TOD Lending
The Equitable Transit-Oriented Development Accelerator Fund (ETODAF) was created by LISC Boston, The Boston Foundation, and the Hyams Foundation in 2014 to provide developers with streamlined access to acquisition and predevelopment financing that can be used to buy and advance strategic properties along transit corridors. In 2019, Partners Healthcare answered LISC's call to join the foundations in the fund as an equal investment partner.
The Fund has invested in rental and homeownership units, in new construction and preservation, and in diverse communities including Gateway Cities, suburban communities, and Boston neighborhoods. Equitable transit-oriented development helps ensure residents have equitable access to affordable transit which often translates to access to jobs, education, health care, shopping, services, other critical resources, and amenities. ETODAF provides critical early-stage financing that enables fast action to acquire key parcels near transit, replaces the cash equity developers otherwise need to buy properties in a hot market, and it finances the early, high-risk predevelopment costs that many others lenders will not finance.
How the Fund Works
To establish the fund in 2014 the foundations each invested $1.5 million as Program Related Investment (PRI) capital for 10 years at a very low interest rate. LISC paired that with a $1 million MassWorks grant from the Executive Office of Housing and Economic Development through MassDevelopment, resulting in a total revolving loan fund of $4 million.
LISC has leveraged that capital with $7 million of its own funds and a similar amount from other community development institutions. Since its start and with the latest addition of Partners HealthCare, the Fund has invested $18 million for TOD projects in Boston and throughout Massachusetts. It has seeded the acquisition and development of more than 1,500 apartments within walking distance of transit - with 1,100 of those homes being affordable to low-income tenants.
Where done successfully by a community-focused developer, TOD also attracts businesses and jobs, maximizes existing infrastructure, and capitalizes on new investments to make neighborhoods more vibrant. The Fund can be used throughout the Commonwealth. It has invested in 13 neighborhoods to-date, empowering community developers revitalizing their own communities in some cases and staving of displacement in others by preserving existing or naturally occuring affordable housing.
ETODAF provides financing in the form of subordinate loans above the amount typically provided by a Lead Lender's loan. The financing covers the loan-to-value (LTV) gap, predevelopment expenses and holding costs. The Fund invests in projects based on alignment with its equitable TOD mission, and the impact and feasibility of the project.
ETODAF Acquisition/Predevelopment Loan Term Sheet
ETODAF Predevelopment Only Loan Term Sheet
Project underwriting will assess:
- Impact of the project on the goals of equity, affordability, transit proximity and neighborhood transformation
- Capacity of the borrower and security of the loan
- Timing and adequacy of take-out sources of funding including funding for holding costs
- Value and appraisal standards
- Readiness to proceed and a strong case for strategic land acquisition
