Capital Impact Partners Deepens Investment in Underserved Communities and Commitment to Social Justice In First Half of 2018
Investments in health, education, and affordable housing – as well as criminal justice reform and capacity building for place-based projects – empowered disinvested communities to excel
strong>Arlington, VA – (RealEstateRama) — Capital Impact Partners began 2018 by deepening its commitment to breaking down barriers to success for underinvested communities by expanding justice and equity. The organization announced today that it provided more than $36 million in financing during the first half of 2018. The first six months of the year also saw several new initiatives and significant developments for Capital Impact – from Capital Impact being chosen as a fund manager for Washington, D.C.’s Affordable Housing Preservation Fund to hosting a convening on the ways in which financial institutions can support the needs of returning citizens to introducing new staff and new roles to the executive management team.
“In 2018, we have focused on ensuring that the voices of marginalized communities are heard, and that they are empowered with the tools to achieve equity, opportunity, and shared prosperity,” said Ellis Carr, president and CEO of Capital Impact. “Education, health care, housing, and more are necessary infrastructure for wealth building; however, many people lack these basic but essential assets. Our investments, whether through lending or thought leadership and innovation, are breaking down the barriers of race and place, and opening pathways to success for our communities.”
Capital Impact’s financing in the first two quarters supported projects across several states, including California, Massachusetts, Michigan, Texas, and Washington, D.C. This effort helps increase access to quality health care for vulnerable people including inner-city homeless populations and immigrants; expand access to healthy food and enrich healthy food systems; create new educational opportunities; and construct more affordable places to live in communities across the United States. Capital Impact’s first and second quarter project investments are expected to serve more than 20,518 beneficiaries and create more than 305 permanent and construction-related jobs.
Expanding Equity to Marginalized Communities
Beyond its lending, Capital Impact began 2018 with several initiatives that position the organization well to continue creating social impact and expand justice for underinvested communities.
In early 2018, Washington, D.C. Mayor Muriel Bowser named Capital Impact Partners as one of two fund managers for the District’s newly created $40 million Affordable Housing Preservation Fund. Capital Impact works across all eight wards of the city to increase access to affordable housing through new or existing housing projects. Mayor Bowser invested $10 million in local funds for the Housing Preservation Fund in DHCD’s FY18 budget; Capital Impact received $5 million, which it is leveraging to invest $20 million in the fund. Washington, D.C. has experienced rapid economic development that threatens to displace many residents, especially those among the working class and elderly populations. Through this effort, Capital Impact has continued investment in the future of the communities in its own backyard.
Incarceration marks people with a label that makes it difficult to reestablish stability in mainstream society. Returning citizens – individuals re-entering society after incarceration or with a criminal record – have particular difficulty in establishing financial stability. With partner Mission: Launch, Capital Impact hosted a convening in Washington, D.C. on the role that financial institutions can play in improving financial stability for returning citizens and their families. Financial institutions, community organizations, and local government came together to identify challenges and opportunities for changing to better serve these community members.
After launching the Equitable Development Initiative with JP Morgan Chase – designed to level the playing field and support minority real estate developers to participate in Detroit’s revitalization – in late 2017, Capital Impact announced the inaugural class of developers. This two-year initiative provides participants with real estate training and technical assistance to support participants’ efforts to develop real estate in Detroit. Out of the class of 30, seven participants were selected to receive additional one-on-one mentorship and project financing to build one development each.
Executive Management Transitions
In March, Capital Impact Partners announced two significant changes to its Executive Management Team. Scott Sporte, Capital Impact’s Chief Lending Officer since 2005, assumed the newly created role of Chief Strategy & Innovation Officer. Sporte will oversee a number of functions that had previously been spread across the organization, including: development and expansion of innovative programs and initiatives, social impact management, policy advocacy, communications, and strategic partnership development. Moreover, his role looks for opportunities to amplify Capital Impact’s innovative work and drive it into new areas. Diane Borradaile, formerly of the Low Income Investment Fund (LIIF), accepted the role of Chief Lending Officer. Borradaile oversees financing to community-based health care providers, nonprofit educational institutions, affordable housing developers, retail grocers and wholesalers, and other affiliated organizations. She will further work to identify debt, equity, and grants to implement and grow the organization’s lending programs.
First and second quarter project lending highlights include:
Increasing Access to Health Care
Health care is a right that all individuals deserve, however accessing these services becomes steadily more difficult for disinvested communities. Good health is crucial for achieving success. In the first half of the year, our programs have supported health care for more than 19,651 patients in four facilities.
