Black neighborhoods in metro Atlanta have been historically excluded from investment and continue to experience its long-term consequences coupled with lingering impacts from the foreclosure crisis, recent gentrification, and destabilizing effects of the ongoing Covid-19 pandemic. Through this project ANDP aims to help strengthen these neighborhoods while providing affordable and wealth building homeownership opportunities.
Addressing systemic race-based homeownership gaps is central to ANDP’s strategy to develop and market homes. Of the more than 600 homes ANDP has developed in the past decade, 60% were sold to Black buyers and 65% of the buyers earned below 80% of Area Median Income (AMI).
This project will develop 42 homes over 12-24 months and ANDP expects to sell the majority of the units from this project to Black buyers leveraging the historically low interest rates to support wealth building through homeownership. ANDP plans to sell all the homes to low- to moderate-income buyers, with at least 40% of the homes sold to buyers earning 80% of AMI or less.
Reinvestment Fund is supporting the financing by providing New Markets Tax Credit allocations and a source loan. While NMTCs have typically been used to support economic development activities and mixed-use development with rental housing, this project uses an innovative new deal structure to allow credits to finance for-sale housing. Reinvestment Fund’s capital for the source loan includes resources from the Grow with Google Fund.
Reinvestment Fund itself has been a source lender on four prior single family NMTC transactions, including two earlier projects with ANDP. On those prior deals, Housing Partnership Network (HPN) provided the allocations with Smith NMTC Assocs. as compliance consultant and US Bank as investor. This transaction repeats the structure successfully employed by HPN and is also supported by Smith NMTC Assocs and US Bank.
Compared to previous NMTC single family projects we have supported, which primarily consisted of scattered site rehabs acquired during the construction period, the overwhelming majority of the units here are new construction units. The focus on new construction is driven by recent changes in the existing single-family market. Much of the existing single-family inventory has been absorbed as part of the pandemic-related flight to single-family homes, as well as by earlier absorption of units into the single-family rental market. That limited supply has driven up acquisition prices for what inventory is available, making it hard to achieve affordability targets through a rehab strategy.