WEBVTT - Addressing Inequities in US Housing

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, as

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<v Speaker 1>you know, Wells Fargo has been dealing with a series

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<v Speaker 1>of scandals and regulatory issues for years, and it's operating

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<v Speaker 1>under a growth cap imposed by the Federal Reserve. A

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<v Speaker 1>last week, we even had Congresswoman Max and Waters say

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<v Speaker 1>that the banks had faced an investigation by US regulators

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<v Speaker 1>into allegations at the bank denied black refinancing applicants and

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<v Speaker 1>hosted mock interviews to fulfill diversity numbers. To be fair

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<v Speaker 1>to signs to every coin, we should point out that

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<v Speaker 1>Wells Fargo, Tim has been working to make some changes,

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<v Speaker 1>including awarding a forty million dollar grant to help cultivate

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<v Speaker 1>diverse housing developers. We've got with us Gina Merritt, whose

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<v Speaker 1>principle at Northern Real Estate Urban Ventures. It's a community

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<v Speaker 1>development organization that's engaged in a holistic approach to real

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<v Speaker 1>estate development. Gina joins us from Washington, d C. Gina,

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<v Speaker 1>how are you? I thank you? How are you all doing?

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<v Speaker 1>We're doing well. Thanks so much for joining us. Talk

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<v Speaker 1>to us about how you're gonna use this forty million

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<v Speaker 1>dollar grant. It's called Growing Diverse Housing Developers. Well, the

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<v Speaker 1>funds were awarded by Wells Fargo to three regional c

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<v Speaker 1>d f ies Community development Financing institutions, and they have

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<v Speaker 1>selected a cohort of twenty seven diverse developers to provide

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<v Speaker 1>funding support both for their enterprise as well as their

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<v Speaker 1>real estate projects. Well and talked us about a little

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<v Speaker 1>bit about what kind of impact this could do, the

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<v Speaker 1>money itself and really changing the system. And I know, Gina,

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<v Speaker 1>you know, I kind of laid it out because Bloomberg

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<v Speaker 1>viewers they know Wells Fargo. There's been a lot of

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<v Speaker 1>you know, things that they have been grappling with on

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<v Speaker 1>many different levels. And they're not alone in terms of

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<v Speaker 1>the banking society and banking industry and leaving out, you know,

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<v Speaker 1>minorities and being more inclusive, especially when it comes to housing.

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<v Speaker 1>So tell us how you think this money can help

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<v Speaker 1>move the needle. Well, this money is certainly going to

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<v Speaker 1>help my organization. I've been in business for more than

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<v Speaker 1>twenty years and have more than twenty seven years of

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<v Speaker 1>experience developing affordable housing for other people. Never having enough

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<v Speaker 1>capital to be able to develop my own projects, and

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<v Speaker 1>so the funds well Spargo has provided will allow me

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<v Speaker 1>to one UM leverage their grants to hire people and

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<v Speaker 1>to support my balance sheet, and will it will also

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<v Speaker 1>allow the cd I fies to create products that will

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<v Speaker 1>help diverse developers UM develop their their projects. It's been

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<v Speaker 1>very challenging going to conventional banks to try to get

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<v Speaker 1>funds both early funding, the early stage funding for development

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<v Speaker 1>projects as well as construction and permanent financing. So this

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<v Speaker 1>this program helps provide the kind of support developers need

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<v Speaker 1>in order to get their projects done on their own.

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<v Speaker 1>If I can just follow us the word challenging, it's

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<v Speaker 1>got to be even harder than challenging, right, is it okay?

