Investing $1M into Innovative Real Estate Models to Build BIPOC Wealth
Authors: Ana Ramos, Manager of Impact Investments
Last week, my colleague Melonie Tharpe wrote about community-owned real estate (CORE) projects and the power for change held by groups engaging in commercial and mixed-use real estate projects in BIPOC communities across the county. Owning real estate has been seen as part of the storied American dream, but it has also been one built for white Americans.
Indeed, the federal government implemented redlining practices in the 1930s whereby they downgraded Black neighborhoods’ creditworthiness by stating that these were, “places where property values were most likely to go down and the areas were marked in red—a sign that these neighborhoods were not worthy of inclusion in homeownership and lending programs,” according to the New York Times.
We are still living with the repercussions of redlining in 2023—in fact, there is a documented correlation between neighborhoods that were redlined and those that are being gentrified today. But there are groups across the country reclaiming vacant lots, properties, and whole blocks for their communities combating gentrification—and ensuring the future of ownership includes Black, Indigenous, and other people of color excluded by our systems.
Today, Common Future is announcing that we have invested $1 million from our investment fund to support the trailblazing work of the Kensington Corridor Trust (KCT) and Jane Place (JP), community-owned real estate and affordable rental initiatives based in Philadelphia and New Orleans, respectively.
In 2022, Common Future convened a cohort of five community-owned real estate practitioners engaging in commercial and mixed-use real estate projects in BIPOC communities across the county to share both best practices, and better understand the barriers to these types of projects together.
Community ownership is not a reality with a bank mortgage. The bank holds the deed. In addition, restrictive government definitions of household, guardianship, and citizenship have us saying no to some of the most vulnerable households before they can submit an application.
—Veronica M. Reed, Executive Director at Jane Place Neighborhood Sustainability Initiative.
“The CORE cohort with Common Future not only provided a unique opportunity for networking and collaboration with mission-driven ventures across the United States but also championed a set of best practices for investing in innovative neighborhood redevelopment efforts.”
—Adriana Abizadeh, Executive Director at Kensington Corridor Trust
Building on successful investments to support more equitable small business lending to date, and on the learnings from the cohort of CORE practitioners, we decided to invest in two organizations taking innovative approaches to real estate—one was a member of the cohort and one was not. From engaging the cohort, it was clear that patient, flexible, and investee-centered capital was needed to equitably support these innovative real estate initiatives.
We managed our due diligence process in such a way that extended that focus on being in the right relationship with both KCT and JP.
In practice that meant:
- Focusing on getting to a ‘yes’,
- Taking on responsibility
- Quantifying our partners’ unique expertise and value.
The mentality of focusing on making the investment helped us shore up gaps in due diligence or finances, rather than automatically disqualifying them. We waited to do the site visit after we felt confident in the prospective investment. We took on the responsibility of researching both organizations and we built off of KCT’s inputs with our CORE cohort so as to not duplicate efforts.
Lastly, we sought to quantify their teams and unique experiences in creative and intersectional ways. Ultimately, our goal was to get to know the leaders, learn about the communities that they’re in, and understand the impact these solutions were having in their local communities. We asked permission to visit; co-built the schedule and agenda; shared planning responsibility and asked strategic questions in a simple/consolidated way.
Both KCT and JP are located in neighborhoods that are facing rapid development and gentrification. Without this catalytic funding, they would not be able to preserve affordability in these neighborhoods. Our low-interest, long-term loan of $500,000 to KCT mirrors what the CORE cohort lifted as a need in the field—patient capital with affordable terms. KCT will use funding to purchase local commercial and residential real estate, which will be controlled by local civic and business leaders, renters, and community organizers.
In addition to investing in KCT, we invested $500,000 in patient debt to Jane Place, a community land trust, to seed its fund for acquisition and development of affordable housing for low-income renters in New Orleans. This investment will enable Jane Place to have dedicated funds for acquisition and rehab so that they can move on properties in real time, and would give them the capacity to acquire and rehab up to two properties at a time.
“The patient loan we received from Common Future was the first infusion of capital into a board-controlled Acquisition & Developed Fund we are growing to support the permanently affordable rental housing work of our land trust. The goal of the fund is twofold: 1)true community ownership, and 2)the ability to provide housing to our community free of government restrictions. ….In recent months, the A&D Fund has grown from a combination of grants and an additional patient loan. The available and flexible funds are a game changer for Jane Place.”
—Veronica M. Reed, Executive Director at Jane Place Neighborhood Sustainability Initiative.
[Common Future]’s investment evaluation process accepted shared due diligence and minimized the burden on us as capital seekers...In the world of impact investing, the availability of low-interest and patient capital is often a game-changer for organizations that prioritize long-term change over short-term gains. This aligned seamlessly with the values of the cohort; to secure the financial resources necessary to fuel their missions without being burdened by the pressure of immediate returns.”
—Adriana Abizadeh, Executive Director at Kensington Corridor Trust
Our investments in these two organizations are aligned with our investment thesis of increasing access to affordable capital for communities historically excluded and extracted from the financial system and of building power, choice, and ownership in and for communities adversely impacted by economic and racial injustice. Both JP and KCT are reclaiming land and properties for their communities, building multi-family units, preserving affordability, and ensuring that the future of these neighborhoods always includes working-class Black and brown neighbors.
Building trust and mutual respect for each other is both possible and essential to execute equitable investments. Before 2023, I had never met KCT or JP, but thanks to how our team approached introductions, due diligence, and negotiations, we built trust quickly. Which enabled us to speak openly, quickly work through unclear details, and get to a yes that felt prudent and empowering.
—Eric Horvath, former Director of Impact Investment and Lead on CORE for Common Future, now Founder & Principal, Untapped Capital Consulting.
About Jane Place
Jane Place is a Black-led Community Land Trust (CLT) and housing rights organization committed to creating sustainable, democratic, and economically just neighborhoods and communities in New Orleans. For nearly 10 years it has worked to increase the range of affordable housing options available to low and moderate income residents and advocated for housing justice across the city.
About Kensington Corridor Trust
Kensington Corridor Trust, based in Philadelphia, fosters the equitable economic revitalization of a commercial corridor and its surrounding neighborhood through local partnerships, strategic programming, and an innovative approach to moving real estate assets out of the speculative private market. Leveraging patient, flexible capital and a Neighborhood Trust Model, the KCT de-commodifies real estate assets and transitions them to neighborhood control. This pioneering model of neighborhood ownership, governance, and local economic development has the potential to keep control within the neighborhood and ensure long-term affordability.
