Mayor Adams unveils $50m initiative to break down barriers for minority-owned developers

Mayor Eric Adams, joined by key officials, has revealed a $50 million initiative aimed at dismantling historical financial hurdles obstructing Minority Business Enterprises (MBEs) from contributing to vital affordable housing projects.

The “New York City Minority Business Enterprise Guaranty Facility,” established in collaboration with Goldman Sachs and the Community Preservation Corporation, anticipates unlocking up to $500 million in private construction lending for MBEs.

This initiative marks a crucial stride in Mayor Adams’ unwavering commitment to combat the housing crisis, echoing his plea for Albany’s support in crafting a comprehensive housing package. “For too long, Minority Business Enterprises have faced systemic barriers,” Mayor Adams stated, emphasizing the need for a fairer, more equitable New York City.

The partnership with Goldman Sachs and CPC is a strategic move to address historical inequities, providing MBEs access to low-cost capital. The MBE Guaranty Facility, backed by a $25 million commitment from HDC and $25 million from Goldman Sachs over five years, aims to stimulate opportunities and capitalize on the potential of MBEs in the affordable housing sector.

MBEs have traditionally encountered obstacles securing construction loans, forcing partnerships that dilute ownership. The MBE Guaranty Facility, with up to $50 million in back-stop guaranties, aims to remove these barriers, enabling independent access to capital for MBE developers and facilitating the creation of city-financed affordable housing projects.

Mayor Adams’ administration, already demonstrating a commitment to economic equity, has consistently supported Minority- and Women-Owned Business Enterprises (M/WBE). In FY23, city agencies awarded over $6 billion to M/WBE firms, aligning with the city’s goal to award $25 billion in contracts to M/WBEs by FY 2025.

This initiative aligns with the Adams administration’s efforts to address the severe housing shortage, breaking records for affordable housing production. In 2023, HPD and HDC closed financing for an unprecedented 14,227 new affordable homes, emphasizing the administration’s focus on expanding access to capital for MBE developers.

Political figures, industry leaders, and MBE developers have commended the initiative, acknowledging its potential to reshape the affordable housing landscape. The MBE Guaranty Facility has garnered widespread support for its potential to create opportunities, dismantle barriers, and foster economic empowerment in historically overlooked communities.

To be eligible, MBE developers must have a certification, a strong track record, and a demonstrated need for capital. Joint ventures are allowed with non-controlling, not-for-profit partners. The facility will start accepting applications in winter 2024, with the first projects expected to close by the end of FY24 or early FY25.

Mayor Adams said, “Today, we launch a historic initiative to empower the diverse communities of New York, while bringing us closer to our moonshot goal of 500,000 new homes.”