Breaking barriers: Innovative capital is making the toughest projects possible
The nation is in the middle of a severe housing crisis, with estimates suggesting developers need to build 4 million to 7 million more houses to meet current demand. Increasing new construction activity is the best way to combat the shortage, but the cost of new construction is prohibitive.
“There is not enough money to solve America’s housing crisis,” says Brett Sheehan, relationship manager at KeyBank. “As a result, we need to be excellent stewards of every penny that is directed towards affordable housing. Discipline, creativity, commitment, and leverage are all needed to get as many units on the ground as possible.”
According to Brett, creative approaches to bringing multiple sources of financing together are the key to unlocking more opportunities for new housing construction across the country. One prime example played out in Portland, Oregon, where Brett’s team was able to connect BRIDGE Housing Development with KeyBanc Capital Markets’ municipal bonds team. Ultimately, a capital stack featuring both traditional and municipal bond financing was assembled and BRIDGE was able to break ground on an affordable housing development in early 2025.
A challenging project gains momentum
Following a competitive bid process in 2017, the Tri-County Metropolitan Transit District selected BRIDGE Housing to develop a 12-story, 222-unit affordable housing project at the Hollywood Transit Center. Known as HollywoodHUB, the project broke ground in early 2025, with an expected completion in 2027.
BRIDGE Housing initially issued the RFP to multiple potential lenders to raise the $71 million required to build the project. Key responded with a blend of construction financing, a permanent loan, and equity, as is standard for these transactions. But Key didn’t stop there.
“Keeping financing and development costs low was very important for the success of this project, and this one was particularly tight,” explained Sheehan. “We needed to deliver a financing solution that kept the cost of capital as low as possible.”
Given the credit strength of BRIDGE Housing, we were in a position to do a
first-of-its-kind transaction for this tax credit financing.
Sam Adams
Managing director at KeyBanc Capital Markets
Collaboration leads to a novel approach
Adding municipal bonds from KeyBanc Capital Markets proved to be a critical piece of the puzzle. After assessing the complexities of the deal, KeyBanc Capital Markets’ municipal bond professionals and BRIDGE’s finance team worked together to curate a more creative capital stack and save critical dollars. Importantly, BRIDGE Housing already had an S&P rating from an earlier bond sale for a non-project-specific corporate raise. At the same time, Key leads the nation in working with social housing providers to issue municipal bonds, including public housing authorities, which operate similarly in the municipal bond market.
Key and BRIDGE professionals saw a unique opportunity to pursue a public offering of tax-exempt bonds to raise money directly from institutional investors that purchase municipal bonds. Serving as the bond underwriter, KeyBanc Capital Markets was able to raise $71 million in fixed-rate tax-exempt construction bonds. This was historic: it represented the first time in decades that a nonprofit housing provider has used a credit rating to issue publicly offered tax-exempt bonds for the construction of a new development.
“Given the credit strength of BRIDGE Housing, we were in a position to do a first-of-its-kind transaction for this tax credit financing,” says Sam Adams, managing director at KeyBanc Capital Markets. This was an innovative approach that leveraged BRIDGE’s strong credit rating to create a financing at a noticeably lower construction interest rate.
KeyBank’s capital experts used the power of ingenuity to assemble the right capital stack to fund the HollywoodHUB project. At the same time, Key Community Development also delivered $62 million in Low-Income Housing Tax Credits (LIHTC) and KeyBank Real Estate Capital came through with a $18.5 million permanent loan.
Leaning into relationships is an important part of finding those solutions for clients and new projects. When BRIDGE Housing put out the RFP for the capital, KeyBank’s team of local experts in Portland had already been tracking the project for years. In addition, Key had a close relationship with BRIDGE Housing and knew the developer’s track record and history. That knowledge allowed the team to be creative in finding the best solution to serve both the developer and the project. Ultimately, BRIDGE Housing saved $4 million by using this financing structure.
To successfully build a project in today’s complex environment, it’s important to
have access to a variety of financing tools.
Brett Sheehan
Relationship manager at KeyBank
Using the right tools to create financing options
Key’s innovative approach is to take a bird’s eye view of client needs, and deliver the innovation needed to fund the project whenever possible. While leveraging tax-exempt bonds required creativity, it also meant the bank had an in-place team of financial experts from a variety of sectors—construction financing, municipal capital markets, equity, permanent loans — to look at the deal from every possible angle. Every transaction is unique, and every deal is custom tailored to the project.
“To successfully build a project in today’s complex environment, it’s important to have access to a variety of financing tools,” says Sheehan. “Sometimes it's a construction loan; sometimes it's using bonds; sometimes it's using LIFT financing. We find the different products that are available and then customize a package focused on the needs of the developer.”
BRIDGE Housing saw firsthand the benefits of the team’s ability to be creative and leverage all of the lending products at its disposal to make the deal come together.
Creative thinking and a diverse team of experts and resources allowed Key to find the best solution for its client and help greenlight a critical affordable housing project.
The takeaway here is this team has a certain unwillingness to accept the status quo.
They take an innovative approach.
Ken Lombard
President and CEO of BRIDGE Housing
Contact Us to Learn More
Contact your mortgage banker, or email the HollywoodHUB transaction team:
Brett Sheehan
Sam Adams
Kortney Brown
Take a look at key.com/affordable for our latest in thought leadership and the breadth of our expertise in the affordable space.
