Community Development and Wealth Building Are Front and Center for Capital Impact in the First Half of 2019
Amplifying community assets to achieve equity and justice through community development investments has enabled individuals and families to break barriers to success
Arlington, VA (August 20, 2019) – In the first two quarters of 2019, Capital Impact Partners’ activities aimed to build the power of our community members by leveraging their community assets alongside our flexible capital and capacity building. From affordable housing to workers’ rights to entrepreneurship, we are invested in empowering communities of color and underinvested individuals across the country. Capital Impact announced today that our financing and investment efforts in the first half of the year served more than 124,000 beneficiaries and created nearly 1,200 permanent and construction-related jobs.
“Shared prosperity is the work of mission-driven organizations like Capital Impact. Every day, we support communities to amplify their assets in combination with our strengths to achieve their goals,” said Ellis Carr, president and CEO of Capital Impact. “So far this year, we have been able to maximize opportunities to expand community access to resources so that they have the power to build health, wealth, and justice.”
Capital Impact’s lending and programs leveraged partnerships and acumen to catalyze innovative practices that move immigrants, workers, minority entrepreneurs, and more toward shared prosperity. We also renewed our commitment to using impact investing to build power for all of our communities.
Our 2018 Annual Report showcases our commitment to creating communities of opportunity nationwide by supporting justice for individuals who have experienced historical disinvestment. Justice – racial, social, and economic – is core to our mission and is a critical conversation that we seek to drive every day through our work. Our Annual Report highlights new stories and videos featuring individuals and families who have been empowered to succeed through our efforts. The report also highlights our continued impact as we seek equity, justice, and opportunity for all.
Investing in Communities of Opportunity
Capital Impact announced our role in “The Partnership for the Bay’s Future,” a new affordable housing investment fund using the power of partnership to address the San Francisco Bay Area’s housing crisis through new and collaborative solutions. We are committing $50 million in flexible capital raised through our Investment Notes program to achieve our shared goal of protecting and stabilizing affordable housing for up to 175,000 households over the next five years and preserving and producing more than 8,000 homes in the next decade. Our CDFI partners at LISC and the Corporation for Supportive Housing are also contributing to this fund to maximize the ability to deploy needed financing.
Annaly Capital Management, Inc. and Capital Impact launched a new joint venture with a $25 million commitment to support affordable housing and other community development projects in Washington, D.C. The venture is closely aligned with Annaly’s focus on housing finance given Capital Impact’s work in preserving affordable housing. This represented Annaly’s second impact investing partnership with Capital Impact since 2017, allowing us to amplify the impact achieved through this continued relationship.
With our fifth annual Co-op Innovation Award, Capital Impact partnered with The Workers Lab to give three cooperative organizations the chance to create systemic change in their communities. We provided award grants totaling $50,000 to the Independent Drivers Guild and Centro de Trabajadores Unidos: United Workers’ Center, and awarded a $50,000 grant to CLEAN Carwash. These awards recognized organizations leading initiatives that address workers’ rights as well as wealth building and asset creation for immigrant workers.
The Co-op Innovation Award aims to increase co-op development in low-income communities and/or communities of color. Organizations that focused on local community-driven co-op development initiatives broadening opportunities for quality jobs, wealth creation, and asset building were given priority. Some of this year’s winners are also demonstrating new models and standards for their industries that can have a transformative impact on their communities.
Capital Impact celebrated a new milestone as fund manager of the Affordable Housing Preservation Fund, in partnership with D.C. Mayor Muriel Bowser and the D.C. Department of Housing and Community Development: protecting more than 600 affordable housing units for individuals and families across the District. With these housing units preserved in our first two deals under the Fund (Ridgecrest Village and Worthington Woods), we have pushed the total number of affordable units preserved under the Fund to more than 1,150. Capital Impact, D.C. Mayor Muriel Bowser, Montgomery Housing Partnership, and the D.C. Department of Housing and Community Development recently celebrated this milestone with Worthington Woods residents.
