The city is creating a $50 million fund that will serve as collateral for minority-owned businesses attempting to secure loans for work on affordable housing projects, Mayor Adams announced Monday.
The effort is aimed at giving a competitive helping hand to nonwhite developers who historically haven’t made up a significant portion of affordable-housing builders in New York City.
The new fund, which the city is calling the Minority Business Enterprise Guaranty Facility, is composed of $25 million from Goldman Sachs Asset Management and an additional $25 million from the city’s Housing Development Corp. and will essentially serve as a financial backstop for minority-owned developers, which often don’t have that kind of cash at their disposal.
Such guarantees are usually required by lenders as a prerequisite to grant loans, which has led to minority developers either missing out on work, or having to partner with larger, white-owned firms.
“There are probably a lot of developers in the city who have no problem putting up that guaranty,” Deputy Mayor Maria Torres Springer said. “But it has been an historical barrier for [minority businesses] in the city, and we want to dismantle that by providing that important guaranty.”
At a City Hall press briefing Monday, Torres Springer and the mayor predicted the $50 million will help unlock $500 million in loans to minority developers seeking to help build housing at a time when the city’s vacancy rate hovers at an abysmal 1.4%. The city’s Housing Preservation Commissioner Adolfo Carrion Jr. said that’s the lowest it’s been since 1968.
Calls to address the city’s ongoing housing crisis have grown louder with every dire new stat: about a third of New Yorkers are severely rent burdened, a report by the Community Service Society says, meaning they spend over half of their income on rent. And a vacancy survey from last month also found just 0.4% of apartments available on the market in 2023 were for under $1,100.
Those numbers come as Adams has largely put the onus on Albany to address the housing crisis after a housing compact floated by Gov. Hochul fell apart last year. A key issue is 421-a, the expired state tax break for developers meant to spur affordable-housing creation. The real estate industry says it’s crucial for encouraging new construction — but whether the state Legislature will be able to agree on a replacement this session remains to be seen.
“One of the most important ways we can address this crisis is simple: build more housing,” Carrion said. “We can’t wait to move forward on our ambitious housing agenda — and this includes empowering our minority business enterprise firms to take the lead.”
