The Creative Charlotte Housing Fund That Can Serve as a Model for Tackling Affordability Nationwide

6.14.2022 - LISC Stories

The story of Charlotte, NC, is the story of many communities around the country.

A major hub of the New South, Charlotte is one of America’s fastest-growing cities. But economic growth by itself has done little to disrupt the entrenched segregation that limits the prospects of people living in some of the city’s under-resourced zip codes. And rising rents have made it a struggle for ordinary residents—teachers and hairdressers, young families and retirees—to keep a roof over their heads.

Three years ago, affordable housing advocates in Charlotte, including the newly-opened LISC office there, launched a trailblazing initiative to tackle this seemingly intractable problem. It brings private dollars to augment public investments, and directs this capital to establish durably affordable housing in neighborhoods of opportunity.

Now that initiative, the Charlotte Housing Opportunity Investment Fund (CHOIF), is reporting results that make it a promising model for the country: 1,047 units of new or preserved mixed-income affordable housing, with hundreds more in the offing. The vast majority of these homes are affordable to households earning no more than 80 percent of area median income (AMI). A quarter are affordable for people at 30 percent of AMI. And 72 units serve people earning up to 120 percent of AMI.

What’s more, the CHOIF’s investments have helped build affordable homes, or refurbish and secure them with long-term deed restrictions, in parts of town with higher-than-average access to public transit, grocery stores, low-cost health care, and child care.

All these things nurture livability, racial and economic integration—shared opportunity.

“We are already getting calls from other cities interested in replicating the CHOIF model,” says LISC Charlotte executive director Ralphine Caldwell. “Affordable housing is not just a Charlotte issue, it’s an issue across the country. And our model really allows the public and private sectors to come together in a big way to increase affordability.”

The CHOIF was first conceived by The Foundation for the Carolinas, which invited LISC to lead the fund and bring its community development and fund management expertise to the effort, catalyzing the establishment of LISC Charlotte in March 2019. Meanwhile, Charlotte voters had authorized a dramatic boost in the city’s public-bond-funded Housing Trust Fund, from $15 million to $50 million every two years. The CHOIF raised some $53 million from private social-impact investors—banks, foundations, and companies in the energy and health-care sectors—in essence, doubling the amount the city fund brings to bear for affordable housing.

The CHOIF works in tandem with the city fund, with a single, one-stop-shop application for developers that streamlines the enormously complex process of putting together a capital stack for affordable housing. Indeed the application gives developers potential access to a host of low-cost financing from CHOIF partners and investors, including LISC’s Black Economic Development Fund and suite of other financing products. In another key partnership, a third of the CHOIF’s investments leverage project-based housing vouchers through the city’s housing authority, INLIVIAN, that make units deeply affordable while assuring a steady income stream to help project developers meet their bottom line.

The CHOIF’s private money enables more flexibility in designing economically mixed communities than do traditional tools like the Low-Income Housing Tax Credit (LIHTC), the federal workhorse of affordable-housing development.

Take Varick on 7th, for example, a 105-unit new development in Uptown Charlotte, the Queen City’s exciting and well-served downtown. With the help of $21 million in combined investment from the CHOIF and LISC’s Black Economic Development Fund, this five-story apartment building is “making space for people of all incomes to live together,” says Dionne Nelson, president and CEO of developer Laurel Street. About half the apartments are income-restricted for folks earning 30 percent, 60 percent, and 80 percent of AMI. The other half rent at market rate. “Deviating from LIHTC parameters in this deal reinvented what was possible,” says Nelson

In other cases, the CHOIF has helped to upgrade aging systems and make improvements, as well as secure affordability with 20- or 30-year deed restrictions, in developments where Charlotte residents have put down roots but were at risk of displacement, whether from terminal neglect of the buildings or rent hikes.

Lake Mist is a 19-building, garden-style complex with 144 units, steps from the city’s light rail, a grocery, and other necessaries. A $2.5 million CHOIF loan and equity investment were part of a $20.5 project by Ascent Housing to acquire the property; repair its foundation, roof, water and sewer lines, and other systems; fix up apartments as they turn over; and add a playground and soccer field. “When they see something, they take care of it,” says one resident, a single mom to a toddler, of the new management. “From my kitchen remodel to new mailboxes that accommodate packages, everything has been done the way it should be.”

A follow-on to the CHOIF, aptly dubbed CHOIF II, is now underway. Charlotte’s deficit in affordable housing amounts to tens of thousands of units. “The need is there,” says LISC Charlotte’s Caldwell. Able and community-minded developers are lining up to bring proposals for financing to this second round of the CHOIF’s nimble public-private process.

Meanwhile the team at LISC Charlotte, during three years marked by a pandemic, has deployed some $60 million for comprehensive community development in its home city—for emergency grants to small businesses hammered by Covid, capacity building in the Historic West End, and a state-of-the-art new athletic field in suburban Indian Trail, to name just a few initiatives.

Ultimately, LISC Charlotte and its CHOIF partners hope to change the narrative about affordable housing that reverberates across the country. It’s not just a program for the few, the partners insist, but something every household needs to thrive, and the very foundation of a workable, inclusive, prospering community.

“Over the 27 years I’ve been in this business,” says Fulton Meachem, president and CEO of Charlotte’s housing authority, “people have often talked about affordable housing or people that need it in terms of ‘them.’ Now that we have more private investment and LISC as a partner, we have a space for people to talk about this openly and change old perceptions.”