Transformative Development
Bolstering BIPOC neighborhood-scale developers with technical assistance and capital to further equity and democratize development.
In an industry dominated by profit and returns, there are a class of developers focused on meeting the affordable housing and economic development needs of the most vulnerable communities. These smaller-scale, infill developers and community development corporations (CDCs) have been trying for years to create residential and mixed-use projects through a lens of inclusionary, multi-stakeholder engagement, while artfully balancing affordability and community benefits with the constraints of the capital stack available to them.
Their portfolios tend to focus on medium-density housing and smaller apartment developments. Their commercial spaces tend to be occupied by locally-owned small businesses that subcontract locally, and often live in and are personally invested in the neighborhoods where they work. Despite their unique niche service and intended impact, these developers, especially developers of color, are consistently met with financing challenges moving projects forward while meeting target affordability metrics.
The TransFormative Development (TFD) project is a pilot cohort of 5 promising small to medium-sized developers led by people of color, working in underserved communities of color across Atlanta. Collectively, these developers cultivate equitable real estate projects in many of Atlanta’s historic Black neighborhoods that are currently facing the pressure of residential and business displacement. These neighborhoods include Sweet Auburn, Old Fourth Ward, West End, Vine City and English Avenue, Adair Park, Capitol View, Summerhill, Pittsburg, and East Point.
The Guild and Transformation Alliance partnered to provide convenings that brought guest speakers from public agencies, community-based organizations, and other relevant private partners to create high-impact conversations and exchange with the cohort on their specific challenges. The goal of the program is to rebalance the development ecosystem so BIPOC developers, who may not have deep balance sheets, but do have innovative solutions for their neighborhoods, get access to capital on the right terms to meet their affordability and equity targets.
This project was sponsored by TransFormation Alliance and Enterprise Community Partners, and funded by JP Morgan Chase, which provided re-granting dollars for the cohort’s predevelopment expenses.
Speakers and Session Participants
- Tony Pickett Grounded Solutions Network
- LISC
- R. John Anderson Incremental Development Alliance
- Will Lambe & Tim Block Enterprise Community Partners
- Sean Campbell Common Future
- Christina Szczepanski The Reinvestment Fund
Topics discussed with our program partners included…
- Incorporating participatory design and community input into the development
- Understanding how CoA zoning and code roadblocks affect deal financing
- Debt, tax credits, TIF/TAD financing
- Equity (working with impact investors, community investors and philanthropy)
- Designing equitable capital stacks for housing and mixed-use projects
- Reimagining exits via community ownership and permanently affordable models
“The same “friends and family” capital gaps that exist for Black entrepreneurs also exists for Black developers”
Joel Dixon, Cohort Participant,
Urban Oasis Development
“There is no housing crisis. It is just housing under capitalism.”
Keeanga-Yamahtta Taylor,
“Race for Profit”
General discourse around housing focuses on symptoms — gentrification, evictions, homelessness — rather than the core issues of racial capitalism. Contextualizing these symptoms within the systemic processes operating at their root creates opportunities for more complete, effective and long-lasting solutions.
Local Zoning Policies have a major impact on smaller infill developers. Building affordable multifamily and mixed-use sites on vacant and underused sites often requires zoning variances, which can be difficult, time consuming and resource-intensive to obtain. Restrictive zoning ultimately becomes a barrier to developers and reduces the available amount of land available.
True affordable housing often does not fit the lending criteria for traditional banks, leading community developers to rely on CDFIs and their more patient repayment terms. However, many CDFIs are unable to provide working capital, predevelopment and land acquisition financing, which are the some of the cohort’s most common pain points that prevent project launch.
High costs of capital often stymie projects before they can get off the ground. Being forced to fit transformational projects into traditional lending structures leaves developers reliant on market-rate investments that cede ownership or having to compromise affordability to meet market pressures. Both debt and equity become unaffordable, inhibiting developers from breaking ground.
COHORT I
2021 Cohort Report
At the conclusion of the program, the collective organizations co-authored a report of challenges for neighborhood-scale developers of color and recommendations for advancing equitable development.
COHORT II