How the sale of the Cincinnati Southern Railway is impacting local affordable housing
The sale of the city-owned Cincinnati Southern Railway last year has had an impact on local affordable housing.
The $1.6 billion sale revenue has been invested, with returns required to pay only for maintaining existing infrastructure like streets and parks. About $21 million was invested right here in Hamilton County through the firm Community Capital.
"Impact investing is an approach where, as managers, we deploy capital to help solve societal challenges while at the same time looking to receive a market-rate return," said Chief Financial and Diversity Officer James Malone at last week's Cincinnati Southern Railway Trust Board of Trustees meeting .
RELATED: Cincinnati will get $56M for infrastructure in the first year of investment returns from the railway sale
So far, the portion of the fund invested through Community Capital has a return of 5.62% over the last six months. The fund overall has grown about 5.9% .
The local investment includes the purchase of mortgages for two affordable housing apartment complexes, and for five single-family homes purchased in low-income neighborhoods.
"We're sending a signal to investors that there is a demand for loans that are supporting those types of initiatives," Malone said.
CSR Board of Trustees member Mark Mallory says it's a double benefit for Cincinnatians.
"Part of what I wanted to focus on with $1.6 billion was not just, can we get diversity among money managers and so on," Mallory told WVXU. "I wanted to make sure that we actually have impact investment; so we use the money to positively impact underserved and minority communities."
RELATED: Here's how Cincinnati will spend its money from the railroad sale
The Board of Trustees has promised to disburse $56 million to the city for the next fiscal year, which starts July 1, 2025. That money is limited by law to pay for maintaining existing infrastructure, and it's about double what the city was receiving under the pre-sale lease agreement.
"Keep in mind that if we had gotten a new lease that, say, was $50 million a year, we would have doubled the amount that we were getting for infrastructure investment, but there would be no additional dollars for direct and impact investment of this type," Mallory said. "So this is a wonderful thing to be able to report."
The total value of the fund as of Sept. 16 has grown about $94 million. That number will fluctuate as investment returns rise and fall.
