Complex new partnerships between philanthropic foundations, non-profit community development organizations, government and private lenders are emerging to provide much-needed financing for mixed-income transit oriented development (TOD) in regions around the U.S., according to a panel at the Urban Land Institute’s October 2010 Fall Meeting and Urban Land Expo in Washington, D.C.
The panel included Aaron Miripol, President and CEO of the Urban Land Conservancy (ULC) in Denver, Colorado; Heather Hood, Great Communities Collaborative Initiative Officer at The San Francisco Foundation; and Brian Prater, Director of California Lending and Strategic Opportunities at the Low Income Investment Fund (LIIF) in San Francisco; and was moderated by Allison Brooks, Chief of Staff at Reconnecting America in Oakland, California. Funds created by these partnerships are innovative tools in addressing the unique set of challenges posed by TOD, including limited land supply and higher costs in transit-rich areas, the need for higher-risk and more-patient capital, and local land-use and policy support for workforce housing and mixed-use development.
There are about 15 funds existing or forming throughout the country, but the three discussed by the panel—$15 million in Denver created by the ULC, $60 million in Los Angeles County created by LIIF, and $50 million created by LIIF in the San Francisco Bay Area—all shared a major investment by the public sector in a top loss position (by the City and County of Denver, Los Angeles County, and the Metropolitan Transportation Commission—the Bay Area’s metropolitan planning organization–respectively). This public money (which is often pass-through federal funding, such as community development block grants or neighborhood stabilization program dollars) has leveraged tens of millions in grants and loans from national philanthropies such as The MacArthur Foundation, local foundations, community development financial intermediaries (CDFI) like Enterprise Community Partners and LIIF, as well as private banks, at blended interest rates of between 3-6% over a 3-5 year period.
The advantages of such collaboration include sharing capacity, expertise, risk and building relationships to achieve policy objectives. But they also mean negotiating control and different policy goals between the different parties, as well as adding layers of complexity to the financing. Without them, however, much new TOD would likely be unaffordable for working families, to the extent new transit-supportive development can be built, which is challenging even under more typical market conditions. A new report on CDFIs and TOD by the Center for Transit Oriented Development addresses the topic.