$34M of Cincinnati's affordable housing fund can't be spent. Why?
A fund for affordable housing in Greater Cincinnati has $112 million, but nearly a third can't be spent right now.
The Affordable Housing Leverage Fund includes funding from the city, Hamilton County, and private donors. It's managed by the nonprofit Cincinnati Development Fund.
Part of the city's contribution is $34 million in a revolving loan fund from the federal department of Housing and Urban Development, something called the HUD 108 Fund. The idea dates back to 2021, when city officials wanted to take advantage of historic low interest rates to offer developers really affordable loans.
CDF Chief Strategy Officer Luke Blocher says by the time HUD approved the idea a year and a half ago, interest rates had skyrocketed.
"It's just a really unfortunate coincidence that at the same time we were getting the program formally approved through the HUD process, the national interest rate environment dramatically changed in a way that hasn't changed back," Blocher told WVXU.
Basically, it's too expensive to borrow that money right now. Blocher says in the meantime, they're focused on deploying the funds that can be used.
"I do think that fundamentally, there will either need to be a revisiting once interest rates have come back down, or thinking about a different use," Blocher said. "But I don't know that I have a particular alternative in mind at this point."
Applications are now being accepted for forgivable loans to build affordable housing in Cincinnati. Close to $5 million from the city's federal stimulus money is available for this round of awards, which is open for applications through Jan. 11.
"If there is anybody out there thinking about developing affordable housing projects, and it's at the point where they really think a shot of gap financing can get them over the top, we want to make sure they're contacting us and getting into this pipeline," Blocher said.
Learn more about this funding opportunity on the CDF website. Applications for other sources in the leverage fund are accepted on a rolling basis.
CDF has already awarded more than $30 million in grants and loans as of last August, funding about 850 units, nearly all income-restricted.