A unique aspect of the Fund is its use of the Tenant Opportunity to Purchase Act (TOPA). The Act gives residents of for-sale, multifamily, residential properties the right of first refusal to buy their properties, allowing them to work with mission-driven developers to purchase the buildings. This helps keeps rents affordable and prevents residents from being displaced in the face of rapid gentrification in mixed-income neighborhoods. Through the Fund, Capital Impact is able to provide short-term bridge acquisition and predevelopment financing to eligible borrowers.
Capital Impact was named to ImpactAssets’ 2019 impact investing showcase, the ImpactAssets 50 (IA 50). The eighth annual guide features fund managers representing private debt and equity investments that deliver social and environmental impact as well as financial returns. It represented the second year in a row that Capital Impact was named to the IA 50. This recognition followed the announcement that Capital Impact reached the milestone of selling $100 million in ‘AA-’* rated fixed-income Capital Impact Investment Notes, which allow retail and institutional investors the opportunity to invest in the organization’s nationwide efforts to create social impact for underserved communities.
Building the Power of Communities of Color
Capital Impact has expanded its investments to support entrepreneurs of color across the country. A prime example is the Washington Metropolitan area, where development has been booming, but the pool of real estate developers and entrepreneurs still does not reflect the region’s diversity. To increase opportunities for minority real estate developers in Washington, D.C. to participate in the region’s booming development landscape, Capital Impact launched our Equitable Development Initiative (EDI) in the Washington Metropolitan area. EDI targets flexible capital and capacity building tools to minority developers to reduce barriers to entry and strengthen their business enterprises while promoting equitable community development, particularly affordable housing for communities of color. Our first cohort will begin training and mentoring in the coming months.
Additionally, our second EDI cohort in Detroit, where the initiative originated, wrapped up in June as teams used lessons learned to present sample projects for developing vacant parcels in Detroit’s Islandview neighborhood to an expert jury.
Alongside supporting real estate developers of color, we joined JPMorgan Chase to announce the expansion of the Entrepreneurs of Color Fund in the Washington, D.C. area. The Fund will support local minority entrepreneurs from northern Virginia to Baltimore to drive minority business growth through access to capital and technical assistance. With Capital Impact working as fund manager, the Latino Economic Development Center (LEDC), the Washington Area Community Investment Fund (Wacif), and the Harbor Bank of Maryland will provide low-cost capital with business advisory services, including networking support and business coaching to minority small business owners in the region.
JPMorgan Chase is seeding the loan fund with a commitment of $3.65 million, alongside a $2 million commitment from Capital Impact Partners and a $1 million investment from the A. James & Alice B. Clark Foundation, for a total of $6.65 million. This effort builds on existing Entrepreneurs of Color Funds in Detroit, Chicago, San Francisco and the South Bronx.
Lending Highlights for the first half of 2019
Capital Impact’s $58.3 million in financing for the first half of the year spans several states, including California, Michigan, Pennsylvania, and Washington, D.C. 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 spaces for communities of color to prosper.
Working within and becoming of our communities, our social impact for the first half of 2019 includes:
Expanding Equity, Opportunity, and Inclusion in Our Communities
Fruitvale Village, a transit-oriented mixed-use development in Oakland’s Fruitvale neighborhood, is making a big impression as a model for growing community assets while preventing displacement of long-time residents. The San Francisco Bay Area is experiencing a housing crisis, with many families unable to afford to remain in their communities. That is pushing people further away from urban hubs with jobs, schools, and social services. The Village contains 80,000 square feet of nonprofit office space, 37,000 sq. ft. of ground-floor retail space, and 44,000 sq. ft. of residential living space. The 47 residential units include 10 units affordable to individuals earning between 35 and 80 percent of the Area Median Income (AMI), with the remaining units leased slightly below true market rate to keep all units relatively affordable.
Fruitvale Village provides access to health care services, affordable groceries and food options, and a high-performing charter school in a predominantly Latino, mixed-income neighborhood. Additionally, the Village provides stable space for impactful local nonprofit organizations to support the community. Capital Impact provided $7 million as part of a $14 million transaction with LISC to help the Fruitvale Development Corporation refinance a previous construction loan for this development.
