The partnership that’s beginning to break a city’s housing logjam

When it comes to housing, the numbers don’t lie: There’s a shortage of 7.1 million affordable and available rental homes for residents with extremely low incomes across the United States, which means that there are only 35 homes for every 100 households that need them. No wonder 69 percent of Americans say they’re “very concerned” about housing and 60 percent of U.S. mayors call the state of housing in their cities less than satisfactory. 

The numbers don’t lie in Cincinnati, either. Only two and a half years after taking the unconventional step of rerouting their own affordable housing fund to an external partner that crowds in additional resources and streamlines development, local leaders are making real progress. In fact, the new approach is on track to fund nearly three times as many affordable units annually as the city once produced on its own.

It's an effort that reflects Bloomberg Philanthropies’ belief that cities can move faster and farther toward their priorities when they supplement their own efforts by tapping into a broad range of outside resources, talent, and know-how. Here’s a closer look at the work in Cincinnati and the insights it offers other cities—in the face of any challenge—as they work to make local government more nimble and productive.  

Leveraging city money in a creative way.

Many U.S. cities have trust funds geared at paying for affordable housing, sometimes generated by taxes and often managed out of city hall. But those funds are seldom large enough to meet a city’s demand for affordable units. That’s why Cincinnati moved to create a “fund of funds,” combining city money with county and private-sector contributions, and partnered with a nimble, semi-independent agency to manage and, especially, scale this new lending power.  

The city’s partner in this work is a nonprofit called the Cincinnati Development Fund (CDF), a 37-year-old community-development financial institution whose mission is to provide innovative real-estate financing to improve low-income neighborhoods. The city is still working to fund housing on its own, but now its longstanding efforts are being supercharged. “From our tiny little $4 million or $7 million, we’re able to leverage and use [CDF’s] capacity so that we’re now dealing with upwards of $70 million as part of this loan fund,” explains Markiea Carter, the director of the city's Department of Community and Economic Development. 

Cincinnati Mayor Aftab Pureval, who has participated in the Bloomberg Harvard City Leadership Initiative, says this work points to the value for cities in not going it alone—and, instead, using creative collaboration to move the needle on core priorities.

“When it comes to challenges that are as massive and complex as housing production—particularly affordable housing—cities like ours have limited resources to move the market ourselves,” he tells Bloomberg Cities. “That’s why innovative models like this can be so effective.”

Streamlining the process. 

Cincinnati’s approach doesn’t just pool city money with outside resources in a creative way. It also streamlines the process of awarding that money, so new projects start faster.

In some cases, developers can only access city-backed affordable housing loans during a once-a-year application cycle. But the Cincinnati Development Fund can offer financing whenever it’s needed. “If a project’s ready sooner, we can tap this funding source right away, while other sources from the city or county might arrive later,” explains Luke Blocher, general counsel and chief strategy officer at the Fund, who previously worked inside city hall himself.

Ultimately, what this approach offers is a one-stop shop that housing developers know is the best place to direct their time and energy when seeking support for new projects.

“Time is money, and for a developer, if you're making 10 different applications into 10 different entities to try to get $100,000 here, $250,000 there, that takes time,” Carter explains. “And if our goal is: How can we streamline this so that we're able to get a product out of the ground and new housing units online, having this one place where all of us are talking together is really valuable.”

Since this collaboration took off in 2022, it is showing promising—if early—signs of progress. Previously, Cincinnati was creating or maintaining an average of 256 income-restricted housing units annually. As of this January, the new partnership was on track to fund over 700 of those same units every year. 

Beefing up in-house expertise with outside knowledge.

Another critical advantage the city is gaining with this approach is significantly expanded technical expertise around real-estate financing that complements its own capacity.

As part of this work, the city is tapping CDF’s staff, who have deep experience working with every actor across the housing industry, from nonprofits to developers to banks. “The knowledge that they have as a lender in this space is really important,” Carter says of CDF, going so far as to describe their support as "invaluable."

Tapping that expertise positions Cincinnati to play a new role in its housing ecosystem. According to Ryan Bellinson, a senior research fellow at the UCL Institute for Innovation and Public Purpose who has been following this work, the city can now operate more like a developer that is laser-focused on building more affordable housing as quickly as possible.

“Creatively bringing together people with diverse skillsets—from inside and beyond local government—to work on a shared challenge is helping the city develop an expanded mindset of what it can achieve,” Bellinson explains.   

Guiding but not micromanaging.

This effort hinges on local leaders ceding some day-to-day management of public funds to unlock what their residents need. But the city isn’t compromising local values to get it done. Instead, the whole enterprise is shaped by city hall, albeit in a light-touch way.

Under the contract governing Cincinnati’s relationship with CDF, city funds can only be used on the types of housing local leaders prioritize—specifically, below-market units affordable for low-income residents. The city can veto proposals involving its contributions to the regional fund if officials feel they are not in the public interest.

According to Carter, the city hasn't had to do that a single time yet. But it’s a critical safeguard. “Because these are ultimately our dollars, we want to make sure that these projects that are being funded are the projects that we actually believe are going to advance what we want to do for affordable housing,” she says.

Going forward, this effort points to the potential for cities everywhere to set ambitious goals and crowd in knowledge and resources to make them happen. As Mayor Pureval explains, “By putting the right systems in place and empowering our partners, we are able to multiply our impact in a way that has tangible, meaningful results for our constituents.”