Roots Community Health Center is an example of what it means to be embedded in its community to address local needs. Roots serves the East Bay area of Oakland, CA, where 74 percent of residents live below the federal poverty level, and 90 percent live below 200 percent of the poverty line. This community health center particularly focuses on groups that have historically been overlooked by the health care system, such as low-income African Americans young Black men and fathers, people who are homeless, and returning citizens. Roots provides contextually appropriate care to make its patients feel comfortable.
In order to provide care to more individuals, Roots needed to expand into a new space. Through Capital Impact’s Healthier California Fund, Roots received a capacity building grant around the construction management process, including hiring a consultant to produce cash flow projections for the project. Subsequently, Capital Impact provided a $1.4 million acquisition and construction loan for the purchase and renovation of their new 6,456 sq. ft. building.
Roots will relocate its current clinic and administrative offices to this building, which will also allow the staff to increase its patient base from 4,300 to 5,286. Roots will continue to provide a wide array of services, including adult primary care, pediatrics, immunizations, lab services, health screenings, immigration health exams, women’s health, mental and behavioral health services, group and individual counseling, residence-based care, and street outreach programs (to homeless encampments). In addition, Roots focuses on the social determinants of health, supporting transitional housing and connections to housing, workforce development focusing on training individuals for careers in health care (Roots Health Academy), and apprenticeships and internships (also open to staff). Roots also operates a social enterprise (soap factory) that gives returning citizens a work history and skills for future employment.
Community Medical Wellness Centers USA, Inc. (CMWC) is a Federally Qualified Health Center located in the heart of Cambodia Town in Long Beach, California, where it provides culturally competent primary care services to low-income families. Founded in 2015, CMWC provides a full range of primary care and behavioral health services and specializes in post-traumatic stress disorder in the Cambodian community. In addition, to the 56 percent Cambodian population in the surrounding area, the community is composed of Latino (18 percent) and African-American (11 percent) residents. Ninety-nine percent of the community that this health center serves lives at 200 percent below the federal poverty level. CMWC began acquiring two other community health centers in Southern California in 2018, which it will operate as satellite clinics.
In fall 2017, CMWC performed facility improvements on its 5,915 square foot clinic, increasing the number of exam rooms to accommodate growing encounters and provider numbers, and enabling CMWC to add dental services in the following year. Capital Impact provided CMWC with a $500,000 loan through our CPCA Ventures Fund, to reimburse their cash reserves and provide working capital as CMWC expands its services. In addition to supporting the FQHC to increase its patient base, this project will provide at least 10 new permanent jobs.
Located in an area with a large immigrant population in North Orange County, CA, Korean Community Services, Inc., (KCS) is a cornerstone in a community with little financial stability. KCS supports the local immigrant population – many of whom have experienced traumatic situations – with a particular focus on the large Korean population in the area. Ninety-either percent of KCS’ patients live below the federal poverty line. It is the only FQHC in the county to provide health care services in Korean. KCS
KCS received a $200,000 loan through Capital Impact’s CPCA Ventures Fund to add dental services and staff to their main health center, expand a satellite clinic, and establish a mobile clinic. KCS previously received a CPCA loan from Capital Impact in 2016. The lack of dental services in Southern California is federally recognized as an epidemic; KCS’ dental clinic will provide thousands of low-income residents with quality dental care. Additionally, KCS wants to better serve the senior and student populations in the area, and the mobile clinic will help them meet their patients in the communities where they live and thus prevent transportation from becoming a burden to securing care. KCS currently serves around 1,500 patients per year, and expects to expand its client base to 5,000 within five years, which the renovations and mobile clinic will help to accomplish.
Across the country in Washington, D.C., low-income individuals and families have difficulty accessing quality health care, a result of few services provided in their community, lack of insurance, and other barriers. For example, Benning Heights – a community that is 99 percent minority – has a 26 percent poverty rate. The median household income is $36,000, versus $76,000 for the rest of the city. Families in the District’s Wards 7 and 8 – historically disinvested parts of the city like Benning Heights – have a particularly hard time accessing health care.
To address this disparity, Unity Health Care and So Others Might Eat (SOME) partnered to invest in a new 320,000 sq. ft. building in Northeast Washington, D.C. The Conway Center, as the building will be known, is the first project in D.C. to combine affordable housing, health care, and job training in one location for low-income and homeless community members. Capital Impact contributed $2.55 million to a larger loan for tenant improvements to a 37,659 sq. ft. health center to be run by Unity within the building. Nonprofit Finance Fund (NFF) also contributed $2.55 million, and Industrial Bank contributed $1.89 million to the loan. In the new facility, Unity will reach 23,000 individuals with primary and dental care, as well as behavioral health, lab, and pharmacy services. Unity will sublease 1,300 sq. ft. back to SOME to support their efforts to address addiction In addition, SOME will provide healthy food, clothing, job training, and affordable housing out of the rest of the building.
