How the Bama Works Fund mobilized private, public, and philanthropic capital to transform public housing - Stanford Social Innovation Review Article
Like many college towns, Charlottesville faces an affordable housing gap, estimated at over 4,000 units. With high housing costs and low wages, many families struggle, with African American families hit hardest by the crisis.
Established by the Dave Matthews Band in 1991, the Bama Works Fund is one of the many organizations working to address the housing crisis, having mobilized unprecedented levels of catalytic capital and cross-sector collaboration to fill one-third of the city’s affordable housing gap. Thus far, the organization has undertaken affordable housing redevelopment projects like the renovation of the Crescent Halls, South First Street, Sixth Street, and Westhaven communities: all resident-led, these initiatives not only renovate existing public housing to create hundreds of affordable housing units but also add valuable amenities, such as health clinics (in partnership with the University of Virginia), and incorporate solar energy and energy-efficient designs.
How did they do it? Put simply: community engagement, building the capital stack, and clean energy incentives.
1. Community Engagement
Bama Works Fund’s success can largely be attributed to the organization’s focus on community engagement. The initiative was first catalyzed by the violence that devastated the Charlottesville community during the August 2017 Unite the Right Rally. Originally from Charlottesville, the Dave Matthews Band had already administered more than $40 million in contributions to local charities through the Charlottesville Area Community Foundation, which had helped them build strong relationships with local organizations and positioned them well to address the city’s affordable housing challenges. In response to the Unite the Right Rally, Bama Works and the band’s management company, Red Light Management, hosted the Concert for Charlottesville, a free event for the community that raised donation-based philanthropic funds for victims of the violence and racial justice initiatives, and helped kickstart the redevelopment of public housing in Charlottesville. In 2018, Bama Works pledged $5 million in private donations to address the city’s affordable housing shortage. This funding played a key role in launching a resident-led effort to replace all public housing units and create additional affordable housing options.
Charlottesville’s public housing was, in 2017, already in dire need of revitalization, and required a cohesive systems approach. As the Charlottesville Redevelopment and Housing Authority (CRHA) aimed to redevelop the city’s public housing system, the project became viable by leveraging partnerships with a network of public, non-profit, and private groups, such as the Public Housing Association of Residents (PHAR) and private investors like Bama Works and Riverbend Development. Recognizing past mistakes, such as the wrongful demolition of Black neighborhoods like Vinegar Hill, the CRHA prioritized a community-engaged and resident-led approach, ensuring that the voices of Charlottesville residents would be heard and represented in the process. In each project, residents were placed at the forefront of decision-making and redesigning their community to ensure procedural equity. Reforming the entire public housing system in Charlottesville became a vital project, not only for the livelihoods of residents but also to serve as a model for other public housing initiatives.
Bama Works’ first affordable housing initiative was the redevelopment of Crescent Halls. Primarily serving elderly individuals and people with disabilities, the property had been in deteriorating condition before the renovation. Residents had been raising concerns about the poor living conditions—which included roaches and bedbugs, malfunctioning washing machines, water damage, broken HVAC systems causing extreme heat, and unsanitary common areas—for many years. Recognizing that the residents best understood their needs, they were closely involved through regular engagement sessions where residents could voice their concerns directly to architects and contractors (and PHAR assisted by advising the redevelopment team on the residents’ priorities and needs).
All current Crescent Halls residents were assured a renovated unit, ensuring they wouldn’t be displaced. When water damage issues during construction necessitated that all residents be evacuated, the Charlottesville community stepped in, and the local owner of Home2Suites, a hotel on Monticello Ave, generously offered discounted accommodations for the residents, with the project team covering their rent. Since the completion of the Crescent Halls renovation, Bama Works has launched several other public housing redevelopment projects, all following the same community-focused, locally supported, and resident-driven approach that made the Crescent Halls project successful.
