San Francisco—The business of community development is booming.

At least that's the way it looked at a conference sponsored by the San Francisco Federal Reserve Bank this spring. The corridors of the city's posh Fairmont Hotel were thronged with housing developers, nonprofit neighborhood groups, financiers, and economists. They were all talking about community development: how they manage to make it happen, and how others can replicate their successes.

When you're selecting your site, wading through the permitting swamp, hunting for financing, evaluating bids from contractors, and crunching the numbers to make sure your new apartment project pencils out, community development may not be something you're thinking about. But coming at the construction of new apartments from a community development perspective could be a useful tool for for-profit developers.

While the typical sources of financing for new multifamily projects have been conduits, balance-sheet lenders, agencies, and life companies, in addition to equity partners and mezzanine lenders, looking at your projects as contributors to community development can give you access to tools you may not have considered before.

For instance, if you ever build in neighborhoods experiencing economic distress, you might want to consider tapping into the New Markets Tax Credit (NMTC) program. Enacted by Congress in 2000 and administered by the Treasury Department, the NMTC program is intended to stimulate growth and investment in low-income neighborhoods.

Developers can generate the credits by lending to or investing in businesses or projects—including multifamily developments, though typically these have to include a commercial component—in designated areas.

Another option, especially if you're looking at sites that have existing buildings: historic tax credits (HTCs). While prices for low-income housing tax credits have nose-dived over the past year, the prices investors are willing to pay for historic credits have climbed to, in some cases, more than a dollar per dollar of credit.

For example, for a workforce housing redevelopment project at Crown Square in St. Louis, developers were able to generate $3.1 million in equity investment from just $2.7 million in HTCs, or $1.16 per dollar of tax credit.

Another private source of financing: “double bottom line” equity funds. These are funds that aim to produce not just decent financial returns but also measurable social returns.

One example is the Bay Area Smart Growth Fund, a $66 million real estate equity fund focused on projects that help produce community revitalization. Sponsored by the Bay Area Council, an alliance of businesses in the San Francisco Bay Area, the fund has invested $80 million in 15 deals, and so far returns have exceeded projections, according to the group's Web site.

Any of these sources can help inject equity into your deal. So when you're evaluating your next project, try thinking “community” along with “development,” and you might find you have a little more cash to work with than you'd planned.