Increasing Access to Health Care
South Central Family Health Center (SCFHC), a returning borrower in Los Angeles’ South Central community, provides approximately 21,000 patients with comprehensive health care services, including primary care, dental care, behavioral health services, women’s health and prenatal care, vision care, pediatrics, pharmacy services, and wellness classes and health education. Ninety-nine percent of patients live below 200 percent of the federal poverty level and 90 percent live below 100 percent below of the federal poverty level. Many in the community have high blood pressure and diabetes. SCFHC provides high-quality health care to its clients, routinely earning high marks for service.
In addition to its other health care services, the local community has a high need for optometry services. To address this need, Capital Impact provided a $500,000 loan through our California Primary Care Association (CPCA) Ventures Fund for the renovation of a building to create a new 4,200 sq. ft. vision care center. This new building stands directly across the street from one of SCFHC’s existing health centers, which Capital Impact also helped to finance. The new facility will create 5 construction jobs and 10 full-time positions, while filling a gap in care for the more than 8,300 patients that the clinic will serve.
Northeast Philadelphia has one of the highest populations of older adults in the country. Supporting high-quality, integrated health and social services for these residents allows them to age with dignity in their homes and communities. The Program of All-Inclusive Care for the Elderly (PACE) fosters dignified aging for seniors. With $8.3 million from Capital Impact as part of a $20 million New Markets Tax Credit transaction, returning borrower NewCourtland Elder Services will begin ground-up construction of the new 28,000 sq. ft. NewCourtland Pennypack LIFE Center (PACE is referred to as Living Independence for the Elderly or “LIFE” in Pennsylvania).
At full capacity, the Pennypack LIFE Center will provide access to primary and specialty care, healthy meals, and social services for 553 Medicaid-eligible people aged 55 and older. In addition to exam rooms and a rehab area, the center will include activity rooms, a full commercial kitchen, a garden and greenhouse, a memory care patio (enclosed to give people the freedom to wander safely), and a hair care station. The services provided by the LIFE program will keep older adults out of nursing facilities and in their own homes.
In the Los Angeles neighborhood of San Pedro, Harbor Community Clinic (HCC) provides care to thousands of uninsured or underinsured patients each year, including more than 1,500 children. More than just a provider of primary care and pediatrics, HCC offers dental care, as well as behavioral health and respiratory services. HCC provides a health care safety net that would not otherwise exist. In addition, HCC employs many local residents, which enables community members to earn a decent wage for their families and build wealth.
Through Capital Impact’s Healthier California Fund and CPCA Ventures Fund, HCC has been able to leave its previous constrained space and expand health care services for children. With a $3.2 million loan from Capital Impact, HCC is renovating a 7,878 sq. ft. building that will house its pediatric care services, allowing HCC to provide more comprehensive and dignified services in a new facility.
In South Los Angeles, which is a medically underserved area, Martin Luther King Jr. Community Hospital (MLK) provides critical inpatient, emergency, and outpatient care for local residents. Its service area contains 1.3 million people, which has strained its emergency room staff. To provide a higher-quality experience for clients, MLK needs additional space to provide adequate post-discharge care.
Using $8 million from Capital Impact as part of a larger New Markets Tax Credit transaction, MLK is creating its Martin Luther King Jr. Wellness Center, a new 44,500 sq. ft. building on its campus which will house a variety of primary and specialty care providers. MLK will operate directly out of 21,200 sq. ft. and will lease the remainder of the space to a pharmacy and tenants providing dialysis, wound care, and other medical services. Enterprise Community Partners also participated in the transaction, with Citibank as the equity investor. The project will create 279 full-time and 100 construction jobs.
Axis Community Health, an FQHC and returning borrower located in east Alameda County, CA, provides medical and behavioral health services for all members of its community, regardless of income, language, culture, or any other factor. The majority of patients are people of color and have incomes below the federal poverty level. Many patients are uninsured. Axis’ service offering includes adult, pediatric and geriatric medical care; obstetrics, gynecology and family planning; dental care; integrated behavioral health; mental health counseling for individuals, couples and families; a WIC nutrition program; and community and school-based health education.
