Credit unions are in-tune with the communities they serve, making it a priority to address financial barriers in their own backyards. One of the most significant issues facing residents across the Northwest is accessible housing – and credit unions are tackling it, head-on, in Idaho, Oregon, and Washington.
A great example of credit union cooperation in housing started taking shape in 2018, when six credit unions began formulating a plan to help people living in communities around the Seattle-metro area. BECU, Seattle, Verity, Sound, Salal, and Washington State Employees credit unions wanted to help people obtain affordable housing near their places of employment — something that many in the area struggle to find.
Verity Credit Union, as well as other credit unions around the Seattle area, have explored ways to alleviate housing hurdles in the community, but “found it to be complicated and therefore difficult to find an entry point,” said John Zmolek, Verity President and CEO.
“I think credit unions’ willingness to come together to solve issues is unique,” Zmolek said. “Each credit union had to get an investment exception from the DFI (Washington State Department of Financial Institutions). However, each one of us is committed to helping alleviate what is the primary issue in our communities today.”
Kris Hermanns, Chief Impact Officer with the Seattle Foundation, echoed Zmolek’s sentiments.
“We appreciate the early commitment of the credit unions, who embraced the idea of a private investment vehicle that could leverage proven affordable housing financing to build more where we most need it,” Harmanns said. “The Evergreen Impact Housing Fund is scaling our region’s response to the housing crisis, in large part to the leadership of these credit unions.”
Zmolek, along with Tom Berquist, EVP and Chief Marketing Officer with BECU, began hosting meetings, bringing the six credit unions together to discuss how they could make an impact. Through collaboration, the credit unions created an $11 million pilot fund that would go toward new housing.
That fund grew as more organizations contributed to it, and earlier this month, it was unveiled as the Evergreen Impact Housing Fund, housed at the Seattle Foundation. Microsoft recently made a $50 million commitment to the fund, which aims to build between 5,250 and 7,000 apartment units over the next five years for modest-income renters in the communities of Bellevue, Kirkland, Redmond, and other nearby cities.
“The gap funding we will be providing for this project should provide 200 affordable housing units for persons with 60% or lower of the median household income in Seattle,” Zmolek explained. “Perhaps more importantly, the credit union willingness to step forward and participate in this pilot project has laid the foundation for contributions from other corporations.”
The fund, launching this spring, will make long-term subordinate loans to housing developments that are financed with tax-exempt bonds and the Federal Low Income Housing Tax Credit program as the sole public funder. Projects will entail larger-scale housing developments of 200 apartments or more, with rents that are affordable to people earning 50% to 60% of King County area median income. The fund targets investments in areas experiencing the highest rent inflation and rent displacement.
“BECU has been looking for ways to address the housing issue in a way that goes beyond grant making and to use our balance sheet (investments or loans),” Berquist explained. “The work with the Seattle Foundation allows the opportunity to do just this, with the added benefit of cooperating with other credit unions.”
Faith Li Pettis, Partner of Pacifica Law Group and co-chair of the Evergreen Impact Housing Fund’s advisory committee, commended the credit unions on their collaboration and impact.
“The credit unions were early boosters of the idea of a privately impact investment fund aimed at closing the financing gaps in affordable housing projects,” Li Pettis said. “They enthusiastically supported the premise that solving our region’s housing crisis requires the participation of the private sector. The $11 million investment from these credit unions enabled the Evergreen Impact Housing Fund to start discussions with pilot projects, which helped to solidify the fund’s process and requirements. And even more importantly, the confidence in the fund demonstrated by the credit unions was important in securing additional funding from JPMorgan Chase for fund development and from Microsoft, which recently announced a $50 million investment in the fund.”
Beyond Seattle, credit unions across the Northwest are tackling housing issues that are unique to their communities by building local partnerships and creating products and services that address the problem directly. The Northwest Credit Union Foundation, a convener of credit unions and their partners, continues to promote and support innovative housing solutions through the Workforce Housing Initiative, awarding $685,000 in grants since the initiative was launched in 2018.