Effort Expected to Enable $500 Million in Private Construction Lending to Minority-Owned Affordable Housing Developers Through Partnership With Goldman Sachs and Community Preservation Corporation
As Adams Administration Doubles Down on Commitment to Fight Housing Crisis, City Needs More Tools from Albany to Build Affordable Homes for New Yorkers
New York City Mayor Eric Adams, New York City Housing Preservation Development (HPD) Commissioner Adolfo Carrión Jr., and New York City Housing Development Corporation (HDC) President Eric Enderlin today announced a new initiative to provide up to $50 million to help Minority Business Enterprises (MBE) developers overcome historical financial barriers and fully participate in the development of critically needed affordable housing for New Yorkers. Established in partnership with the Urban Investment Group at Goldman Sachs and the Community Preservation Corporation (CPC) the new “New York City Minority Business Enterprise Guaranty Facility” is expected to enable as much as $500 million in private construction lending to MBEs.
Today’s announcement builds on Mayor Adams’ commitment to fight the housing crisis as he continues calls made in his State of the City Address for Albany to deliver a housing package this session that will help create the affordable homes New Yorkers need and deserve.
“For too long, Minority Business Enterprises have faced systemic barriers and restrictive financial requirements in our construction sector that have prevented them from being a part of the solution to the affordable housing crisis,” said Mayor Adams. “Today’s $50 million initiative is a major step forward towards our goal of building a fairer, more equitable New York City while creating housing, jobs, and opportunity for all. As we said in this year’s State of the City address: this city and this nation are facing a massive housing crisis. To face this moment, we must be a ‘City of Yes’ — ‘yes’ in my backyard, ‘yes’ on my block, ‘yes’ in my city, and ‘yes’ to our MBEs.”
“Minority Business Enterprises are critical drivers of affordable housing development across the five boroughs,” said Deputy Mayor for Housing, Economic Development, and Workforce Maria Torres-Springer. “This new initiative is a powerful way to combat our housing crisis while addressing the historical inequities and gaps in capital for MBE businesses. I am excited to see this unprecedented investment bolster diverse businesses and help us forge a clear path for equitable growth in our city.”
“In order for New York City to stay competitive on a global stage, we must ensure we’re building the affordable housing we need, and minority-housing development partners are a key part of that path forward,” said HPD Commissioner Carrión. “This new initiative, in partnership with Goldman Sachs, CPC, and HDC, is a major step in the right direction, removing barriers that will allow minority developers to grow, stay competitive, and build more housing — just as our city needs it the most.”
“With the launch of the MBE Guaranty Facility, the city is making strides to address barriers that have historically limited minority-owned business enterprises from participating in the development of affordable housing,” said HDC President Enderlin. “HDC is proud to partner with HPD, CPC, and Goldman Sachs to provide more equitable access to low-cost capital through the facility and promote greater opportunity for our MBE development partners to succeed.”
“In establishing the MBE Guaranty Facility, New York City is taking action against entrenched barriers to entry to this industry that have their roots in a history of structural racism,” said New York City Executive Director for Housing Leila Bozorg. “I'm proud to see HPD and HDC partner with Goldman Sachs and the Community Preservation Corporation on this $50 million initiative, which not only proactively removes obstacles that have prevented minority-owned firms from taking part in the creation of affordable housing, but that will stimulate even greater opportunities and access to capital going forward.”
“Access to affordable housing remains a persistent and considerable generational challenge for large urban cities like our own,” said Chief Business Diversity Officer Michael J. Garner. “Far too often, working- and middle-class families, who are most responsible for ensuring that our great city continues to operate like one, are unable to participate in its benefits. That dynamic also holds true with our diverse community of minority-owned businesses that are critical to supporting local economies yet are often left out of meaningful city development opportunities funded by taxpayer dollars. This partnership between the city, Goldman Sachs, and Community Preservation Corporation is an example of what we can achieve through great public-private partnerships and the political will to accomplish meaningful things. I applaud and stand alongside Mayor Adams in his commitment to ‘Get Stuff Done’ the right way, and in assisting New York City certified minority-owned developers who’ve historically been excluded.”
“This facility is one of the first products in the market to directly address the financial barriers that preclude many minority developers from accessing capital,” said Asahi Pompey, global head of corporate engagement, Goldman Sachs. “Through One Million Black Women, this innovative, collaborative funding model will not only finance MBE developers, but create affordable housing that is responsive to community needs.”
“We are excited to partner with the city and CPC to create an ecosystem that enables minority-owned businesses to scale,” said Sherry Wang, co-head, Urban Investment Group, Goldman Sachs. “After two decades of investing with MBE developers, we know that access to affordable capital is one of the major barriers they face, and we are dedicated to creating new innovations and solutions.”
