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Marion Mollegen McFadden, Senior Vice President, Policy and Senior Advisor, Resilience, Enterprise Community Partners
Enterprise Community Partners has been working with disaster-affected communities for 15 years, in part thanks to the support and partnership with multiple funders, such as financial institutions and social investors. This article highlights some of Enterprise’s key lessons learned and recommends ways that banks and other private sector organizations can help residents and communities prepare for and bounce back after disasters.
As with our regular nationwide work as the Enterprise Community Loan Fund (ECLF) community development financial institution (CDFI), as a syndicator of low-income housing tax credits, and investor of other public and private funds, Enterprise provides a spectrum of resources in the form of capital, programs, policy development, research, and advocacy before and after disasters occur. During crises, Enterprise uses its tools and resources to help spur recovery, specifically targeting low-income communities, including many communities of color. Enterprise is not a first responder but rather acts as an intermediary supporting emergency preparedness, mitigation planning, and long-term disaster recovery for the affordable housing sector.
The COVID-19 pandemic has led Enterprise and its partners to expand our work in disaster recovery to include health emergencies and their aftermath. For example, many of the properties financed in part by ECLF have been affected by the economic downturn, which hit low-income, working-class families the most. Even with the patchwork of federal, state, and local relief programs, some tenants in ECLF-financed multifamily properties cannot pay their rent. ECLF is providing grants to support the operations, in addition to loan principal and interest deferments, so tenants can stay in their homes.
Over the past roughly two years of pandemic response, the country simultaneously grappled with devastating hurricanes, tornados, floods, and wildfires. Although no two disasters are alike, Enterprise has learned that the people whose lives, homes, and jobs are affected all need the same thing—a safe and secure future, starting with a safe place to live and work. Enterprise has been supporting rebuilding and resilience initiatives in California, the District of Columbia, Florida, Georgia, Illinois, Louisiana, New York, North Carolina, Michigan, Puerto Rico, Texas, and the U.S. Virgin Islands. In the places affected by weather-based disasters, one thing has held true: Recovery has not come fast enough. At each phase of recovery, there have been delays and missed opportunities to improve the flow of resources to spur rebuilding and stability.
Working with nonprofit organizations to reach individuals affected by disasters, Enterprise has learned the value of bringing national expertise and offers of assistance to frontline staff who are working long hours and often overwhelmed by local conditions. Enterprise gathers resources from a variety of private sector partners, such as financial institutions, to deliver funds to individuals where they are needed most.
After Hurricanes Harvey and Maria in 2017 and the subsequent disasters, Enterprise worked with public and private sector partners to gather resources to support rebuilding residences and businesses. Enterprise checked in with the housing and community development organizations that it had existing business relationships with to get a sense of the needs they were facing and to formalize processes for applying for assistance. We have deployed more than $900,000 in post-storm grants to 18 community development organizations in Puerto Rico and the U.S. Virgin Islands.
Enterprise provided nearly $1 million in grants to 24 nonprofit organizations for Hurricane Harvey recovery work. These grants helped stabilize partner organizations and spurred long-term recovery work in the gap between the end of short-term assistance and the arrival of such public resources as the U.S. Department of Housing and Urban Development’s (HUD) grants to states and local governments.
Highlights of Enterprise’s disaster recovery work with nonprofit organizations include:
In each of these efforts, Enterprise’s grant dollars flew off the shelves. Almost as soon as partner organizations knew assistance was available, Enterprise was oversubscribed with applications for available funds. Knowing that grant dollars would only stretch so far, Enterprise sought to offer loans through its CDFI as well. To bridge the gap between the cost of rebuilding and available grants and other resources, Enterprise worked with partners to pilot a $15 million loan fund to offering short-term entity-level capital at lower rates and substantially reduced processing times.
Unfortunately, despite best efforts, demand for loan financing was low. Enterprise went back to the drawing board to design a financing product that would have the greatest impact in communities with the worst damage to their affordable housing stock. In looking at the two-year gap between when a disaster strikes and when affordable housing owners and developers receive rebuilding funds, Enterprise homed in on states newly selected to receive HUD disaster recovery funding. A good chunk of the lag between disaster and availability of government dollars is attributable to the steps necessary to protect taxpayer dollars and advance public policy. For example, states are required to set up policies and procedures for procurement, contracting, and funds management appropriate to the influx of millions or even billions of dollars while also drafting and seeking public comment on their plans for use of the funds. Enterprise determined that this would be the optimal point to infuse private sector financing to bridge public funds.
In November 2021 Enterprise launched a $25 million fund, capitalized by Morgan Stanley and Enterprise via a grant from philanthropist MacKenzie Scott. The fund will provide eligible multifamily property owners with interest-only loans up to $3 million with a three-year term. Loans will be repaid from federal recovery grant funds once they are received by the states, jumpstarting rebuilding by an average of 18 months. In the pilot phase, Enterprise is working with Iowa, Louisiana, and Oregon, all of which received HUD allocations. Once the concept has a proven track record of accelerated deployment and successful repayment, Enterprise plans to scale the fund and perhaps foster a larger capital markets solution that will permanently accelerate disaster recovery at the magnitude now required.
Since 2005 Enterprise’s natural disaster work has evolved, pivoting from focusing primarily on rebuilding to encouraging both rebuilding and resilience. Disaster-affected communities can recover most effectively if they harness rebuilding dollars with a look to the future, carrying forward what was most unique about a place pre-disaster and adding to that whatever mitigation strategies are needed to protect against foreseeable hazards.
To maximize the community benefit, Enterprise is helping communities make disaster recovery plans to correct systemic failures that were present before the disaster, so that a newly rebuilt community can better serve its members. Enterprise provides technical assistance to connect resources with high-performing organizations engaged in recovery and to help local organizations apply for and receive private and public funds. In September 2021 Enterprise launched the first of its regional residential resilience academies, teaching owners and operators of affordable housing in the Southeast to engage with residents, assess their risks and opportunities to address them, identify available funding sources, and create free business continuity plans. Participants in the initial cohort communicated the need for flexible affordable financing to cover property upgrades that will not immediately pay for themselves.
Organizations and development projects able to absorb additional debt may opt to take below-market-rate loans from the U.S. Small Business Administration or other governmental sources, in addition to working with lenders, CDFIs, or intermediaries providing grants or loans for mitigation measures. Private lenders may find it fruitful to work with CDFIs and others to identify communities and borrowers who are best positioned to qualify for loans and see them through, from application to repayment, and recycling funds into new resilience projects.
Enterprise stands committed to deploying existing resources and finding new solutions to aid disaster recovery that are cohesive and equitable, ideally harnessing both public and private capital that will help to keep people and property safe from harm. Working collaboratively across all levels of government, the private sector, and nonprofit institutions, we can spur the level of investment and focus required to build a resilient future for everyone.
For further information, contact Marion McFadden at email@example.com.
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Collection: Community Developments Investments
Banks are partnering with community financial institutions and other local organizations to help communities across the nation recover from flooding, fires, other natural disasters, and the COVID-19 pandemic. Stock photos.
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Articles by non-OCC authors represent the authors’ own views and not necessarily the views of the OCC.