By Dale Mitchell and Rick Neal
of Pinnacle Financial Partners

The affordable housing gap is built from complex historical and systemic factors, including problems rooted in decades old social and economic issues.

The issue isn’t simple, and neither is its solution. Advocating for more housing is the right thing to do. Understanding and supporting the mechanisms required to build it are just as important.

Multifamily developments take tens of millions of dollars to build, and affordable price points make them impossible to finance without help. The capital it takes to build or renovate affordable single-family homes also make traditional funding difficult.  

This is why it takes strong partnerships, complex financial arrangements and a lot of political capital to bring more housing to the people who need it. Many entities have a part to play, from banks and developers, nonprofits and governments, community advocates and neighbors.

To start, you need a general partner to lead the project and financing. Nonprofits and government entities like MDHA, as well as for-profit developers, can play that role, layering funding together from multiple sources and creative government solutions to reduce the cost, thus allowing them to make homes affordable.

Two of Pinnacle’s most recent such projects illustrate the layered approach required to build the housing our community needs.

The Skyliner

2996 Dickerson Pike | 147 units | mixed income

Urban Housing Solutions was the general partner.

Pinnacle Financial Partners provided equity supported through low-income housing tax credits (LIHTC).

LIHTC allows the investor to earn returns through tax credits rather than traditional profit, making it possible to provide capital to support affordable housing without economic burden. This lowers the cost to develop and creates the opportunity to build more homes with affordable rent.

Fifth Third Bank provided debt financing, through the Community Investment Tax Credit (CITC) program provided by the State of Tennessee.

Similar to LIHTC, CITC allows banks to lend at more favorable rates while still meeting their obligation to shareholders.

Metro Nashville provided a $2 million grant through the Barnes Fund to fill the gap between financing and actual construction costs.

Curb Victory Hall

1112 12th Ave S | 39 units | for veterans experiencing homelessness

MDHA provided substantial capital and served as the general partner.

Pinnacle provided equity financing through LIHTC and more capital through debt financing with CITC, both via Tennessee Housing Development Agency.

A Mike Curb Foundation grant helped cover construction costs, as did the Housing Trust Fund from THDA.

Rent payments are subsidized with vouchers from the U.S. Department of Housing and Urban Development that links supportive services from the Veterans Administration.

Since 2016, Pinnacle has committed $153.2 million to build 1,802 affordable housing units in Nashville. In 2022, we were the largest provider of CITC funding in Tennessee with $313 million for low- and moderate-income housing on our books. Another $342 million was invested in nearly 4,500 units of affordable rental housing across our footprint, and $246 million went to nearly 1,500 affordable home loans.

In all, Pinnacle had $1.7 billion committed to investments, lending and grants for low- to moderate-income housing, small business and minority-owned institutions at the end of 2022.

Nashville has the ingredients in place to grow our affordable housing stock. Banks want to provide financing and have the financial incentives to do so. The city is a willing partner. Developers and builders are at the ready to lead projects. And our nonprofit partners grow in number and strength all the time. However, we must all continue to support, provide and expand the tools required to achieve quality housing affordable for all.

Pinnacle is ready to build on the momentum we’ve created together and help lead Nashville to a future with housing equity. 

Visit PNFP.com/CSR for the bigger picture of the impact Pinnacle makes on the communities we serve.