The equity injection came from the AIC CEI-Boulos Opportunity Fund, a joint venture of Maine-based real estate fund manager CEI-Boulos Capital Management and Allivate Impact Capital that invests in Opportunity Zones.
The funding will go towards a new affordable housing development in South LA’s Vermont Square neighborhood, a low-income and historically-Black neighborhood sited in an Opportunity Zone tract. The $63 million project is being developed by local real estate firm SoLa Impact, led by Martin Muoto, a Nigerian born entrepreneur and investor who has been acquiring and rehabbing low-income housing in South LA since 2008 (see, “Agent of Impact”).
SoLa Impact has remained “committed to developing high-quality, affordable housing in underserved communities,” said Muoto, who has gained backing from the California State Teachers’ Retirement System. The project, on 43rd and Vermont, has secured $35 million in construction debt capital from Acore Capital, a San Francisco-based commercial real estate debt manager. Funds managed by SoLa Impact will put up the rest of the capital.
Modular build
Model/Z, a modular construction company founded by Muoto and his SoLa Impact co-founder Gray Lusk, will build prefabricated units at a South LA factory for the 43rd and Vermont project. “By leveraging Model/Z modular units, we can do this faster, more cost-effectively, and much more sustainably,” said Muoto.
The approach was hailed by new HUD secretary Scott Turner, who visited Model/Z’s factory last week. “The thoughtfulness that has gone into Model/Z from the people that you hired, the expertise, and then the precision by which these are produced. I’m just amazed,” Turner told Muoto, while praising his understanding of the country’s housing affordability crisis.
The US is four million homes short of meeting national demand, a gap that has nearly doubled over the past decade. Model/Z employs 150 local factory workers at fair wages to build the modular units.
Subsidized rents
The SoLa Impact project will create 188 units of affordable housing, with priority for locals who have experienced homelessness, a challenge exacerbated by the recent wildfires that swept through LA.
SoLa Impact will leverage Section 8 vouchers to subsidize their rents. Most of the units will be restricted to rents earning 80% of the area’s median income and that affordability covenant will remain in place for 55 years.
The project “will bring much needed affordable housing with wrap-around services for tenants, all while creating quality jobs through this innovative modular building approach,” said Allivate’s Noelle St. Clair.
SoLa Impact’s nonprofit affiliate SoLa Foundation will partner with other nonprofits to provide job training and placement and financial education to residents at the property.