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<v Speaker 1>Because because it's you know, we've we've reported on a

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<v Speaker 1>lot here in Bloomberg in terms of the financial sector

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<v Speaker 1>really turning its back on a more inclusive, you know sect,

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<v Speaker 1>if you will, within the housing markets. Listen. I was

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<v Speaker 1>almost put out of business actually by one of these

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<v Speaker 1>large institutions. Uh I was working with a smaller institution

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<v Speaker 1>that was bought by a larger, you know, brand name

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<v Speaker 1>financing organization, and that organization would not honor the deal

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<v Speaker 1>that the smaller organization made to me right, smaller, smaller

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<v Speaker 1>financing entity. So the the eight thousand pound guerrilla basically

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<v Speaker 1>took over this company and wouldn't honor the deal, almost

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<v Speaker 1>put me out of business. So we need organizations like

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<v Speaker 1>Wells Fargo to fund the c d fies that will

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<v Speaker 1>provide financing for people like me, because the major institutions

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<v Speaker 1>won't do it. Gina, how how do you build affordable

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<v Speaker 1>housing right now? I mean, construction costs are high, materials

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<v Speaker 1>costs are high, land is high, interest rates are going up.

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<v Speaker 1>How do you do it? It's very difficult. I mean

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<v Speaker 1>I have a couple of projects right now in development

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<v Speaker 1>um that are about to close that just experience these

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<v Speaker 1>kinds of things, both an increase in interest rate and

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<v Speaker 1>an increase in construction costs. And you know, I would

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<v Speaker 1>say luckily, there was also, luckily and not so luckily,

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<v Speaker 1>there was an increase in the rental rates because HUD

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<v Speaker 1>issues new rents every year for affordable housing developments, and

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<v Speaker 1>those two went up, So that helped absorb some of

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<v Speaker 1>the increase in interest rates and construction costs, but not

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<v Speaker 1>all of it. So then what you have to do

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<v Speaker 1>is really go back to these municipalities that provide what

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<v Speaker 1>we call gap funding, which is, you know, all of

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<v Speaker 1>the private money you can get, all of the low

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<v Speaker 1>income housing tax credit investment you get, there's usually still

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<v Speaker 1>a gap, right, There's still some some chunk of money

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<v Speaker 1>that the private institutions can't fund. And so really what

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<v Speaker 1>we look to now is those states and cities to

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<v Speaker 1>provide additional support to these projects so they can get

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<v Speaker 1>them done. Is this about all so um gina creating projects?

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<v Speaker 1>You know, if we're going to really embrace as a

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<v Speaker 1>world diversity inclusion, that means these kind of projects and

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<v Speaker 1>maybe a traditionally white neighborhood. Is that part of this, Yes,

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<v Speaker 1>especially in the district of Columbia. Actually, um the basically

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<v Speaker 1>the financing programs that support affordable housing, UH give you

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<v Speaker 1>a higher score if you're in a neighborhood that has

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<v Speaker 1>higher incomes, and so you know that's just that just

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<v Speaker 1>happens to be, you know, neighborhoods that are whiter in

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<v Speaker 1>terms of its population. Right. I just think about it.

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<v Speaker 1>If we're really gonna you know, be all in, go

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<v Speaker 1>ahead to him. I know you want to jump in. Yeah, yeah,

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<v Speaker 1>I just want to ask, you know, where are your

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<v Speaker 1>most optimistic right now because there is such a housing crisis.

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<v Speaker 1>We just have twenty seconds left. Sure, um, I am really.

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<v Speaker 1>I'm working in three markets which I'm very optimistic about, Cleveland,

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<v Speaker 1>D C. And Maryland because the leadership in all of

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<v Speaker 1>those places understands how important affordable how thing is and

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<v Speaker 1>they are investing tens of millions of dollars resources into

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<v Speaker 1>affordable housing. So that means good things for people like

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<v Speaker 1>me because I'm working in communities that look like me

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<v Speaker 1>and these leaders are willing to invest in them. Well, Gina,

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<v Speaker 1>come back, let us know how things are going. Gina Merritt,

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<v Speaker 1>principal at Northern Real Estate Urban Adventures, joining SBA Zoom

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<v Speaker 1>from Washington, d C. Looking forward to hearing more. This

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<v Speaker 1>is Bloomberg