For anyone seeking to access lending for community development projects, understanding the different types of loans can be confusing.
At Capital Impact Partners, our commitment to fostering positive social impact drives us to support mission-aligned real estate developers and community development leaders with a range of flexible and affordable financing solutions.
Our community development lending offerings include predevelopment loans, real estate acquisition loans, construction loans, working capital loans, refinance loans, New Market Tax Credit (NMTC) leverage loans, and NMTC Qualified Low-Income Community Investment (QLICI) loans.
Our loan products are designed to help our borrowers achieve their goals and revitalize communities, whether that constitutes developing or preserving affordable housing, creating jobs through a small business, or building the resilience of communities through access to health care, healthy food, and education.
In this series of blogs, we aim to shed light on the diverse types of loans we offer and explore their significance within the context of Capital Impact’s mission-driven financing, in the hope that it will provide clarity to help borrowers make informed decisions about applying for community development loans.
We walk through the different types of loans we use to support developers and community leaders in bringing their community-centered projects to life:
As a mission-driven developer, organization, or business looking into community development projects, you may be coming across language that might sound confusing and be challenging to understand. What is a CDFI? What is NMTC? What is LTV?
At Capital Impact Partners specifically, we offer flexible and affordable financing to a broad range of community development projects that deliver social impact, including community health centers, public charter schools, small businesses, cooperatives, healthy food retailers, affordable housing developments, and dignified aging facilities.
This glossary aims to demystify terms to help you navigate through our lending and programmatic services and offerings. Below you will find definitions of terms divided into the following thematic sections:
Community Development Financial Institutions (CDFIs)
Community Development Financial Institutions (CDFIs) are mission-driven private sector financial institutions that focus on serving people living with low incomes and people who have historically been locked out of the financial system. Their work entails providing lending for small businesses and community projects, affordable housing, and essential community services in the United States.
As a CDFI, Capital Impact Partners has delivered community facility financing, capacity-building programs, and impact investing opportunities to champion key issues of equity and social and economic justice since 1982.
Community Development
Community development activities tackle underestimated populations that do not have equitable access to affordable housing, health care, healthy food, and education, nor connections to capital, entrepreneurship, and quality jobs, to help them become stronger and more resilient.
At Capital Impact Partners, and together with the Momentus Capital branded family of organizations, we offer a continuum of capital products and services to transform how capital and investments flow into underestimated communities and drive community-led solutions that support economic mobility and wealth creation.
Lending Process
Capital Stack
Debt coverage ratio (DCR) is a measurement of a firm’s available cash flow to pay current debt obligations. While a DCR of 1.25 is the minimum requirement for most lenders, a higher number — such as 2 — shows lenders you are financially stable and can repay your debts. A higher DCR can also mean a potentially lower interest rate as lenders see you as less of a risk for defaulting on your loan.
Loan Term
The term of a loan is the period of time a borrower has to repay the loan. This choice affects their monthly principal and interest payment, their interest rate, and how much interest they will pay over the life of the loan.
A term sheet is a nonbinding agreement that shows the basic terms and conditions of an investment. The term sheet serves as a template and basis for more detailed, legally binding documents. Once the parties involved reach an agreement on the details laid out in the term sheet, a binding agreement or contract that conforms to the term sheet details is drawn up.
Underwriting
Underwriting is the process of your lender verifying your income, assets, debt, credit, and property details to issue final approval on your loan application.
Loan Types
Predevelopment Loan
A predevelopment loan serves as a critical lifeline during the earliest stages of a development project. It specifically targets the upfront costs associated with project planning and preparation, enabling developers to refine their visions and align them with the needs and aspirations of the communities they aim to serve. This loan bridges the gap between concept and execution, ensuring a solid foundation for success.
Real Estate Acquisition Loan
A real estate acquisition loan is a type of loan that is used to purchase real estate. This type of loan is often used by community developers to acquire existing property or development land that they plan to preserve or redevelop for affordable housing, commercial development, or other community-benefit purposes.
Construction Loan
A construction loan is a short-term loan that propels your development project from the drawing board to a physical structure. It provides the necessary funding to cover the costs associated with building, renovating, or expanding community assets. Construction loans may also cover the costs of buying land, drafting plans, taking out permits and paying for labor and materials. Construction loans typically have higher interest rates than other types of loans because lenders are taking on more risk by financing the construction of a new property.
