JACKSON, Miss. – In what it said is one of the first transactions utilizing separate investors to bring Opportunity Zone Fund (OZF) equity alongside Low-Income Housing Tax Credits (LIHTC), Hope Enterprise Corp. is reporting it has closed a deal to create high-quality, affordable housing in a distressed community in Mississippi.
According to Hope, an affiliate of Hope Credit Union, the innovative financing structure addresses the issue of long-term viability of affordable housing developments by leveraging transactions on the front-end. The transaction completed for Millcreek Development in Brookhaven, Miss., is the first pairing of social investor OZF equity with LIHTC credits in the state, and is believed to be among the first in the nation, HOPE said.
“Throughout our history, HOPE’s community and economic development teams have found innovative ways to extend resources into the nation’s most economically distressed communities” HOPE CEO Bill Bynum said. “HOPE’s project in rural Mississippi demonstrates the successful deployment of Opportunity Zone Funds and serves as a template for community development financial institutions and developers to replicate nationwide.”
Highly Distressed Neighborhood
A market study found a strong demand for sustained affordable housing in Brookhaven, a southwest Mississippi town with a population of 12,000. The development is located in a highly distressed, Opportunity Zone-qualified census tract, which has a poverty rate of 24.8%, HOPE said. While Lincoln County has a long track record of blue collar jobs in the manufacturing and distribution industries, over 38% of area households earn less than $25,000 per year.
“With the special round of LIHTC by the Mississippi Home Corporation that required the use of an OZF, the gap funds from HOPE made this project possible,” said Mike Molinari, a developer with SFS. “As developers, this is one more tool to use when finding appropriate funding to create much needed affordable housing in Mississippi.
The new units will be constructed in a neighborhood, featuring sidewalks, lighting, and landscaping found in any market rate development. Construction will be completed in June 2021.