By Danielle Graceffa, Senior Director, Legal Services
Real estate development has always been a risky proposition, fraught with numerous challenges that must always be carefully balanced against the promise of reward.
Throw in the possibility of rehabbing historic properties and that risk-reward scenario is certainly amplified. The city of Detroit, where we have our Midwestern office, is a perfect example.
Founded in the 1700s, the city has witnessed various transformations, with Henry Ford setting the stage for Detroit to become the booming manufacturing center that it is best known as. During that time, the population swelled from around 200,000 residents to well over 1.5 million.
By Emilie Linick, Senior Loan Officer, and Quanic Fullard, Impact Strategy Specialist
Capital Impact Partners has long been driven by a mission to help people build communities of opportunity that break barriers to success. To that end, we continually look to expand our lending and incubate, scale, and advocate for new ideas that advance community development for those most in need.
By Ellis Carr, President and CEO and Scott Sporte, Chief Lending Officer
Note: This Op-Ed originally appeared in the publication Capital Weekly.
According to the U.S. Census Bureau’s report The Supplemental Poverty Measure: 2015, nearly eight million people in California were living in poverty in 2015. The report indicated that the state’s poverty rate was 20.6 percent—well above the national rate of 15.1 percent—and surpassed the rates of every other state in the nation.
2016 was marked by change—both for the U.S. and for Capital Impact. Our country witnessed a transition in leadership and with it words and actions that have divided our country. Part of this division included the voices of many who felt the American Dream had passed them by.
We have had a strong year in our lending work, where many of our newest initiatives gained momentum and had tremendous impact in the communities we serve. As witnessed in our 2016 Annual Report, we delivered $118 million in financing through our core lending work that supported community-based health care, high-performing charter schools, innovative approaches to services for seniors, mixed-income housing and access to fresh, healthy foods.
Capital Impact Partners ended 2016 in an extremely strong financial position with unrestricted net assets increasing by $2.4 million. As illustrated in our 2016 Annual Report, our loan portfolio grew by $26 million or 15%, and total assets grew by $42 million or 15%.
Earnings from new business totaled $2.3 million, as we continued to focus on expanding our business across sectors as well as expanding our national footprint. This asset growth reinforces the idea that a strong social-focused mission can be successfully coupled with a strong balance sheet.
Capital Impact’s solid financial results were largely driven by our lending activities. We ended 2016 with $118 million in loans closed, while the credit quality of our portfolio remained extremely strong. Our Chief Lending Officer Scott Sporte wrote about some of those lending highlights in his 2016 retrospective.
One of our major 2016 accomplishments is receiving a AA with Stable Outlook rating from S&P Global. This rating — in addition to our 4-star, Triple A, Policy Plus Aeris rating — recognizes our strong robust asset quality and liquidity, minimal risk profile and consistent growth in loans and assets. The rating also improves our ability to access financial tools, allowing us to respond even more quickly to gaps we see in community investment as well as amplify our social impact.
Another highlight was a $70 million New Markets Tax Credit allocation from the U.S. Department of Treasury’s CDFI Fund. This will allow us to further incentivize private sector investors to partner in financing projects that increase access to critical social services in distressed communities, spur economic development and create jobs. Capital Impact will utilize this new allocation to finance high-impact projects in cities like Detroit, Los Angeles and Richmond, CA.
In looking forward to 2017, we will continue to leverage capital through our membership in the Federal Home Loan Bank of Atlanta and new proceeds issued through the CDFI Fund sponsored Bond Guarantee Program.
In addition to these efforts, we will continue to innovate as we seek other forms of flexible capital to support longer-term projects throughout our sectors and geographic footprint.
Solidifying our firm financial footing will support the organization as we refine and focus on the goals set in our 2020 strategy. Doing so will guide us toward fulfilling our worthy and ambitious mission in communities across the nation.
As a mission-driven lender, Capital Impact Partners collaborates with a wide range of public, private and philanthropic organizations that invest in our efforts to transform underserved communities into vibrant places of opportunity. These partners—and the financial support they provide—are indispensable. Quite simply, our work would not be possible without them.
On Sunday, January 22, the Capital Impact family lost a dear friend and colleague, Brad Frost. He will be remembered as an individual of integrity, thoughtfulness, sharp wit, and dedication. Brad wore his passion for Detroit on his sleeve and was an unceasing supporter, critic and advocate for the city and all its residents.
S&P Global evaluated our financial condition, operational performance, policies, and risk management strategies by analyzing published reports, internal data, and information collected through interviews and discussions with Capital Impact’s management team.
Pursuing a credit rating supported our desire to expand our work across the country and respond quickly to investment gaps that healthy communities require. This rating helps advance our ability to broaden our investor base with socially motivated impact investors and establishes our credibility with mainstream investor markets by demonstrating our creditworthiness with transparency and authority.
In addition to being just one of five Community Development Financial Institutions who have received an S&P Global rating, our financial strength and impact in communities has been recognized by Aeris, the CDFI ratings agency. We have consistently received Aeris highest ratings for our social impact, policy leadership, and financial performance.
Combined with our ‘AA’ S&P Global rating, this recognition reaffirms our more than thirty years of work to deliver capital and commitment to underserved communities nationwide. Equally important for me is that this recognition truly illustrates that we do not have to make a choice between a strong balance sheet and driving social change.
I could not be prouder of our team and partners who have helped made this possible and look forward to working with many of you in the coming year as we implement our 2020 strategy and work to build communities of opportunity that break barriers to success.
As I close out my first year as Capital Impact Partners’ president and CEO, I find myself incredibly humbled and inspired to be part of a movement that is focused on improving the lives of those in communities across this country.
While we continue to make meaningful progress, the results of our Presidential election highlighted incredibly important issues. Individuals across this country – on both sides of the political aisle – made clear their feelings of disenfranchisement. These concerns about equity, opportunity, and access to quality social services touch all of us.
It is certainly a sentiment we share, and one that we’ve been working to address for the past three decades. Yet, as the political landscape changes and policies evolve, we must continue to challenge ourselves to find new ways to push farther and go deeper.
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ding work, where many of our newest initiatives gained momentum and had tremendous impact in the communities we serve. As witnessed in our 
As a mission-driven lender, Capital Impact Partners collaborates with a wide range of public, private and philanthropic organizations that invest in our efforts to transform underserved communities into vibrant places of opportunity. These partners—and the financial support they provide—are indispensable. Quite simply, our work would not be possible without them.
