The Equitable Transit-Oriented Development Accelerator Fund (ETODAF) was created by Boston LISC, The Boston Foundation, and the Hyams Foundation to provide developers with streamlined access to acquisition and predevelopment capital that can be used to acquire and advance strategic properties along transit corridors. Definition of "Equitable Transit-Oriented Development"
The Fund encourages development and preservation of equitable, mixed-use, affordable housing that will revitalize and preserve neighborhoods. Smart transit oriented development (TOD) will reduce low and moderate income households’ combined housing- plus-transit costs, lower car use and create and increase ridership for existing and expanding transit lines.
The Accelerator Fund’s objective is to preserve, encourage and reinforce a pattern of smart growth and equity in TOD housing development in Greater Boston and Massachusetts.
How the Fund Works
The Fund utilizes the existing Massachusetts network of affordable housing lenders (Lead Lenders) in partnership with public and philanthropic lenders to advance equitable TOD projects by providing acquisition and predevelopment funding. The Fund’s Lead Lenders originate the loans, using their own loan capital. The Fund provides funding, in the form of subordinate loans, above the amount of the typical Lead Lender loan to cover the loan-to-value (LTV) gap, predevelopment expenses and holding costs.
The Accelerator Fund consists of $3.5M in Program Related Investment (PRI) capital from foundations and $1M in top loss from the Commonwealth of Massachusetts. Together with the Lead Lender capital, the Fund will provide over $25M in loans for TOD projects.
The Accelerator Fund invests in projects based on alignment with its equitable TOD mission, and the impact and feasibility of the project. Boston LISC will be the Fund Manager and will coordinate with Lead Lenders to make project specific investments. For predevelopment only loans, LISC will be the Lead Lender.
Lead lenders originate the loans and underwrite them in accordance with Accelerator Fund criteria and their own underwriting standards. In order to streamline the process, the underwriting of the Lead Lender and the Fund is coordinated. Documents are standardized and designed to make the transaction as coordinated and simplified as possible. The borrower will experience one closing and The Fund will buy a participation from the Lead Lender. The Lead lender will service the loans.
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
The summary Term Sheets detail requirements for Acquisition/Predevelopment Loans and for Predevelopment Only loans.