Mayor Ras J. Baraka and President and CEO of the Urban League of Essex County (ULEC) Vivian Cox Fraser have announced the launch of a new $6 million initiative aimed at promoting homeownership and wealth-building opportunities among Newark Black and Latino residents, in partnership with National Community Investment Fund (NCIF) and Wells Fargo.
“The City of Newark has committed $750,000 to further reduce costs for participating families because we believe so strongly that homeownership is fundamental to equity for those who have been blocked by systemic barriers decade after decade,” said Mayor Baraka. “We are grateful to The Urban League for developing high quality affordable housing for residents to buy and rent in the West Ward and we are proud to support their commitment to one of this administration’s highest priorities.”
ULEC will develop and sell 10 two-family homes in the Fairmount neighborhood of Newark. Each home will include a unit for the homebuyer along with an affordable rental unit that can help defray the cost of owning the home. Bringing affordability even further, these homes are designed and built for economy and efficiency during ongoing climate change. By reducing their carbon footprint and greenhouse emissions, these dwellings contribute to racial equity and economic and environmental justice.
Through an innovative use of capital sources, ULEC will sell those homes at below market sales prices to low-income homebuyers and provide them with mortgage financing with favorable terms, including an interest-only option. ULEC’s program combines a saving and wealth-building component with benefits that include homeownership and landlord readiness training and personalized financial empowerment counseling.
“Transforming communities requires capital,” said Fraser. “We are excited to utilize the New Market Tax Credit (NMTC) program to address the racial wealth gap and build homeownership. Using NMTC for subsidizing single-family homes is unique and could not have been possible without the assistance of the solid partnerships with the City of Newark, NCIF, Wells Fargo and Monge Capital. We’ve worked very hard to create wealth among low-income communities, especially minority communities, to revitalize Newark and create generational wealth.”
The NMTC Program attracts private capital into low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called Community Development Entities (CDEs). This project funding was made possible through a strategic partnership with NCIF, a community development financial institution (CDFI) that invests in low- and moderate-income communities nationwide, and Wells Fargo’s Community Lending and Investment Group (Wells Fargo). In addition, NCIF brought in Industrial Bank (a minority depository institution and another CDFI) as a participant in its loan. Bringing Industrial Bank as a partner aligns with NCIF’s three-way strategy to generate long-term, sustainable change in low-and moderate-income markets nationally.
“NCIF is thrilled to partner with the Urban League of Essex County and Wells Fargo on this groundbreaking pathway to make eight individuals become homeowners to build wealth,” said Saurabh Narain, president and CEO, NCIF. “The Urban League’s track record and its affiliation with a national network of partners make them the ideal collaborator to help us replicate this unique structure across the country.”
As part of the capital stack, Wells Fargo Bank contributed $1.9 million in equity to the project through its purchase of the New Markets Tax Credits.
“Wells Fargo is proud to be part of another impactful Urban League homeownership initiative, helping residents of a low-income, minority community begin to build wealth and stability through the long-term benefits of owning a home,” said Scott Pinover, director of Wells Fargo’s Northeast New Market Tax Credit Team.
ULEC engaged Monge Capital Advisors, a Newark based Minority Business Enterprise firm, as a key advisor to this transaction. Monge Capital provides financing and real estate solutions leveraging their expertise in New Markets Tax Credit financing nationally and including the Newark area.
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