Success Story: Aeon

In a span of four years CJ, pictured above, and her two sons lost their home twice. She’s since found a home in one of Aeon’s properties in Minneapolis.

Introduction – Calvert Impact’s history with Aeon

Aeon is an affordable housing developer and manager that operates primarily in the Twin Cities of Minnesota to create and preserve affordable homes, connect clients with resources they need to stay in their homes, and build communities. Their motto is “Home changes everything,” and everything they do is focused on providing Minnesotans with a safe, stable place to call home. Since 1986, Aeon has grown and expanded from a small neighborhood community-based organization primarily focused on tax credit housing, to an organization that also develops and operates permanent supportive housing as well as acquires and preserves naturally occurring affordable housing (NOAH). These NOAH properties are typically not subsidized by government programs – thus they are naturally affordable due to a variety of factors, including location or condition of the property. To date Aeon has built, purchased, or renovated over 5,900 apartments and townhomes, providing housing stability for thousands of people each year.

How did our loan impact Aeon and the communities they serve?

Calvert Impact has a longstanding relationship with Aeon that began in 2003 with an initial loan of $500,000. Since then, we have continued to support Aeon’s work and increased our loan size throughout the past 21 years, until Aeon repaid our latest loan this past year.

In 2003, Aeon owned 1,200 affordable housing units and most of their pre-development capital came from local community development financial institutions (CDFIs). Aeon found that, while the loans were useful, the scope of financing was limited as Aeon could only use the loans for specific projects’ predevelopment activities that occur before breaking ground on a housing project. This allowed Aeon to finance predevelopment costs such as acquiring the properties, conducting the required assessments, and securing the required permits, but what they really needed was flexible financing that allowed them to meet project needs at any point in the development cycle, as well as financing that wasn’t tied to specific projects. Aeon needed funding that they could use for whatever was needed at the time. This kind of nimbleness would allow them to secure site control and acquire properties much more quickly, without having to line up project-specific financing, a process that takes more time to get the right lenders in place.

To help solve this challenge, in 2003, Aeon initiated an internal revolving loan fund, which allowed them to deploy dollars to projects as needed.

That’s when they approached the team at Calvert Impact. By partnering with us and pooling together unrestricted financing from other lenders, Aeon was able to use more flexible, unrestricted debt capital to acquire properties on a faster timeline and to pursue larger, more complex developments. This kind of unrestricted capital—typically called a balance sheet, or corporate, loan—is not tied to specific uses or properties. This flexibility enabled them to be more responsive to opportunities and scale their organization, expanding the scope of their work.

Calvert Impact also helped Aeon manage their first major corporate-level debt, enabling them to create a track record that they could call upon when looking for additional funding. “Aeon was able to secure a loan with Calvert Impact and better understand the expectations of institutional lenders, including how larger lenders view Aeon on their balance sheets, and helped familiarize our team with a corporate loan term sheet," said Caroline Horton, CFO of Aeon.

Today, Aeon benefits from a variety of lenders and as of 2024, has purchased and managed just under 6,000 units, with NOAH properties making up half of their portfolio.

How does Aeon's work support communities in the Twin Cities?

Aeon’s scope of work spans from property acquisition and management to community development, given they both develop properties and manage them. Aeon is focused on understanding the communities they serve as, “the needs of the community drive what projects we do,” said Caroline. Their Resident Connections staff focuses on housing stability and supports residents through services such as eviction prevention, emergency assistance programs, resource referrals, and community engagement opportunities. In 2023, Aeon helped 2,493 households across its portfolio receive additional support from the Resident Connections team – nearly 15% of the total residents in their properties.

Aeon also implements programs to build leadership capacity for their residents and the wider community. Aeon’s Resident Connections team and other staff members identify residents who are interested in developing leadership skills and offer them training and engagement activities. Aeon also holds a Speakers Program where residents have the opportunity to talk with local legislative leaders about their experiences living in affordable housing, developing their own voice to advocate for their communities.

Housing stability is a fundamental part of Aeon’s work and has become increasingly difficult with the end of the statewide eviction moratorium, which prohibited landlords from evicting tenants for missed rent payments through October 2021 and prohibited evicting tenants with pending rent assistance applications through June 1, 2022. However, it did not stop or cancel rent from being owed or stop the buildup of owed rent, which was due once the eviction moratorium expired. After the end of the eviction moratorium, non-profit housing organizations like Aeon were left in desperate need of financial support to continue providing safe and affordable homes for their communities. According to the Urban Institute, data from the US Census Bureau's Household Pulse Survey from June 2021 found that approximately 4.2 million adults reported being at risk for eviction or foreclosure, which would lead to $2.6 to $4.6 billion in costs incurred by the landlords to serve and process the evictions as well as an additional $8 to $50 billion in lost rent and expenses to repair units.

Aeon is responding to this challenge in several ways, focusing on short-term funding to fill current funding gaps as well as collaborating with local nonprofit housing organizations to engage state and local governments in financing the long-term solution. In the short-term, Aeon helped secure state and local funding to cover rent forgiveness costs, recover advances it made to its properties, cover deferred maintenance of properties, and fund property operating deficits. Looking longer-term, Aeon is assessing and prioritizing the recapitalization needs in its portfolio and working with a $1 billion state commitment, made in 2023, intended to finance various new affordable housing programs, including funding to expand affordable housing supply, recapitalize existing properties, stabilize supportive housing, provide rental assistance for low-income families, and fund homeless prevention programs.

Looking into the remainder of 2024 and 2025, Aeon remains focused on serving their current residents as well as expanding and preserving more affordable housing in the Twin Cities. Aeon’s work has helped thousands of residents find stable housing and empowers residents to have a voice within their communities, including by testifying 19 times in 2023 alone to help advocate for more affordable housing in Minnesota. During their annual Beyond Bricks & Mortar gathering in May 2024, Aeon’s President and CEO Dr. Eric Anthony Johnson spoke to attendees, including Aeon residents, for- and non-profit organizations, and elected officials from state and local governments, about the urgent need to jointly create solutions for housing inequalities and crisis in their communities.

One of Aeon’s residents spoke about how housing stability, provided by an affordable apartment on an Aeon property for homeless teens, changed his life. “Those first few nights in my home, I felt something new: comfort. Aeon made me feel safe,” said Aeon resident John. 20 years later John is still living at an Aeon property and shared his thoughts about the need for Aeon’s services in Minnesota, “Every day, Minnesotans find themselves with nowhere to go and with no other choice than the path that they’re dealt. They need your support.”

What we can learn from Aeon’s success

Aeon’s work highlights the importance of preserving and creating affordable housing units and engaging everyone, from residents to state governments, in finding solutions to housing instability.

1. Investor partnerships and financial flexibility are crucial for organizations that are looking to grow their community reach and need to build a track record to attract additional capital in the future development.
2. Combating housing instability and supporting quality, affordable housing is everyone’s responsibility, not just that of affordable housing organizations or residents. There is a crucial need for support from cities and states to be part of the long-term solution.
3. Implementing inclusive resident programs, such as Aeon’s Speakers Program, is an effective way to give residents an opportunity to share their experiences and empowers them to have a voice in the work towards a solution.

We are proud to support Aeon’s work in strengthening the communities they serve and providing quality affordable housing to their residents. While Aeon repaid our latest loan in late 2023 and is in the process of securing additional state and local funding to support their critical work, Aeon may again turn to support from lenders like Calvert Impact as the country emerges from the post-pandemic housing crisis. Through our lending relationship, we have had the privilege of building a trusted partnership with Aeon, helping Aeon to continue to build trust in their communities.