CHICAGO—As reported last week in GlobeSt.com, theCommunity Investment Corp. has justbegun raising another $200 million for an ongoinglending facility that which will finance the acquisition and rehabof affordable privately-owned rental housing in the metro area overthe next five years. CIC president Jack Markowskitells GlobeSt.com that the group is reaching out to many potentialnew investors. CIC last did a similar round of fundraising aboutfive years ago, and signed a five-year agreement with 40 investorsin 2010.

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New potential investors on his target list include majorfinancial institutions like TCF Bank andWells-Fargo, and smaller community banks such asNorth Community Bank, Community Bank ofOak Park-River Forest, and many others. Markowski, aformer commissioner of housing for Chicago, says FannieMae and Freddie Mac are otherpossibilities. “Fannie Mae did not renew with us last time, but Iwant to have another go at them.”

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“We've already had consultations with our top 11 investors,those that have invested over $10 million,” he adds. “We surveyedthem, gauged their appetite for renewal, and are now finalizing thenew agreement." At $72 million, Bank of Americawas the largest investor in the last round, and CIC has alreadyreceived new commitments from Chase,Northern Trust, BMO Harris Bank,PNC Bank, the Wintrust FinancialCorp., the PrivateBank and MBFinancial Bank.

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Markowski expects that once they secure the new funding, CICwill make about $40 million in new loans per year, a modest boostfrom the $30 million in loans he expects to make this year. Thegroup was founded in 1984, and has provided more than $1.2 billionfor 55,000 units of affordable housing in low-to-moderate incomecommunities. A typical loan for CIC is about $500,000 for a 20-unitbuilding.

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“We were originally created as a vehicle for the banks to reachthese territories,” he adds, and participating “also helps themservice their Community Reinvestment Actrequirements as well. We have more expertise in this type oflending,” so many institutions, even the large ones, have come todepend on CIC. “Some of these banks don't want to take on loansthat are under $10 million.”

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However, according to Markowski, the other thing they get fromthe CIC loan program is “positive returns.” In today's low-interestenvironment, returns are about 3.3%, but over the last 25 years,CIC investors have averaged a 6.3% return.

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"There is nobody else doing this, at least on our scale,”ensuring that the loan program plays a key role in the area'shousing economy. “The vast majority of affordable housing is notpublic housing, and it's not coming from tax credit deals. It's theordinary corner apartment buildings and the six-flats. About 75% ofaffordable rental housing in the US is privately-owned affordablehousing.”

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“People think you lose affordable housing throughgentrification, and in the stronger neighborhoods you do haverising rents, but in the weaker neighborhoods, the real threat isone of deterioration and disinvestment.”

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Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.