourages more companies to come forward to support our city,” Lyles said. “It’s going to take all of us to solve these big issues facing so many of our citizens.”
Bank of America CEO Brian Moynihan called the partnership between the city and the private sector a “great model for other cities” facing affordable housing issues. “In Charlotte, the general public, the business community and elected officials work together to take action and meet these needs,” Moynihan said.
Barings Chairman and Chief Executive Tom Finke said the investment is just a first step. “While this investment is significant, there is more work to be done to make affordable housing achievable and sustainable in Charlotte,” Finke said.
Ally Chief Executive Jeff Brown said the bank is “encouraging other companies to join [them] in this important initiative.”
Correction: The article previously stated that Barings is a bank. Barings is an asset management firm.