It’s no secret that real estate development in New York is expensive. With some of the highest land values in the country, complex local regulations, and an industry saturated by large for-profit developers, the barriers to entry and success in the field are high. For smaller affordable housing developers, including Minority and Women-owned Business Enterprises (M/WBEs), having access to capital early on in the development process is vital, both for the success of the project and for the long-term stability of the organization itself.

To address this need, we created the Partners Impact Fund, or Frey Fund, to offer flexible funds to seasoned affordable housing developers. This risk tolerant, flexible capital is the kind of resource our strongest community-based development partners need to grow their business and reinvest in the communities they serve. 

Since 2018, we've committed loans of $500,000 to $1,000,000 to seven mission-based organizations. These early stage loans will assist with the development of over 1,700 affordable homes, including supportive homes for the formerly homeless, in addition to the development of mixed-use space for programs that provide services to the community.

The Frey Fund resources have allowed the grantee organizations to build capacity and pursue more affordable housing development opportunities. With increased funding for both staff time and predevelopment expenses, many organizations were able to grow their pipelines or take on larger projects than they had before.

This has been particularly true for those developing scattered site projects, which are both notoriously difficult to finance and increasingly important to pursue in New York City, where there is a shortage of large parcels of developable land.

For nonprofit service providers, this capital enabled them to further develop their affordable housing pipelines. Additionally, organizations noted that the Frey Fund loans allowed them to refinance more expensive loans or equity sources, resulting in significant savings that can help boost net earnings and be used to strengthen operations. The flexibility of the funds also proved to be valuable given unforeseen project delays due to the Covid-19 pandemic.

The need is there, and the impact is tangible. However, accessing this type of flexible, unrestricted funding continues to be a challenge for mission-driven organizations pursuing affordable housing development. As the city accelerates its efforts to prioritize M/WBE developers in large projects such as Vital Brooklyn and NYCHA’s Permanent Affordability Commitment Together (PACT) program, access to predevelopment capital is critical for organizations to be able to take full advantage of these opportunities.

The past year has seen increased emphasis on uplifting racial equity within real estate development. Similar to other large cities, New York is grappling with a troubled past of redlining, disinvestment in Black and brown communities, and urban renewal projects that obliterated entire neighborhoods. Due to these adversities, many M/WBE developers still lack the resources to compete with the more established, cash-rich, and historically white-led developers.

While it’s important to level the playing field by providing opportunities for M/WBE developers, this must be done in conjunction with a holistic support system. In the coming years, with the likelihood of increased federal investment in infrastructure, there is an opportunity not only to ensure that diverse developers are selected to do this work, but also to ensure these developers are supported throughout the project’s lifecycle.

Hearing firsthand from the recipients of the Frey Fund about the challenges they face has been invaluable to identifying these critical points in the development process where they most need support. By addressing the roadblocks our partners have identified, Enterprise hopes to advance awareness of the challenges and build support for solutions that can fill these critical capital needs