City Boosts Minority Builders to Develop More Housing

A new city initiative will provide up to $50 million to help Minority Business Enterprise (MBE) developers overcome historical financial barriers and participate in the development of critically needed affordable housing for New Yorkers. 

Established in partnership with the Urban Investment Group at Goldman Sachs and the Community Preservation Corporation (CPC), the New York City Minority Business Enterprise Guaranty Facility is expected to generate as much as $500 million in private construction lending to MBEs, according to a news release. 

“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,” said Mayor Eric Adams. “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.”  

The MBE Guaranty Facility removes those barriers by providing a total of up to $50 million in back-stop guaranties, allowing MBE developers to independently access the capital required to secure construction financing and develop city-financed affordable housing projects in New York City. The MBE Guaranty Facility includes a $25 million commitment from HDC on behalf of the city and a $25 million commitment from Goldman Sachs Asset Management over a five-year period, with CPC serving as the facility manager. The $50 million is expected to leverage as much as $500 million in investment in affordable housing.

To be eligible, developers must be a certified MBE with a strong development track record and a demonstrated need for the capital. Joint ventures are allowed if the partner is a non-controlling, not-for-profit entity, such as a faith-based organization. Eligible projects include affordable housing projects in the city’s construction financing pipeline expecting to close within six months and with a senior private construction loan up to $50 million.

The MBE Guaranty Facility will provide guaranties up to 10% of the applicable senior loan value and will begin accepting applications in winter 2024, with the first projects expected to close by the end of Fiscal Year (FY) 2024 or early FY25. To learn more, MBE developers should ask their HPD project managers for more information.