Affordable Housing Program

Affordable Housing Program

A Legacy of Success

By: Tim Zimmerman

If we consider the numbers only – $238 million in grants from FHLBank Pittsburgh and $4.7 billion nationwide – the Affordable Housing Program (AHP) would be a tremendous success story. The 40,000 individuals and families helped by FHLBank Pittsburgh and the 758,000 nationwide are the heart of AHP, but not its whole story. Community bankers have discovered that AHP is about more than good work, it’s also good business.

This summer, the Federal Home Loan Banks celebrate the 25th anniversary of the Affordable Housing Program. I’ve watched AHP from various vantage points over these 25 years: from Landmark Savings, participant in the first funding round; from Standard Bank, 2014 winner of the Bank’s Pillars of the Community Award; and from eight years on ICBA’s Federal Home Loan Bank Task Force. I’m a big supporter of AHP: it’s enormously successful and a great opportunity for community banks. If your institution hasn’t gotten involved, you’re missing out on a key value of membership in FHLBank. I can say without hesitation that we’ve been able to do far more with AHP than we ever could have done on our own.

A Legacy of Success: 1990-2015

I have learned that in its first funding round, FHLBank Pittsburgh received 63 applications from 50 different members, the most of any FHLBank in the System. On July 16, 1990, they announced the results: 10 projects would receive $3.7 million in funding commitments. My employer at the time, Landmark Savings, on behalf of the Garfield Jubilee, was one of them. Colleagues from back then remind me that one of the Garfield properties was rehabbed for a young nurse named Karen. On a July morning, representatives from Landmark, Garfield Jubilee and FHLBank joined Karen for a news conference at the site of what was to become her new home.

On that hot summer morning in 1990, no one could have predicted that the $3.7 million in FHLBank Pittsburgh’s first funding round would grow to a total of $238 million over 25 years, or that Karen would become one of nearly 40,000 individuals and families helped through AHP. Those are amazing numbers – and they are for just one FHLBank district.

Today, AHP has become the largest private source of funding for affordable housing in the United States. Over 25 years, the individual FHLBanks across the System together have provided more than $4.7 billion in funding through AHP, all private money, to create 758,000 units of affordable housing. These staggering numbers prove a legacy of success – not just for the FHLBanks and the member financial institutions that have delivered every single cent, but for people like Karen whose lives have been profoundly changed because of what we have been able to accomplish together. We did this.

Beyond the Numbers

The total development costs associated with AHP projects far exceed the amount of the grants themselves. FHLBank Pittsburgh tracks the total development supported by AHP grants based on information we, the members who apply for the grants, supply during the application process. Using these numbers, we see that the $238 million provided by FHLBank Pittsburgh has supported $3.6 billion in development. This large number reflects all the costs to construct or rehabilitate AHP projects: lumber, bricks, roofing, windows, heating, electrical and many more. Beyond the housing units created, there are also jobs and increases to the tax base.

In addition to improving the overall health of local communities, AHP brings specific opportunities to member financial institutions. By working with sponsors to apply for AHP grants, we can expand our base by getting involved with community organizations, developers and other community leaders. As success breeds success, we’ve found that more community development opportunities come our way and – a great side benefit – our employees have become more involved in community outreach. This is the spirit inherent in community banking.

If you’ve participated in the AHP, you’ve come to understand it’s a terrific program that offers us, as FHLBank members, a resource to do more than we ever could on our own: be better corporate citizens, foster new relationships, generate new opportunities and improve our CRA ratings. But, like me, maybe you didn’t pause to consider AHP’s aggregate impact over 25 years – until now. It may be cliché, but AHP really is an example of doing well while doing good. If your institution wasn’t involved during the first 25 years, the second 25 is right around the corner.