2. Building a Capital Stack
These affordable housing development projects were made possible through innovative mixed-finance and development strategies. Redeveloping communities typically requires substantial capital investment, and many organizations lack the necessary resources or incentives to fully invest in low-income housing. A capital stack helps catalyze affordable housing projects by combining different funding sources to cover the project’s costs, blending lower-cost, long-term funding (like grants) with higher-cost funding (like loans). This layered approach makes it easier to secure financing, helping reduce the financial burden on developers and ultimately making affordable housing more achievable. For example, the Crescent Halls project combined philanthropic funding from Bama Works (5.6 percent), private investment (8.5 percent), City of Charlottesville contributions (15.9 percent), and Low-Income Housing Tax Credits (70 percent), raising a total of $94 million.
Tax credits are a key component of the capital stack; for example, the Low-Income Housing Tax Credit helps developers build or fix up affordable housing by giving tax breaks to companies in exchange for them agreeing to keep rents low for people who need it most. This incentivizes private companies to invest in affordable housing by reducing their tax burden, helping create more homes for people with lower incomes.
While LIHTC is an important part of Bama Works’ funding mix, it represents a smaller portion of the overall capital stack in the Sixth Street redevelopment, with a significant portion coming from philanthropic donations. But not every affordable housing project will have the same funding. The debt-to-equity ratio in a project’s capital stack depends on the project’s resource needs, the availability of local, state, and federal funding, and the ability to secure private or philanthropic investments. For example, Phase 1 of the Sixth Street redevelopment project includes a blend of philanthropic contributions (12.6 percent), funding from the Virginia Department of Housing and Community Development (12.9 percent), contributions from the City of Charlottesville (9.4 percent), LIHTC (39.2 percent), a Virginia Housing Loan (22.3 percent), a deferred developer fee (2.3 percent), and housing authority land (1.3 percent), making up a total of $31.84 million in capital. For projects looking to replicate Charlottesville’s approach, leveraging innovative mixed financing and available incentives like the LIHTC could be a beneficial strategy.
3. Clean Energy Incentives
Affordable housing projects often aim to incorporate clean energy features like solar panels and energy-efficient designs to reduce utility costs and promote environmental sustainability. Of course, the high initial investment costs can be prohibitive for developers focused on low-cost housing solutions. But state-level funding and creative financing strategies can be leveraged to bridge this gap.
Bama Works provides a model for overcoming financial barriers to integrating clean energy features, utilizing programs like zero-energy tax credits from the Virginia Department of Energy, Virginia Housing Innovations in Energy Efficiency (HIEE) funding, and power purchase agreements (PPAs) with solar developers. For example, the Crescent Halls redevelopment project featured solar panels funded through innovative means, such as selling reusable water bottles. The South First Street project used a PPA with SunTribe, allowing for rooftop solar installations with little-to-no upfront cost. Additionally, HIEE funding from the Virginia Department of Housing and Community Development has supported several Bama Works projects, providing $1.5 - $2 million in funding for each project to cover the costs of energy efficiency improvements.
It Can Be Done
The Bama Works Fund’s innovative approach to building affordable housing in Charlottesville demonstrates the power of community engagement, strategic capital stacking, and clean energy incentives. By mobilizing private, public, and philanthropic capital, Bama Works has successfully redeveloped several public housing communities, ensuring residents are at the forefront of the process. Their projects not only provide affordable housing but also place residents at the forefront of the decision-making process to ensure equitable outcomes for the community. They also incorporate sustainable energy solutions, reducing utility costs and promoting environmental sustainability using state-level incentives. This model of cross-sector collaboration and resident-led initiatives offers a replicable framework for addressing system-level affordable housing challenges in other communities.
-Christine Mahoney is chief innovation officer, and a professor of public policy and politics at the Frank Batten School of Leadership and Public Policy at the University of Virginia. She directs the Tadler Program in Impact Investing. This article was written in collaboration with the 2024-25 Tadler Fellows in Impact Investing in Appalachia: Adam Ashley, Skylar Brement, Dylan Craig, Jennifer Donovan, Rosemarie Dojcak, Makala Gray, Anastasia Jones-Burdick, Joshua McCray, Mariama Mohammed Sanni, Kalista Pepper, Hannah Quinn, and Jaynae Wright.