Capital Impact provided $2 million from our Healthier California Fund to finance the renovation of Axis’ 4,786 sq. ft. Railroad location. The renovated space will support behavioral health services, and will convert poorly configured space into a call center, as well as billing, medical records, and referrals operations. The work will also create 20 construction jobs and retain 14 full-time jobs.
Providing High-Quality Education
ARISE High School is a single-site charter high school located in the Fruitvale neighborhood of Oakland, which has a mission of empowering students with the knowledge and skills to be leaders in the city. ARISE is committed to building and maintaining healthy communities by providing students – more than 90 percent of whom are students of color and more than 80 percent of whom are first-generation college bound – access to college and careers in education, community social services, social justice, public health, and public policy, as well as wraparound services. The school’s management has led to 90 percent of graduates being accepted to four-year college programs.
A $1.4 million loan from Capital Impact will finance improvements to a newly leased space adjacent to ARISE’s current location within Fruitvale Village, which will result in 11 new classrooms.
Scaling Affordable Housing
Originally built in 1951, Ridgecrest Village is a community of 272 apartment units that house approximately 900 city residents in Washington, D.C.’s Congress Heights community. About 10 percent of residents within the complex have lived there affordably since the 1970s, and 90 percent of residents earn up to 60 percent of AMI. However, across the District, the cost of housing has been rising beyond the reach of many District residents. When the complex owner decided to sell, tenants feared rising rents. They were able to use D.C.’s Tenant Opportunity to Purchase Act (TOPA) to select a developer to buy the property through D.C.’s Affordable Housing Preservation Fund (AHPF), which Capital Impact manages.
The Ridgecrest Village Tenant Association assigned their TOPA rights to The NHP Foundation to ensure long-term affordability of the Village’s units and make way for tenant-designed improvements. Capital Impact provided $7.5 million as part of $31 million in financing with Chase and W.C. Smith to support the purchase of the property as well as future improvements preserving the affordability. Now this community can control its future and financial stability, and can take advantage of an increasing amount of amenities across the city.
Also located in Congress Heights, Worthington Woods is preserving affordable housing for residents with lower incomes. The community has 394 units of affordable housing for more than 900 renters. It is also near shops, groceries, and three bus lines. The Worthington Woods Tenant Association assigned their TOPA rights to the Montgomery Housing Partnership (MHP) in exchange for a commitment to preserve the property as affordable, make improvements, and avoid tenant displacement. Capital Impact provided MHP with a $6.1 million loan as part of a $40 million transaction including Sandy Spring Bank to purchase the property.
As mentioned above, Capital Impact’s EDI program provides real estate developers of color in Detroit with capacity building and technical assistance; it has also supported developers to get their projects off of the ground. In the first half of the year, we provided two loans to EDI participants:
Capital Impact provided a $475,000 acquisition and predevelopment loan to Ron Bartell, a participant in our first Detroit EDI cohort, to develop Live@LIV, a neighborhood-scale, mixed-use project in northwest Detroit. The development, located on Livernois Avenue, will include 6,050 sq. ft. of commercial space and 8 one and two-bedroom residential units. On top of its location on a revitalizing city corridor – one block from another Capital Impact mixed-income investment – 75 percent of the units will be affordable for individuals earning 120 percent of AMI. The project will also create 83 construction jobs.
Capital Impact provided a $175,000 predevelopment loan to Sauda Ahmad-Green, who also participated in our first Detroit EDI cohort, for Merrill Place, a development of 54 new multifamily units, including 36 units with rental rates affordable at 80 percent of AMI. Providing affordable housing options in this area is important since most of the new housing coming online in the nearby New Center neighborhood is primarily market rate housing. In addition, this project is in close proximity to Henry Ford Health Systems, offering a quality health care option near vital affordable housing.
Fostering revitalization in Detroit takes increasing density and enhancing inclusive growth. As a main corridor within the city, the Woodward Corridor has long been a target for development. One part of that development is the “Casket Building” at 644 Selden Street in Midtown. Midtown Detroit, Inc. (MDI), which has been a long-time partner of Capital Impact, also works to revitalize Detroit neighborhoods, and this building is part of what calls “Selden Corridor,” where MDI supports considerable community development.
