One City Built to Last

$75,000 grant. And that’s how the Equity
Fund got started.”
Raising roughly $355 million in equity
to date, since its beginning the Equity
Fund has produced 4,400 housing
units throughout its service area. The
equity raised has funded both rehabilitation
of residential units, as well as
new construction of residential units.
These units include one, two and three
bedroom apartments as well as three
bedroom single family homes.
The Process
SLEFI identifies new projects that are
in the planning phase that it would be
interested in investing. “We know who
is making applications to the Missouri
Housing Development Commission
(MHDC), who allocates the credits on
behalf of the IRS, and who we would
like to invest with,” said Wuest. “We’re
tracking them – and we issue a support
letter which is included in the application
package that is submitted to
MHDC. If they are successful in receiving
an allocation SLEFI then negotiates
a purchase of the credits from the recipient
utilizing the funds raised from the
Financial Institutions and Corporations
who have agreed to invest in the Fund
created by SLEFI. A limited partnership
or a limited liability corporation is
created and the current years Fund becomes
the 99.9% limited partner in the
developer entity which enables SLEFI
to pass back through to its investors
99.9% of the tax benefits of the Credits
along with the operating losses of the
specific project.”
Banks represent the largest portion
of any given Fund. The Bank investor
group includes both larger regional
banks along with community banks.
“This vehicle has a particular attraction
for the smaller community bank’s
whose resources limit their ability to
have in house personnel participating
in these endeavors,” said Wuest.
In addition to banks, SLEFI raises
funds from corporations. Current participating
companies include Ameren
and The Laclede Group (local utilities),Anheuser-Busch
and Centene
Corporation. For the year 2014, SLEFI
is on track to raise $30 million. Wuest
indicated that a future goal is to raise
an annual Fund in the $40 to $45 million
range. The average investment per project
is in the $6 million range.
Special Needs Projects
Wuest commented that in recent
years SLEFI has placed an emphasis on
investing in projects that serve individuals
having special needs. These needs
include alcohol and drug dependency,
mental health issues, and ex-offenders.
They have teamed with the leading institutions
providing these services including
The Salvation Army and the St.
Louis Archdiocese.
SLEFI has partnered with the Salvation
Army on three projects, including
a 48-unit building of furnished
apartments strictly dedicated to both
male and female veterans. “These are
individuals that, for one reason or another,
have not been able to get back
into the mainstream of society, mostly
because of addiction and other problems,”
Wuest explained. To qualify for
residency the individual is required to
make a commitment to participate in
the treatment program provided “with
the goal of becoming a productive
member of society,” he said. The individual
is able to live in a safe environment
while in recovery – and even after
they gain employment if they wish to.
Gateway Community Development Fund, Inc.
In an effort to provide a wider range
of products and services to serve the affordable
housing community and its investors,
SLEFI formed Gateway which
is a wholly owned subsidiary of SLEFI.
Gateway is a certified CDFI whose primary
mission is to provide both consulting
services and lending products
to be used to assist groups participating
in community development and provide
financing for the creation and sustainability
of affordable housing. Gateway
has solicited participation from
Banks to participate in the formation of
Loan Pools, the proceeds of which will
be used to finance affordable housing.
To date Gateway has raised $4.5 million
in these Pools.
Both SLEFI and Gateway are governed
by its investors and participants
who serve on the boards and committees
of both organizations. The Community
Reinvestment Act previously
mentioned has three basic tests: Investment,
Lending and Service. With the
addition of Gateway, SLEFI is able to
offer opportunities to banks that assist
in meeting all three tests.
THE SUIT MAGAZINE p.69