Development Initiative to Increase the Development Capacity of Developers of Color Across the San Francisco Bay Area

Innovative Program Provides Critical Training to Help Developers of Color Overcome Systemic Issues and Spearhead Affordable Real Estate Projects

(Oakland, CA/Arlington, VA) – While there is a critical need to address the San Francisco Bay Area’s housing crisis in a way that supports racial and economic inclusion, developers who identify as racial or ethnic minorities are severely underrepresented in a market dominated by large global and national firms. In an effort to help solve this crisis, Capital Impact Partners announced the expansion of its Equitable Development Initiative (EDI) into the region to help local real estate developers of color who represent the region’s diversity take a leadership role in shaping the development landscape within the local context. These developers have historically faced significant barriers to entering the real estate industry due to the lack of access to capital, equity, and experience resulting from generations of structural racism and disinvestment.

The program’s first cohort will provide approximately 20 emerging real estate developers with training, mentorship, and network building, as well as pathways to access the capital necessary to grow their businesses. This initiative is modeled after the successful program that Capital Impact launched in Detroit in 2018, and expanded into the Washington Metro area in 2019. Those two programs have trained 86 developers of color, many of whom have gone on to create their own organizations, build local developments, and foster peer-to-peer networks.

Tailored to the needs of local communities and markets where rising costs and displacement are increasing, the two-year program is designed to prepare emerging developers of color to pursue multifamily housing developments that are affordable to long-standing residents across Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano, and Sonoma Counties.

Participants will receive broad-based training, including project budgeting, real estate finance, project and contractor management, legal services, and community engagement, as well as local mentorship. In addition, Capital Impact is working to develop a loan product tailored to cohort graduates based on their “Diversity in Development” loan product rolled out in Detroit and the Washington Metropolitan area.

“There is an incredible talent pool of developers of color who are well positioned to work with communities to create housing solutions that maintain affordability and limit displacement,” said Ellis Carr, president and CEO of Capital Impact Partners and CDC Small Business Finance. “Like so many other issues facing communities of color, however, systemic efforts to prevent these developers from accessing capital, training, and networks has created barriers to achieving this potential. As we are doing in Detroit and the Washington Metro area, our EDI program will begin to build a more equitable real estate development ecosystem here in the Bay Area.”

The application window runs from September 22, 2021 through October 20, 2021. Capital Impact will select participants based on the following guidelines. Developers should:

•  Identify as racial or ethnic minorities;
• Be actively working to further careers in real estate development with some real estate development experience;
• Live in or near the primary metropolitan area of the program, and have a strong connection to the city/region in which they are working;
• Demonstrate a commitment to their city/region’s revitalization; and
• Be interested in responding to requests for proposals for real estate development opportunities with or without a development partner in the next 1-2 years.

Market analysis highlights key issues of inequality in development space:

At a national scope, Urban Land Institute, a global real estate and land use organization, states only 5% of its US members are African American, 4.5% are Asian, 8.5% are Hispanic or Latino, with the vast majority – 82% – identifying as White.

A market analysis of the Bay Area region conducted by Capital Impact Partners further underscored the need for this program. Below are several of the key themes:

• Though the local population is primarily Asian, Hispanic, and Black, the real estate development industry is dominated by white-owned and managed firms.
• Deep institutional bias and structural racism has created ongoing barriers for developers of color.
• The array of current capacity building programs supporting black entrepreneurs does not focus on real estate development.
• Lack of networking and peer mentoring for developers of color is a significant barrier.
• Out-migration of both Black and moderate-income households impacts the ability to create inclusive communities and drains the local talent base, further limiting the ability to build wealth through development of workforce housing and homeownership models.

Interviews conducted for the study provided the following points of feedback:

• “We as Black developers are nowhere close to being able to compete with non-Black for-profit developers. When I walk into a room…they do not treat me as an equal. We need access to the resources they get.”
• “White developers are able to access money or have money; Black people do not have wealth and investment to gain entrée into the industry.”
• “Our region is denied a better skyline because there is not enough diversity in who is defining the skyline.”

