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| In the early 1990s, developers who wished to use the Low Income Housing Tax Credit program to build affordable rental housing had difficulty finding investors to purchase the Tax Credits, especially (1) if the housing was to be located in a “distressed area,” (2) if it was less than 100 units in size, (3) if it served persons with Special Needs or (4) if it was being proposed by a non-profit sponsor.
In order to promote investments in these types of rental communities, Terry Duvernay and staff at the Michigan State Housing Development Authority organized an exploratory committee to investigate the creation of a local equity fund. In 1992, Michigan State Housing Development Authority (MSHDA) provided a $500,000 repayable grant to establish Michigan Capital Fund for Housing (MCFH). In 1993, MCFH was established as a non-profit corporation and over the next year, MCFH was able to secure investments of $10 million to invest in five developments.
From 1995 through 2003, MCFH continued this process and was able to invest $500 Million of equity in 155 affordable rental communities to leverage the creation of 8500 housing units and 60,000 Square Feet of commercial space.
In 2002 and 2003, MCFH responded to leaders from the affordable housing community in Indiana to establish the Indiana Capital Fund for Housing (ICFH). As a result, ICFH was able to raise $26 million to invest in 11 affordable rental communities in Indiana. However, it soon became clear that there were greater efficiencies of scale achieved by having local offices in each state but to have a central staff to handle investor relationships, accounting and fund management. Therefore, in 2003, MCFH and ICFH merged to create the Great Lakes Capital Fund. In its first year, GLCF was able to invest $149.3 million in 52 rental communities.
Using this same model, GLCF has now been able to expand its services to establish local offices and make local investments in Wisconsin and Illinois, as well as Michigan and Indiana. GLCF also has been certified as a Community Development Financial Institution (CDFI) and serves as manager for Michigan Magnet Fund to administer a $60 million allocation of New Markets Tax Credits.
Other subsidiary additions to GLCF include the Capital Fund Investment Corp. to provide permanent loans for LIHTC and commercial real estate developments in target communities, and Capital Fund Title Services.
By the end of 2006, GLCF had invested in its 300th affordable housing community and could claim an economic impact of over One Billion Dollars!
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