Case Study

Stone House Development leverages opportunity zones equity to fund Madison, Wisconsin project

New mixed-use development in Madison, Wisconsin is among the first to utilize opportunity zone investment to stimulate economic growth in downtown area.
Case Study

Stone House Development leverages opportunity zones equity to fund Madison, Wisconsin project

New mixed-use development in Madison, Wisconsin is among the first to utilize opportunity zone investment to stimulate economic growth in downtown area.

About the project

Stone House Development has developed successful projects in the vibrant and historic Tenney-Lapham neighborhood in Madison, Wisconsin. Adjacent to the popular Lyric apartment community, Stone House crafted plans to develop The Arden, a mixed-use development located at 1050 E. Washington Avenue. Today, the $54.6 million project consisting of 126 apartments, approximately 51,000 square feet of commercial office and retail space and a two-floor enclosed parking deck is under construction and expected to open in October 2020. Residents will have exclusive access to amazing amenities at the property, and the development site will soon be home to the new and highly anticipated Madison Youth Arts Center. 

The Arden fell within a qualified opportunity zone (QOF) and Stone House Development sought Baker Tilly to source investment capital utilizing the new and highly publicized program as an alternative part of their capital structure.

Baker Tilly solution

Baker Tilly’s opportunity zones (OZ) team analyzed the new law and draft regulations faced by Stone House to develop a compliant investment structure to attract capital. Baker Tilly worked with the developer and their legal counsel to produce a private placement offering to raise capital from OZ-motivated investors.

Project location at 1050 E. Washington Avenue

The map above confirms that the project location at 1050 E. Washington Avenue in Madison, Wisconsin, is situated within a QOZ.

View the interactive mapping tool

Results

Stone House announced the initial closing of the opportunity zone equity capital on August 6, 2019 and began construction. Helen Bradbury, president of Stone House, commented that, “Increasing construction costs have made raising capital more difficult as rental income is growing at a much slower rate. The use of opportunity zone capital enabled us to attract capital from new sources outside of our community.”

This mixed-use development was among the first projects funded in Wisconsin with an investment structure designed to attract third party investors motivated by the OZ benefits. The development will create construction jobs, provide housing convenient for employees working downtown, and stimulate economic growth in the downtown Madison area.

Post-closing, Baker Tilly will provide OZ compliance, tax reporting and investor relations services

Stone House plans to keep The Arden offering open for additional investment through the opportunity zone program.

View more information about the available investment

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

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