A shortage in the availability of affordable housing is a significant problem for communities across the United States. It’s not a new issue, but rather one that has existed for the last several years and has only intensified due to ongoing economic volatility.
“A combination of factors like rising interest rates and inflation, supply chain disruptions, and labor shortages has made an existing imbalance between supply and demand in affordable housing much worse in recent years,” said Todd Crow, head of PNC Tax Credit Solutions. “What has always been a very serious issue of housing affordability has turned into something resembling an epidemic in some parts of the country.”
One city that is proactively working to find solutions to this problem is Louisville, Kentucky. Through a coalition of government support and private investment, real estate developers are working toward the ambitious goal of creating 15,000 units of affordable housing in Louisville by 2027.1 To this end, many are leveraging the Low-Income Housing Tax Credit (LIHTC), a federal program that subsidizes the acquisition, construction, and rehabilitation of affordable rental housing for low- and moderate-income tenants.
The Prestonian is an example of one such LIHTC project currently underway in the city center. The 343-unit apartment development will serve families who earn between 30% and 80% of the area median income (AMI). It is located near the downtown medical district, which is one big driver of its value, according to PNC Kentucky Regional President Kristen Byrd. “The Prestonian will not only help meet the increased demand for more affordable housing units, but it will also allow healthcare professionals who provide essential services, such as EMS staff, first responders, and social workers, to live near where they work,” Byrd said. “It will also create a space where residents can have access to valuable wraparound social services that support families with children. LIHTC developments like this are about more than providing just housing – they’re really about investing in the health and well-being of local communities.” PNC provided $44,850,000 in LIHTC equity investment for the project, working in partnership with LDG Multifamily.
The Prestonian project follows other investments PNC Tax Credit Solutions has made in affordable housing in Louisville over the last several years, including a nearly $7 million LIHTC equity investment in the Roosevelt Apartments, a renovated historic property that offers quality affordable housing for economically vulnerable families in Louisville’s West End area.
Another noteworthy example is the Family Scholar House, which consists of five residential campuses in Louisville that provide housing for single-parent families, as well as former foster children who are pursuing post-secondary education. Through four separate projects, PNC has contributed more than $41.2 million in LIHTC equity investment in developing Family Scholar House housing units, which consistently remain in high demand and are currently home to more than 200 single-parent families and foster alumni in Louisville. But the model’s reach extends far beyond the city limits, as additional Family Scholar House affiliates have implemented programs in 23 states across the country and currently serve nearly 30,000 households.2
According to Crow, while LIHTC funding alone is not sufficient to solve the affordable housing crisis in the U.S., it can be an effective path forward to addressing needs on a local level. “When you look at the scale of the affordable housing shortage, it’s clear that we’re facing a formidable challenge,” said Crow. “LIHTC subsidies are a limited resource and don’t provide a comprehensive solution to the problem, but they are helping to make a difference in the areas where these projects are taking place. PNC is committed to continuing to be involved in these efforts as developers, governments, and communities work together to address the shortage in affordable housing supply.”
Learn More About PNC Tax Credit Solutions Investments in Local Communities
- PNC Tax Credit Solutions: Making a Difference in Northern California
- PNC Bank Drives Change in Portland Throught Tax Credit Solutions
Ready to Help
PNC is one of a small number of banks that has successfully launched a dedicated business, PNC Tax Credit Solutions, that is devoted to preserving and bolstering affordable housing supply and spurring economic development. PNC combines Low-Income Housing Tax Credit (LIHTC) equity financing with our affordable housing debt solutions to deliver a seamless financing package for the construction or redevelopment of affordable housing. For more information, reach out to your relationship manager or contact us.