Providing High-Quality Education
Building opportunity for individuals and communities takes a strong foundation; high-quality education is an integral element of that foundation. Quality education, lays the groundwork for achievement for children and adults. Our charter school construction and financing support in the beginning of 2018 resulted in 654 students accessing education within their community.
In 2017, hurricanes impacted much of the Houston, TX area, leaving buildings and homes ruined. Many students lost their homes and belongings, and schools became places where communities could come together. The Rhodes School was no different. Founded by a Black woman and operated by a predominantly Black executive team, the Rhodes School serves a student body that is 95 percent Black or Latino. Ninety-two percent of students qualify for free or reduced-price lunch. The median income in the community is $44,000 per family, compared with $63,000 in Houston overall. Much of the school community lost everything that they had; the school’s own administration building was unusable after the floods and had to be renovated.
After Hurricane Harvey, the owners of the school building decided to sell; Capital Impact’s $1.35 million acquisition loan with credit enhancement allowed the Rhodes School to establish a permanent home and support its community as it rebuilds.
In Madera, CA, 30 miles north of Fresno, Ezequiel Tafoya Alvarado Academy provides quality education to a generally underserved community. Ezequiel Tafoya provides culturally and historically appropriate education for Latino students, with a focus on taking pride in history, language, and family roots. Many of the children in the region come from low-income immigrant families. About 18 percent of families live at or below the federal poverty level. Of the 592 students in grades K-8, 99 percent are Latino, 69 percent are English Language Learners, and 98 percent qualify for free and reduced-price lunch. Ezequiel Tafoya believes that healthy food helps students succeed, and it sources food from local farmers for meals at the school. In addition, the school has come to be important for community cohesion, creating a positive impact through education and healthy food policy.
Capital Impact provided a $1 million term loan to support construction of a new wing with twelve classrooms to allow Ezequiel Tafoya to expand from 592 students to 810 by 2025. In addition, Ezequiel Tafoya’s school administration had little experience with loan or construction management; Capital Impact staff provided education to help them through the process, building their capacity to manage future loans and construction.
Expanding Healthy Food Access
Food deserts and food insecurity plague low-income communities. Pathways to success require pathways to healthy food options within the reach of residents of underinvested communities. Between January and June this year, Capital Impact invested more than $500,000 to expand healthy food access to communities that often go without.
Capital Impact has invested considerably in healthy food systems and enterprises across Michigan through the Michigan Good Food Fund (MGFF), a $30 million public-private partnership loan fund that provides financing and business assistance to good food enterprises that benefit underserved communities across the state. In addition to lending to good food borrowers itself, MGFF works with intermediary lenders like Northern Initiatives to administer loans less than $250,000 to grocery stores, growers, and good food entrepreneurs. To support Northern Initiatives to extend more funding and technical assistance to several food borrowers across the state, Capital Impact provided Northern Initiatives with a $500,000 loan.
Scaling Affordable Housing and Housing Cooperatives
Housing is the most crucial social determinant for success, supporting all other rights to help communities achieve prosperity. With housing costs at record highs, affordable housing for low-income communities is critical to get families on the path to success. Through the first half of 2018, Capital Impact created 279 units of housing through five projects.
Detroit has its share of rundown buildings that have seen better days. Through an investment involving Capital Impact, Invest Detroit, Michigan Economic Development Corporation, Detroit Economic Growth Corporation, and developer Matt Hessler, the old B. Siegel Building on Detroit’s Avenue of Fashion will become a mixed-use development called 7.Liv. Detroit’s once iconic Avenue of Fashion was a destination of city residents, but has suffered from a lack of investment for many years.
This development is the first of its kind in the neighborhood, bringing together three buildings to create 10 units of housing and 20,000 sq. ft. of retail space. Capital Impact provided $4.7 million to support this project through a $1.825 million balance sheet loan and a $2.875 million loan through its Detroit Neighborhood Fund. The project will employ 27 construction workers and 30 full-time employees.
With affordable housing difficult to find across the country, unique housing models can help keep a roof over the heads of vulnerable populations. In Austin, TX, the housing boom has meant that lower-income area residents have had to move farther out of the city to afford housing. Lower-cost options exist outside of the city, but the city’s poor transportation system makes it hard for residents to commute back into the city. This creates a hardship for students, restaurant workers, and seniors in accessing school, work, and social services.
