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Two of Massachusetts’ biggest affordable housing lenders are teaming up to launch a fund aimed at growing the state’s cadre of minority developers.
The quasi-public MassHousing and the private, nonprofit Massachusetts Housing Investment Corp. (MHIC) announced the launch of their new $50 million Equitable Developers Fund Wednesday morning, calling it “the largest publicly led financing program of its kind in the country.” MHIC and MassHousing will also look to raise an additional $25 million for the fund from private investors.
The fund will offer predevelopment and growth capital, through lines of credit and other financial assistance, with applications opening this spring. MHIC also plans to make at least $10 million available for loans for predevelopment, acquisition and construction financing to projects receiving assistance through the fund.
“We are thrilled to partner with MHIC to launch the Equitable Developers Fund,” MassHousing CEO Chrystal Kornegay said in a statement. “Our two organizations have intimate knowledge of the barriers of entry related to the Massachusetts affordable housing ecosystem. Working together, we will help unlock new opportunities for housing growth, while creating a path for more developers to participate in confronting the state’s housing challenges.”
Black and Hispanic real estate developers made up less than 1 percent of the national commercial real estate development industry, according to 2023 research by Grove Impact and the Initiative for a Competitive Inner City, with direct consequences for racial wealth gaps. As the number of developers of color has grown in Massachusetts in recent years, local policymakers and commercial real estate industry leaders alike have looked for ways to break down barriers to their growth that currently exist – most notably, capital. Affordable housing development, in particular, has become a focus of efforts to grow the ranks of developers of color while addressing the state’s high housing costs.
“Ultimately, we want to see more developers helping to solve the affordable housing crisis in Massachusetts,” noted MHIC President and CEO, Moddie Turay. “Developing a public-private partnership that draws upon MassHousing’s and MHIC’s decades of affordable housing and community development financing experience provides the critical foundation upon which to establish the Equitable Developers Fund.”
In its announcement of the fund, MassHousing said it based the idea on results from a statewide listening tour aimed at finding ways to increase minority participation in the affordable housing industry, held in collaboration with the Mel King Institute and the Builders of Color of Coalition.
MHIC will lead day-to-day operations of the fund, including developing the fund’s financial products, evaluating and underwriting developer applications, and servicing loans. MassHousing will work with developers to provide technical assistance as it relates to understanding the state’s affordable housing development opportunities and financing sources. MassHousing and MHIC will collaborate on outreach to prospective borrowers.
