Fourth Quarter Centered on Increasing Racial Equity, Immigrant Rights, and Economic Justice Brings Values Into Focus

Catalyzing community engagement and investing in communities of color in regions nationwide is enabling underinvested communities to raise their voices to overcome structural racism and discrimination

Arlington, VA (March 13, 2019) – In 2018, Capital Impact Partners invested time and capital to empower communities of color and underinvested individuals across the country. Capital Impact announced today that its fourth-quarter financing and investment efforts are expected to serve more than 153,000 beneficiaries and create more than 2,200 permanent and construction-related jobs. The organization convened community members to envision what is needed to foster inclusive food systems that support prosperity for all community members. Capital Impact also reached a milestone with its S&P-rated Investment Notes, selling more than $100 million to institutional and retail investors.

“Our 2018 investments really aligned with our focus on achieving social justice for our communities,” said Ellis Carr, president and CEO of Capital Impact. “We fostered deeper connections in the regions that we work in, and stood side-by-side with community members as they work for equity and sovereignty. In 2019, we recommit ourselves to standing fast and working toward shared prosperity nationwide.”

Over the course of 2018, Capital Impact’s mission-driven work supported more than 202,000 community members and created more than 4,100 permanent and construction jobs. Our social justice work also:

  • Addressed the need for quality charter school education for nearly 6,800 students;
  • Created more than 1,000 housing units for families;
  • Provided more than 163,000 patients with quality health care; and
  • Supported more than 41,000 individuals through cooperative development.

Engaging Investors to Foster Communities of Opportunity

Started as a way to offer retail and institutional investors the opportunity to invest in Capital Impact’s mission-driven nationwide efforts to create social impact for underserved communities our Capital Impact Investment Notes allowed individual and institutional investors to purchase Notes through their brokerage accounts and earn a financial, as well as a social, return on their investments.

In the fourth quarter of 2018, Capital Impact achieved a significant impact investing milestone by selling more than $100 million of Capital Impact Investment Notes through Incapital LLC’s Legacy platform. With increased interest in values-based investing, Capital Impact has seen considerable interest in its AA- rated Notes, which are still the only offering by a Community Development Financial Institution (CDFI) that is S&P rated, DTC-settled and offered on a continuous basis through brokerage accounts in almost all U.S. states.

Empowering Community Sovereignty and Transformative Change

While working within communities, it is crucial to involve community members in any and all conversations that determine ways forward in addressing structural discrimination and long-standing community needs. In December, Capital Impact hosted a convening with community members from Washington, D.C.’s Wards 7 and 8, as well as with food policy and activism organizations to discuss what is needed to create a truly inclusive healthy food system for all of the city’s residents. More than just a question of food access, attendees examined how to build inclusive food systems that ensure economic opportunity, high-quality jobs with living wages, access to affordable housing, and greater agency for communities no matter their racial or socioeconomic make-up. A convening report will be available on Capital Impact’s Publications webpage shortly.

In addition to this community-level support, Capital Impact’s Corporate Contributions Committee supported 50 organizations in regions across the country with project-based grants of up to $1,500 throughout 2018. Organizations apply on a quarterly basis to fund projects such as workforce development/life skills training, homeless shelters with early childhood development programs, health care targeting communities of color, and financial literacy programs for teens.

Several of the organizations that we have funded include: Building Bridges Across the River, Caritas of Austin, La Cocina, McClendon Center, MyPath, North by Northeast Community Health Center, North Flint Reinvestment Corporation, People Serving People, and United Communities Against Poverty.

Fourth Quarter Lending Highlights

Capital Impact’s $53 million in fourth-quarter financing spans several states, including California, Michigan, New York, Texas, and Virginia. This effort helped increase access to quality health care for all; create new educational opportunities in communities of color; address affordable housing needs; and create safe spaces for immigrants to live in communities across the United States.

Working within and becoming of our communities, our social impact for the fourth quarter of 2018 includes:

Expanding Equity, Opportunity, and Inclusion in Our Communities

Fostering equitable, inclusive communities where everyone has a chance at success means expanding opportunity to all.

Make the Road New York supports the needs of immigrant New Yorkers, providing comprehensive services that center the dignity and rights of this community. To better support its clients, Make the Road New York is building a new, 25,000-square-foot, three-story community center in Queens, NY that will provide a permanent home for immigrants in the community and the city overall.

