To Fuel Affordable Housing, This Innovation Fund Targets Predevelopment Costs
A new fund that pays for upfront soft costs associated with affordable housing may provide more stability for the developer and faster returns for investors.
A new housing project under construction along the Gowanus Canal in Brooklyn, New York, in 2024.
Photographer: Andrew Lichtenstein/Corbis News/Getty Images
As tariffs put new pressure on homebuilders, and cuts at the Department of Housing and Urban Development disrupt federal funds for affordable housing, one New York City developer is looking to jumpstart growth using a novel financing strategy.
With a $20 million donation, the nonprofit Volunteers of America-Greater New York has seeded what the group is calling a Housing Innovation Fund that’s designed to help pay upfront costs for affordable housing projects. It’s part of a wider push to leverage philanthropic dollars in the earliest stages of the development process, where so-called predevelopment costs can pose barriers for smaller developers trying to get affordable projects off the ground.