Reflections from an EDI Graduate:

Thomas Houston and Talayah Jackson, graduates of the 2019 EDI cohort in the D.C. area, went on to work with Capital Impact on the acquisition and development of a vacant lot in Washington, D.C.’s Ward 7. With nearly $1 million in financing through Capital Impact’s Diversity in Development – DMV Loan Fund, they are working to develop a 17,000-square-foot building with affordable housing, retail, and office space.

“It is extremely important for programs like Capital Impact’s Equitable Development Initiative to exist. Are there universities that offer similar courses? Absolutely. But you go back to barriers, like who can afford a $10,000 certificate course? When you look at networks and how we grew up, I didn’t know any developers. I didn’t know anybody who had a $20 million, 10-unit portfolio. And so there is nobody to teach me about development. I absolutely think programs like EDI will assist future developers in thinking differently about development,” said Houson.

You can hear more reflections from Houston and Jackson in this video.

A History of Supporting High-Impact Projects Throughout the Bay Area

Capital Impact opened its first regional office in Oakland in 1992. With more than $240 million in financing supporting 95 projects, the organization has become a mission-driven leader in increasing access to critical social services in disinvested communities and spurring economic development and wealth creation. This includes working with local partners focused on health care, education, healthy foods, affordable housing, and the ability for seniors to age in their communities with dignity.

One effort includes the Capital Impact’s role in the Partnership for the Bay’s Future, a $500 million initiative launched by the Chan Zuckerberg Initiative, along with the San Francisco Foundation, Facebook, Ford Foundation, and LISC to addresses critical housing needs, prevent displacement, and support racial and economic inclusion across the Bay Area.

As part of this effort, Capital Impact helps manage the Bay’s Future Fund and Community Housing Fund program. These unique funds provide flexible, nimble, and creative approaches that support your affordable housing financing solutions. Both Funds are open to Non-Profit Housing Developers, mission-aligned For-Profit developers, or service providers partnered with either that operate in in San Francisco, San Mateo, Santa Clara, Alameda, and Contra Costa counties

One recent example of our regional lending includes nearly $5 million in financing to Allied Housing, Inc., a minority-controlled developer. This financing is helping Allied Housing build a project in the City of Hayward to provide 125 units of affordable supportive housing. Our support helped to significantly increase their impact from the original plan of 46 units after a successful rezoning.

In another deal, Capital Impact provided a $1.3 million acquisition loan to HIP Housing to finance the $3.3 million purchase of a fully occupied, 10-unit apartment property in Redwood City. This project helps maintain affordability in a neighborhood where rent is more than twice the national median due to the proximity of local tech companies.

Capital Impact is also the largest nonprofit lender to Federally Qualified Health Centers across California. This includes several transactions with La Clínica de La Raza, a pillar of the community providing much needed medical care to traditionally underserved residents since it opened in 1971. Under the leadership of Jane Garcia, who took the helm as CEO in 1982, La Clínica has grown from just four sites in Oakland to serving more than 91,000 patients at more than 35 locations in three Bay Area counties under a $120 million budget, and it continues to grow. Its residency programs with top medical and dental institutions like University of California, San Francisco; the University of California, San Francisco; UOP; and the University of California, Berkeley are training the future workforce, while giving La Clínica patients access to specialty care.

About Capital Impact Partners:

Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. We work to champion key issues of equity and social and economic justice by deploying mission-driven financing, capacity-building programs, and impact investing opportunities.

A nonprofit Community Development Financial Institution, Capital Impact has disbursed more than $2.5 billion since 1982. In 2020, Capital Impact launched a new enterprise with CDC Small Business Finance under one leadership team and national strategy to reinvent traditional and mainstream financial systems. Our goal is to ensure these systems equitably serve communities of color to drive community-led solutions that support economic mobility and wealth creation.

Our leadership in delivering financial and social impact has resulted in Capital Impact being rated by S&P Global and recognized by Aeris for our performance. Headquartered in Arlington, VA, Capital Impact Partners operates nationally, with local offices in Austin, TX, Detroit, MI, New York, NY, and Oakland, CA.

Learn more at www.capitalimpact.org and www.investedincommunities.org.