CHICAGO—Gentrification in stronger neighborhoods is frequently perceived as posing a threat to the region's inventory of affordable housing, but in weaker neighborhoods the true threats come from deterioration and disinvestment. And to combat the latter threats, the Community Investment Corp. has just finished raising $200 million to finance the acquisition and rehab of affordable rental housing in the Chicago area over the next five years. CIC officials say this funding will help preserve 7,500 affordable rental apartments that will house about 18,000 people.

The multifamily rehab lender raised the funds from 37 Chicago-area banks. The effort was led by David Dykstra, senior executive vice president and chief operating officer of Wintrust Financial Corp., and included the efforts of a campaign committee that consists of CIC board members and individuals at financial institutions that invest in CIC. Lead investors in the fund include The Northern Trust Co., BMO Harris Bank, PNC Bank, Fifth Third Bank, Wintrust Financial Corp., The Private Bank, Associated Bank, Citi Community Capital, MB Financial Bank and First Midwest Bank.

The new loan pool will give CIC's multifamily loan program reliable access to capital. The program primarily targets privately owned rental housing that constitutes the vast majority of affordable rental housing in Chicago. CIC was founded in 1984, and has provided more than $1.2 billion for 55,000 units of affordable housing in low-to-moderate income communities. A typical loan for CIC is about $500,000 for a 20-unit building.

The group was “originally created as a vehicle for the banks to reach these territories,” president Jack Markowski told GlobeSt.com. Participating “also helps them service their Community Reinvestment Act requirements as well. We have more expertise in this type of lending,” so many institutions, even the large ones, have come to depend on CIC. “Some of these banks don't want to take on loans that are under $10 million.” And over the last 25 years, CIC investors have averaged a 6.3% return.

“Participating in the CIC loan pool helps Northern Trust invest in affordable housing activities and reach underserved markets in a collaborative way,” Northern Trust chairman and chief executive officer Frederick H. Waddell said. “CIC has proven to be an effective and trusted partner in this effort.”

“These types of loans can be challenging,” said Robert A. Sullivan, president and chief executive officer, Fifth Third Bank, “but CIC has more than proven its ability to successfully invest in low- and moderate-income neighborhoods and provide significant community impact in the process.”