Breaking Ground in LA’s Little Tokyo

Rhea-AI Summary

U.S. Bank partners with Little Tokyo Service Center for a large affordable housing project in Los Angeles, providing 248 units of affordable housing and commercial space for minority-owned businesses. The project involves complex financing with over $85 million in equity financing and $83 million in debt. Construction is expected to be completed by 2026.

Financial Analyst

The announcement of U.S. Bank's involvement in the financing of a major affordable housing project in Los Angeles' Little Tokyo signifies a substantial investment in community development and social responsibility. The deployment of over $168 million in combined debt and equity financing through New Markets Tax Credit and Low-Income Housing Tax Credit deals underscores the bank's strategic use of financial instruments to support urban revitalization. This move aligns with broader trends in impact investing, where financial institutions are increasingly seeking not only financial returns but also social and community benefits.

The project stands out due to its scale and the comprehensive nature of the investment, which could set a precedent for future developments of this type. U.S. Bank's commitment to the Greater Los Angeles Area, totaling $2.3 billion in debt and $1.56 billion in equity, is indicative of a long-term strategy to foster inclusive growth and community engagement. For stakeholders, this could enhance the bank's reputation as a socially responsible entity, potentially attracting customers and investors interested in ethical banking practices.

However, the long-term success and financial sustainability of such projects are contingent upon various factors, including the effective management of the housing units, the economic vitality of the commercial spaces and the broader market conditions. It's essential to monitor the project's progress and its impact on the bank's financial performance and community development goals.

Urban Development Expert

The Go For Broke Plaza and First Street North Residences project represents a significant milestone in urban development, particularly in the affordable housing sector. The focus on providing housing for special needs populations, including veterans and individuals with AIDS, as well as supporting minority-owned businesses, reflects a comprehensive approach to community building. This project is not only about creating affordable housing but also about fostering economic opportunities and preserving the cultural heritage of Little Tokyo.

Urban development projects of this nature can have a transformative effect on neighborhoods, potentially stimulating local economies and improving the quality of life for residents. The integration of commercial space for legacy businesses ensures that the development remains rooted in the community's history and identity. Furthermore, the project's design, which incorporates the Go For Broke Monument, demonstrates a commitment to contextual urbanism, respecting and enhancing the historical significance of the site.

From an urban planning perspective, the project's potential to serve as a model for similar developments is noteworthy. It illustrates how complex financing structures can be leveraged to achieve ambitious community goals. The success of this project could inspire other cities to explore innovative financing mechanisms for their affordable housing initiatives.

Economist

The financial structure behind the Go For Broke Plaza and First Street North Residences project is a testament to the intricate mechanisms that can be employed to address socio-economic issues such as housing affordability. The use of New Markets Tax Credit and Low-Income Housing Tax Credit deals is a strategic economic approach to incentivize investment in underserved areas. These tax credits can be powerful tools for attracting private capital to projects that might otherwise be deemed too risky or unprofitable.

The project's potential economic impact extends beyond the immediate community. By providing affordable housing and supporting minority-owned businesses, the development could contribute to reducing income inequality and promoting diversity in business ownership. Moreover, such investments can lead to job creation during the construction phase and beyond, as new businesses open and require staffing.

It is crucial to consider the opportunity cost of these investments and the potential risks associated with the long-term viability of the project. The economic benefits must be weighed against the costs of the tax incentives and the financial obligations incurred by the bank. The project's alignment with economic development objectives and its expected outcomes will be key factors in determining its overall success and contribution to the local economy.

Complex and creative financing leads to the development of 248 units of affordable housing and commercial space for minority-owned businesses

NORTHAMPTON, MA / ACCESSWIRE / February 29, 2024 / U.S. Bank

Little Tokyo Service Center, Go for Broke National Education Center, U.S. Bank representatives plus other partners and funders break ground in Little Tokyo.

