Charlotte’s efforts to build more affordable housing got another boost Tuesday, with the announcement of $30 million worth of new funding from two big banks.
BB&T and SunTrust, along with the SunTrust Foundation, have agreed to give $10 million to a fund being raised by the Foundation for the Carolinas that will directly subsidize affordable housing. The banks also committed to give $20 million worth of below market-rate loans to developers that will help finance new affordable housing construction.
“Affordable housing is a critical component for any community, which helps them grow and thrive,” BB&T CEO Kelly King said in a statement.
Winston-Salem-based BB&T and Atlanta-based SunTrust are merging to create the sixth-largest U.S. bank by assets and deposits. The combined bank will be based in Charlotte.
The city of Charlotte and the Foundation for the Carolinas have been raising more money over the past year for affordable housing, in response to rapidly rising home prices and rent that have driven the price of housing out of reach for many. The city’s estimates place the affordable housing shortfall at about 30,000 units, with the need most concentrated among the very low-income.
Thousands of older, privately owned apartments have also been demolished or upgraded by investors in recent years and replaced with luxury apartments, exacerbating the issue.
So far, banks have contributed the bulk of private funding to the city’s affordable housing push.
“In our request for contributions from the private sector, it is our region’s financial institutions that have responded the loudest,” Foundation for the Carolinas CEO Michael Marsicano said in a statement.
In January, Bank of America, Ally Financial and Barings announced a $70 million commitment, the bulk of which was in the form of $50 million worth of below-interest loans. They also pledged $11 million to the private affordable housing fund. The Foundation for the Carolinas and Wells Fargo have pledged $5 million each to the fund.
Combined with the $10 million from BB&T and SunTrust announced Monday, that means the fund has raised $31 million of its $50 million goal. Voters also approved $50 million worth of bonds last year for the city of Charlotte’s Housing Trust Fund, more than triple the traditional amount the city asks for.
Combined, that would make $100 million worth of new subsidies available in public and private money. That’s in addition to the low-interest loans the banks have promised, which now total $70 million, and other additional sources such as land donations.
To manage the new money, Charlotte has hired the Local Initiatives Support Corporation, a New York City-based non-profit that manages affordable housing funds. Some City Council members have struggled to define the role of LISC, which will vet proposals from developers to build affordable housing. Traditionally, the city has vetted those requests.
Advocates have said a new approach is needed. But the influx of new funding isn’t expected to solve the problem. Even Marsicano has acknowledged that the effort will only raise enough money to subsidize about 10 percent of the new units that would be needed to totally close the gap.
“Affordable housing is a key component of a vibrant and inclusive community,” said Bill Rogers, CEO of SunTrust.