For more than a decade, D.C.-based CityInterests has financed its 3.1 million-square-foot Parkside development in Ward 7 through traditional means such as bank financing, tax credits and equity.
Now CityInterests has a new way: opportunity zones.
Parkside sits squarely within the footprint of the Mayfair opportunity zone — one of 25 such zones across the District. The zones, here and across the country, are designated Census tracts that allow investors to deploy capital into low-income communities and defer or reduce their capital gains tax burden until the end of 2026.
Managing Partner Peter Farrell says CityInterests is now working with several opportunity zone investors to raise about $40 million to help fund the next three phases of Parkside, the first of which is a $45 million 191-unit multifamily apartment building that is set to begin construction in the first quarter of 2019.
“It has been a game changer for developers like ours,” Farrell said of the opportunity zones. “It’s given us an expanded pool of investors to speak with, and it’s given us additional features to help our project stand out among other projects they may be looking to invest in.”
Farrell said CityInterests has already identified an undisclosed opportunity zone investor for $9 million to support the 191-unit apartment building, to be developed by Bozzuto. It plans to raise as much as $30 million in opportunity funds for additional phases, including a 115,000-square-foot office building over retail, a 72-unit multifamily building over retail and a hotel.
Started in 2004, Parkside is a planned 26-acre development located along D.C. 295 between Jay Street and Benning Road NE. It is accessible via the Minnesota Avenue Metro Station on the opposite side of the highway.
CityInterests has thus far completed 700,000 square feet, including three schools, 104 townhomes from K. Hovnanian as well as The Grove at Parkside, a 186-unit affordable apartment complex that was built in partnership with Gilbane Development Co. CityInterests has reserved a parcel for a federal office user that could take up as much as 350,000 square feet, but the company has struggled to secure a tenant.
Article published originally via opportunity zones – Google News https://www.bizjournals.com/washington/news/2018/11/12/how-opportunity-zones-are-driving-progress-in-one.html