From Affordable Housing Finance

Industry players embrace Opportunity Zone incentive.

Out of the 2017 Tax Cuts and Jobs Act came a new community development tool aimed at spurring investment in low-income neighborhoods.

With high hopes, many in the affordable housing and community development industry are exploring how to turn an idea into reality by utilizing this resource to benefit the communities where they already work and the people who live there.

“We see it as a critically important new tool that can have significant impact for affordable housing and community development, especially for economic development in communities that haven’t seen capital investment in a long time,” says Lori Chatman, senior vice president of Enterprise Community Investment and president of Enterprise Community Loan Fund.

For Local Initiatives Support Corp. (LISC) and its affiliates National Equity Fund (NEF) and New Markets Support Co. (NMSC), 924 of the 8,761 OZs that have been designated across the nation are in communities where they have made prior investments, so they know the area and have developer partners who work there.

“It makes sense for us to be a leader in OZs, given we know these communities, and we can try to increase development by utilizing this new source of capital. It’s pretty exciting to tap these capital gains and see if we can use them for social impact investing,” says Karen Przypyszny, managing director of special initiatives at NEF.

Przypyszny says LISC and its affiliates will focus on the social impact piece to enhance communities, provide jobs and housing, and help create more economic development.

“We’re really seeing OZs as another tool in our tool kit. On the deal side, it’s to achieve more volume and more impact in the communities,” adds Kevin Boes, president and CEO of NMSC. “On the investor side, it has great potential to broaden our investor base beyond Community Reinvestment Act–motivated banks.”

Affordable Housing Boost

BRIDGE Housing, a leading nonprofit developer, owner, and manager of affordable housing, jumped out early in 2018 on OZs. “We’re always looking for new tools to finance affordable housing,” says president and CEO Cynthia Parker.

She says BRIDGE spent time following the OZ designations in the three states where it works—California, Oregon, and Washington—and decided to create a $500 million OZ fund. “We spent time tracking what was in our footprint and realized we had a pipeline of over $1 billion of projects. We jumped in early, worked to build a financial model, and eagerly have read the regulations as they’ve been released.”

BRIDGE is in negotiations to close its first deal—an 80-unit affordable housing development serving residents at or below 50% and 60% of the area median income (AMI) in Watts, a neighborhood in South Los Angeles—in the second quarter of 2019, with two or three more deals expected to close later this year.

“The projects will all be residential, with some retail as a component,” says Parker. “But for sure, it’s a subsidy source we can use, and I think it will be very helpful for developers to further affordable housing.”

Parker adds that negotiating the first couple of deals will help BRIDGE understand the yield expectations. Depending on the yield, $1 billion of developments should result in a couple million dollars’ worth of subsidy for these projects.

“As we work through the program and begin to use it, more things will emerge. I think there’s plenty of guidance for us to get started. It’s not unlike the early days of the LIHTC program, frankly,” Parker says.


Founded in 1997, the Texas Affiliation of Affordable Housing Providers (TAAHP) is a non-profit trade association serving as the primary advocate and leading resource for the affordable housing industry in Texas. Our vision is to inspire and engage our members and stakeholders to end the affordable housing crisis in Texas.

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