Capital Impact Partners Launches $20 million Diversity in Development Loan Fund and Grant Program in Washington, D.C. to Support Real Estate Developers of Color
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This fund will even support the playing field for colored real estate developers who have long been hampered by systemic racism.
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“For too long there has been no level playing field for aspiring color developers trying to get into the real estate market. As a result, many communities are not adequately represented when it comes to shaping the future of their city. By listening to their needs and tailoring a loan product for them, we hope we can broaden their vision, “said Ellis Carr, President and CEO of Capital Impact Partners and CEO of CDC Small Business Finance.
The underrepresentation of black developers is strong. NAIOP, the Commercial Real Estate Development Association, reported in a 2013 survey that only 4.4 percent of commercial real estate professionals were black. in the August 2020, only 5 percent of the Urban Land Institute members identified themselves as black or African American.
Through the DiD-DMV fund, Capital Impact will provide lower-cost, flexible pre-development and acquisition loans, thereby tapping critical early-stage financing that color developers are so often denied or only available through hard money or predatory lenders.
In addition to helping color developers, the fund is also designed to make a social impact by supporting efforts to provide critical services to communities and low-income individuals. To qualify for a loan, at least 20 percent of the housing units in a potential project must be made affordable to households with an income of 80 percent or less of the median family income (MFI).
The DiD-DMV Fund builds on a similar initiative launched by Capital Impact Detroit in 2020.
“This fund will allow color developers to pursue projects that help revitalize their communities – creating affordable housing and common spaces that community members believe will add value and benefit to their neighborhoods,” said Diane Borradaile, Chief Lending Officer at Capital Impact Partners. “The DiD-DMV Fund will promote inclusive growth by ensuring that the area’s developers better reflect the demographics of the communities in which they operate. Community-led projects also ensure that dignity and agency are central of the development process. “
Complementary to Capital Impact’s Equitable Development Initiative
The fund complements Capital Impact’s Equitable Development Initiative (EDI), a program that provides training, mentoring and enhanced access to capital to help color developers advance their careers. The program started for the first time in Detroit in 2017 and saw 86 participants. In 2019, Capital Impact expanded EDI to the DC region, where 51 developers worked through the program.
Access to capital through the DiD-DMV fund is not exclusively reserved for EDI graduates, ie all locally based developers who identify as colored personalities and have a project that meets the fund’s eligibility criteria can apply.
Borrowers who have participated in the EDI program can also apply for up to $ 100,000 in grants to cover equity capital requirements. Builders who prioritize higher housing affordability by reserving at least 20 percent of the units of their project for families or individuals earning 60 percent MFIs or less may also be eligible for these grants.
Funded the first two Diversity in Development DMV projects
Capital Impact also announced the first two projects to be funded under the new DiD DMV loan fund.
Sheriff Road Housing, Office Space and Groceries | Station 7
Capital Impact worked with EDI graduates Thomas Houston and Talayah Jackson, about the purchase of vacant lot in the Deanwood neighborhood of. finance Washington, DCs Station 7. The almost $ 1 million Loan will support Medici Road, its nonprofit community development company, develop a 17,000 square foot building with affordable housing, retail and office space.
“Capital Impact has been very proactive and conscientious about the racial justice of their organization and what it means for the products they develop and the people they serve. They are aligned with our mission, and that’s another reason I encourage other Black developers to work with Capital Impact, “said Houston.
The 12 condos are expected to house up to 54 residents and will be sold at prices affordable for DC residents who earn 80 percent of the MFI. Creating affordable housing is a critical way of building intergenerational wealth and a way for longtime residents to stay in their neighborhoods that are rapidly disappearing.
The building’s ground floor will include co-working and office space for local entrepreneurs, as well as the easternmost full-fledged grocery store in DC. The grocery store is expected to be a franchise owned and operated by local residents. The project should create 55 construction jobs.
Alabama Ave Apartments | Station 8
Just south of the Sheriff Road project, Capital Impact supported a proposed 86-unit new build community of affordable housing in the Randle Heights neighborhood of DC’s Ward 8.
