ARLINGTON, Va., July 8, 2021 /PRNewswire/ — Capital Impact Partners today launched its $20 million Diversity in Development – DMV Loan Fund (DiD-DMV) and named the first two high-impact housing and community development projects in Washington, D.C.’s Wards 7 and 8 financed through the Fund.
The new lending initiative and coinciding grant program are specifically tailored to make financing more accessible to developers of color in the D.C. metro region. These developers have historically faced significant barriers to entering the real estate industry due to lack of capital, equity, and experience resulting from generations of structural racism and disinvestment.
“For too long, there has not been a level playing field for emerging developers of color trying to enter the real estate market. As a result, many communities are not being appropriately 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 amplify 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 stark. NAIOP, the Commercial Real Estate Development Association, reported in a 2013 survey that just 4.4 percent of commercial real estate professionals were Black. In August 2020, just 5 percent of Urban Land Institute’s members described themselves as Black or African-American.
Through the DiD-DMV Fund, Capital Impact will make lower-cost, flexible pre-development and acquisition loans, unlocking critical early-stage financing that is so often denied to developers of color or only available through hard money or predatory lenders.
In addition to supporting developers of color, the Fund is designed to create social impact by supporting efforts to deliver critical services to communities and individuals living with low incomes. To qualify for a loan, at least 20 percent of a prospective project’s housing units must be made affordable for households earning 80 percent or less of the Medium Family Income (MFI).
The DiD-DMV Fund builds off of a similar initiative that Capital Impact launched in Detroit in 2020.
“This Fund will enable developers of color to pursue projects that help revitalize their communities – creating affordable housing and community spaces that community members feel bring 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 the area’s developers better reflect the demographics of the communities in which they operate. Community-led projects further ensure that dignity and agency remain at the center of the development process.”
Complementing Capital Impact’s Equitable Development Initiative
The Fund compliments Capital Impact’s Equitable Development Initiative (EDI), a program which provides training, mentorship, and increased access to capital to support developers of color to grow their careers. The program first launched in Detroit in 2017 and has seen 86 participants. In 2019, Capital Impact expanded EDI into the D.C. region where 51 developers have worked through the program.
Access to capital through the DiD-DMV Fund is not exclusive to EDI graduates, meaning any locally based developers who identifies as a person of color and has a project that meets the Fund’s eligibility criteria may apply.
Borrowers who have participated in the EDI program are also eligible to apply for up to $100,000 in grants to help cover equity requirements. Developers who prioritize deeper housing affordability by reserving at least 20 percent of their project’s units for families or individuals earning 60 percent MFI or below may also be eligible for these grants.
First Two Diversity in Development-DMV Projects Financed
Capital Impact also announced the first two projects financed under the new DiD-DMV Loan Fund.
Sheriff Road Housing, Office Space, & Grocery | Ward 7
Capital Impact worked with EDI graduates Thomas Houston and Talayah Jackson to finance the acquisition of a vacant lot in the Deanwood neighborhood of Washington, D.C.’s Ward 7. The nearly $1 million loan will support their nonprofit community development corporation, Medici Road, to develop a 17,000-square-foot building with affordable housing, retail, and office space.
“Capital Impact has been very proactive and diligent about their organization’s racial equity journey and what that means for the products they are developing and the people they are serving. They are mission-aligned with us, and that is another reason I encourage other Black developers to work with Capital Impact,” said Houston.
The 12 condo units are anticipated to house up to 54 residents and will be for sale at prices affordable to D.C. residents earning 80 percent of MFI. Creating affordable housing is a critical path to intergenerational wealth building, and a way for long-time residents to remain in their neighborhoods that are rapidly gentrifying.
The ground floor of the building will include coworking and office space for local entrepreneurs along with what will be the farthest-east full-scale grocery store in D.C. The grocery store is expected to be a franchise owned by and employing local residents. The project is expected to generate 55 construction jobs.
Alabama Ave Apartments | Ward 8
Just south of the Sheriff Road project, Capital Impact provided support for a proposed 86-unit, new construction, affordable housing community in the Randle Heights neighborhood of D.C.’s Ward 8.
