At Center for Public Enterprise, (CPE) we see revolving loan funds (RLFs) as one of the government’s most effective tools: a way to turn a one-time invest into a lasting source of financing for projects and sectors the private market deems insufficiently profitable but which deliver needed public benefit.
In housing, a foundational example is Montgomery County Housing Opportunities Commission’s Housing Production Fund, a $100 million RLF that makes low-cost construction loans into multifamily projects. The production fund replaces high-cost private equity in the capital stack, lowering costs and enabling the agency to build publicly-owned, mixed-income housing without the need for traditional federal subsidies and to amass a 3,000+ unit pipeline.
Paul Williams and Yakov Feygin have previously written about how a national level revolving loan fund for construction financing could smooth the housing investment cycle, unstick stalled multifamily projects, and help build millions of homes.
Amidst federal uncertainty, however, it is currently states who are stepping up to carry the concept forward. By CPE’s count there are at least five states that have established revolving loan funds for construction financing in the past two years. This is separate from the dozens of cities, like Chattanooga and Atlanta, that have established, or are in the process of establishing, their own local public development programs and associated RLFs.
In Michigan, the Michigan State Housing Development Authority (MSHDA), the state-wide housing finance agency (HFA), recently announced the creation of a $75 million housing accelerator fund to help finance mixed-income multifamily housing where at least 20 percent of the homes are affordable to households at 50 percent area median income (AMI) or 40 percent affordable to those at 60 percent AMI. (Note: MSHDA is a CPE client).
In New York, New York State Homes and Community Renewal (HCR) released a Notice of Funding Availability in July for the New York State Housing Acceleration Fund, a $100 million fund that will offer low-cost, subordinate construction financing. $50 million will be allocated to New York City and $50 million to the remainder of the state. HCR is seeking partners such as banks or community development financial institutions (CDFIs) to become co-lenders that would match HCR’s funds. HCR would provide up to 50 percent of each loan, with their money coming in at 3 percent interest. The hope is that when blended with lending partner capital, the acceleration fund provides financing below market rates for mezzanine and equity financing. The explicit goal of the fund is to assist multifamily residential projects that are shovel-ready but struggling to get the final financing in place. Interested lenders can submit an application by September 18th, 2025.
In Massachusetts, the $5 billion Affordable Homes Act signed into law in 2024 included $50 million for the Massachusetts HFA MassHousing to create a fund to accelerate the development of mixed-income and workforce multifamily housing. MassHousing developed their Bringing Innovation to Lending and Development (BILD) initiative which includes a product called Momentum Equity – a product designed to be blended with private equity to reduce overall financing costs. Momentum equity can make up to 25 percent of total equity for a development and investments are coterminous with the senior loan. Projects must have at least 20 percent of units affordable to households making 80 percent of AMI. Part of MassHousing’s goal is to target thousands of market rate developments with inclusionary requirements across the state that may be stuck because of lack of financing.
In Utah, the legislature made $300 million available in 2024 to achieve Governor Spencer Cox’s ambitious goal to build 35,000 new starter homes across the state. The Utah Homes Investment Program is managed by the Office of State Treasurer and provides low-cost capital (the greater of the federal funds rate minus 200 basis points or 0.5 percent) to financial institutions for 24 months that offer low-interest loans (no higher than 150 basis points above the federal funds rate) to projects in which no fewer than 60 percent of the homes for sale cost $450,000 or less. Homes must remain owner-occupied for at least five years. This year, the legislature expanded the eligible uses for the funding to include condos alongside single family homes.
In Oregon earlier this summer, senators Pham, Anderson, and Meek introduced and got passed SB 684, directing the state HFA Oregon Housing and Community Services (OHCS) to submit a report by November 15, 2025 providing recommendations on how to structure a mixed-income revolving loan fund similar to Montgomery County and any statutory authorization needed to create the fund. Oregon previously allocated $75 million to a moderate-income revolving loan fund in 2024, which allows OHCS to make no-interest loans to cities and counties to support housing affordable to households at 120 percent AMI and below. In lieu of taxes, projects pay back funds via a fee over 10 years which is used to revolve the fund, with the unit affordability restricted during that time. (Note: CPE provided testimony before the Oregon Senate on the efficacy of revolving loan funds).
If you are interested in learning more about these programs, Paul will be moderating a panel titled Accelerating Production with Housing Finance Agencies on September 15th at 11 AM ET as part of the 2025 YIMBYtown Conference in New Haven. The panel will feature leadership from MassHousing, NY HCR, and MSHDA discussing their programs. CPE will be participating in a panel with the same agencies at 4:15 PM on October 6th during NCSHA’s annual conference in New Orleans.