Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, as
Speaker 1: you know, Wells Fargo has been dealing with a series
Speaker 1: of scandals and regulatory issues for years, and it's operating
Speaker 1: under a growth cap imposed by the Federal Reserve. A
Speaker 1: last week, we even had Congresswoman Max and Waters say
Speaker 1: that the banks had faced an investigation by US regulators
Speaker 1: into allegations at the bank denied black refinancing applicants and
Speaker 1: hosted mock interviews to fulfill diversity numbers. To be fair
Speaker 1: to signs to every coin, we should point out that
Speaker 1: Wells Fargo, Tim has been working to make some changes,
Speaker 1: including awarding a forty million dollar grant to help cultivate
Speaker 1: diverse housing developers. We've got with us Gina Merritt, whose
Speaker 1: principle at Northern Real Estate Urban Ventures. It's a community
Speaker 1: development organization that's engaged in a holistic approach to real
Speaker 1: estate development. Gina joins us from Washington, d C. Gina,
Speaker 1: how are you? I thank you? How are you all doing?
Speaker 1: We're doing well. Thanks so much for joining us. Talk
Speaker 1: to us about how you're gonna use this forty million
Speaker 1: dollar grant. It's called Growing Diverse Housing Developers. Well, the
Speaker 1: funds were awarded by Wells Fargo to three regional c
Speaker 1: d f ies Community development Financing institutions, and they have
Speaker 1: selected a cohort of twenty seven diverse developers to provide
Speaker 1: funding support both for their enterprise as well as their
Speaker 1: real estate projects. Well and talked us about a little
Speaker 1: bit about what kind of impact this could do, the
Speaker 1: money itself and really changing the system. And I know, Gina,
Speaker 1: you know, I kind of laid it out because Bloomberg
Speaker 1: viewers they know Wells Fargo. There's been a lot of
Speaker 1: you know, things that they have been grappling with on
Speaker 1: many different levels. And they're not alone in terms of
Speaker 1: the banking society and banking industry and leaving out, you know,
Speaker 1: minorities and being more inclusive, especially when it comes to housing.
Speaker 1: So tell us how you think this money can help
Speaker 1: move the needle. Well, this money is certainly going to
Speaker 1: help my organization. I've been in business for more than
Speaker 1: twenty years and have more than twenty seven years of
Speaker 1: experience developing affordable housing for other people. Never having enough
Speaker 1: capital to be able to develop my own projects, and
Speaker 1: so the funds well Spargo has provided will allow me
Speaker 1: to one UM leverage their grants to hire people and
Speaker 1: to support my balance sheet, and will it will also
Speaker 1: allow the cd I fies to create products that will
Speaker 1: help diverse developers UM develop their their projects. It's been
Speaker 1: very challenging going to conventional banks to try to get
Speaker 1: funds both early funding, the early stage funding for development
Speaker 1: projects as well as construction and permanent financing. So this
Speaker 1: this program helps provide the kind of support developers need
Speaker 1: in order to get their projects done on their own.
Speaker 1: If I can just follow us the word challenging, it's
Speaker 1: got to be even harder than challenging, right, is it okay?
Speaker 1: Because because it's you know, we've we've reported on a
Speaker 1: lot here in Bloomberg in terms of the financial sector
Speaker 1: really turning its back on a more inclusive, you know sect,
Speaker 1: if you will, within the housing markets. Listen. I was
Speaker 1: almost put out of business actually by one of these
Speaker 1: large institutions. Uh I was working with a smaller institution
Speaker 1: that was bought by a larger, you know, brand name
Speaker 1: financing organization, and that organization would not honor the deal
Speaker 1: that the smaller organization made to me right, smaller, smaller
Speaker 1: financing entity. So the the eight thousand pound guerrilla basically
Speaker 1: took over this company and wouldn't honor the deal, almost
Speaker 1: put me out of business. So we need organizations like
Speaker 1: Wells Fargo to fund the c d fies that will
Speaker 1: provide financing for people like me, because the major institutions
Speaker 1: won't do it. Gina, how how do you build affordable
Speaker 1: housing right now? I mean, construction costs are high, materials
Speaker 1: costs are high, land is high, interest rates are going up.
Speaker 1: How do you do it? It's very difficult. I mean
Speaker 1: I have a couple of projects right now in development
Speaker 1: um that are about to close that just experience these
Speaker 1: kinds of things, both an increase in interest rate and
Speaker 1: an increase in construction costs. And you know, I would
Speaker 1: say luckily, there was also, luckily and not so luckily,
Speaker 1: there was an increase in the rental rates because HUD
Speaker 1: issues new rents every year for affordable housing developments, and
Speaker 1: those two went up, So that helped absorb some of
Speaker 1: the increase in interest rates and construction costs, but not
Speaker 1: all of it. So then what you have to do
Speaker 1: is really go back to these municipalities that provide what
Speaker 1: we call gap funding, which is, you know, all of
Speaker 1: the private money you can get, all of the low
Speaker 1: income housing tax credit investment you get, there's usually still
Speaker 1: a gap, right, There's still some some chunk of money
Speaker 1: that the private institutions can't fund. And so really what
Speaker 1: we look to now is those states and cities to
Speaker 1: provide additional support to these projects so they can get
Speaker 1: them done. Is this about all so um gina creating projects?
Speaker 1: You know, if we're going to really embrace as a
Speaker 1: world diversity inclusion, that means these kind of projects and
Speaker 1: maybe a traditionally white neighborhood. Is that part of this, Yes,
Speaker 1: especially in the district of Columbia. Actually, um the basically
Speaker 1: the financing programs that support affordable housing, UH give you
Speaker 1: a higher score if you're in a neighborhood that has
Speaker 1: higher incomes, and so you know that's just that just
Speaker 1: happens to be, you know, neighborhoods that are whiter in
Speaker 1: terms of its population. Right. I just think about it.
Speaker 1: If we're really gonna you know, be all in, go
Speaker 1: ahead to him. I know you want to jump in. Yeah, yeah,
Speaker 1: I just want to ask, you know, where are your
Speaker 1: most optimistic right now because there is such a housing crisis.
Speaker 1: We just have twenty seconds left. Sure, um, I am really.
Speaker 1: I'm working in three markets which I'm very optimistic about, Cleveland,
Speaker 1: D C. And Maryland because the leadership in all of
Speaker 1: those places understands how important affordable how thing is and
Speaker 1: they are investing tens of millions of dollars resources into
Speaker 1: affordable housing. So that means good things for people like
Speaker 1: me because I'm working in communities that look like me
Speaker 1: and these leaders are willing to invest in them. Well, Gina,
Speaker 1: come back, let us know how things are going. Gina Merritt,
Speaker 1: principal at Northern Real Estate Urban Adventures, joining SBA Zoom
Speaker 1: from Washington, d C. Looking forward to hearing more. This
Speaker 1: is Bloomberg