$50M fund to spur affordable housing preservation in Nashville

A fund that could yield as much as $300 million in affordable housing renovations and development is budding in Nashville.

The Metropolitan Government of Nashville and Davidson County created the Nashville Catalyst Fund, seeded with $19.5 million in federal Covid-19 relief aid, which will be operated by the Community Foundation of Middle Tennessee, the Nashville Business Journal reported. The fund also has $5 million from Vanderbilt University and a $25 million line of credit from First Horizon bank.

The fund is expected to grow to $90 million, which would be loaned to landlords and developers. The loans would be geared toward renovating existing properties, but they could also be used for new development.

The fund “could preserve 3,000 units in a decade,” the outlet reported. Because the loans presumably would be paid back, they could fund as much as $300 million in development in 10 years.

“It won’t solve all of affordable housing,” said Jim Gingrich, who is a Community Foundation of Middle Tennessee board member. “But it’s an essential tool in the broader strategy.”

Like most major cities, Nashville is facing an affordable housing shortage. Davidson County needs an estimated 18,000 units for households making less than 80 percent of the area median income by 2030, the outlet reported.

Gingrich, the former CEO of AllianceBernstein, is managing partner of Elk Mountain Partners, and he ran for mayor of Nashville last year. He is seeking another $15 million from Vanderbilt and $25 million from First Horizon.

The fund will provide short-term loans and below-market interest rates, and it will work faster than lending institutions, Gingrich said. The timing would allow developers “to pounce on an opportunity and have more time to put together their full, permanent project financing,” the outlet reported.

Gingrich expects the loan process to take two or three months, and the first loan is expected to be issued later this summer. The fund’s seven-member investment committee will make decisions, weighing location and whether the developer or landlord will accept vouchers or otherwise commit to keeping the property affordable. 

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Two other Community Foundation of Middle Tennessee board members, Hannah Davis of Metro’s planning department and Bert Mathews of developer the Mathews Company, were instrumental in creating the fund.

New York-based Forsyth Street Advisors will serve as the fund manager, and local development firm Pillars Development is helping to source investments for the fund.

— Rachel Stone