Mayor Adams announces $50 million fund to support minority-owned real estate developers

Mayor Adams announced Monday that the city will create a $50 million fund to serve as collateral for minority-owned businesses seeking to secure financing for construction of affordable housing projects.

The initiative aims to provide competitive assistance to non-white developers, who have traditionally not made up a large portion of New York City’s affordable housing builders.

The new fund, which the city is calling the Minority Business Enterprise Guarantee Program, is made up of $25 million from Goldman Sachs Asset Management and an additional $25 million from the city’s Housing Development Corporation, which provides basic act as a financial backstop for minority-owned developers. , often do not have such cash at their disposal.

Such guarantees are typically required by lenders as a precondition for making loans, forcing minority developers to either miss out on work or partner with large white-owned companies.

“There are probably a lot of developers in the city who would have no problem making that guarantee,” said Deputy Mayor Maria Torres Springer. “But it has been a historical barrier. [minority businesses] We want to dismantle that by providing that important guarantee. ”

At Monday’s City Hall press conference, Torres Springer and the mayor said the $50 million will help minority developers build housing at a time when the city’s vacancy rate is at an abysmal 1.4%. It was predicted that a loan of $500 million would be available. Adolfo Carrion Jr., the city’s Housing Preservation Commissioner, said this is the lowest since 1968.

According to a report by the Community Services Association, about one-third of New Yorkers are severely rent-burdened, spending more than half of their income on rent. Last month’s vacancy survey also found that only 0.4% of apartments on the market in 2023 will be priced under $1,100.

These numbers come after Adams placed the primary responsibility on Albany to address the housing crisis after Gov. Hochul’s housing deal collapsed last year. A key issue is 421-a, an expired state tax break for developers intended to encourage the construction of affordable housing. The real estate industry says it’s important to encourage new construction, but it remains to be seen whether the state Legislature can agree on an alternative this session.

“One of the most important ways we can address this crisis is simple: build more housing,” Carrion said. “We can’t wait to take forward our ambitious housing plan, which includes empowering minority businesses to take the lead.”