MBEs have historically faced challenges securing construction loans due to restrictive financial barriers, including lender guaranty and liquidity requirements, often resulting in the need to form a partnership with larger firms that dilutes their ownership and reduces their developer fees, or entirely prevents them from participating in affordable housing developments. The MBE Guaranty Facility removes those barriers by providing a total of up to $50 million in back-stop guaranties, allowing MBE developers to independently access the capital required to secure construction financing and develop city-financed affordable housing projects in New York City. The MBE Guaranty Facility includes a $25 million commitment from HDC on behalf of the city and a $25 million commitment from Goldman Sachs Asset Management over a five-year period, with CPC serving as the facility manager. The $50 million is expected to leverage as much as $500 million in investment in affordable housing. Goldman Sachs’ commitment is a part of its One Million Black Women initiative, which aims to deploy $10 billion in direct investment capital and $100 million in philanthropic capital over the next 10 years in partnership with Black-women-led organizations, financial institutions, and other partners to address the dual disproportionate gender and racial biases that Black women have faced for generations.
To be eligible, developers must be a certified MBE with a strong development track record and a demonstrated need for the capital. Joint ventures are allowed if the partner is a non-controlling, not-for-profit entity, such as a faith-based organization. Eligible projects include affordable housing projects in the city’s construction financing pipeline expecting to close within six months and with a senior private construction loan up to $50 million. The MBE Guaranty Facility will provide guaranties up to 10 percent of the applicable senior loan value and will begin accepting applications in winter 2024, with the first projects expected to close by the end of Fiscal Year (FY) 2024 or early FY25. To learn more, MBE developers should ask their HPD project managers for more information.
Mayor Adams is delivering on a commitment towards increasing economic equity across New York City, especially with Minority- and Women-Owned Business Enterprises (M/WBE). In FY23 — the first full fiscal year of the Adams administration — city agencies and affiliated entities awarded over $6 billion in total to M/WBE firms through the OneNYC initiative, the city’s goal to award $25 billion in contracts to M/WBEs by FY 2025, contracting with a record-setting 1,903 certified vendor firms. The M/WBE figures include more than $1.4 billion in contracts awarded to M/WBEs under the Local Law 1 program — setting a record in M/WBE contracts since the program’s creation in 2013 — and tied the city’s highest-ever M/WBE utilization rate of 28 percent for one fiscal year.
Mayor Adams implemented expanded discretionary authority under the non-competitive purchase methods, unleashing millions of dollars in additional contract awards to M/WBEs. Using that method, the city also awarded a record-setting $175 million dollars in contracts to M/WBEs — a 60 percent increase over FY22 and more than double the contract value in previous fiscal years. Additionally, Mayor Adams appointed Michael Garner as the city’s first-ever chief business diversity officer to address historic disparities in city contracting and provide minority and women entrepreneurs increased opportunities to do business with New York City.
The Adams administration is playing its part to build more housing, breaking several records for producing much-needed affordable housing amid a severe housing shortage in the five boroughs. Data released by the Adams administration shows that, in calendar year 2023, the HPD and HDC closed on financing for the creation of an all-time record-breaking 14,227 new affordable homes. HPD also directly connected more New Yorkers to homes than ever before, bringing nearly 13,000 households into affordable units in 2023. As part of “Housing Our Neighbors: A Blueprint for Housing and Homelessness,” Mayor Adams committed to expanding access to capital, and is ensuring that MBE developers have access to the opportunities created by this investment.
“The launch of the MBE Guaranty Facility is a major milestone in MBE contracting. Under Mayor Adam's leadership, New York City's housing agencies are leading the nation by intentionally addressing the hurdles forged by historical inequities,” said Craig Livingston, board chair, New York Real Estate Chamber (NYREC), and managing partner, Exact Capital Group. “The Department of Housing Preservation and Development should be commended for not doing business as usual, but instead, for listening to the needs of the MBE community and responding by creating a financial vehicle that will allow for greater participation by MBE developers. The MBE Guaranty Facility will help to increase equitable participation in our real estate economy by MBE firms that have been marginalized due primarily to the wealth gap.”
“In the past 10 years, HPD and HDC collectively, have thoughtfully and strategically responded to its partners and the community on ways in which to increase minority participation in all facets of the development process of affordable housing,” said Ericka Keller, managing member, Brisa Builders Development LLC. “The MBE Developer Guaranty Facility joins the ranks of the M/WBE Build Up Program and the M/WBE Request for Proposals as a mechanism upon which to open the doors of opportunity in a meaningful and sustainable way. We thank the agencies for listening and for their action!”
“The Latino community is the fastest growing in New York City. However, our participation in the for-profit public-private partnerships that create and preserve affordable housing in the city is among the lowest of all minority groups,” said Juan Barahona, principal, SMJ Development. “We are not physically shaping nor creating work opportunities in our own community. The New York City MBE Developer Guaranty Facility is a tremendous barrier buster in that regard. It will enable more Latino and other MBE owned firms to overcome the structural impediments to being deemed credit-worthy to undertake complex and larger housing projects, and the pool of capable MBE sponsors will grow as a result. SMJ applauds and thanks the Adams administration and all the leaders and team members at HPD, HDC, Goldman Sachs, and CPC that persevered to make this facility a reality. ¡Adelante!”
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