A housing fund from the Northern Kentucky Catalytic Fund is aiming to increase the region’s housing stock and is seeking investors to help get it off the ground.
Dubbed the Northern Kentucky Housing Fund, the initiative represents one of the more significant and actionable solutions proposed for Northern Kentucky’s ongoing housing shortage, which fund organizers argue will only get worse if nothing changes.
“It’s important to understand that housing in our region that people can actually afford is extremely difficult to find right now,” said Catalyic Fund COO Joe Klare, who presented the details of the fund to the Covington Business Council last week.
The Catalyic Fund is a nonprofit development organization that provides alternative funding mechanisms for economic development and redevelopment through the use of grants, low-interest loans, help in obtaining historic tax credits and other financial mechanisms typically unavailable for conventional developers. They tend to focus on projects that wouldn’t get off the ground in typical market conditions and have been involved in several big projects in the region. Most recently, they were involved in the old Duro Bag building acquisition in Covington.
Although the fund has been involved in housing development projects in the past, they have not had a dedicated fund for housing until now.
The region’s housing crisis is well documented, and Klare took some time to go over the specifics of the situation based on available data. According a statewide study on housing from the Kentucky Housing Corporation last year, Boone, Kenton and Campbell Counties are about 24,500 units short to meet its workforce needs, and that number is projected to increase to over 37,000 in the next five years. About 57% of households in Boone, Kenton and Campbell Counties cannot afford a median-priced home, according to the Catalyic Fund’s analysis.
“I’ve been involved in or aware of several regional economic plans for Northern Kentucky since the early 90s,” said CEO Jeanne Schroer, “and while there were some brief mentions of housing, there was never any specific actionable initiatives to address it at the same time.”
Housing funds are not a new phenomenon. Cincinnati has one, and so do Louisville and Lexington. The problem for Northern Kentucky, Klare said, is that those metro areas are large, singular jurisdictions with broad tax bases that could shuttle money into a fund. Northern Kentucky is more fragmented, so that funding structure was foreclosed.
Instead, the new housing fund will have to rely on money from investors to get started. Once launched, it will operate much in the same way as the regular Catalytic Fund–by issuing low interest loans and then reinvesting any profit off interest back into the fund.
“We’re going to approach it through a supply and demand methodology,” Klare said. “We will finance the construction of new housing that’s specifically priced for working families in that missing middle, people that are earning that 60% to 100% of the area median income.”
The Cincinnati Statistical Metro Area’s median income is about $81,000.
Klare elaborated.
“Our strategy is to increase the housing supply, which will, in turn, reduce demand,” said Klare. “As demand goes down, so does the cost of housing, making everything more affordable and available for the workforce in Northern Kentucky.”
They hope to raise $27.5 million for the new Northern Kentucky Housing Fund. The goal is to make the fund self-sustaining within five years. They need about $5 million for the first year of lending capital.
The Greater Cincinnati Foundation has already given $1.5 million as an anchor investment for the fund.
“What we need now is the collective will to build the housing this region’s future demands, the housing this region’s future deserves,” said Greater Cincinnati Foundation’s Director of Housing and Place-Based Initiatives Ron Stubblefield, “If we’re going to be serious about our future, this is the moment to co-invest because this region will only go as far as our housing stock will take us.”
Anyone who wishes to become an investor in the new Northern Kentucky Housing Fund should contact Joe Klare at jklare@thecatalyticfund.org.