Not that long ago I wrote about the seemingly mind boggling amount of money we spend, as a state, to get “affordable” housing units online. Who exactly they’re affordable for is really debatable. Because, yes, the units are kept below market rate. But that’s about all that is really deemed affordable in the process. The cost, as I wrote then, often swells to more than $500,000 per unit, which to the lay person seems like more than enough money to just build someone a single-family McMansion in most zip codes — even with the very real utility and infrastructure costs that come with building today.
If we’re willing to spend tens of millions of dollars to bring a handful of affordable rental units online at a time, why aren’t we willing to do something with a lot more permanence?
A few weeks ago I read a Substack by Benjamin Schneider, who shared a larger piece he’d written about revolving loan funds. There was a lot of useful information in that piece, which I’ve linked to here, but the most important takeaway wasn’t the headline claim that this could be the “next big thing” in housing.
Because for all the attention paid to zoning, land use, and even construction costs, a significant share of housing isn’t getting built for a much simpler reason.
The deals don’t pencil.
Across the country — including here in New York — there are projects that are fully approved, fully designed, and ready to go. Readers outside the Finger Lakes region where I’m from have written me, as this Substack has picked up steam. The projects, they tell me, clear the regulatory hurdles everyone likes to talk about. And yet, there they sit — undeveloped, unfinished, and not even a shovel having hit the earth.
Why? Because the financing doesn’t come together.
As Schneider writes, in many cases it’s not even a massive gap. It’s the last 15 to 30 percent of a project’s capital stack — a portion traditional lenders won’t take on and private equity won’t touch unless the returns are high enough to make the project unaffordable.
So it stalls, or just dies entirely.
That’s the bottleneck. Not just regulation. Not just cost. Financing.
Revolving loan funds are designed to attack that exact problem. And the mechanics matter, because they expose just how inefficient our current approach is.
Instead of pouring large, one-time subsidies into individual projects, the state creates a pool of capital that can be deployed as low-cost, short-term loans to fill those gaps. Once a project is built and stabilized, that loan is repaid. The money goes back into the fund. And then it gets deployed again.
Same dollars. Multiple projects. Over time, that changes everything.
New York has already started down this path, whether most people realize it or not.
The state’s Housing Acceleration Fund — seeded with public dollars and matched by private lenders — is built around this exact idea. It targets shovel-ready projects that are stuck purely because the financing won’t close. It doesn’t replace private capital. It just unlocks it.
That alone is a meaningful shift in how the state is thinking about housing. It’s an acknowledgment that we don’t just have a housing shortage — we have a financing problem.
But here’s where the critique enters: New York is still treating this like a temporary experiment instead of the primary strategy.
Right now, most of the state’s housing policy is built around stacking subsidies into individual projects — tax credits, grants, layered funding sources that make one deal work at a time. That system produces units, yes. But it’s expensive, slow, and almost impossible to scale. Each project absorbs millions in public dollars. Those dollars get spent once. Then we start over somewhere else.
You don’t generate real momentum that way. And that’s what housing is lacking across the state.
Revolving funds flip that model and narrative. Because public money is only filling a slice of each deal, it can be leveraged several times over by private capital. And because the loans are repaid, that same money can move from project to project. Over time, it creates a pipeline instead of a series of one-off wins.
That’s the difference between funding housing and financing production.
It also shifts what gets built. These funds tend to support mixed-income housing — projects that include below-market units, but also serve middle-income and workforce households that are increasingly locked out of development. That’s not a flaw. That’s a recognition of where the shortage actually exists.
And it’s where the politics get messy.
Some will argue that anything short of deeply subsidized housing misses the point. Others will resist the idea of government-backed capital entirely, even when it’s structured as a one-time investment that recycles itself. In my opinion, both critiques miss the bigger picture.
We’re not going to subsidize our way out of a supply shortage that spans the entire market. And we’re definitely not going to build enough housing if viable projects keep dying because the last piece of financing isn’t there.
One of the more underappreciated advantages of revolving loan funds is that they can keep projects moving even when the market turns. Housing development is cyclical. When rents flatten or borrowing costs rise, construction slows or stops altogether. Demand doesn’t disappear. Supply does, though. These funds can help smooth that cycle, pushing projects forward when private capital pulls back.
That matters if the goal is sustained production, not just bursts of activity.
Of course, none of this works if the policy is poorly designed. There are already examples where funds have underperformed because they were too complicated or too disconnected from how real-world financing works. That’s not a reason to dismiss the model — it’s a reason to get it right.
Because the broader takeaway here is bigger than any single program.
Housing policy isn’t just about zoning. It isn’t just about subsidies. It’s about capital — how it moves, where it flows, and whether it actually enables projects to get built.
Right now, New York spends a lot of money on housing. But it doesn’t always deploy that money in a way that multiplies itself. That’s the gap to fill. And until we do, we’re going to keep having the same conversation — about high costs, limited supply, and system that feels like it should be working better than it is.
Revolving loan funds won’t solve everything. But they do something most of our current policies don’t. They make more housing possible.
And right now, that’s exactly what we’re missing.
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