This project is being led by Durrani Development Corporation, whose principal, Mustafa Durrani, arrived in the United States as a political refugee at the age of 3 and grew up in Northern Virginia. After successfully running his own government contracting firm, Mr. Durrani is now pursuing his passion for real estate development with a focus on affordability and green construction. Mr. Durrani is also opening several Spanish immersion day care centers throughout the area which will focus on dual language English and Spanish classes for children aged six weeks to six years old.
“As a developer of color focused on nontraditional projects that create unique opportunities to expand affordable housing, it can be a challenge to secure capital. Capital Impact’s Diversity in Development – DMV Loan Fund fills a necessary gap in the marketplace by focusing on mission-based projects that support community needs while also ensuring they can be built in a cost-effective manner,” said Durrani.
Capital Impact is providing a $2.475 million acquisition loan and another $900,000 predevelopment loan for this project, which will transform under-developed lots that currently house a vacant building into a brand new affordable housing community. The proposed three-story (plus cellar) 87,085 sq. ft. project includes an even mix of one-, two-, and three-bedroom units.
Eighteen of the family-sized units will serve as Permanent Supportive Housing for residents earning 30 percent MFI. Of the remaining units, 59 will serve residents earning 50 percent MFI and 9 will serve residents earning 60 percent MFI. With this tiered income approach, Mr. Durrani’s project aligns with Capital Impact’s philosophy of supporting inclusive growth that benefits residents at various income levels.
Diversity in Development – DMV Loan Fund Key Terms
The Diversity in Development – DMV Loan Fund terms include:
- Loans from $500,000 to $5 million
- Loans will primarily be used for acquisition and predevelopment
- Loans may be used for housing and community facility projects in the D.C. Metro Region
- Housing projects must include at least 5 units with a minimum of 20 percent of the units affordable at 80 percent MFI or below
- Up to 100 percent Loan-to-Value (LTV) for acquisition loans and up to 125 percent LTV when combining acquisition and predevelopment financing
- Senior real estate collateral preferred, but subordinate loans will be considered
- Minimum equity contribution of 5 percent
- Loan terms up to 5 years
- Interest-only payments in most cases
- Interest rate equivalent to the applicable US Treasury rate plus 500 basis points with a 5.5 percent floor
- Equity grants available in some instances
Capital Impact’s Commitment to Inclusive Growth Across D.C.
With its headquarters in Arlington, Virginia, Capital Impact has launched a number of locally driven initiatives to drive more equitable access to critical services. This includes:
- Providing capital and technical assistance to local entrepreneurs of color through the Entrepreneurs of Color Fund.
- Partnering with the Washington, D.C. Department of Housing and Community Development (DHCD) to manage its DHCD Preservation Fund. Through this effort, we are deploying more than $50 million in low-cost, flexible financing to mission-driven developers to prevent tenants from being displaced by preserving thousands of affordable homes across the District through the Tenant Opportunity to Purchase Act (TOPA).
- Expanding opportunity for local, people of color-owned food businesses to engage in the robust food ecosystem and increase health equity through the $1 million Nourish D.C. Fund.
To date, Capital Impact has invested more than $200 million across the Washington Metropolitan region to support more than 100 projects delivering affordable housing, health care, education, and healthy food services.
For more information or to inquire about a loan from the Diversity in Development – DMV Loan Fund, please visit our website or reach out to Seth Whetzel at swhetzel@capitalimpact.org.
ABOUT CAPITAL IMPACT PARTNERS
Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. Through mission-driven financing, social innovation programs, capacity building, and impact investing, we work to champion key issues of equity and social and economic justice. Our commitment to community focuses on ensuring that individuals have access to quality health care and education, healthy foods, affordable housing, cooperative development, and the ability to age with dignity.
A nonprofit Community Development Financial Institution, Capital Impact has disbursed more than $2.5 billion since 1982. 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.
View original content to download multimedia:https://www.prnewswire.com/news-releases/capital-impact-partners-launches-20-million-diversity-in-development-loan-fund-and-grant-program-in-washington-dc-to-support-real-estate-developers-of-color-301327431.html
SOURCE Capital Impact Partners
Source link
The content is by PR Newswire. Headlines of Today Media is not responsible for the content provided or any links related to this content. Headlines of Today Media is not responsible for the correctness, topicality or the quality of the content.
