Can Affordable Projects Fill the Gaps With OZ Funds?

Chicago developers tap PNC for a first mortgage and OZ capital.

Ogden Commons, a 10-acre, $200 million mixed-use project in Chicago, is emerging as one of the first viable projects in the city where investors have placed qualified Opportunity Zone funds.

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A project of The Habitat Co.—in partnership with the Chicago Housing Authority, Sinai Health System, Cinespace Chicago Film Studios and the city of Chicago—the development will include roughly 140,000 square feet of commercial and retail space, along with more than 350 residential units—comprising mid-rise, flats and townhomes—over several phases.

Ogden Commons, in Chicago’s Lawndale neighborhood, is part of the Ogden Avenue Corridor Master Plan. Rendering courtesy of the Habitat Co.

Charlton Hamer, senior vice president of Habitat’s Affordable Group, says part of the financing for the first phase of residential development will come from low-income housing tax credits. “The majority of people in those units must be at 60 percent AMI—hard and fast,” explained Hamer. “When we are marketing the units, or showing the units, we’re certifying people’s income before we bring them into the building.”

The financing was executed through PNC Bank, which provided the first mortgage, as well as access to its large Opportunity Zone fund. “The major key to fulfilling the majority of our gap was through QOZ funds,” said Hamer.

Ken Rogozinski, chief investment officer at America First Multifamily Investors L.P.,  explains that it’s difficult to make projects pencil for Opportunity Zone fund investors, who typically expect to receive the deferred capital gains tax benefits, as well as returns of anywhere from 8 percent to 12 percent. “That’s probably a cost of capital that your normal affordable housing transaction can’t bear,” he said.

Ogden Commons’ mixed-use, mixed-income structure will serve many of the 10,000 to 12,000 people in the immediate area who work for Sinai Health and Cinespace, and increase diversity for underserved communities, according to Hamer.


Sector Insights rotates among market rate/luxury housing, workforce housing, low-income housing, student housing, senior housing and mixed-use.

Read the May 2020 issue of MHN.