More than doubling Make the Road’s current capacity, it will house classrooms and a flexible education space, a community gathering area, outdoor space, and a commercial kitchen and shared dining area. The center will enable large groups to gather to advocate for fair services and policies for immigrants in New York and beyond. Capital Impact provided $3.7 million as part of a $27.3 million New Markets Tax Credit (NMTC) transaction in partnership with Nonprofit Finance Fund Blue Hub Capital, Banco Popular, and New York City Regional Center, with PNC as the tax credit investor.

Small nonprofit organizations serving underinvested communities do not always have the funds to cover operating costs like office space and legal services. In Denton, Texas, Serve Denton helps to fill that gap, enabling nonprofits to be financially self-sufficient and serve their communities while colocated services benefit community members. With the construction of a new 48,000 sq. ft. hub, Serve Denton will provide space for a Federally Qualified Health Center, a food bank, and many other nonprofit service providers in the area. The organizations will have affordable office space and will share operating costs so that each can focus more funds on its clients. Capital Impact supported Serve Denton through a $9.5 million NMTC transaction, with US Bank as the tax credit investor. It is the first ever NMTC transaction in Denton County.

Increasing Access to Health Care

In 1974, Urban Health Plan (UHP) – a Federally Qualified Health Center (FQHC) – was created to address health issues experienced by Latino families enduring economic hardship in the South Bronx. The majority of the community lives below the federal poverty level; many do not have the funds to access quality health care. Since its founding, Urban Health Plan has come to serve more than 85,000 clients in the area with medical care. In addition to standard medical care, UHP also works to address social determinants of health for its communities. It launched a charter school, has school-based health care sites and a mobile clinic, and now runs an economic development corporation in the Bronx to increase economic opportunity for residents.

Capital Impact provided $6.3 million of a $19.3 million transaction in partnership with Low Income Investment Fund (LIIF) to provide permanent financing for a new 60,000 sq. ft. medical facility, as well as the renovation of an adjacent 32,520 sq. ft. medical facility for UHP’s clients, 65 percent of whom rely on Medicaid for health care. Capital Impact provided the funds through the CDFI Fund’s Bond Guarantee Program.

La Clinica de la Raza is an FQHC that serves nearly 87,000 clients from 35 sites across the San Francisco Bay Area, many of whom experience considerable economic burden. Fifty-nine percent of its clients earn at or below the federal poverty level. La Clinica currently serves approximately 15,000 patients out of five leased clinic locations in Vallejo, making it inefficient for its staff to connect primary care services with behavioral health, dental, and the many other medical services that it provides.

To increase its capacity and better serve its clients, La Clinica is renovating a blighted building to become the new 26,000 sq. ft. home for its medical services in Vallejo. The renovation will not only enable the organization to expand its client base, but also better refer clients to other services within the same building. Capital Impact provided $9 million out of an $18 million NMTC transaction; Northern California Community Loan Fund provided the other $9 million, with US Bank serving as source lender and tax credit investor.

Providing High-Quality Education

Healy Murphy Center (HMC) was founded in 1888 to meet the “pastoral and educational needs of the post-Civil War African-American population.” More than 100 years later, HMC operates a free, private high school in San Antonio, TX for students who have dropped out of traditional schools. The school provides an intergenerational and wraparound service approach for at-risk youth and their children to break the cycle of poverty. One-third of HMC’s high school students are young parents; HMC offers free daycare for their children so that the students can attend and complete high school.

Capital Impact participated in a NMTC transaction with Capital One Bank; Capital Impact provided $6 million to finance the ground-up construction of a new 14,630 sq. ft. child development center adjacent to the school. HMC will continue to provide daycare and pre-kindergarten education for approximately 100 children while their parents complete their high school or General Equivalency Diploma (GED) courses. Capital One was the tax credit investor.

Capital Impact provided $5.7 million as part of a larger $16.7 million NMTC transaction to help purchase the permanent home of East College Prep, a public charter high school in Los Angeles. The funds will allow the high school, operated by Ednovate, to purchase the 11,000 sq. ft. building that they currently lease and add on to the building, tripling its size and increasing its student capacity from 415 to 460 students.