Business Acquisition Loan
A business acquisition loan is a financial instrument designed to provide funding for individuals or businesses to purchase an existing business. These loans are often sought by entrepreneurs looking to expand their business portfolio, individuals seeking to become business owners, or existing business owners interested in diversifying their operations by acquiring complementary businesses. In the case of community developers, the specific goal would be to further community development initiatives.
Loan Refinancing
A refinance refers to the process of revising and replacing the terms of an existing credit agreement. Borrowers usually choose to refinance a loan seeking to make favorable changes to their interest rate, payment schedules, or other terms outlined in their contract. If approved, the borrower gets a new contract that takes the place of the original agreement.
New Market Tax Credit (NMTC) Qualified Low-Income Community Investment (QLICI) Loan
The capital that a community development entity provides to a qualifying project is known as a Qualified Low-Income Community Investment (QLICI) and it is a seven-year, interest-only loan.
Health Care
Integrated Care
Integrated care is a unique approach to health care that is characterized by close collaboration and communication between multiple doctors and healthcare professionals. In other words, it is a type of healthcare where all of your doctors work together to solve issues with your physical, mental, and behavioral health. At Capital Impact, we support the Integrated Care model because it improves the quality of care, promotes better health and lower costs while creating thousands of jobs, spurring economic development.
PACE (Program of All-inclusive Care for the Elderly)
Area Median Income is the income for the median household in a given region. If you were to line up each household from poorest to wealthiest, the household in the very middle would be considered the median.
Tenant Opportunity to Purchase Act (TOPA)
TOPA, or “Tenant Opportunity to Purchase Act”, is a type of anti-displacement housing policy that gives tenants options to have secure housing when the property they rent goes up for sale, while also preserving affordable housing.
Cooperatives
Food Co-ops
A food co-op is a grocery store that is totally independent and owned by the community members who shop there. An illustrative example is ChiFresh Kitchen, a food co-op owned by justice-involved Chicagoans. ChiFresh won a Co-op Innovation Award and was not only able to continue its expansion, but also pivot to provide freshly cooked and culturally appropriate foods to those impacted by COVID-19.
Housing Co-ops
A housing co-op provides an alternative to the traditional methods of acquiring a primary residence. It is a type of residential housing option that is actually a corporation whereby the owners do not own their units outright. Instead, each resident is a shareholder in the corporation based in part on the relative size of the unit that they live in. Capital Impact Partners has helped ROC USA, a nonprofit that helps residents form cooperative corporations to purchase their manufactured home communities from private owners and manage their neighborhoods in perpetuity. They have gone on to become a powerhouse in this area, helping thousands of residents become homeowners and community stewards.
Worker Co-ops
Worker cooperatives are values-driven businesses that are owned and operated by their employees. Capital Impact has made a $1 million preferred equity investment in Obran Cooperative, a unique company that operates a number of worker-owned healthcare companies.
Worker Co-op Conversions
Worker co-op conversions – or employee ownership conversions – occur when businesses transition from a traditional ownership structure to employee ownership. Essentially, the business owner sells the business to the employees. These conversions (PDF) can drive company productivity while rewarding the people who are contributing to the company’s success, as well as helping to preserve the company’s mission and values.
In 2021, Capital Impact Partners financed the worker co-op conversion of Ward Lumber. This new cooperative is another example of the power of worker co-op conversion to maintain and increase wealth and stability within communities.
2022 is a special year for us at Capital Impact Partners as it marks our 40th anniversary. Four decades of leaning into helping people build communities of opportunity and developing pathways to success.
And while this is an exciting time for us as we embark on a new strategy under Momentus Capital, it is equally important to remember our roots as a champion for the cooperative movement.
Co-ops represent a cultural shift away from blind profit toward shared social benefit. It is a model that challenges the status quo and offers workers, especially workers of color, an alternative to extractive systems.
These principles not only shaped our work in the very beginning, but continue to anchor our strategy as we grow and evolve and develop new business lines and affiliate organizations. They even underpin our newest vision statement to help create an economic system that respects and uplifts all peoples’ right to achieve the dreams they have for themselves, their communities, and generations to come.
