JPMorgan seeks to address gaps in affordable housing financing

Historic tax credits are an interesting way to finance the development of affordable housing.

JPMorgan is gearing up to expand its affordable and workforce housing programs, with Alice Carr, head of community and development banking, telling Real Estate Capital USA the firm still sees a gap in housing for lower- to middle-income earners who struggle to pay market rate rents but do not qualify for many subsidies.

“Almost everything we finance is done with low-income housing tax credits. But LIHTC alone is not going to solve the affordable housing crisis. We have to think broader,” Carr said.

Individuals making 60 percent to 120 percent of area median income are often in need of affordable housing options. Yet, few subsidies are carved out for this group. “There is much less government subsidy and below market rate financing for housing that serves a higher income population than the 60 percent AMI,” Carr said.

In addition to expanded subsidies, Carr believes other community institutions and stakeholders will need to play a role in finding solutions for affordable housing gaps. It will take resources outside of what is currently available to close the gap in the number of affordable housing units the country needs.

“You see a lot of players joining the conversation that weren’t there before. You see tech companies, hospitals, universities, school districts, [and] businesses who have housing concerns. [This is] not just at the federal level, but you see states and cities prioritizing housing as well,” Carr said.

Yet, many of these organizations do not have a background in building or financing affordable housing, which is where JPMorgan Chase can step in.

“We do see a lot of other players coming to the table but they’re not affordable housing developers, and they’re not affordable housing funders or investors. They have resources and they have a commitment to affordable housing,” Carr said. “Given our understanding of multi-layered capital stacks [and] the need for different sources and players to create affordable units, we can bring that technical assistance and professionalism to the table and hopefully have those conventional tools ready to fill that gap.”

Historic tax credits are an interesting way to finance the development of affordable housing. “Think [about] turning an old factory building into affordable housing using historic tax credits,” Carr said. “The rehabilitation and renovation of historic buildings can also support the creation of affordable housing.”

There is a bigger picture view as well – the firm is thinking beyond simply creating safe housing.

“Healthy, thriving communities need more than just safe, stable housing. We’re using new markets tax credits to finance the development of vital community institutions that support the overall wellness of a neighborhood,” Carr said.

JPMorgan Chase also prioritizes working directly with community development financial institutions (CDFIs) which have boots on the ground in the communities they serve to extend support deeply and quickly.

“We lend to the top 40 CDFI loan funds in the country [and] we invest in important initiatives they’re driving, as they are able to more handily deploy financing in the community. So, we are very supportive of the CDFI industry,” Carr said.

Most importantly, Carr said she wants JPMorgan Chase to continue to identify local stakeholders and assist them in developing more and better affordable housing.

“We’ve done a lot of due diligence finding these other players that have resources, such as hospitals and universities, tech companies, healthcare companies. We are talking to them as they’re building up their own expertise around housing, looking for outlets for their own resources.”