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MassHousing and the Massachusetts Housing Investment Corp. are starting a new fund aimed at diversifying the state's housing industry.
The partnership will launch the Equitable Developers Fund with $50M in public funding to provide financing to developers from "socially and economically disadvantaged backgrounds and communities," according to a press release Wednesday. It plans to raise an additional $25M from private investors.
The team says this will be the largest publicly funded financing program focused on this issue in the U.S.
"Our two organizations have intimate knowledge of the barriers of entry related to the Massachusetts affordable housing ecosystem," MassHousing CEO Chrystal Kornegay said in a statement. "Working together, we will help unlock new opportunities for housing growth, while creating a path for more developers to participate in confronting the state’s housing challenges."
The fund will help to address disparities that minority developers face when accessing capital used to acquire development sites and begin projects. The partnership plans to open funding applications in the spring.
MHIC plans to make at least $10M in loans available for project-level, redevelopment, acquisition and construction financing through the fund.
MassHousing is a quasi-public agency that provides financing for affordable housing in the state, while MHIC is a nonprofit that finances housing and community development with a focus on low-income neighborhoods and communities of color.
Developers of color have faced issues for decades with a lack of diversity in commercial real estate, but access to capital to fund projects and grow companies has been at the forefront of their challenges in recent years.
Before launching the fund, MassHousing hosted a listening tour in collaboration with the Mel King Institute and the Builders of Color Coalition to understand disparities and identify opportunities to bridge the gap.
Black and Latino commercial real estate developers make up less than 1% of the total number of private developers across the country, according to the Grove, making it harder to close the wealth gaps the country has seen.
A Bisnow analysis in November found that diversity in the sector has been rising for women, who made up 29.2% of high-ranking positions at development firms. However, the percentage of people of color stayed stagnant at just under 8.7%.
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