Nashville affordable housing fund makes first loan. Here's how it works.
Nashville's Catalyst Fund, designed to help affordable housing developers and landlords acquire and preserve attainably-priced homes, has announced its first loan deal.
The fund on Wednesday announced its first investment, a $450,000 low-interest loan to Gentry Investment Properties to acquire a four-unit home in Madison. The company plans to purchase the property and update its individual units as they become available over time.
It's the first major action for the Catalyst Fund, which was launched in June as a collaborative effort between Metro Nashville and the Community Foundation of Middle Tennessee. The central purpose of the fund is to give affordable housing developers a competitive edge to preserve more housing units that would likely otherwise be replaced by high-end homes in Nashville's fast-paced market.
The fund's financing structure requires that two of the four units be maintained as attainably-priced for families with incomes at or below Nashville's Area Median Income (AMI), which is currently $96,250 for a family of three.
Tenants at the Madison property may also use federal Housing Choice Vouchers to subsidize rent payments for families making a very low or extremely low income (defined as being below 50% or below 30% of the Nashville AMI, respectively).
Vandale Gentry, principal at Gentry Investment Properties, said the fund has been instrumental for the project. He is a participant in Urban League of Middle Tennessee's Real Estate Developers Academy, which trains emerging affordable housing developers from minority backgrounds.
'Their support has been invaluable," he said about the Catalyst Fund, in a news release.
The fund also announced the results of its first round of capital fundraising, which totaled $76 million. Investments came from Regions Bank, Citizens Savings Bank & Trust, Pinnacle Financial Partners and others. The fund aims to raise another $20 million in its next investment round.
First Horizon Bank contributed a $50 million line of credit while Vanderbilt University invested $5 million.
"When we launched the Catalyst Fund, we joined forces with the financial and philanthropic community to add another tool to preserve affordable homes in Nashville that might otherwise be lost to redevelopment,' Mayor Freddie O'Connell said in a news release. 'I'm encouraged to see the shared investment beginning to pay off in the community."
The following is a complete list of the first round of fund investors:
Citizens Savings Bank & Trust
First Horizon Bank
FirstBank
Metropolitan Government of Nashville and Davidson County
Pinnacle Financial Partners
Regions Bank
Ryman Hospitality
Studio Bank
The Healing Trust
Vanderbilt University
This article originally appeared on Nashville Tennessean: Nashville Catalyst Fund makes first investment for affordable housing
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