For the student population – many of whom are Latino and first-generation college-bound – the school not only provides quality education, but also opportunities to study STEM (Science, Technology, Engineering, Math). The school, situated in a transitional neighborhood with a 48 percent poverty rate, takes advantage of its proximity to a biotechnology corridor to partner with organizations to give their students the opportunity to learn valuable skills that could impact their studies and careers. LIIF led the loan; Pacific Charter School Development and Civic Builders also participated, with US Bank and the tax credit investor.

Detroit Prep is the first diverse-by design public charter school in Detroit, intentionally seeking out children and staff of diverse backgrounds for the benefit of all. The school network was originally founded to address the gap in educational achievements by Black boys in the Detroit area. Using research that shows that all students do better when a school is diverse, Detroit Prep works to maintain a socioeconomic and racial balance in the school’s kindergarten-second grade population. The school has only been in operation for two years and is outperforming all other schools in the area; it plans to expand to support kindergarten-fifth grade students by 2025.

The community was significantly impacted by the Great Recession, and the remaining residents put together a plan to revitalize the community, including rehabilitating abandoned buildings. Capital Impact provided $1.25 million as part of a $6.9 million NMTC transaction to renovate the building currently used by Detroit Prep. The renovated building will expand high-quality education for the surrounding neighborhood and reduce blight in the area. Additionally, 28 construction jobs and 35 full-time positions will be created. IFF also provided funding, and Chase was the tax credit investor.

Scaling Affordable Housing

Capital Impact works to ensure that Detroit’s revitalization supports the needs of long-term and new residents, which takes an intentional focus on expanding affordable housing opportunities, particularly in the downtown area, where an influx of new residents and rising rent costs can displace lower-income community members. The Leland is an historic building in a severely distressed part of Detroit’s downtown, and is home to 150 tenants, including 60 older adult, low-income, long-term residents.

Capital Impact provided a $1.5 million predevelopment loan toward the renovation of the Leland, which will create 339 housing units – 20 percent of which will remain affordable and available to current and future residents living at 50 percent of the Area Median Income (AMI). The renovation will also create 54,000 sq. ft. of commercial space, with plans to include a grocery store in what is now a food desert and an FQHC, as well as other retail options. Cinnaire and Invest Detroit each purchased $500,000 participations in the transaction, which will create more than 100 permanent jobs and 438 temporary construction jobs. Hiring will target low-income persons as well as Detroit residents.

The San Ysidro neighborhood of San Diego is a border community that experiences a significant economic burden. The median household income is $28,000, 60 percent less than in San Diego. For the community residents – the majority of whom are Latino – Casa Familiar has been a longstanding partner, providing social services including workforce development.

To expand affordable housing options and access to services in this community, Capital Impact provided Casa Familiar with $4.4 million as part of a NMTC transaction for the ground-up construction of a mixed-use development called “Living Rooms at the Border.” The 14,000 sq. ft. development will create 10 affordable housing units and will provide social services and other amenities, including an arts center, a theater, a community space for job training, and space for the University of California San Diego’s Global Justice Center in the neighborhood. The goal is to create a community-centric space in a transitional neighborhood, where families, including immigrants, can gather to share resources and expand economic opportunity.

Just outside of Washington, D.C., Capital Impact provided $2.37 million as part of a $7.1 million loan to acquire 1.04 acres of land in Alexandria, VA that will become The Arden, a two-building affordable housing community. While the D.C. area is seen as relatively affluent, poverty exists within the region’s communities. In particular, Fairfax County is one of the most affluent in the nation, so affordable housing is critical for low-income families residing and working in the area. The Arden will provide 125 units of affordable housing, as well as vouchers for public housing for very low-income families.

About Capital Impact Partners

Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. We champion social and economic justice for underserved communities to foster good health, economic opportunity, and interconnectedness. Through mission-driven lending, incubating social impact programs, impact investing, and policy reform we partner with local communities to create equitable access to health care and education, healthy foods, affordable housing, and dignified aging for those most in need. We have disbursed more than $2.5 billion to revitalize communities over the past 35 years. Our leadership in delivering financial and social impact has resulted in Capital Impact earning a “AA-” rating from S&P Global and being recognized by Aeris since 2005 for our performance. Headquartered in Arlington, VA, Capital Impact Partners operates nationally, with local offices in Detroit, MI, and Oakland, CA. Learn more at www.capitalimpact.org.

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