Model/Z Closes $32 Million Tax Credit Transaction to Unlock Financing for Modular Affordable Housing

The financing addresses one of the most persistent barriers to scaling modular housing: how to finance homes while they are being built in a factory, before they are delivered to a construction site and permanently affixed to the land. One of modular construction's greatest advantages is its ability to manufacture housing in a controlled factory environment at the same time that foundations, utilities, and other site work are underway. By performing these activities in parallel rather than sequentially, developers can significantly shorten construction schedules, reduce costs, improve quality and limit waste.

Traditional construction financing, however, was largely designed around buildings constructed directly on real estate. As a result, many lenders are reluctant or unable to advance construction funds for modules while they are still inside a factory. This financing gap often forces developers or manufacturers to carry millions of dollars of production costs themselves — delaying projects, increasing costs, and undermining many of the efficiencies modular construction is intended to create.

Model/Z's new NMTC financing is designed to help bridge that gap.

The transaction provides Model/Z with a working capital line to begin manufacturing modules ahead of a project's on-site construction schedule on behalf of its clients. This allows developers to preserve the speed advantages of modular construction while enabling Model/Z to maintain more consistent factory production, improve efficiency and further reduce costs.

The financing is expected to support approximately 800 units of near-term orders scheduled for 2026–27 delivery and help facilitate Model/Z's broader pipeline of approximately 2,500 affordable and workforce housing units. The investment is also expected to create and retain more than 117 permanent jobs, which will be accessible to residents of Watts and surrounding South Los Angeles communities. Since opening its Watts factory in 2024, Model/Z has produced more than 500 housing modules.

Model/Z's factory is also helping create pathways into skilled careers, including plumbing, electrical work, manufacturing and assembly. These accessible jobs provide opportunities for workers without four-year college degrees and represent occupations that will become increasingly important as artificial intelligence (AI) transforms other sectors of the U.S. economy.

"Housing affordability remains one of the biggest challenges facing California, and unless we fundamentally reduce the cost and time required to build housing, we will never solve it," said Martin Muoto, founder of Model/Z. "Model/Z has focused on using technology, manufacturing and standardization to bring those costs down. This transaction represents yet another important innovation: creating a financing structure that allows affordable and workforce housing to move into production sooner while supporting hundreds of accessible jobs in historically disadvantaged communities."

"We are thrilled to work with New Markets Community Capital, Greenline Ventures and our other partners to reach this milestone," Muoto added. "We believe this financing can demonstrate a model that others can replicate and ultimately help unlock significantly more modular housing throughout California and beyond." 

The financing is already supporting affordable housing developments using Model/Z units, including 105th & Central, a 90-unit affordable housing development being developed by Logos Faith Development on church-owned land in South Los Angeles. "We are proud to be one of the early beneficiaries of this New Markets Tax Credit transaction from Model/Z and their many innovations at our 105th & Central project," said Pastor Martin Porter, CEO of Logos Faith Development, a developer focused on transforming underutilized church-owned land into affordable housing. "Whenever mission, purpose and financing align, it's a match made in heaven."

Model/Z, an affiliate of SoLa Impact, combines manufacturing, standardization and AI-assisted design to reduce the cost and time required to develop housing. Its technology platform accelerates site feasibility, design, permitting and financial analysis—processes that traditionally can take months or years—while its Watts factory produces highly standardized, steel-frame volumetric housing units.

Model/Z has developed standardized configurations for affordable, LIHTC and student housing projects. Because units are designed around consistent specifications and manufacturing standards, modules can be deployed across multiple projects with limited customization. That interchangeability is an important component of the new financing model because it reduces the risk associated with financing modules before they are permanently installed at a specific project.

The $32 million NMTC allocation was provided by two Community Development Entities:

• Greenline Community Development Fund, an affiliate of Denver-based Greenline Ventures, which provides flexible capital to underserved businesses and communities, provided $18 million in NMTC allocation.
• New Markets Community Capital, a TELACU company that finances commercial, industrial and community development in low-income urban communities, provided $14 million in NMTC allocation.

The federal New Markets Tax Credit program is designed to encourage private investment in businesses and economic development projects located in economically distressed communities.

Dudley Ventures and Valley National Bank, through DV VNB Community Investment Fund, LLC, served as the tax credit investor. Dudley Ventures also participated in Model/Z's first NMTC transaction.

About Model/Z: Model/Z is a housing innovation company transforming how affordable housing is designed, financed and delivered. Built by leaders with experience in the aerospace, automotive and technology industries, Model/Z combines an AI-powered development platform with precision-engineered, steel-frame volumetric modular construction to dramatically reduce costs and compress development timelines. Its proprietary AI-enabled software helps move projects from site selection and feasibility through design and permitting in a fraction of the traditional time, while its factory in Watts, South Los Angeles, produces durable, all-electric, high-quality housing designed for rapid deployment. By partnering with affordable housing developers, municipalities, nonprofits and institutions, Model/Z is building a faster, more scalable and more cost-effective approach to addressing California's housing shortage

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SOURCE SoLa Impact