TIF funding: North End Project

North End is a project located north of Smokey Row Road and the Monon Trail, in Carmel, Indiana, that offers 168 high-end apartments, with 40 units serving individuals with intellectual and/or developmental disabilities (IDD), plus office and retail. Old Town Companies served as the developer on the project, while Hageman Capital purchased the TIF supported by the real estate.

Old Town Companies and project goals

Old Town Companies is a commercial real estate developer based out of Carmel, IN, that focuses on mixed-use real estate development through public private partnerships in Indiana. Old Town expanded its presence from specializing in single family residential homes, to creating a company to focus on transformative mixed-use projects in communities looking to grow.

Turning an infeasible CRE development into a driver of proceeds

Carmel has always looked to incentivize transformative projects along its city center core. While North End sat on the northern end of the City, its proximity to the Monon trail, and the lack of commercial development in that area provided an opportunity for Old Town to add housing, plus office and retail.

While mission driven housing is often needed, they’re not often profitable, and require government assistance for it to be feasible. North End was given municipal support through TIF revenues supported by the real estate development; however, Old Town needed a capital partner to monetize the TIF on the real estate.

Unlocking capital from TIF with Hageman Capital

Hageman has been an expert in commercial real estate and TIF, especially because we’ve been given TIF as developers in our own projects. In 2021, Hageman elected to purchase TIFs on real estate on behalf of developers, and subsequently created a business around acquiring TIF with our own capital, called Hageman Capital.

Old Town was financing the project through a Freddie Mac program, which meant there were several requirements traditional lenders did not require.

The project needed to have municipal incentives to qualify for this Freddie program. This came in in the form of TIF. Additionally, the project needed at least 10% of the units to be under 80% Area Median Income, which Old Town was able to accomplish by setting aside affordable units for individuals with IDDs. Lastly, Freddie’s underwriting standards are high, which often requires multiple iterations of project financials and construction budget reviews.

A Successful TIF Partnership

For the project to get started, and ultimately, the lender to be comfortable with closing the loan, Old Town needed to find a way to monetize the TIF upfront, with proceeds coming in at loan closing. Old Town needed a partner that had certainty of execution, and a partner that understands how complicated real estate closing can be, especially transactions involving Freddie Mac.

North End officially closed in December of 2021, and Old Town is set to complete the project by end of 2023. Carmel was able to utilize TIF to help create a vibrant community on the northside of the city, that also provides affordable housing to individuals with IDD.

Hageman Capital was able to make the development project a reality by purchasing the TIF bonds upfront for Old Town and providing them with the equity required to close the construction loan. Throughout the transaction, Hageman Capital maintained financing flexibility, and created solutions that were developer friendly and kept the real estate closing as the main goal. Effectively, Hageman Capital understands its role to help facilitate transactions, and not make transactions difficult.

The competitive advantage of expert partners

We understand what’s necessary to facilitate a real estate transaction. We built Hageman Capital to make real estate transactions more seamless by demystifying TIF monetization. Our experience working with real estate developers and being a developer ourselves, gives us a unique perspective and allows us to better serve a developer’s needs, especially when it comes to monetizing the TIF bonds.

Old Town has since become one of Hageman Capital’s closest partners. Our approach to buying TIF bonds has created tremendous value to their team. Most importantly, Hageman Capital’s certainty of execution have created a niche in the market and have facilitated transactions that would not have otherwise happened.

Learn about our partnership