Related Urban Development Group and Miami-Dade County have started construction on a 383-unit affordable housing development that utilizes the federal Opportunity Zone (OZ) program.
The partners say it is the largest project of its kind to combine OZ funds with low-income housing tax credits (LIHTCs), the federal Rental Assistance Demonstration (RAD) program, and other resources.
The $106 million effort involves the redevelopment of the Three Round Towers community that was originally built in 1970 on nearly 7 acres in the Allapattah area of Miami-Dade County. The project includes a major rehabilitation of Towers B and C along with the construction of the Brisas del Este, a 120-affordable housing development. Tower A was substantially renovated in 2018.
“We purchased the tax credits with an Opportunity Zone fund that we created internally,” says Albert Milo Jr., president of Related Urban Development Group, the affordable housing arm of Related Group. “We created our own fund and then reinvested the proceeds by buying the credits.”
That raised about $24 million that was invested into the deal. Another $11 million went to a separate project, so a total of $35 million in OZ investments went to support two deals.
Typically, a developer would sell the LIHTCs to a syndicator or an investor. In this case, Related Urban purchased the housing credits with its OZ fund.
Enacted as part of the 2017 tax reform package, the OZ program aims to drive private investment into low-income urban and rural areas by providing tax incentives.
The team also utilized the RAD program to convert 135 public housing units in Tower B to the Section 8 platform, with those apartments being interspersed throughout the overall project. This provides a more stable funding source for those units.
The aging units were in dire need of capital improvements, so the project’s upcoming renovations will make a huge difference in the quality of life for residents, Milo says.
“It’s also taking a site that was strictly all low-income elderly public housing and now creating a mixed-income project serving residents across a spectrum all the way to 80% and 100% of the area median income,” he says.
The project takes care of the older housing stock by preserving it and also creates new opportunities for workforce housing on the same location, according to Milo.
Other financing includes HOME funds and a Purchase Money Mortgage of $18 million from Miami-Dade County. County and state surtax funds are also used.
