General Industry Letters
Mortgage Banking Letters
Bank Partnerships with Supportive Housing Organizations and Agencies
To: The CRA Officer of the Institution Addressed
Re. Bank partnerships with supportive housing organizations and agencies
In an effort to foster collaboration and generate new housing alternatives, Governor George E. Pataki recently established an Interagency Task Force on Housing for People with Special Needs. Through this effort, New York State Agencies will cooperatively explore and advise the Governor on opportunities for financing and increasing the availability of housing and on-site support services throughout the state. In May, the New York State Banking Department and the New York State Division of Housing and Community Renewal co-hosted a bankers' breakfast and tour of several supportive housing facilities on behalf of the Governor's task force.
As you know, the New York State Banking Department has long encouraged banks, in connection with their Community Reinvestment Act (CRA) programs, to provide financial and technical assistance to housing organizations and agencies serving low and moderate-income populations and communities. In this context, institutions are encouraged to consider financing housing that is linked with targeted services for special needs populations, or “supportive housing.” Supportive housing, or permanent affordable housing linked to services, has proven to be a highly effective way to help address the needs of the disabled and other low-income individuals who are homeless or have special needs. It is also cost effective, and can reduce the use of public services.
In connection with a CRA evaluation, a direct lending role in a supportive housing venture will often be considered complex, given the multi-layered financing structures typically employed for these projects. Moreover, an institution’s activities will be considered innovative and highly responsive to community development needs if it develops a long-term, multifaceted relationship involving the provision of financial and technical assistance to supportive housing organizations and agencies. This assistance can have a catalytic effect at the project and organizational level by providing key development capital and operating support, helping to leverage funding from other sources, and enhancing capacity.
This letter focuses on the important work of organizations and agencies that are involved with the development and expansion of supportive housing, and outlines some of the ways your institution may promote these efforts. Attached for your reference is a list of organizations and agencies for those institutions seeking to partner with supportive housing entities.
Why Supportive Housing?
Across New York State, there is a critical need to increase the availability of housing and support services for individuals with special needs, to help them achieve independence and live with dignity. Homelessness, particularly among families, continues to escalate. Many of these individuals and families confront significant barriers to independence, including mental illness, substance abuse, and chronic healthcare problems that extend homelessness. Without services (such as case management, substance abuse and mental health counseling, job readiness and job training) that help to address these challenges, they are often unable to maintain stable households. These groups can benefit greatly from supportive housing, helping not only to reduce homelessness but also to integrate the formerly homeless into communities. Furthermore, a growing number of seniors and the disabled urgently need supportive housing to stabilize their lives.
Opportunities for Investment
A variety of successful supportive housing models exist, involving government, non-profit housing and for-profit developers. While supportive housing ventures traditionally have been funded by Federal, State and City agencies - often involving over a dozen sources - additional resources are needed to meet growing demand. Supportive housing ventures typically involve highly complex funding structures, and the provision of technical expertise can add considerable value at every stage of development.
Banking institutions can bolster these efforts in a variety of ways, at both the project and organizational levels.
At the project level, banks can:
purchase tax credits, thereby creating additional incentives for investment
sponsor an Affordable Housing Program grant or low-interest loan through the Federal Home Loan Bank
provide a letter of credit or other credit enhancement products
provide a line of credit to help a developer meet working capital needs
make construction loans
provide bridge, acquisition and/or predevelopment financing
At the organizational level, banks can:
provide technical assistance to supportive housing organizations
make grants and charitable contributions to supportive housing organizations
make in-kind contributions, such as donations of space, equipment, furniture, etc.
Any one or more of these measures can leverage other resources, help attract additional outside capital and overcome bottlenecks that otherwise impede the success of supportive housing ventures.
As the Governor’s interagency effort yields additional information and ideas concerning special needs housing, the Banking Department will be available to serve as a channel for advice and information to help private and public entities collaborate on financing supportive housing ventures in low- and moderate-income communities. If you have any questions or comments about the enclosed contact list and would like to tell us about a new program or partnership, please call Deputy Superintendent Edward Kramer at (212) 709-3560 or Gail Bernstein-Gold, Director, Community Affairs Unit, at (212) 709-3573. We will periodically update our contact list and would like to have up-to-date information available. Please visit our web site at www.banking.state.ny.us for updates.
Diana L. Taylor
Superintendent of Banks