Matt Wiltshire is a household name in the economic development and affordable housing world in Nashville.
He worked for 15 years in the private sector before moving into the public sector, serving under three different mayors as the director of the Office of Economic and Community Development and then moving over to the Metropolitan Development and Housing Agency (MDHA) as their chief strategy officer. He also served as the chair of Hands on Nashville during the 2010 flood, which provided a crucial public service in helping organize volunteers citywide.
In 2023, he ran for Mayor, but said he now is fully focused on affordable housing issues and has no plans to run for the seat again.
Wiltshire is currently the President of the Pathway Housing Fund, a division of Pathway Lending, and spoke with us about his work and leadership in the affordable housing sector.
The Pathway Housing Fund is a division of Pathway Lending. What is the Pathway Housing Fund?
The Pathway Housing Fund was set up to acquire housing that is currently affordable, but is at risk of gentrification and keeping it affordable in perpetuity.
What do you do?
There are three things. First, identify acquisition opportunities; second, raise the financing for those acquisitions; and third, oversee the operations of the apartment buildings we acquire.
How many have you acquired so far?
Three apartment buildings totaling 119 units. One’s in Donelson, one’s in Hermitage, and one’s in Hillsboro Village.
Once you acquire an apartment what happens next?
We make modest investments to improve the properties and make sure that they remain attractive, viable, sound properties for the foreseeable future.
The problem that we’re solving is what we have seen happen dozens and dozens of times: Apartment buildings that provide good housing for Nashvillians get acquired often by out-of-state investors who paint them, landscape them, jack up the rents by 40 percent or more and displace the residents.
That’s the problem that we’re looking to solve, and we’re looking to solve it by buying those same apartment buildings that out-of-state, value-add redevelopment entities want to buy. But instead of completely renovating them, we make modest investments to ensure that they remain in good condition so that we can keep them affordable forever.
How long has the Pathway Housing Fund existed?
It is helpful to talk a little bit about what Pathway Lending is. It is a 27-year-old nonprofit bank that makes loans to entrepreneurs to whom banks aren’t ready to loan money yet.
To give a little bit more context: essentially Pathway is a nonprofit CDFI, which stands for Community Development Financial Institution. With a typical bank, you deposit your money in the bank, the bank puts 10 percent in a vault, they loan out 90 percent of the money in the form of mortgages or commercial loans. They make money on those loans, and that’s how the bank exists.
We don’t have depositors, we don’t get deposits, but banks loan us money at very, very low rates, like 1 percent or 2 percent interest. And that is where we get our capital from. Then we turn around and we make loans. Typically they’re a little bit more expensive than a bank loan, but we’re loaning to people who the banks are unwilling to loan money to yet. If a bank is loaning you money at seven percent, we’d loan you money at nine percent. But the reality is the bank isn’t loaning you money because you don’t fit the profile that they typically want to loan money to. Once those folks prove to be good borrowers with a track record, we hand them back to the bank. That’s the Pathway story.
And then the Pathway Housing Fund, we started about a year and a half ago. We’re still fundraising, but we’ve raised $30 million so far to go acquire apartment buildings. We can leverage that money two to one, so we could go borrow $60 million on top of the $30 million. So we have essentially $90 million worth of purchasing power.
Where do you raise the money from?
Bank partners. It’s from the same folks who have lent money to Pathway in the past. We’ve just gotten $30 million that’s dedicated to this effort. Banks are required under something called the Community Reinvestment Act to do good things in the community. Essentially, the federal government says, “Hey, we made capitalism work in this country. Banks, you benefit from capitalism, so you got to do good stuff in your communities.” And all banks do very good things in the community, but they don’t always know how to do all the things that they’re supposed to do.
That’s why about 30 years ago, they started lending money to Pathway, saying, “Hey, Pathway, you’re the ones who know how to lend money to disadvantaged borrowers, to small entrepreneurs. We don’t know how to do that. You know how to do that. You’ve got those relationships. You understand those borrowers. You do that work.”
Then about a year and a half ago, as we saw the housing crisis getting worse and worse and worse, we came up with this idea of [how to] preserve housing that’s affordable for the folks who work at the businesses we’re lending money to. We saw that many of our borrowers weren’t able to attract employees because people couldn’t afford to live in the city anymore. And so we’re now buying apartment buildings and keeping them affordable so that working Nashvillians can actually afford to stay in the city that they helped build.
You are a native Nashvillian and have seen Nashville grow. What are some of the positives and negatives of some of the growth you’ve been observing?
I think the growth in Nashville has been wonderful for many people — new restaurants, new jobs — but it has not been wonderful for all of us. Many Nashvillians have been priced out of the city and aren’t able to take advantage of all the new things that have come to town. That lack of balance in a city is ultimately unsustainable. One of the biggest examples of that is that many of the folks who actually work here can’t afford to live here anymore.
There is a lot of movement in the affordable housing sector. What are some promising new tools that you see on the horizon, other than the Pathway Housing Fund?
Just like you need to use many different tools to build a house, we need to use many different tools to address the affordable housing crisis that we’re facing. [We should use] everything from grants from the Barnes Fund to low-income housing tax credits to build new units to low-cost borrowing to preserve the affordable housing that we still have. That is a more overarching statement.
The specific tool that I would like to talk about is in 2024, the state passed a law allowing cities to use debt to create and preserve affordable housing. I’m hopeful that cities across our state will begin to pull this tool out of the toolbox.
Is Nashville using that tool already?
No. We are not yet. But I’m hopeful for the future.
Do you think cities like Nashville can put a dent in the affordable housing crisis without the state and federal government pulling in the same direction?
Yes, because our peer cities have. Charlotte, North Carolina, has had significantly higher population growth than Nashville over the last 20 years, but has had significantly lower housing cost increases. This has been due to a variety of factors, but a significant one is the innovative strategies that Charlotte has employed both in the public sector and in the nonprofit sector to address this challenge.
Nashville is the urban engine of the state. Do you think there could be more regional approaches when it comes to affordable housing, transit and also homelessness?
The short answer is yes. We need to address these challenges regionally. Traffic doesn’t start or stop at the county line, nor does the housing affordability crisis. Decisions in one county absolutely impact the reality in surrounding areas.
Have you already seen some regional talks happening, especially in the affordable housing arena?
THDA (Tennessee Housing Development Agency), which allocates low-income housing tax credits, takes a statewide view and has been a leader on this issue. The Pathway Housing Fund also has a statewide mandate.
Has the Pathway Housing Fund already looked at specific areas outside of Nashville?
We have, yes. We haven’t acquired any yet, but any place that’s experiencing gentrification and a rapid rise in housing costs is a place where we want to be to help preserve housing options for the folks who work in those communities. From Chattanooga to Clarksville to Knoxville to Jackson, communities across our state are facing this challenge.
Anything else you’d like to add?
We are looking for other apartment buildings. There are two audiences. One, we want more banks to give us more money. But that’s a very select, very specific list.
The broader universe of people we want to market to are owners of apartment buildings. If there is anybody out there who owns an apartment building that’s affordable, who is interested in seeing it remain in good hands. We’d like to talk to them.
I say that to say, if you hear about apartment buildings that folks are living in that are affordable, probably older, probably a little run down, probably need some investment in them. We want to step in and buy those apartment buildings and invest in them to bring them up to Codes [and] keep them affordable for folks who live in them today.