East Boston is a vibrant, multicultural community nestled between highways, Logan Airport, and the sea. For generations, immigrant and working-class families have found affordable, transit-connected housing here, and today, just over half of residents are Latino.

The real estate boom in Greater Boston has dramatically changed the neighborhood, however, bringing rapid gentrification. Rents have risen sharply – sometimes by as much as 22% in one year – and new luxury apartment and condo complexes are proliferating.

So, when Tanya Hahnel, project manager at the East Boston Community Development Corporation, saw the “Blue Line Portfolio” for sale in early 2022 – 36 multi-family houses with 114 rental units – she saw an opportunity. She reached out to Mike Leyba, co-executive director of City Life/Vida Urbana, which had partnered with EBCDC before to buy and preserve some affordable units in East Boston.

Through a fund manager fellowship program, Mike, who was on the board of Boston Impact Initiative, and BII Investment Director Henry Noël Jr. had been learning about the Kansas City-based nonprofit Trust Neighborhoods’ use of mixed-income neighborhood trusts (MINTs) to buy and preserve affordable housing.

The East Boston houses were listed for $47 million, and the nonprofits knew they would be competing with developers eager to buy them. They could secure some financing through the City of Boston, but they still had to raise millions more from private sources. That’s where BII came in – and BII board member Lisa Owens, executive director of the Hyams Foundation.

The Boston-based foundation focuses on increasing economic, racial, and social justice and power within low-income communities. At BII, meanwhile, we were preparing to launch Fund II to support impact-focused entrepreneurs of color and community-controlled real estate. Investing in this deal fit squarely within our criteria, and it was backed by City Life, a trusted community partner and tenant advocate.

At a time when cities across America are facing dire housing affordability crises, we need to mobilize capital on a massive scale for socially just, inclusive solutions.

We all have deep ties in Boston, and we leveraged our connections to engage other funders. Members of BII’s board and Investment Committee also worked to help maximize the impact of the MINT, focusing on three priorities:

Deep permanent affordability to prevent displacement: Initially, less than half of the East Boston Neighborhood Trust portfolio would be affordable to households at 60% of the area median income (AMI) – yet large numbers of East Boston residents are at 30–60% of AMI. By partnering with the City of Boston to obtain public subsidies, we were able to achieve deep affordability for a majority of the units. The transaction also leveraged deed restrictions to make the units affordable in perpetuity.

Community voice and power: To ensure truly inclusive governance, EBCDC and Trust Neighborhoods worked with City Life and other tenant advocates to design a trust stewardship committee board with seats for both residents and representatives of local community organizations. This structure, overseeing an LLC operating board of additional neighborhood stakeholders and real estate experts, balanced a vested interest in the community with the people working to keep these units affordable in perpetuity.

Leveraging multiple public, private and philanthropic capital sources: The deal itself was built on an integrated capital stack that combined debt, equity, and grants from public and private investors, including subordinated loans from BII and philanthropic institutions, to mobilize a total of $52.5 million. No single investor would have been able to finance the purchase alone, but by mobilizing multiple sources of capital, we made it possible.

This financing model, in turn, requires trusting relationships: BII, City Life and the Center for Economic Democracy have made it a priority to build social capital, and together we convened impact investors, city officials, and philanthropic foundations in Boston, encouraged them to get involved, and shared BII’s analysis and due diligence to make it easier for other investors to participate.

Almost a year later, EBCDC has fully de-leaded 47 units, replaced 10 roofs, and made several other improvements. By summer’s end, 38 units will soon turn over from student to family housing. Two local Latino families with children have already moved in, both prioritized because they were staying in a motel after the house where they lived was condemned. The waitlist for the remaining units already exceeds 500 people and continues to grow.

Every dollar, every investor, every compromise, and creative approach was essential to this deal’s success. Without stakeholders deeply committed to our place-based goals of community ownership and power in East Boston, the MINT wouldn’t have happened.

Jason Dehaemers, chief product officer at Trust Neighborhoods, told us a critical factor was that BII wasn’t just a funder, but also a gateway into Boston’s robust philanthropic community, which was “transformational.” From our perspective, this was a chance to show what is possible, and to introduce the MINT model in Massachusetts, where we believe it holds enormous promise.

There are real challenges. The sharp rise in interest rates, combined with escalating construction and acquisition costs, has created unfavorable real estate market conditions, with a significant drop in inventory, but little change in prices. Still, we have two more deals like this in the pipeline. It will take time, because each involves many players, and the financing is complex. BII’s Fund II is filling a key gap for flexible financing, but we need more capital players to join us.

Trust Neighborhoods is raising a fund to proliferate the MINT model, and City Life is launching its own anti-displacement real estate fund. At a time when cities across America are facing dire housing affordability crises, we need to mobilize capital on a massive scale for socially just, inclusive solutions like the EBNT. Community ownership and control not only protect affordable housing, but also keep decision-making and the revenue and wealth these projects create within the neighborhood. That is the kind of transformative change we need, in Boston and nationwide.