Agencies announce $100m housing tax credit.

On the heels of Mayor Michael Bloomberg's announcement of an ambitious plan to reduce the number of homeless people in New York City by creating 12,000 units of supportive housing over 10 years with the city, state and federal funds, Fannie Mae, the nation's largest source of financing for home mortgages, and the Enterprise Social Investment Corporation announced a $100 million low-income housing tax credit (LIHTC) to help increase the supply of permanent supportive housing nationally for chronically homeless people.

The fund has been under development since March, when Fannie Mae announced its expanded American Dream Commitment. At that time, Fannie Mae said it would work with its partners to create at least two new LIHTC funds dedicated to permanent housing for the homeless.

As a result of this new partnership, the Enterprise Foundation, of which ESIC is an affiliate, announced a commitment to build 2.500 new supportive housing units in New York, investing in tax credit equity, acquisition and predevelopment loans and providing grants in the process.

Permanent supportive housing is considered to be an effective way to help people make the transition from homelessness to sustainable independent living by providing counseling and services in addition to shelter. A study conducted by the Enterprise Foundation, found that residents living in supportive housing were able to increase their monthly income from $225 to $643; decrease their hospitalization rate from 65% to 38% and increase their average residential tenure to 4.6 years.

Fannie Mae and ESIC are committed to helping a coalition of organizations dedicated to ending homelessness through the creation of permanent supportive housing nationally. As part of this commitment, Fannie Mae presented $1 million of a five-year, $5 million grant to the Corporation for Supportive Housing, a national non-profit organization that helps communities create permanent housing with services to prevent and end homelessness.

Participating in the announcement al Chelsea Court, a model 18-unit permanent supportive housing residence opened a year ago by Palladia, Inc., with financing from Fannie Mae, ESIC and the New York City Department of Housing Preservation and Development were: Linda Gibbs, New York City Department of Homeless Services Commissioner; John Warren, HPD First Deputy Commissioner; Carla Javits, president of CSH; Bart Harvey, chairman and CEO of the Enterprise Foundation and chairman of ESIC; and Daniel H. Mudd, vice chairman and COO of Fannie Mae.

"The $100 million investment we are announcing today is the first of many initiatives we and our partners will undertake to tackle homelessness," said Mudd. "While America is among the world's best-housed nations, homelessness is a chronic and growing problem. Fannie Mae is going to invest its creativity and capital to help expand the stock of permanent supportive housing for families and individuals that are homeless. We are honored to make ESIC our first partner in this initiative."

"For more than 20 years the Enterprise Foundation and ESIC have worked to restore and stabilize urban communities through the development of affordable housing and Fannie Mae has supported our efforts with its investments," said Harvey. "We are pleased to announce this timely initiative to extend our work beyond bricks and mortar to contribute to the development of supportive housing for those who may need help with life's challenges in New York and nationwide."

ESIC has financed 17,000 units of supportive housing nationwide.

Supportive housing studies have concluded that homeless people achieve improvements in housing stability when services that provide counseling for issues such as substance abuse, mental illness, the absence of job and financial management skills, and health are combined with housing.

Unlike community residences and shelters, supportive housing allows tenants a choice in their living arrangements, separating housing from support services they receive on-site or nearby.

"New York has struggled, as have many American cities, with a disturbing increase in the number of people who are homeless, many for long periods of time," said Gibbs.

"Studies initiated more than a decade ago have helped us understand the value and efficacy of supportive housing.

"Today's announcement by Fannie Mae and ESIC will help New York get off to a fast start with out plant to create 12,000 new supportive housing units for the chronically homeless."

LIHTCs are provided by the federal government to encourage corporate investment in housing that is affordable to people earning up to 60% of an area's median income, with is $32,640 in New York City. Fannie Mae invests directly in low-income, multi-family housing that is eligible for LIHTCs, or indirectly through partnership funds that pass the LIHTC benefits through to investors, and is the largest single investor in LIHTC"s to increase the availability of affordable multi-family housing.

The LIHTC fund announced recently will primarily support developments for individuals and families earning less than 30% of an area's median income.

The $100 million equity investment through ESIC and the $5 million grant to CSH are part of Fannie Mae's expanded American Dream Commitment to expand access to homeownership for millions of first-time home buyers; help raise the minority homeownership rate to at least 55%; and make homeownership and rental housing a success for millions of families at risk of losing their homes; and expand the supply of affordable housing where it is needed most.

This article was written by Michael Dutton, Director of Communications, Fannie Mae; Sandi Abadinsky Baer, Director of Communications, The Enterprise Foundation and; Sally Robey, Director of Communications, ESIC.