A multifamily property is being developed in one of Tennessee’s designated Opportunity Zones (OZs). VITA Development Group’s Kodak Crossing will bring 192 affordably priced one- to three-bedroom units to the town of Kodak in Sevier County, 15 miles east of Knoxville and in the foothills of the Great Smoky Mountains National Park. The developer projects a baseline rent of approximately $900 per month plus $125 for utilities for the units.
The workforce housing development, located behind retailer and employer Bass Pro Shops, will provide needed housing after the area recently was devastated by forest fires.
Led by managing directors Keith Melton and David Strange, Walker & Dunlop arranged a $22.1 million loan through the Federal Housing Administration’s Sec. 221(d)(4) new construction program that provides construction and permanent financing in a single loan and mitigates interest rate risk. It is one of the first OZ properties financed through the Department of Housing and Urban Development (HUD), which has started to prioritize and offer lower fees for OZ projects.
The team worked closely with the developer to ensure the terms of the financing are consistent with OZ guidance, securing a two-year construction term followed by a 40-year, fully amortizing, fixed-rate loan.
“We’re proud to have arranged this complex and unique transaction,” said Melton. “Our experience as a HUD partner has certainly played a part in our ability to lock in low rates, secure extended financing, accelerate processing, and provide confidence in execution.”
The OZ incentive was established by Congress as part of the 2017 Tax Cuts and Jobs Act to encourage long-term investments in designated low-income communities nationwide.
