April 2019 - In 2014, FHLBank Atlanta shareholder United Bank embarked on a partnership with the Griffin Housing Authority to bring more affordable housing to this Georgia community located just south of the Atlanta metro area. Over the next four years, the work of these two organizations, along with many others in Griffin, resulted in more than 230 units of well constructed, energy-efficient rental housing that serves the needs of low- to moderate-income seniors and families.
United Bank’s access to FHLBank Atlanta’s Affordable Housing Competitive Program (AHP Competitive) was a key piece of the financing mix for each of the three phases of the Housing Authority’s Meriwether Redevelopment Project. Between 2014 and 2017, the community bank was awarded three AHP grants for a combined $1.5 million to support the reconstruction of two existing apartment buildings and the construction of a new mid-rise building. Total development costs for these projects exceeded $41 million.
According to Thomas Williams, senior vice president and senior compliance manager for United Bank, the Meriwether projects first came to their attention during an informal meeting with the Housing Authority. It soon became clear that the project would be a good fit for United Bank for a number of reasons: its ability to serve an unmet housing need in Griffin, its solid financial profile, and its sponsorship by the Housing Authority and the Tapestry Development Group, which would help coordinate the AHP application and overall project.
“This project filled a void in the community, creating better housing and a better sense of community in this part of Griffin,” said Williams. “Additionally, the project was very well underwritten and had strong sponsors in the housing authority and Tapestry to coordinate the application process.”
AHP-supported housing developments deliver benefits to communities in many obvious ways, but they can also create value for the participating financial institution by helping to advance affordable lending compliance objectives and business development goals.
Rebekah Betsill, vice president and corporate counsel for United Bank, says that the opportunity for the bank to earn Community Reinvestment Act (CRA) credit was a key consideration in the decision to participate in the AHP application. United Bank also participated financially in these projects beyond the AHP grant by extending a line of credit to the Housing Authority, resulting in new lending business for the bank and bolstering the strength of their AHP applications.
“The fee structure for the line of credit loan contemplates the work that will have to be completed on the AHP portion of the project and helps offset that cost,” said Betsill. “These relationships can be beneficial for all parties involved.”
And while United Bank already enjoyed a strong reputation in Griffin, Williams and Betsill said that being a visible part of the Meriwether redevelopment projects has helped to enhance the bank’s brand in the local community even further.
Considerations for a First-time Applicant
For a community bank that is considering participation in the AHP Competitive for the first time, Williams says that prospective applicants should not be deterred by the paperwork if they identify a project in their community that could benefit from the funding.
“The application process is straightforward, and FHLBank Atlanta is very helpful in guiding you through the process,” said Williams.
Betsill adds that FHLBank Atlanta staff are easily accessible by phone and can help with any roadblocks. The Bank’s webinars are also good resources for understanding the steps involved. She also notes that before a community bank takes on an AHP Competitive project, it’s important to understand the full scope of the process.
“Banks should designate specific staff members to be in charge of AHP projects,” said Betsill. “The compliance area should be involved in tracking and understanding CRA credit, while legal should understand the member bank’s duties under the AHP agreement. It’s also recommended to have a board-approved policy on AHP projects.”
Williams and Betsill recognize that AHP Competitive projects are likely new areas for most community banks but that the effort is well worth the end results.
“At the end of the day, the difference that the funds make in your local community, in addition to the lives that it impacts in a positive way, make the time spent submitting the application and working through the process well worth the effort,” said Williams. “These funds are transforming communities one life at a time, while for some areas, they are redefining what community is all about.”
About the AHP Competitive
FHLBank Atlanta’s AHP Competitive provides funding to develop or rehabilitate housing that is affordable to households earning up to 80 percent of area median income. Real estate developers partner with FHLBank Atlanta member financial institutions to apply for up to $500,000 per project to help finance the construction of apartments, supportive housing, subdivisions, single-family homes, and more. Applications for the 2019 AHP Competitive will be available on June 3, 2019. Call the Bank’s Community Investment Services department at 1.800.536.9650, option 3 for more information and visit the Bank’s website to register for a webinar.