This project is led by the Durrani Development Corporation, whose client, Mustafa Durrani, arrived in The United States as a political refugee aged 3 and raised in Northern Virginia. After successfully running his own state-owned construction company, Mr. Durrani is now pursuing his passion for real estate development with a focus on affordability and environmentally friendly construction. Mr. Durrani is also opening several Spanish language daycare centers across the area that will focus on bilingual English and Spanish courses for children aged six weeks to six years.
“As a developer of Color, who focuses on non-traditional projects that create unique opportunities to expand affordable housing, raising capital can be challenging. The diversity in the development of Capital Impact – DMV Loan Fund fills a necessary niche in the market by focusing on mission-based projects that support community needs while ensuring that they can be built inexpensively, “Durrani said.
Capital Impact offers one $ 2.475 million Acquisition Loans and Others $ 900,000 Advance Development Loan for this project that turns underdeveloped land currently housing an empty building into a brand new affordable shared apartment. The planned three-story (plus basement) 87,085 m² project comprises an even mix of one-, two- and three-room apartments.
Eighteen of the family-sized units will serve as permanent support housing for residents who earn 30 percent MFI. Of the remaining units, 59 residents will serve 50 percent MFIs and 9 residents will serve 60 percent MFIs. With this tiered income approach, Mr. Durrani’s project aligns with Capital Impact’s philosophy of supporting inclusive growth that benefits residents at different income levels.
Diversity in development – key concepts in the DMV loan fund
The terms of the Diversity in Development – DMV Loan Fund include:
- Loans from $ 500,000 to $ 5 million
- Loans are mainly used for acquisitions and advance developments
- Loans can be used for residential and community facilities in the DC metro region
- Residential projects must have at least 5 units, with at least 20 percent of the units affordable at 80 percent MFIs or below
- Up to 100 percent loan-to-value (LTV) for acquisition loans and up to 125 percent LTV for a combination of acquisition and pre-development financing
- Senior real estate collateral is preferred, but subordinated loans are considered
- Minimum equity contribution of 5 percent
- Loan terms up to 5 years
- In most cases only interest payments
- Interest rate equal to the applicable US Treasury rate plus 500 basis points with a lower limit of 5.5 percent
- Equity grants available in some cases
Capital Impact’s commitment to inclusive growth in DC
Based in Arlington, VirginiaCapital Impact has launched a number of locally-driven initiatives to promote fairer access to critical services. This contains:
- Providing capital and technical support to local color entrepreneurs through the Entrepreneurs of Color Fund.
- Partnership with the Washington, DC Department of Housing and Community Development (DHCD) to manage its DHCD Preservation Fund. Through these efforts we set more than $ 50 million in low-cost, flexible financing for mission-driven property developers to prevent tenants from being crowded out by maintaining thousands of affordable homes across the borough through the Tenant Opportunity to Purchase Act (TOPA).
- Expanding the opportunity for local color-owned food businesses to participate in the resilient food ecosystem and promote health equity through the $ 1 million Maintain the DC Fund.
To date, Capital Impact has more than $ 200 million about the Washington Metropolitan Area to support more than 100 projects that provide affordable housing, health care, education and healthy food.
For more information or inquiries about a Diversity in Development – DMV Loan Fund loan, please visit our website or contact Seth Whetzel at the [email protected].
ABOUT CAPITAL IMPACT PARTNER
Through capital and commitment, Capital Impact Partners supports people in building communities of opportunity that overcome barriers to success. We advocate key issues of equity and social and economic justice through on-order financing, social innovation programs, capacity building and impact investing. Our community engagement is focused on ensuring that individuals have access to quality health care and education, healthy food, affordable housing, collaborative development, and the ability to age gracefully.
Capital Impact, a not-for-profit community development financial institution, has more than. paid off $ 2.5 billion since 1982. Our leadership in creating financial and social impact has resulted in Capital Impact being rated by S&P Global and recognized by Aeris for our performance. Headquarters in Arlington, Virginia, Capital Impact Partners operates nationally, with local offices in Austin, TX; Detroit, Michigan; New York, NY; and Oakland, California. Learn more at www.capitalimpact.org.
SOURCE Capital Impact Partner
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