You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, as you know, Wells Fargo has been dealing with a series of scandals and regulatory issues for years, and it's operating under a growth cap imposed by the Federal Reserve. A last week, we even had Congresswoman Max and Waters say that the banks had faced an investigation by US regulators into allegations at the bank denied black refinancing applicants and
hosted mock interviews to fulfill diversity numbers. To be fair to signs to every coin, we should point out that Wells Fargo, Tim has been working to make some changes, including awarding a forty million dollar grant to help cultivate diverse housing developers. We've got with us Gina Merritt, whose principle at Northern Real Estate Urban Ventures. It's a community development organization that's engaged in a holistic approach to real estate development. Gina joins us from Washington, d C. Gina,
how are you? I thank you? How are you all doing? We're doing well. Thanks so much for joining us. Talk to us about how you're gonna use this forty million dollar grant. It's called Growing Diverse Housing Developers. Well, the funds were awarded by Wells Fargo to three regional c d f ies Community development Financing institutions, and they have selected a cohort of twenty seven diverse developers to provide funding support both for their enterprise as well as their
real estate projects. Well and talked us about a little bit about what kind of impact this could do, the money itself and really changing the system. And I know, Gina, you know, I kind of laid it out because Bloomberg viewers they know Wells Fargo. There's been a lot of you know, things that they have been grappling with on
many different levels. And they're not alone in terms of the banking society and banking industry and leaving out, you know, minorities and being more inclusive, especially when it comes to housing. So tell us how you think this money can help move the needle. Well, this money is certainly going to help my organization. I've been in business for more than twenty years and have more than twenty seven years of
experience developing affordable housing for other people. Never having enough capital to be able to develop my own projects, and so the funds well Spargo has provided will allow me to one UM leverage their grants to hire people and to support my balance sheet, and will it will also allow the cd I fies to create products that will
help diverse developers UM develop their their projects. It's been very challenging going to conventional banks to try to get funds both early funding, the early stage funding for development projects as well as construction and permanent financing. So this this program helps provide the kind of support developers need in order to get their projects done on their own. If I can just follow us the word challenging, it's got to be even harder than challenging, right, is it okay?
Because because it's you know, we've we've reported on a lot here in Bloomberg in terms of the financial sector really turning its back on a more inclusive, you know sect, if you will, within the housing markets. Listen. I was almost put out of business actually by one of these
large institutions. Uh I was working with a smaller institution that was bought by a larger, you know, brand name financing organization, and that organization would not honor the deal that the smaller organization made to me right, smaller, smaller financing entity. So the the eight thousand pound guerrilla basically took over this company and wouldn't honor the deal, almost
put me out of business. So we need organizations like Wells Fargo to fund the c d fies that will provide financing for people like me, because the major institutions won't do it. Gina, how how do you build affordable housing right now? I mean, construction costs are high, materials costs are high, land is high, interest rates are going up.
How do you do it? It's very difficult. I mean I have a couple of projects right now in development um that are about to close that just experience these kinds of things, both an increase in interest rate and
an increase in construction costs. And you know, I would say luckily, there was also, luckily and not so luckily, there was an increase in the rental rates because HUD issues new rents every year for affordable housing developments, and those two went up, So that helped absorb some of the increase in interest rates and construction costs, but not
all of it. So then what you have to do is really go back to these municipalities that provide what we call gap funding, which is, you know, all of the private money you can get, all of the low income housing tax credit investment you get, there's usually still a gap, right, There's still some some chunk of money that the private institutions can't fund. And so really what we look to now is those states and cities to provide additional support to these projects so they can get
them done. Is this about all so um gina creating projects? You know, if we're going to really embrace as a world diversity inclusion, that means these kind of projects and maybe a traditionally white neighborhood. Is that part of this, Yes,
especially in the district of Columbia. Actually, um the basically the financing programs that support affordable housing, UH give you a higher score if you're in a neighborhood that has higher incomes, and so you know that's just that just happens to be, you know, neighborhoods that are whiter in terms of its population. Right. I just think about it. If we're really gonna you know, be all in, go
ahead to him. I know you want to jump in. Yeah, yeah, I just want to ask, you know, where are your most optimistic right now because there is such a housing crisis. We just have twenty seconds left. Sure, um, I am really. I'm working in three markets which I'm very optimistic about, Cleveland, D C. And Maryland because the leadership in all of those places understands how important affordable how thing is and they are investing tens of millions of dollars resources into
affordable housing. So that means good things for people like me because I'm working in communities that look like me and these leaders are willing to invest in them. Well, Gina, come back, let us know how things are going. Gina Merritt, principal at Northern Real Estate Urban Adventures, joining SBA Zoom from Washington, d C. Looking forward to hearing more. This is Bloomberg