The $ 1.1 trillion infrastructure bill passed by Congress last week will fund roads, bridges, railroads and other components of the country’s infrastructure. The legislation also deals with racial inequality.
President Joe Biden’s infrastructure plan aims to “reconnecting neighborhoods cut off by historic investments” and “repair historical inequalities”. Part of his plan includes awarding government contracts to minority-owned businesses, including real estate development companies that will carry out the work in conjunction with climate projects.
Why is racial injustice addressed in the plan? The real estate development community is almost exclusively white. This lack of diversity, said black developers who interviewed ABC News, translates into less affordable housing in black communities, low rates of homeownership, and a scarcity of retail and other businesses. businesses within these communities.
According to a 2019 report from Urban Land Institute – a non-profit organization for real estate and land use experts – only 5% of its US members are African-American, 4.5% are Asian and 82% are white.
According to black developers, one of the main problems with diversifying real estate is that they often face obstacles in acquiring funds and, ultimately, in growing their businesses.
Many are working to remove these barriers. The protests of racial calculation over the past year have reinvigorated the real estate development community to create and leverage more initiatives and programs to not only help the black real estate development business, but also to strengthen black economic power. .
DC becomes a model of black real estate development
Last summer in Washington, DC, Mayor Muriel Bowser’s office implemented several initiatives to provide access to funding for minority developers.
“We are committed to making our city’s prosperity more inclusive, but it won’t happen by chance – it will happen because as a government and as individuals we are intentional about how we invest and to whom we offer opportunities “, noted Bowser shortly after launch.
One of these initiatives is Capital Impact The partners’ $ 20 million DMV Diversity in Development Loan Fund (DiD-DMV) and concurrent grant program.
“Our goal is really to take a holistic approach to delivering opportunity, especially in communities of color,” Ellis Carr, president and CEO of Capital Impact Partners and CEO of CDC Small Business Finance, told ABC News.
“As we pondered whether to support the DC area real estate development community, we looked at where the barriers were, especially those faced by developers of color. We heard a number of things, but it mostly boiled down to the lack of access to capital in the form of debt and equity for developers to really take the plunge and grow their businesses and salaries, ”said Carr.
Through the fund, developers, nonprofit and for-profit alike, will have access to flexible, low-cost pre-development and acquisition loans, unlocking crucial seed funding that developers of color are often denied.
The first two funded projects are expected to be built in neighborhoods 7 and 8 of Washington, DC, areas with high African American populations.
Thomas Houston and Talayah Jackson both received nearly $ 1 million in funding for their nonprofit community development company, Medici Road.
“Housing in the United States is a product change,” Jackson told ABC News. “There is a link between public health, education and housing… it’s all a systemic problem. It’s not just about solving an answer for someone, it’s… tackling Several things.”
With the funds, Medici Road plans to develop a 17,000 square foot building on vacant land in DC’s Deanwood neighborhood with affordable housing, retail and office space to create essential services in the community.
“We are creating systemic change for generations,” Jackson said. “I think it’s about time that taxpayers, as residents, had access to the things that really should already be in place. This community should be thriving, it should be thriving.”
The new condominium community will create mixed-income development to provide access to healthy eating and health and wellness education, Jackson said.
Currently, the Seventh Ward has higher crime rates, low homeownership rates, and few grocery stores. But Houston says that’s the reasoning behind the decision to expand in the region.
“We have a car to go to the grocery store where we wanted. But what if there is an emergency for, say, food, formula and we have no access? When you start looking at it from the professional side of the road, and we start looking at the public health outcomes, access to everything is linked, and none of that exists in our neighborhood. And that’s where the idea came from, ”Houston said.
The grocery store should be a franchise owned and operated by residents of the community.
Steps from the Deanwood neighborhood project, another developer, Mustafa Durrani of Durrani Development Corporation, secured a $ 2.5 million acquisition loan and another $ 900,000 pre-development loan. Durrani plans to transform a vacant area into a new affordable housing community in the Randle Heights neighborhood of Ward 8 of DC.
“There is an idea that affordable ownership and rentals are like public housing. And so we want to be able to create something that looks like the market rate but is still affordable,” Durrani said.
Both projects are in the early stages of development.