Image Credit: Ed Reed/Mayoral Photography Office.
On March 4, 2024, New York City Mayor Eric Adams, the New York City Housing Preservation Development (HPD) Commissioner Adolfo Carrión Jr., and New York City Housing Development Corporation (HDC) President Eric Enderlin announced an initiative to provide up to $50 million to help Minority Business Enterprises (MBE) overcome financial barriers and participate in developing much needed affordable housing for New Yorkers. The “New York City Minority Business Enterprise Guaranty Facility” is established in partnership with the Urban Investment Group at Goldman Sachs and the Community Preservation Corporation (CPC). It is projected that the initiative will enable as much as $500 million in private construction lending to MBEs.
MBEs are disproportionately affected by challenges in securing construction loans due to restrictive financial barriers including both lender guaranty and liquidity requirements. This often results in MBEs being forced to partner with larger firms and thus dilute their ownership over the project and reduce their developer fees or entirely prevent them from participating in affordable housing developments. The MBE Guaranty Facility will remove those barriers by providing $50 million in funding for back-stop guaranties and thus will allow MBE developers to independently access the capital needed to secure construction financing and develop city-financed affordable housing projects. The $50 million in funding consists of a $25 million commitment from Goldman Sachs Asset Management over a five-year period and a $25 million commitment from HDC on behalf of the city.
For developers to be eligible, they must be a certified MBE with a strong development track record and demonstrate a need for capital. Joint ventures will be allowed if the partner is non-controlling and a not-for-profit entity. Eligible projects will include affordable housing projects in the city’s construction financing pipeline expecting to close within six months and with a senior private construction loan of up to $50 million. The MBE Guaranty Facility will provide guaranties for up to 10 percent of the applicable senior loan value and will begin accepting applications in the winter of 2024. The first projects will close by the end of Fiscal Year 2024 or early 2025. For more information, MBE developers should ask their HPD project managers for more information.
Mayor Adams said, “For too long, Minority Business Enterprises have faced systemic barriers and restrictive financial requirements in our construction sector that have prevented them from being a part of the solution to the affordable housing crisis. Today’s $50 million initiative is a major step forward towards our goal of building a fairer, more equitable New York City while creating housing, jobs, and opportunity for all. As we said in this year’s State of the City address: this city and this nation are facing a massive housing crisis. To face this moment, we must be a ‘City of Yes’ — ‘yes’ in my backyard, ‘yes’ on my block, ‘yes’ in my city, and ‘yes’ to our MBEs.”
Deputy Mayor for Housing, Economic Development, and Workforce Maria Torres-Springer said, “Minority Business Enterprises are critical drivers of affordable housing development across the five boroughs. This new initiative is a powerful way to combat our housing crisis while addressing the historical inequities and gaps in capital for MBE businesses. I am excited to see this unprecedented investment bolster diverse businesses and help us forge a clear path for equitable growth in our city.”
HPD Commissioner Carrión said, “In order for New York City to stay competitive on a global stage, we must ensure we’re building the affordable housing we need, and minority-housing development partners are a key part of that path forward. This new initiative, in partnership with Goldman Sachs, CPC, and HDC, is a major step in the right direction, removing barriers that will allow minority developers to grow, stay competitive, and build more housing — just as our city needs it the most.”
HDC President Enderlin said, “With the launch of the MBE Guaranty Facility, the city is making strides to address barriers that have historically limited minority-owned business enterprises from participating in the development of affordable housing. HDC is proud to partner with HPD, CPC, and Goldman Sachs to provide more equitable access to low-cost capital through the facility and promote greater opportunity for our MBE development partners to succeed.”
By: Meg Beauregard (Meg is the CityLaw intern, and a New York Law School student, Class of 2024).
New York City Department of Housing Prevention and Development (HPD), New York City Housing Development Corporation (HDC), and the New York State Division of Housing and Community Renewal (HCR): “City, State, and Partners Break Ground on Stevenson Square, Starting Construction on 174 Affordable Homes for Older New Yorkers and Homeownership Opportunities in The Bronx” (March 1, 2024).