New $100 Million Fund Links Affordable Housing, Health Care

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Morgan Stanley, The Kresge Foundation, and the Local Initiatives Support Corporation (LISC) have launched a pioneering new $100 million investment fund that will finance additional affordable rental housing and health care facilities for low-income households in an integrated fashion.

The new Healthy Futures Fund will provide developers of rental housing and federal qualified health centers with equity, loans, and grants. The equity will be generated by federal low-income housing tax credits, which will help fund the housing projects, and by federal new markets tax credits, which will help fund the health centers.

The initial fund is being seeded with capital to finance the development of 500 housing units with integrated health services and to construct eight federally qualified health centers that will serve an estimated 75,000 people. The initial investments will fund projects expected to create 2,200 jobs in hard-hit communities.

“Connections between health and housing for low-income people need to be intentional. We can’t rely on serendipity to make this happen,” said LISC President and CEO Michael Rubin. “This is the painful reality: low-income people generally experience higher levels of sickness and disease and have lower life expectancies. With this fund, we can help move families from deteriorating apartments into quality, affordable homes and provide them with first-rate health care. That can be life-changing.”

Morgan Stanley is investing $63 million in equity in the Healthy Futures Fund in exchange for receiving federal housing and new markets tax credits. The Kresge Foundation, LISC, and Morgan Stanley are providing another $37 million in loan and grant capital for the projects.

The fund expects to expand in coming months with additional new markets tax credits and lending capital from new partners. Organizations already signed on include the National Development Council, NCB Capital Impact, Capital Link, Primary Care Development Corporation, Mercy Loan Fund, and Opportunity Finance Network.

The Healthy Futures Fund is in part a response to the Patient Protection and Affordable Care Act and the 20 million new health care consumers that the legislation is likely to create.

Certified by the Health Resources Services Administration (HRSA) of the U.S. Department of Health and Human Services, federally qualified health centers provide free or low-cost health care services to low-income patients. HRSA provides capital grants and loans that help fund the construction or expansion of such health centers and help cover operating expenses. HRSA grants and loans have been paired with new markets tax credits to fund numerous federally qualified health centers.