Some companies aren’t waiting for policy changes regarding affordable housing. Instead, there is a growing movement within larger companies to support the communities they are based in, specifically pertaining to affordable housing.
This was made especially apparent at “Unlocking the Market: Big Ideas for Local Housing Challenges,” an event held by Urban Institute and Fannie Mae on Wednesday. Hugh Frater, chief executive officer at Fannie Mae, kicked things off with an overview of the problems the nation is facing regarding housing affordability.
“Our current affordable housing shortage is a national problem, which means there is no single or simple solution,” Frater stated. “The problem, though, is simple: When you have demand for an asset without a corresponding supply response, what happens? Prices go up.”
Frater traced the disconnect between home price appreciation and housing starts back to the Great Recession.
“What this means is that the large Millennial generation that wants to consume housing, whether by homeownership or rental, can’t find the affordable housing that they need,” Frater explained. “To make things worse, the Baby Boomers who were supposed to downsize haven’t done so, which means there are fewer houses available for move-up buyers – Gen X – which means there are fewer start up homes for first-time buyers. So what can we do?”
Frater answered his own question by expressing a need for policy at the national and local level, as well as a nationwide willingness to innovate and create new technologies and methods to lower the cost of housing.
To his point of innovation, several members of a panel of company representatives presented the ways their companies have been tackling affordable housing issues in their communities. The panel included representatives from JBG Smith, Google, Prudential Financial and Johns Hopkins University.
“There’s a lot of new players that are playing in affordable housing, in part because of the urgency,” panel moderator and CEO of Living Cities Ben Hecht said. “And they’re showing up at a very local level to solve local problems. And so that’s what we put together for this panel. They’re both from traditional local institutions like Johns Hopkins and anchor institutions – the folks who basically can’t leave because they own so much real estate.”
Located in the heart of Silicon Valley, Google is a prime example of an anchor company and is attacking the lack of affordable housing in the Bay Area head-on. As head of U.S. progressive engagement for the tech monolith, Michele Jawando said she recognizes the urgency of the issue.
“As an institution, we really recognize that we have to do more and we have to step up,” she said.
In June, Google announced plans to invest $1 billion dollars in land and money to construct housing in the Bay Area over the next decade. Of that, $750 million was committed to repurposing Google-owned land and building 15,000 units in affordable housing. The investment also included the forging of a $250 million investment fund to incentivize developers to build another 5,000 affordable housing units, Jawando explained.
A month later, the company announced its $50 million investment in Housing Trust Silicon Valley’s TECH Fund. Additionally, Jawando estimated that Google has invested $18 million over five years to aid the homeless community.
From the financial side, Daryl Shore, the director of inclusive communities for Prudential Financial, shared how his company is impacting its headquarter city of Newark, New Jersey.
“We’ve been in Newark for 140 years and we stayed in the city through capital and social unrest to really be a partner in the city,” Shore said. “So we’re committed and we do consider ourselves an anchor institution in the community.”
Shore said that Prudential has invested well over $1 billion for the city of Newark. “So as we think about the city of Newark, we really are focused on what inclusive economic growth looks like,” he said.
In his role, Shore aims for what he calls a “blended capital approach,” using investment capital and grant capital to promote economic and social mobility for the residents. That includes $400 million that Prudential has invested in affordable housing. The company has also created more than 1,500 housing units to downtown Newark, as well as 1,000 affordable housing units in the surrounding neighborhoods.
“We want to make sure that living in the area is affordable. We don’t just want housing for the sake of housing,” Shore concluded
Representing real estate investment trust JBG Smith, AJ Jackson, the company’s executive vice president of social impact investing, shared how his firm is looking to solve the housing crisis in the Washington, D.C. metro. In partnership with DC nonprofit Federal City Council, JBG Smith launched the Washington Housing Initiative.
The initiative aims to preserve affordable workforce housing for those who can’t afford Washington’s high market-rate home prices but earn too much to qualify for its subsidies. As of this summer, the program was expected to preserve or build between 2,000 and 3,000 units of affordable housing in the Washington region over the next decade.
“What we as a company realized is that housing is critical to infrastructure,” Jackson said. “It’s as important as transportation and education for the region’s long-term growth and health. The Washington Housing Initiative became our solution to use our skills and talents as a company to try and address affordable housing,” he added.
The initiative houses The Impact Pool, a vehicle managed by JBG Smith. The pool provides secondary financing to acquire or develop affordable housing communities, enabling the owners and developers to secure long-term, lower-cost permanent financing. Additionally, a portion of Impact Pool profits is donated to the Washington Housing Conservancy to fund long-term affordability and neighborhood services.
“We’ve raised a little over $90 million to date,” Jackson said.
Coming from what is viewed as a more traditional type of anchor institution, Alicia Wilson, the vice president for economic development at Johns Hopkins University, discussed how the university is helping shape Baltimore. She described the college’s role in housing as “evolving,” as its philanthropy has expanded beyond its original area.
Notably, Johns Hopkins is a core supporter of the East Baltimore Development Initiative, a 20-year $1.6 billion mixed-use revitalization endeavor. The university has invested more than $50 million in the planned community, which will include 1,700 affordable and market-rate housing units, a new school and an early childhood center.
“We’re expanding beyond where our students are to neighborhoods that may not be just adjacent to the hospital or the university or where employees a certain income of strata would like to live in,” Wilson said. “So we’re expanding to say it’s not just about the concentric circles of where our students live.”
“Housing issues are a manifestation of complex issues. There are structures that prevent individuals from getting an education. It’s an issue that requires collaboration,” she concluded.