NASCO Properties, Inc. offers students, families, and older adults low-cost housing with an unusual twist. The residents of the buildings rent their properties, but run the facilities cooperatively, committing to maintain the buildings and shared spaces, hold regular meetings, and share communal meals. The Sasona co-op is a 17-unit building with shared living spaces; La Reunion is a 20-unit apartment complex with some shared spaces. Residents range from 18-60s. The rental rate is 60-70 percent of market rate, making it affordable for residents, all of whom earn 80 percent of the Area Median Income (AMI) or below. As part of this rental agreement, their rent cannot exceed 30 percent of their income. In addition, NASCO’s properties are open to all racial, gender, and sexual identities.
Capital Impact’s $2.2 million loan helped NASCO acquire existing property. Capital Impact’s ability to provide funding through the U.S. Treasury Department’s CDFI Fund Bond Guarantee program meant that NASCO’s loan could mature in 25 years, rather than the standard 10 years, providing security for NASCO and allowing the rents for its residents to remain low.
ROC USA has supported residents of mobile home communities to determine their futures by taking ownership of their communities. Conifer Green Cooperative, Inc. is a 75-unit, 55+ manufactured home community in Kingston, MA. Located just 35 miles south of Boston, Kingston itself is a high-cost market. There is little other affordable housing available in the region, especially for older adults on fixed incomes. However, ninety-three percent of the households in the community live below 80 percent of AMI while 68 percent of households live below 50 percent AMI, reinforcing the need for local affordable housing.
One of two manufactured home communities in the area, residents of Conifer Green found that their community could be sold to an outside investor that owns many properties in the region, potentially leading to rising rents. Instead, Conifer Green’s approximately 150 residents decided to create a cooperative and purchase their community, managing rent and maintenance themselves. Capital Impact purchased a $2.55 million participation in this ROC investment. Having a stable community that cannot be sold out from under them gives the residents of Conifer Green the ability to create equity, and thus live more secure lives.
Like Conifer Green, Wamsutta Residents Association, Inc. is a 55+ manufactured home community, with 84 units and approximately 168 residents in North Attleboro, MA. ROC USA supported Wamsutta to purchase their community with a loan in 2011. Ninety-three percent of community residents live below 80 percent of AMI and 66 percent of the community lives below 50 percent AMI, considered very low income. With few other affordable options in the area, maintaining affordable housing where they could control the cost of rent was pivotal.
With their loan maturing in a few years and housing rates and prices climbing ever higher, the Wamsutta community sought a new loan with a low rate to help them maintain their cost of living, as well as make critical community improvements. Capital Impact supported the community with a $1.5 million loan at a lower rate than their original loan. In addition, Leviticus 25:23 Alternative Fund and ROC maintained their participation in the original loan. Through this partnership, Wamsutta was able to maintain affordable housing for older adults in a region that does not provide many other options.
In a long-awaited deal, Capital Impact provided a $4 million loan and $9 million in New Markets Tax Credits (NMTCs) as part of a $26.7 million deal to create The Corner, a mixed-use development on the site of Detroit’s former Tiger Stadium. The stadium was torn down in 1999 and sat empty; in 2007, the city of Detroit called for development of the land. The Corner, one of four developments on the land, will establish 111 residential units – with 20 percent at 80 percent of AMI – and more than 25,000 sq. ft. of retail space. Approximately 60 percent of the retail space is reserved for Detroit businesses.
The Corner creates badly needed affordable residential options and expands density in Corktown, which connects the Central Business district with Southwest Detroit. The project will creates more than 400 jobs, between construction and retail; 50 percent of those jobs are being held specifically for Detroit residents. In fact, at least 121 of the 237 construction jobs have to go to low-income persons; at least 90 of the 150 permanent jobs have to go to low-income persons. The Enterprise Foundation and Local Initiatives Support Corporation participated in the loan, with Goldman Sachs as the NMTC investor.
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About Capital Impact Partners: Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. We champion social and economic justice for underserved communities to foster good health, economic opportunity, and interconnectedness. Through mission-driven lending, incubating social impact programs, impact investing, and policy reform we partner with local communities to create equitable access to health care and education, healthy foods, affordable housing, and dignified aging for those most in need. We have disbursed more than $2.5 billion to revitalize communities over the past 35 years. Our leadership in delivering financial and social impact has resulted in Capital Impact earning a “AA-” rating from S&P Global and being recognized by Aeris since 2005 for our performance. Headquartered in Arlington, VA, Capital Impact Partners operates nationally, with local offices in Detroit, MI, and Oakland, CA.
