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A group of government, financial and philanthropic leaders on Friday announced the establishment of the Nashville Catalyst Fund, a $100 million effort to spur the private sector to preserve or build affordable housing units in the city.
The Community Foundation of Middle Tennessee will oversee the fund alongside Forsyth Street Asset Management, with additional support from Nelson Community Partners and Pillars Development. Former AllianceBernstein executive and mayoral candidate Jim Gingrich is helming the fund’s investment committee, which will make lending decisions. (Another 2023 mayoral candidate, Matt Wiltshire, is leading the development of an unrelated affordable housing fund.)
Initially, the effort will be funded by $20 million from Metro’s remaining American Rescue Plan Act allocation, a $5 million below-market-rate investment from Vanderbilt University and a $50 million credit facility led by First Horizon Bank. The group aims to raise an additional $25 million to round out the funding.
“We’ve got some soft commitments; it just takes some time,” Hal Cato, CEO of the Community Foundation, told the Banner.
The investment committee met for the first time Thursday and already has 12 potential projects in the pipeline.
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“We are one of many American cities where the cost of housing has marched steadily upward over the past decade, and as we have tried to tackle that issue with policy changes, one of the challenges is that for many mission-driven and emerging minority affordable housing developers, it’s hard to raise capital fast enough to compete in Nashville’s real estate landscape,” Mayor Freddie O’Connell said. “As a result, our city is facing a serious challenge of providing affordable housing to enough working families.”
O’Connell said the fund is expected to help create or preserve 3,000 units over the next decade. It’s expected that the projects approved for funding would average affordability for those making around 75 percent of the area median income — that’s $59,900 for a two-person household — with some projects featuring a mixed-income makeup. Officials expect the projects primarily to be multifamily developments, though people seeking to preserve single-family affordable housing can submit applications, too.
“The fund will provide fast, flexible loans to help preserve affordability from rental homes that would otherwise be lost to the market, and to increase affordable housing production in Nashville,” O’Connell said. “We’ve seen a lot of people motivated to create affordable housing, but if you hit a market price point, they can’t preserve it, and so this is trying to step into that space.”
Cato added that he believes foundation endowments could invest in the program because it will offer small returns.
“What’s resonating more than anything is the preventing and preserving [elements] because it’s the fastest way to move the needle,” Cato said.
Community Foundation of Middle Tennessee is a sponsor of the Nashville Banner. Donors and sponsors have no say in the editorial content.
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The Nashville Banner's deliberately local news coverage is funded by just 4% of our regular readers. Thanks to their help we're able to give you context and depth to help you understand what's at stake for the present and future of our every-changing city through our deeply reported journalism.
No paywall.
No clickbait.
No hot takes.
It's good news for Nashville.
But we need more of you to help. Just imagine what we could do with 5% or even 10% of our regular readers pitching in.
If you choose to support us on a monthly basis it will help the Banner deliver balanced, dependable local news at a crucial time for our democracy and our city. It only takes a minute and you can cancel anytime. Thank you.
Stephen Elliott is a staff reporter covering Metro and elections. Previously, he spent more than seven years reporting on politics for the Nashville Scene and Nashville Post. He also spent more than two years as editor-in-chief of the Post.