Capital Impact provided $4.5 million as part of a $5.5 million loan with the Michigan Economic Development Corporation to support the construction of a four-floor, 30,252 sq. ft. mixed-use development. The first floor will be occupied by the North Peak Brewing Company, the second floor by Midtown Detroit, Inc., and the third and fourth floors will have 8 one-bedroom residential units, two of which will be affordable at 80 percent of AMI. Capital Impact and Midtown Detroit have worked with local communities on other investments near the building.
In the Eastern Market neighborhood of Detroit, Develop Detroit’s Eastern Market Gateway development is providing increased affordable housing options for individuals with low incomes in a community experiencing a rapidly intensifying housing market and gentrification. Eastern Market Gateway will eventually be a 263-unit, mixed-income, mixed-use development with 16,000 sq. ft. of retail space. Crucially, 40 percent of the units will be affordable for individuals earning between 40 and 80 percent of AMI.
In addition, the Gateway development provides two and three-bedroom apartments, which is vital as rental homes for larger families can be scarce. The development is part of a larger group of vacant buildings that are being developed to create a neighborhood feel. Capital Impact provided $842,092 in predevelopment and acquisition financing for the project as a participant on a $3.5 million loan, along with Housing Partnership Network, Cinnaire, Mercy Housing, and LISC.
Detroit pastors created the Central Detroit Christian Community Development Corporation in 1993 after recognizing the need for unified action to create social impact for neighborhoods in their city. To increase the availability of affordable housing, Central Detroit Christian CDC developed Casamira Apartments. The apartments are housed in a historic building, one of three adjacent apartment buildings located near the New Center area in Detroit. The other buildings have been renovated and consist entirely of affordable apartments. Of the 44 one and two-bedroom units in Casamira, 11 will be affordable rentals for individuals earning 50 and 60 percent of AMI.
Capital Impact provided a $3.8 million loan for the renovation of the four story, 42,400 sq. ft. building. This project will take advantage of activity already going on in the area to benefit individuals and families with low incomes, and will help to continue to push the revitalization going on in Midtown further northward.
The City of Detroit’s neighborhood strategy focuses on increasing density in main corridors, like the Kercheval corridor. Capital Impact provided a $2.93 million construction loan through our Detroit Neighborhoods Fund for the renovation and construction of “Kercheval East,” a 16,000 sq. ft. mixed-use development. Kercheval East will deliver 15 new apartments and approximately 3,300 sq. ft. of new commercial space (with 5-10 jobs) along the Kercheval corridor in the Islandview/Villages neighborhoods. Of the 10 one-bedroom units and 5 two-bedroom units, 20 percent will be affordable to households earning less than 80 percent of AMI.
Roughly four blocks down Kercheval from Capital Impact’s Garland Building project and close to other Capital Impact investments, Kercheval East will transform two blighted properties and one vacant parcel, bring in several local businesses, and add high-quality market rate and affordable housing in a neighborhood where little exists, developing the West Village into a vibrant, walkable neighborhood.
Coogan Terrace, a 199-unit public housing apartment building in Melvindale, MI, serves individuals and families experiencing economic hardship, primarily older adults and a smaller group of persons with disabilities. Through a $1.2 million Capital Impact loan that was partially sourced with the Capital Magnet Fund, Coogan Terrace will be converted to the Housing Choice Voucher program (also known as Section 8 housing) through a Rental Assistance Demonstration (RAD) conversion with the U.S. Department of Housing and Urban Development.
Fifty percent of the units will become income and rent-restricted at or below 50 percent of AMI and 50 percent will become income and rent-restricted at or below 60 percent of AMI. RAD was created in order to give Public Housing Authorities a powerful tool to preserve and improve public housing properties and address the $26 billion nationwide backlog of deferred maintenance. Coogan Terrace is in dire need of updating to improve resident safety and energy efficiency. The property is already 90 percent occupied and renovations will occur with tenants in place.
About Capital Impact Partners
Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. We deliver strategic financing, incubate new social programs, and provide capacity building to help ensure that low-to-moderate-income individuals have access to quality health care and education, healthy foods, affordable housing, and the ability to age with dignity. A nonprofit community development financial institution, Capital Impact Partners has disbursed more than $2.7 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.