Opportunity Alabama (“OPAL”) is seeking experienced partners to assist in bringing impactful development to Alabama’s Opportunity Zones. We need developers to help us scale deals and diligence professionals to help us underwrite them. If you have experience with developing or underwriting industrial, commercial, housing, broadband, or public-private partnership transactions, we’d love your assistance.
WHAT IS OPAL?
Opportunity Alabama (or OPAL) is a nonprofit initiative dedicated to connecting investors with investable assets in Alabama’s Opportunity Zones. By using a data-driven approach, we bring investors, opportunities, communities, and key institutional supporters together to generate real returns while improving economic vitality and quality of life.
WHAT IS THE PIPELINE DEVELOPMENT INITIATIVE?
OPAL has identified over 150 potential OZ real estate or tangible property-anchored development opportunities across Alabama – and we know there are hundreds more out there. Those projects fall into the following buckets, arranged roughly by asset class, level of dealflow, and stage of dealflow (as explained below):
Dealflow Stages. Our process for screening deals takes place across three stages:
- Stage 1: Initial Screen. We collect sufficient information from whoever informs us of the potential deal to determine whether there is enough merit to the idea to justify additional engagement. Because deals come from such a wide variety of sources (landowners, developers, elected officials, etc.), opportunities vary drastically in their level of preparedness. If the idea has merit, we cycle on to Stage 2.
- Stage 2: Predevelopment. Different projects will need different levels of predevelopment work, depending on where they come to us in the development cycle. Because most of our highest impact projects (e.g., childcare facilities or industrial site prep) come to us directly from communities, we oftentimes need to assist with developing construction cost estimates and pro formas, assessing markets, building demand studies, conducting site feasibility assessments, and more. We work with a developer partner with deep industry knowledge to prepare these materials, with the ideal outcome being that the developer partner agrees to sponsor the project.
- Stage 3: Investor Underwriting. Once a project is “shovel ready,” we review the assembled information from an investor perspective, diving deep into risk factors and potential modeling improvements before placing a project in front of a third party. We work with professional underwriters (like fund managers and bankers) to undertake this stage, with the ideal outcome being that the team underwriting the project ultimately decides to make an investment.
WHAT WE NEED. We want to establish formal relationships with seasoned real estate developers, fund managers, and other experts who can help us (a) get projects “shovel ready” and/or (b) prepare underwriting reports for third party investors.
For Stage 2 (Predevelopment) providers, this means:
- committing to review a set number of projects with OPAL (likely three or more);
- scoping demand and feasibility for potential projects;
- developing or reviewing financials, renderings, site plans, budgets, pro formas, and other materials on an as-needed basis;
- providing technical assistance to solve additional challenges that present as a project scales (e.g., environmentals, systems design or engineering, etc.) on an as-needed basis; and, broadly,
- helping get projects “shovel ready” for conversations with construction lenders and national investors.
Ideally, our service providers would be able to step in as project sponsors if the projects we have provided them actually get to “shovel ready” status.
For Stage 3 (Project Diligence), providers, this means:
- committing to write diligence reports on a set number of projects with OPAL (likely three or more);
- reviewing and quality-checking the predevelopment work presented by a project’s sponsor (irrespective of whether that project comes from our network or from a third party); and
- preparing detailed diligence reports for the OPAL team to turn into investment memoranda for our investor network (with a particular focus on return profiles, community impact, and risk factors).
WHO WE ARE LOOKING FOR. We are using this RFI to assemble a “preferred provider list” of organizations and individuals who – for Phase 2, Phase 3, or both – have one or more of the following skillsets:
- Deep experience developing or underwriting one or more of the asset classes listed under “project type” above (with a preference for providers who can assess multiple asset classes);
- Competency working across diverse array of settings (urban, suburban, and rural);
- Working knowledge of and experience with relevant federal and state incentive programs (tax credits, grants, or loans); and
- Experience with development or underwriting in severely distressed places.
As mentioned below, we have a small pool of grant dollars available to pay predevelopment expenses (for Phase 2) and reimburse diligence costs (for Phase 3). Our ideal partners would need limited or no reimbursements, particularly for transactions they decide to undertake. One of our key decision points will be identifying partners who can provide top-quality service under the most cost-competitive pricing / reimbursement models – and we are more than willing to entertain creative proposals on this subject.
WHY GET ENGAGED. Being on OPAL’s preferred provider means –
For Stage 2 providers:
- First look / access to dedicated pipeline of potential new projects.
- OPAL expertise on OZ deal qualification, structuring, and incentive layering (e.g., NMTCs, HTCs, USDA loans, etc.).
- Direct access to Opportunity Fund capital for “shovel ready” projects.
- Potential for grants to cover predevelopment expenses.
For Stage 3 providers:
- First look / access to dedicated pipeline of quality investment opportunities.
- Initial vetting and predevelopment work provided by OPAL.
- Opportunity to participate in Alabama’s first comprehensive impact investing ecosystem – and be part of a national model for how OZs can be made to work for the places that need investment the most.
- Potential for grants to cover time and expense of preparing diligence materials.
HOW TO RESPOND. If interested, please submit a 2-3 page response (not including appendices) that explicitly addresses the following questions, in order:
- Are you interested in assisting with Stage 2, Stage 3, or both?
- Why do you meet each of the qualifications listed under “Who Are We Looking For” above?
- Enclose team bios, slide decks, etc. as appendices to your response, but only if relevant / necessary beyond the core 2-3 page narrative.
- Which “Project Type” categories and sub-categories (e.g., Commercial: Hotels and Office) listed above would you consider as your “core competencies,” either as a project developer or an underwriter?
- Please enclose a representative sampling of transactions (at least 5) as an appendix to your response.
- Why are you interested in being a part of our impact-oriented ecosystem?
- How many projects are you interested in undertaking with us? Describe your internal capacity (e.g., staff, resources, etc.) to handle the workload you would like to undertake.
- See above note RE: team bios as necessary / relevant.
- Discuss your concept around pricing and reimbursement. Are there any creative solutions you can identify to stretch our limited predevelopment and diligence grant budget even further with you as a partner?
We will accept submissions on a rolling basis, but would encourage all applicants who want access to cost reimbursement in FY 2020 to submit their applications to [email protected] by December 31, 2019.