JPMorgan Chase Provides Capital for Affordable Housing and Healthy Communities

As the nation’s housing crisis deepens, financially attainable housing is increasingly more difficult for people to find. JPMorgan Chase (JPM) has focused immense efforts on not only increasing the supply of traditional affordable housing, but also financing more housing accessible to people with a broader range of income levels. Partner Insights spoke to Lionel Lynch, head of the newly formed community development banking capital solutions team at JPMorgan Chase, to learn more about how the firm is making housing more attainable across the country.

Commercial Observer: As head of community development banking capital solutions, what are your team’s main goals, and what products will you offer?

Lionel Lynch: Capital solutions is a new team within commercial real estate that provides innovative financing solutions to develop housing with rents attainable to a broader income range. We’re also bringing new capital to vital community facilities throughout the United States. We’re offering on-balance-sheet financing that goes beyond what’s traditionally offered in the marketplace. We’re also working with a range of equity providers and other industry participants.

What community development experience did you have before you came to JPMorgan Chase?

My previous role before capital solutions was working on firm-wide affordable housing and community development initiatives within corporate responsibility at JPMorgan Chase. I’ve also been a real estate developer with private multifamily and mixed-use firms. I’ve helped acquire sites and design and build market-rate projects, as well as projects with senior affordable housing. I also served in the federal government as a senior adviser for housing, finance, and policy to the U.S. Department of Housing and Urban Development secretary. I also served as chief of staff to the Federal Housing Administration commissioner during the Great Recession. I’ve worked as a consultant to folks in the private and public sector to help create new types of economic development. 

How would you characterize the current housing need throughout the U.S., and how big of an impact do you think JPMorgan Chase’s innovative approach to financing can have on the nation’s affordable housing inventory?

It’s striking when you step back and realize just how huge the need is. The most recent stats from the Joint Center for Housing Studies show that 46 percent of renters throughout the country are cost-burdened, paying more than 30 percent of their income for housing. In some markets that number is even higher, and it’s especially acute for individuals and communities of color. So the need is huge. That’s why capital solutions was created. We’re using innovative tools and partnerships to increase the supply of attainable rental units, so fewer people are cost-burdened.

We are here to catalyze and stimulate new housing production. What’s really needed is different ways of financing new units to really have an impact on the affordable housing inventory. So, to the extent that we are bringing in new ways of thinking as well as having a dedicated, specific focus, we hope to have a significant impact. 

Will your projects go beyond housing?

Yes. Safe and stable housing is incredibly important, but thriving communities also need health care, grocery stores, schools and other services. Our community development banking platform has been investing more than $300 million in tax credit equity annually in these kinds of facilities. Capital solutions will continue to support these equity investments while bringing new forms of debt to the table.

What big projects does the capital solutions team have in the works? Who are the key players supporting these new ventures?

It’s often difficult for market-rate developers to enter the affordable housing space. Many of them are facing mandates from municipalities to push deeper affordability, and it’s been difficult to finance those projects using traditional financing tools. We bring new tools to enable them to finance housing available to individuals and families earning a broader range of income levels. 

We’re also working with hospitals, health care systems — in a broader sense, companies that haven’t typically been in the development space, but want to invest in creating new kinds of housing and community facilities — as they’re starting to recognize the need and the scale. 

With the scarcity in the supply of Low Income Housing Tax Credits [LIHTC], many developers have available sites or sites that can be entitled, but they’re waiting on that credit. If these developers can use JPMorgan Chase’s new tools, they could even broaden the income range for tenants. LIHTC typically only permits renters who are making below 60 percent of the area median income, but the need above that range and below market-rate is so huge. So, to the extent that we’re able to bring in new types of financing and collaborations, it’s absolutely serving the mission of being able to provide a broader range of housing.

Tell us some more about these new financial tools.

We’re going to bring a broader range of on-balance-sheet debt, allowing us to finance alongside new forms of equity at scale, with a platform that comes from us having a national presence. We could also use tools that tailor terms with a lot more flexibility than normal.

How does your team’s work complement JPMorgan Chase’s more traditional low-income housing effort?

We finance billions in affordable housing using LIHTC each year. This new platform enables us to finance the production of housing for broader income levels than in the past. So, it’s entirely complementary, not just to our low-income housing efforts, but to our market-rate efforts as well. We’re trying to broaden our efforts to bring as many people to the table as possible.

Why are the availability of affordable housing and the implementation of new strategies to make affordable housing available more important now than ever?

In order for communities to be healthy and vibrant, we need housing that is attainable to individuals with a broad range of incomes, along with facilities nearby that provide essential goods and services such as education, medical care, and healthy food. It’s really important to have communities that support everyone and their full range of needs.

View more articles on affordable housing here.