How black developers create new opportunities for underrepresented communities

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V Congress approves $ 1.1 Trillion Infrastructure Bill will finance roads, bridges, rails and other infrastructure components of the country last week. Legislation also addresses the issue of racial inequality.

President Joe Biden’s infrastructure plan aims to “reunite areas cut off by historic investments” and “fix historical inequalities.” Part of his plan includes awarding government contracts to minority-owned businesses, including real estate development companies, who will do work in connection with climate projects.

Why does this plan address racial injustice? The real estate community is almost exclusively white. This lack of diversity, according to black developers who spoke to ABC News, results in less affordable housing in black communities, low home ownership rates, and a lack of retail and other businesses in those communities.

According to Urban Land Report 2019 Institute – a non-profit organization of real estate and land use experts – only 5% of its members in the United States are African American, 4.5% Asian and 82% White.

One of the main challenges in real estate diversification, according to Black’s developers, is that they often face obstacles in raising funds and ultimately expanding their business.

Many are working to remove these obstacles. In recent years racial protests encouraged the real estate development community to create and use more initiatives and programs to help not only black development businesses, but also to strengthen the economic power of blacks.

DC Becomes Black Real Estate Development Model

Last summer in Washington, DC, Mayor Muriel Bowser’s office launched several initiatives to provide access to funding for minority developers.

“We strive to make the prosperity of our city more inclusive, but this will not happen by accident – it will happen because as a government and as individuals, we deliberately determine how we invest and who we provide opportunities to,” said Bowser shortly after its launch.

One such initiative is Capital Impact. Partners Loan Fund DMV (DiD-DMV) and co-grant program of US $ 20 million.

“Our goal is to truly take a holistic approach to empowerment – especially in communities of color,” Ellis Carr, President and CEO of Capital Impact Partners and CEO of CDC Small Business Finance, told ABC News.

“When we thought about the opportunity to support the DC real estate community, we looked at where the obstacles were, especially the ones that color developers faced. We’ve heard a number of things, but basically it all boiled down to a lack of access to capital, both debt and equity, so that developers can really make a breakthrough and expand their businesses and wages, ”Carr said.

Through the fund, developers, both non-profit and commercial, will have access to low-cost, flexible preparatory and acquisition preparatory loans to provide the necessary early funding, often denied to developers in color.

The first two funded projects are slated to be built in Areas 7 and 8 of Washington, DC, home to large African American populations.

Thomas Houston and Talaia Jackson received nearly $ 1 million in funding for their Medici Road, a non-profit community development corporation.

“US housing is a product change,” Jackson told ABC News. “There is a link between public health, education and housing … it’s all a systemic problem. This is not just a solution to one question for someone, it is … a solution to several problems. “

With these funds, Medici Road plans to construct a 17,000-square-foot building in a vacant lot in the Dinwood District of Columbia with affordable housing, retail and office space to provide basic services to the community.

“We’re creating systemic change for generations,” Jackson said. “I think the time has come for taxpayers, as residents, to have access to what really needs to be in place. This community must flourish, it must flourish. “

The new condominium community will create a mixed-income complex to provide access to healthy food and health and wellness education, Jackson said.

Currently, the seventh ward has a high crime rate, a low rate of homeowners, and a few grocery stores. But Houston says it was for this reason that the decision was made to develop in the area.

“We have a car where we can go to any grocery store we would like to visit. But what if there is a food or formula emergency and we don’t have access at all? When you start looking at it from a professional perspective, the road and we start looking at public health outcomes, access is all connected and none of that exists in our area. So that’s where the idea came from, ”Houston said.

The grocery store is expected to be a community owned and operated franchise.

Just steps away from the Dinwood area project, another developer, Mustafa Durrani of Durrani Development Corporation, received a $ 2.5 million acquisition loan and another $ 900,000 pre-development loan. Durrani plans to convert the vacant space into new affordable housing in the Randle Heights area of ​​District 8, District of Columbia.

“There is an idea that affordable home ownership and affordable rent are like public housing. And so we want to be able to create something similar to the market, but still affordable, ”said Durrani.

Both projects are at an early stage of development.

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