NEW YORK (Nov. 23, 2021) – Enterprise Community Partners (Enterprise), in partnership with Morgan Stanley, launched today the Disaster Recovery Accelerator Fund, a first-of-its-kind $25 million initiative to drastically reduce the time it takes for relief dollars to reach owners of multifamily affordable rental properties after natural disasters. This innovative financing product, which is part of Enterprise’s broader Building Resilient Futures program, will enable multifamily owners to begin repairing and protecting their buildings up to two years earlier than they otherwise could.
While for almost a decade, homeowners have been allowed to start repair work immediately following a disaster and later get reimbursed by federal funding, the United States Department of Housing and Urban Development (HUD) has not yet made this option available to rental housing, leading to extended delays in the rehabilitation of rental homes in some of the hardest-hit areas of the country. These delays have also left property owners in financial straits and the renters they serve displaced from their homes without a safety net to fall back on.
The problem is particularly acute for multifamily homes, which require significantly greater resources to repair than single-family, and yet have been closed off to private capital markets as they wait for federal funding. The Disaster Recovery Accelerator Fund fills this gap. Through a first-of-its-kind bridge loan product, it provides affordable rental property owners access to the capital they need to immediately start rebuilding after a disaster, while they wait for HUD disaster relief through their municipality’s Community Development Block Grant Disaster Recovery (CDBG-DR) housing programs.
“There is no excuse for waiting two years after disasters strike to begin rebuilding the rental homes that are the backbone of our hardest-hit communities,” said Priscilla Almodovar, president and chief executive officer, Enterprise. “Enterprise partnered with Morgan Stanley to create the Disaster Recovery Accelerator Fund to prove we can bridge this gap and rapidly mobilize capital to the people in most need. This is truly groundbreaking and would not be possible without the innovative thinking at Morgan Stanley and the generosity of MacKenzie Scott.”
The fund will be put to work immediately through a pilot program in Iowa, Louisiana and Oregon – three of the states selected to receive federal disaster recovery resources from the $5 billion Congress made available to HUD on September 30 through the CDBG-DR Program. The pilot fund, capitalized by Morgan Stanley and Enterprise via a grant from MacKenzie Scott, will provide eligible multifamily property owners with interest-only loans of up to $3 million with a 3-year term. Drawing on the strength of its relationships with state partners, Enterprise is working with jurisdictions to select projects for accelerated financing.
“Morgan Stanley is excited to partner with Enterprise on this pilot program to accelerate the flow of capital for affordable rental housing in communities impacted by natural disasters,” said Joan Tally, Managing Director, Community Development Finance. “Enterprise's deep understanding of community recovery will help States across the U.S. have the needed time to complete their planning process while facilitating efficient distribution of funds.”
Enterprise’s first-of-its-kind bridge fund is based on 15 years of experience with disaster recovery efforts in the Gulf Coast, Florida, New York and New Jersey, Puerto Rico and the US Virgin Islands. When storms, fires, earthquakes and other disasters damage communities, Congress appropriates emergency funds for HUD’s CDBG-DR program to distribute to affected cities and states. At least 70 percent of that funding typically supports low- and moderate-income communities. However, unlike disaster recovery programs through FEMA, which are permanently authorized by Congress and can be mobilized immediately following a disaster, CDBG-DR recovery resources require Congressional approval after every disaster. As a result, the Urban Institute found that it takes an average of 20 months after a disaster for CDBG-DR funds to begin reaching impacted property owners.
About Enterprise Community Partners
Enterprise is a national nonprofit that exists to make a good home possible for the millions of families without one. We support community development organizations on the ground, aggregate and invest capital for impact, advance housing policy at every level of government, and build and manage communities ourselves. Since 1982, we have invested $44 billion and created 781,000 homes across all 50 states – all to make home and community places of pride, power and belonging. We support community resilience nationwide and are working to reform national policy to make disaster recovery faster and more equitable.
About Morgan Stanley
Morgan Stanley (NYSE: MS) is a leading global financial services firm providing investment banking, securities, wealth management and investment management services. With offices in more than 41 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For more information about Morgan Stanley, please visit www.morganstanley.com.