USA: Latinos are funding affordable housing
USA: Latinos are funding affordable housing
In recent years, housing rentals in cities like Miami, Florida have become increasingly unaffordable and scarce. At the same time, commercial banks have tightened lending to organizations working to create more affordable housing. Latinos working in community development financial institutions (CDFIs) have been playing a pivotal role, by ensuring that non-profits that create affordable housing and revitalize neighborhoods have access to necessary loans.
One of these Latinos is Ignacio Esteban, CEO of the Florida Community Loan Fund (FCLF), the state's only statewide CDFI. FCLF has been providing low-interest loans to non-profits focused on safe and affordable housing for disadvantaged families. Recently FCLF was given the Wells Fargo Next Award from the Opportunity Finance Network and was granted $4 million to continue its mission.
“The state of Florida was hit harder than almost any other state in the recession. We saw property values go way down and salaries did not rise proportionately,” said Esteban, who has been with FCLF for over 15 years.
Miami was hit harder during the housing bubble than other areas in the country and those who lost their home began to rent, thus creating a new contingent of renters, explained Skyler Olsen, an economist with Zillow. In the meantime, an influx of wealthy investors, many from Latin America, have been paying cash for properties and pushing out local first time home buyers, even when they’re pre-approved for a loan.
"The gap between wages and the average cost of housing is larger than almost anywhere else in the country,” said Arden Shank, president and CEO of the Neighborhood Housing Services of South Florida (NHSSF), one of the non-profits which has obtained loans from Esteban's organization, FCLF. He said high rental prices are causing overcrowding with too many people in one place.
“Folks are living in inadequate properties that are not in good enough condition to be lived in,” said Shank.
With the money they borrow from FCLF and other lenders, NHSSF stabilizes neighborhoods by developing affordable and sustainable housing. One multifamily apartment building they purchased in the Little Havana neighborhood of Miami is now in stellar condition and stands out from others in the area.
Unfortunately, Miami needs many more affordable apartments and residences like the ones created by NHSSF. A study done by the Shimberg Center for Housing Studies at the University of Florida found that the amount of low-income, cost-burdened renter households in Florida went up by 29 percent between 2005 and 2011. Those considered burdened are spending over 40 percent of their salaries on rent. Historically, renters in Miami would spend 26.5 percent of their income on rentals; now it's about 44 percent.
Maritza Herrero, a supermarket supervisor in Miami, has been looking for an apartment to rent for three months, but everything she has found is out of her budget. Although she makes above minimum wage and her car is paid off, she can hardly afford a studio apartment and health insurance.
"It’s abusive and it’s out of control,” Herrero said, referring to rent prices.
Yet the reality is that commercial banks' tightened lending policies have made it harder and harder for local organizations like NHSSF to invest and build in their neighborhoods.
"Lending and credit have become hard to come by. In the Latino community in particular, the housing crisis killed our equity and our ability to borrow and access capital,” said Nancy Santiago Negrón, Chief External Affairs Officer at Opportunity Financial Network. They provide long-term loans at low interest rates to their CDFI members like Florida's FCLF, who in turn lend to local businesses and organizations. "CDFIs are the institutions that have kept money flowing," she said.
Santiago Negrón, who worked for many years in government - including the Labor Department and the Department of Education - said this is one of the reasons she has refocused her career.
"Policies are only good when they are implemented at the community level," said Negrón, stressing someone has to continue lending to bodega owners or those who want to build affordable housing. "A rising tide lifts all boats...It's aligning capital with justice."
Newly appointed Housing Secretary Julián Castro has pointed out the need to create and fund affordable housing as one of the biggest issues hindering more wealth creation for Latino families and has promised to target funding and programs to these areas.