The Indianapolis Neighborhood Housing Partnership has launched a loan fund intended to create and preserve affordable housing along the city’s public transportation lines.
The $15 million Equitable Transit-Oriented Development Fund was launched in collaboration with Michigan-based Cinnaire, a community development financial institution with offices in Indianapolis, which will manage the fund.
INHP will be the fund’s sole borrower and will acquire existing buildings or vacant or underused properties, with the goal of maintaining or developing mixed-use, mixed-income housing.
The ultimate objective of the fund is to preserve or spur development of 1,000 affordable housing units within close distance of an Indianapolis transit stop over the next five years. The units would be leased to eligible tenants.
“We believe everyone should have equal opportunity to live in a neighborhood with easy access to employment, health care, child care, education, food and support services,” said INHP president and CEO Moira Carlstedt.
John Marron, director of strategic planning for IndyGo, said the fund would help “ensure housing costs remain affordable in locations with easy access to transit” as the IndyGo bus service undergoes an expansion in Indianapolis with an increase in service and creation of three bus rapid transit lines.
The fund is composed of $12 million in lending capital from First Merchants Bank, National Bank of Indianapolis, Lake City Bank and First Financial Bank. It also has $3 million in equity funding: $1.5 million from the INHP, $1 million from the city of Indianapolis and a $500,000 grant from JPMorgan Chase. The fund already has $5 million in lines of credit contributed by banks; and the rest is in various stages of closing, according to INHP.
The idea of the fund is to give the INHP access to more low-interest financing to complete more projects.
Rick Laber, Cinnaire’s executive Vice President for new ventures, said he is encouraged by the initial interest from banks to participate in the fund.
“This couldn’t happen without the bankers having a heart for the mission of what we’re talking about,” Laber said. “This needed to be low-cost, patient capital. The banks have stepped up with low-cost, patient capital.”
The city of Indianapolis’ contribution comes from Department of Metropolitan Development funds, according to a city spokesperson.
“Today is a fantastic day for the city of Indianapolis,” Mayor Joe Hogsett said. “This tremendous partnership will make our city a more equitable city, a more thriving city, and … one that is a prime example of a public drive partnership done well.”
So far, INHP has acquired two properties using the fund, 401 Southern Avenue near Garfield Park, and 2163 N. Illinois St., which is north of downtown. Both stops are close to future IndyGo Red Line stops.
“We’ll see activity on these parcels hopefully soon,” said Carlstedt.
The initiative comes as the result of an idea INHP heard during the community visioning process called Plan 2020 from Indianapolis resident Gary Reiter, who thought the city had a problem with a lack of affordable housing, especially around transit routes.
INHP then conducted studies that showed his hunch was correct. It also found that transit and housing costs were eating up an average of 46 percent of Indianapolis residents’ income.
“The vision he had was to combine the ever-growing transit system with the problem he saw as a shortage of affordable housing,” said Joe Hanson, INHP’s executive vice president for capital development and strategic initiatives. “This tool is intended to address both of those challenges. It addresses the lack of supply of safe, decent affordable housing but more importantly, aligns that with high-quality, frequent, reliable transit. It’s about creating those opportunities for inclusive economic mobility.”
Carlstedt said the fund was also made possible because of a $26.6 million grant in 2015 from the Lilly Endowment to INHP, which helped fund INHP’s contribution.
“They said to the board and staff, ‘Seize opportunities, be innovative and do more of what you do well,’” Carlstedt said. “The equitable transit fund is an example of seizing opportunity and being innovative.”