Originally published on U.S. Bank company blog

A new mixed-use, affordable housing development is underway in Los Angeles' Little Tokyo neighborhood. Go For Broke Plaza and First Street North Residences will provide 248 units of affordable housing plus approximately 40,000 square feet of commercial space that will house the Go for Broke National Education Center and local minority-owned businesses.

"This project is among the largest 100% affordable housing developments to be built in the City of Los Angeles," said Little Tokyo Service Center Director of Real Estate, Debbie Chen. "Beyond that, it is the realization of a Little Tokyo community vision that has been decades in the making, ever since this site was taken from the neighborhood in the aftermath of Japanese American internment during World War II."

U.S. Bancorp Impact Finance is the equity investor in the New Markets Tax Credit (NMTC) transaction and the two Low-Income Housing Tax Credit (LIHTC) deals related to the project, and is providing the construction debt for the LIHTC transaction. For this development, over $83 million in debt and over $85 million in equity financing was committed through the four different transactions.

A longtime partner of Little Tokyo Service Center since 2009, U.S. Bank has provided $466,000 through charitable giving programs over the years to support the important work they do. 

"It was a privilege to lean into this complex financial deal to help drive change," said Impact Finance Business Development Officer Drew Hammond. "My hope is that the project will not only preserve affordability for Little Tokyo residents and legacy businesses, but also stand as a symbol of reclamation and celebration of Little Tokyo's history."

Little Tokyo is in downtown Los Angeles and is home to one of the largest Japanese-American populations in North America. Portions of the neighborhood were declared a National Historic Landmark District in 1995. The Go For Broke Plaza and First Street North Residences project site has been designed to wrap around and prominently display the Go For Broke Monument that commemorates Japanese Americans who served in the United States Army during World War II. Eighty of the 248 units for residents will be designed for people with special needs, including units for veterans and people with AIDS. Some of the small businesses will include retail shops and restaurants that have been in the area for generations.

"This project is among the largest 100% affordable housing developments to be built in the City of Los Angeles."

- Debbie Chen, Little Tokyo Service Center director of real estate

"This project is incredibly meaningful to the Little Tokyo community and provides much needed affordable housing," said Impact Finance Senior Project Manager Suzanne Furay. "Not only has it been rewarding to work closely with Little Tokyo Service Center and all of the project collaborators, but within U.S. Bank, it's a proud moment because multiple teams came together to meet the needs of our clients and the community."

Construction is already underway and the development is expected to be completed in 2026.

"U.S. Bank provided a scale of investment and wholehearted commitment that was critical to ensuring First Street North's success as one cohesive master planned development," added Chen. "U.S. Bank's appreciation for the entirety of the community vision and willingness to finance all the components of this project is worth celebrating. The efforts are an exemplar for how financial institutions can make a transformative difference in a place like Los Angeles."

U.S. Bank's total commitment to date for the broader Greater Los Angeles Area is $2.3 billion in debt and $1.56 billion in equity.

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SOURCE: U.S. Bank

View the original press release on accesswire.com

What is the name of the affordable housing development project in Los Angeles involving U.S. Bank and Little Tokyo Service Center?

The affordable housing development project in Los Angeles involving U.S. Bank and Little Tokyo Service Center is called Go For Broke Plaza and First Street North Residences.

How many units of affordable housing will be provided in the project?

The project will provide 248 units of affordable housing.

What is the total commitment of U.S. Bank for the Greater Los Angeles Area?

U.S. Bank's total commitment to date for the broader Greater Los Angeles Area is $2.3 billion in debt and $1.56 billion in equity.

When is the construction of the project expected to be completed?

Construction is already underway, and the development is expected to be completed in 2026.

Who is the equity investor in the New Markets Tax Credit (NMTC) transaction and the Low-Income Housing Tax Credit (LIHTC) deals related to the project?

U.S. Bancorp Impact Finance is the equity investor in the NMTC transaction and the LIHTC deals related to the project.