Envision Cayce is Much More Than Housing
By Mark Fogarty
6 min read
NMTCs Helping Transform a Nashville Neighborhood
Talk about ambitious. Nashville’s Envision Cayce project is a big, dramatic effort to transform a neighborhood by building more than 2,000 new housing units and supporting facilities like a school, a health center and a pharmacy. Complicated? The master plan alone runs to 105 pages, with 12 potential funding sources. And the New Markets Tax Credit is part of that mix that will finance the more than $600 million it is all planned to cost.
The NMTC money has been used to fund the construction of a new charter school that has just opened in the Nashville neighborhood, and the tax credits are likely to see more use in the building of crucial “amenities” to the new housing, like a health center and a YMCA.
SunTrust invested more than $9 million in tax credit equity in the Explore! Community School, which opened on the Cayce Homes site in August after a year in construction (which will continue a couple of months longer). It is intended to provide quality education for more than 800 students.
A quality school is one of the key elements in a plan to turn public housing into a mixed-income neighborhood where workforce and market-rate units will be developed alongside affordable housing. The goal is to not displace any of the current residents and add more affordable housing units while making a community attractive enough to bring in higher-income populations.
Robert Riggar, Nashville commercial banking relationship manager for a nonprofit unit of SunTrust Bank, says SunTrust prioritizes affordable housing, education and transit as top investment goals. “This project hit two of three of those big problems,” he notes.
Envision Cayce “will have such a positive impact on our community, so we wanted to support it as much as we could,” he says.
Riggar notes the project is located close to Nissan Stadium, which would be another selling point to attract mixed-income residents to move in to what had been a public housing neighborhood.
To date, the developer, Metropolitan Development and Housing Authority of Nashville, has built or started five residential projects at Envision Cayce, the latest started on August 20, as well as the charter school. Four of the five developments are mixed-income.
Chris Leutzinger, SunTrust first vice president and NMTC relationship manager, says the school is SunTrust’s first project at Envision Cayce but that it is in discussion with MDHA about other NMTC deals, such as to build a YMCA and a health center. It could also get involved in financing the residential side of the community in the future, he says, but nothing has been decided yet.
Not Just Housing
On the non-residential side, Leutzinger says, “It’s not enough to have affordable housing. You need to have direct access to community amenities.” And a key to that is the charter school, a $29 million financing.
SunTrust’s unit SunTrust Community Development Enterprises worked with three nonprofits, the Low Income Investment Fund (LIIF), the Nonprofit Financing Fund, and the Reinvestment Fund, which loaned MDHA a total of $20 million.
“We frequently use CDE partners from across the country,” Leutzinger says. (CDEs, or Community Development Entities, are eligible for allocations of the NMTC.) Two of the partners were also Community Development Financial Institutions (CDFIs), which are able to make loans.
Amy Laughlin, vice president, structured products and capital markets for LIIF, says education is a key target for the group. She says it has, “A great relationship with MDHA. We saw them as an innovative housing agency.”
She says LIIF gave NMTC training to the nonprofit Martha O’Bryan Center, the Explore! operator. “The school was a great fit for us,” Laughlin says.
LIIF’s financial contribution was $12.5 million in tax credits and a $5 million loan.
An Anchor and a Driver
“We see this school as an anchor and a driver” for Envision Cayce, Laughlin says. It will be expanding the number of students served from 200 on another site to 800 in the K-8 range. The K-5 building is now open and the grade six to eight facility is expected to be finished this month. When done, the three-story wings will total 87,000 square feet.
LIIF sees the school as part of the quality services “to provide all the different things the community needs to thrive,” she says.
Currently, the Cayce neighborhood suffers from high unemployment and poverty. According to LIIF, “The school is located in a highly distressed census tract with a poverty rate of 78 percent and unemployment rate of 29 percent.”
Leutzinger says SunTrust has funded other YMCAs with tax credits, and he says they provide crucial support for another SunTrust investment objective: wellness.
“YMCAs make a positive contribution to the wellness of low-income communities,” he says, especially through wraparound services after school.
Other amenities projects that might be in the works at Cayce include a library and a Boys and Girls Club.
The non-residential projects provide permanent jobs for residents, he says, and provide “a great focus on access to critical goods and services.”
The Envision Cayce master plan, completed in 2014, puts forth a ten to 15 year timeframe to produce 2,390 new housing units, as well as 127,000 square feet of the non-residential structures the NMTC might be used for. Its budget called for $602 million to be spent, though newer estimates put this higher, to the $700 million range.
Thinking Big
The plan “seeks to transform this neighborhood into a mixed-income, mixed use community that welcomes, supports and improves opportunities for new and long-term residents, while stimulating private investment in the neighborhood.”
Existing properties, built between 1941 and 1954, will be demolished and replaced.
Housing is the biggest intended expense: $473 million, followed by retail at $34 million and institutional at $26 million. The total non-residential budget comes to nearly $100 million. The master plan listed 12 potential funding sources. Besides the NMTC they include the LIHTC, MDHA funds, a Choice Neighborhood Initiative (CNI) grant, conventional debt, Federal Home Loan Bank Affordable Housing Program money, CDBG and HOME money from HUD, and others.
HUD’s Rental Assistance Demonstration (RAD) program will play a big role as well in turning the public housing into project-based rental assistance units.
Story Contacts:
Amy Laughlin
Vice President, Structured Products and Capital Markets Low Income Investment Fund, San Francisco
415-489-6159
Chris Leutzinger
SunTrust First Vice President and NMTC Relationship Manager
[email protected]
Robert Riggar
Nashville Commercial Banking Relationship Manager for SunTrust Bank
[email protected]
