Two former Wall Street investors have launched an affordable housing program designed to help essential-services personnel and other employees in Collier County transition from rentals to a home purchase in three years.

Naples residents Matthew Smith and Patrick Korth, who met at the University of Notre Dame as finance majors, founded Build to Rent to Own LLC, or B2R2O, to develop home-ownership opportunities for Collier’s “community workforce.” The focus is on households making between 60% and 120% of the area median income, $62,580 to $125,160, with an emphasis on essential-service personnel.

“Program participants are provided affordable rents for a three-year period while they’re working through the Housing Navigator Program to transition to homeownership and they do so with equity built into that home, so it’s an exciting model,” The Housing Alliance President Michael Puchalla told roughly 50 people who paid $200 to attend the first annual Housing Matters Luncheon on Jan. 29 at Artis—Naples. “We think it’s something that is very, very innovative.”

Puchalla explained that B2R2O would use recoverable grants through donor-advised funds for a substantial portion of site acquisition and development costs.

B2R2O is the latest tool for The Housing Alliance, launched last March as a collaboration between Collier County Community Land Trust and Housing, Education and Land Programs, which assists residents with foreclosures, mortgage assistance and anything needed to rent an apartment or purchase a home. THA’s funding is provided by Collier Community Foundation, Collier County Community and Human Services Division and private donations.

THA works with the Community Foundation, developers and other nonprofit partners, including the county Affordable Housing Advisory Committee and Habitat for Humanity, to increase Collier’s affordable housing stock.

Smith incorporated Build to Rent to Own LLC in Florida in October and presented the model to AHAC last month. Through a partnership with the Land Trust, they’ll identify undeveloped or underdeveloped sites suitable for workforce housing, construction of single-family town homes or detached homes up to two stories high.

Local philanthropists could commit capital to B2R2O projects at flexible, below-market terms through recoverable grants and program-related investments available only to nonprofits — zero- or low-interest loan-like investments that provide flexibility on prepayment and repayment.

Residents who work in Collier County would apply to B2R2O. They’d have to be employed full time, meet income and credit score minimums, and preference will be given to county employees and essential-service personnel, including teachers, deputies, firefighters, nurses, hotel workers and nonprofit employees.

Smith said he and Korth plan to develop workforce housing stock, with each project operating through a 501(c)(3) subsidiary of the Land Trust. Residents will pay rent at 30% of their income, and transition to home ownership in three years after completing THA’s Housing Navigator Program.

“It offers them the opportunity to rent their newly constructed units for affordable rates and then as they rent over the three-year period, the profit they pay into the unit goes toward a downpayment,” Smith said.

Smith and Korth both worked on Wall Street for about two years, and Smith left to work for New York City Economic Development Corp., where he said he honed his community and economic development skills and learned about funding models. Their parents live in Naples, so they moved there during the pandemic.

“I was picking bits and pieces of different models out there, kind of a funding model of the recoverable grants and trying to morph that to fit the needs of Naples,” Smith said. “We started to see firsthand the housing shortage and crisis and how that began to affect local restaurants and retail.”

They researched the issue, talking to employees of Naples Comprehensive Health and the school district, both hard hit by the crisis.

“We really came to understand the depth of the problem,” he added. “I think the crux of it is trying to activate what Naples has uniquely, this affluent philanthropic community that loves to support initiatives. Housing is just a tough nut to crack, so this is a way.”

They hope to find sites to build eight to 10 units per acre to help young professionals and young families struggling with housing costs. Their work impressed Puchalla and AHAC Chair Steve Hruby, a nationally known architect and urban planner who is the Land Trust’s president.

“These two young guys are amazing, just amazing,” Hruby said. “They have a mission, and they want to be nonprofit. These guys should be up on Wall Street making big bucks and having a Wall Street life. They were in it, but Matt said it wasn’t for him.”

It’s the latest partnership for THA, a nonprofit that serves as a hub to link aspiring homeowners, renters, property developers, local government, funders, donors and the community. THA is designed to be the go-to resource for housing countywide with a focus on workforce, lower income and senior housing.

Since its inception, THA launched the Housing Navigator Program to help residents and households gain financial and housing stability by meeting with Department of Housing and Urban Development-certified housing counselors to improve credit, create budgets, find affordable rentals, prepare for homeownership and access downpayment assistance.

Through funding by the Community Foundation, THA created the Workforce Housing Stabilization Fund to provide short-term, interest-free loans to employees experiencing housing instability. Funds cover rent or move-in costs to secure an affordable rental based on credit and current financial household circumstances.

THA also was the nonprofit partner that helped garner local and federal funding for McDowell Housing Partners’ Ekos Cadenza, a new 160-unit apartment complex for seniors ages 62 and older who earn 60% or less of the area median income that will open early this year. Collier’s AMI is $104,300.

THA also hosted Live Local Act workshops for county staff and developers, allowing them to discuss the challenges and opportunities of the 2023 state law designed to increase availability of affordable-housing opportunities for Florida’s workforce.