IFF Leverages FHLBank Chicago Membership to Unlock $33.5+ Million in Funding for Affordable Housing in the Midwest November 20, 2023

As a member of the Federal Home Loan Bank (FHLBank) of Chicago, IFF has taken full advantage of the FHLBank’s Affordable Housing Program (AHP) by sponsoring 58 grant applications since 2011 that have resulted in more than $33.5 million in funding for developers in the Midwest. Combined, the projects supported with IFF-sponsored AHP funds have created or preserved 2,760 affordable housing units – helping to reduce the gap between the supply of affordable housing and existing demand in the Midwest.   

Launched in the wake of the Great Depression to stabilize the housing market, the FHLBank System is comprised of 11 regional FHLBanks that serve roughly 6,800 member institutions — including banks, thrifts, credit unions, and insurance companies — by providing them with a reliable, low-cost source of liquidity to support housing finance and community investment across the country. In 2010, Community Development Financial Institutions (CDFIs) were permitted to become members for the first time, offering organizations like IFF a critical new source of capital to deploy to support the development of quality affordable housing. That capital comes in the form of “advances” that function as flexible loans, and through AHP, which enables member institutions to apply for grants annually that are passed through to affordable housing developers to subsidize the cost of their projects.  

“Gaining access to FHLBank membership was an important milestone for the CDFI industry, and AHP has been an invaluable resource that we’ve leveraged time and time again to help mission-driven developers in the Midwest create high-quality, affordable housing in communities where it’s needed,” says Joe Neri, IFF’s CEO. “IFF is the largest CDFI sponsor of AHP applications within the FHLBank system, and one of the largest of all of FHLBank’s members, which is the result of being deeply embedded in Midwest communities and leveraging those relationships to increase the flow of capital through the program.”     

AHP grant awards are capped at $1 million per project, with the subsidy helping to bridge gaps in complex capital stacks that are constructed to ensure that housing projects can be completed while maintaining affordable rent levels for residents unable to pay market rate. This gap funding is especially important because not all projects have the capacity to take on permanent debt due to the way the project cash flows. For smaller, nonprofit developers, in particular, AHP funds offer an attractive solution to fill budget gaps and enable projects to proceed that might not otherwise be possible. So, too, is AHP a valuable resource when tax credits are being used to finance the development of affordable housing, which places additional pressure on developers to close financing on projects within set timeframes to avoid losing the tax credits.  

“AHP subsidies provide support for affordable housing in partnership with our member institutions, community organizations, developers, public housing authorities, and tribal governments,” says FHLBank Chicago Community Investment Officer Katie Naftzger. “Since 1989, FHLBank Chicago has awarded more than $559 million in AHP subsidy grants. The Bank understands the challenges associated with affordable housing and supports CDFIs like IFF with providing the critical funding needed to help drive AHP projects in our communities.” 

One example of a project that benefited from an IFF-sponsored AHP grant is Torrence Place, a 48-unit permanent supportive housing development by Full Circle Communities that integrates health and housing with a ground floor community health clinic operated by Christian Community Health Center (CCHC). Torrence Place offers one- and two-bedroom accessible apartments for veterans and people with disabilities and is anchoring the revitalization of a busy commercial corridor in Lansing, IL. In addition to high-quality, supportive housing and on-site health care services, Torrence Place residents have access to a patio, community lounge, fitness center, business center, a secure package room, and supportive services from CCHC.  

To complete the $16.3 million project, Full Circle Communities relied on Low-Income Housing Tax Credits and Illinois Affordable Housing Tax Credits from the Illinois Housing Development Authority, funding from Cook County, the Housing Authority of Cook County, National Equity Fund, Bank of America, and ComEd, as well as a $1.7 million loan from IFF. Because of an AHP grant application sponsored by IFF, Full Circle Communities received a $720,000 subsidy from FHLBank Chicago that reduced the amount of cash the nonprofit developer had to bring to the table to complete the project. 

“For Torrence Place, receiving an AHP grant helped us close our financing gap,” says Lindsey Haines, Full Circle Communities’ senior vice president of real estate development. “Full Circle uses 75 percent of our developer fee and cash flow to fund supportive services for our residents. When we can access funds like AHP, we are better able to reserve that precious developer fee and cash flow to support our residents.”