Construction is underway on a 172-unit workforce housing community in Braintree, Mass., with the help of a unique fund created to finance transformative, transit-oriented developments (TODs) in the region.
Landing 53, located a short walk from a commuter rail station, is one of the first projects receiving financing from the Healthy Neighborhoods Equity Fund created by the Massachusetts Housing Investment Corp. (MHIC) and the Conservation Law Foundation (CLF).
The fund is contributing $5 million in equity gap financing to the $50 million project by Cambridge developer Joshua Katzen of Heller Property Management.
Landing 53 will feature 93 one-bedroom apartments and 79 two-bedroom apartments. The homes will be affordable to middle-income households with starting rents affordable to households earning 90% to 110% of the area median income, according to officials. The mixed-use development will have commercial space on the ground floor.
The fund chose to invest in Landing 53 because it is located close to public transportation, will add workforce housing, create jobs, enhance the environment with new pedestrian walkways, and has the potential to improve the health of the community and its residents.
It has closed financing on two other projects, including Treadmark in Dorchester, Mass., which will have 83 units of mixed-income housing, including 51 affordable rental units and 32 ownership units, and about 5,000 square feet of retail space. The TOD project by Trinity Financial will transform an underutilized site that used to be the home of the Ashmont Tire Co.
Landing 53 and Treadmark are the type of high-impact developments that officials had in mind when creating the Healthy Neighborhoods Equity Fund.
Two additional projects are moving through the approval process, according to Joe Flatley, president and CEO of MHIC, a nonprofit that finances affordable housing and community development projects. Its work includes syndicating low-income housing tax credits.
The new equity fund began as a TOD effort, but fund partners recognized that certain developments could also play a big role in improving the health of its residents and others in the community. They say the lack of healthy, walkable neighborhoods with quality housing, healthy food choices, and green space and recreation, has proven to have major negative impacts on residents’ healthy. One study found that residents in the Roxbury neighborhood of Boston have a lower life expectancy than those in Cambodia, Gambia, and Iraq.
“We’re a believer in mixed-income, mixed-use neighborhoods,” Flatley says. “As we’ve gotten into it, we’ve talked with others about the relationship between health and housing.”
The Boston Foundation recently invested $1 million into the new fund. The Kresge Foundation and Robert Wood Johnson Foundation are also investors. MHIC has also been reaching out to banks, individuals interested in social impact investing, and health-care institutions.
The fund will be critical in providing gap financing. A 2011 study commissioned by the Metropolitan Area Planning Council and the Metro Boston Sustainable Communities Consortium found one of the biggest obstacles for developers trying to finance mixed-use, mixed-income TOD projects was the lack of patient, low-cost equity.
While other private equity investors would look for a return of 15% or above, the Healthy Neighborhoods Equity Fund anticipates a yield of around 10%. “It’s lower-cost equity to the projects,” Flatley says. “We also have a longer timeframe. We look for a return over a 10-year period whereas traditional equity would look at five or seven years.”
If the $30 million equity fund provides 10% of a development’s capital stack, that will be about $300 million worth of development, Flatley says.
CLF, New England’s premier environmental advocacy organization, has been concerned about the dearth of workforce housing, says Virginia Foote, director of fund development at CLF Ventures, a supporting organization of CLF.
“Our mission is to bring market-oriented strategies to solve environmental and related public health issues,” she says, noting that one of its initiatives has been to identify funding gaps that are constraining investment in the environment.
The equity fund recognizes that making improvements in the built environment we can make a big impact over the long term in people’s health, Foote says.