Our Co-op Beginning
While we are now a national organization of nearly 300 staff members across our family of organizations, Capital Impact’s beginnings were quite humble.
One our our first pamphlets…many names ago.One our our first pamphlets…many names ago.
In 1978, Congress rightly saw the need to better support the cooperative movement. That led to the passage of the National Consumer Cooperative Bank Act and the creation of the National Cooperative Bank.
Four years later, a tiny division known as the Office of Self-Help Development and Technical Assistance was launched to provide more focused work on bringing co-ops to underestimated communities and contribute to the economic development for people living with low-to-moderate incomes.
Over time, this effort grew and went through several different names before becoming Capital Impact Partners – the nonprofit Community Development Financial Institution we are today.
To date, Capital Impact has lent nearly $315 million in support of food, worker, and housing cooperatives, and has provided $725,000 in grants for co-op development.
More important than the numbers is the incredible journey of discovery to imbue our work with a co-op lens and shape the impact we can have with communities. It is a journey that has cemented our role as a mission-driven organization dedicated to fostering health, wealth, and justice for underestimated communities.
Expanding to Support Community Development
As our cooperative work expanded across the country, so did our support for community development more broadly. We saw that, for communities to be healthy and thrive, they needed a spectrum of vital social services, from health care to education to affordable housing.
Farmers workers in California often have very little access to health care, so OLE Health takes health care into the fields.
Some of my favorite stories are about projects we’ve financed over the years that have had great impact on their respective communities. Like OLE Health, a health care provider in Northern California that recognized roadblocks to patient care and created programs to meet patients where they are. And Montessori for All, a free public charter school in Austin, Texas dedicated to “diverse-by-design” education, with a mission of achieving equitable academic outcomes for students across socioeconomic levels.
California farmworkers receive health care at a makeshift clinic created by OLE Health.
It was also a time where we expanded our approach to not just think as a lender, but how we could amplify community development through other organizations.
That led to Capital Impact joining with several leading nonprofit organizations to help form ROC USA Capital, a nonprofit that helps residents form cooperative corporations to purchase their manufactured home communities from private owners and manage their neighborhoods in perpetuity. The true power of what this means can be seen in Takesa Village, a community that we helped to finance so they could become stewards of their land.
ROC USA has championed the dignity inherent in all forms of housing, particularly manufactured housing, and build the power of manufactured home communities to control their own destinies
ROC USA, a longtime partner of Capital Impact Partners, helps residents of manufactured home communities, like Takesa Village, to purchase their community and operate it cooperatively, which has preserved affordable housing options across the country.
Evolution Toward Holistic, Place-Based Investment
Over the years, not only has our scope of work developed — but so did our footprint. We saw an opportunity to support Detroit communities in a holistic manner that would advance economic prosperity and social justice for longtime residents, an opportunity that led to a concerted place-based strategy.
In the early 2000s, when the Great Recession sent the Motor City reeling, we were asked by the Kresge Foundation to be part of the Living Cities Integration Initiative. This effort was designed to support the city’s revival by joining with other organizations to invest in a “place-based” strategy designed to foster holistic ecosystem change.
It proved to be a seminal moment for our organization. This strategy allowed us to draw and define on a map the different parts of the city where we knew our work would be most effective. It taught us the importance of what it meant to stand shoulder-to-shoulder with a community, understand the barriers it faced, and work with community members to implement their solutions.
This type of engagement at the local level provided a real understanding of what was going on in the neighborhoods that we serve.
Some great examples of developments we invested in Detroit and Michigan include The Auburn and Casamira — which brought affordable housing options and mixed-use space to local communities — and Imperial Fresh Market, a grocery store that serves its community in northwest Detroit with fresh, healthy food daily.
Imperial Fresh Market has supported its Detroit community with access to healthy food and quality jobs since the Shina brothers opened more than 20 years ago.
We found this approach so impactful that we applied this place-based strategy to our approach in other parts of the country, including northern and southern California, Michigan and northwest Ohio, Texas, the New York Tri-State area, and the Washington metropolitan area.
Equity is the Beginning of Wealth & Health
Our work on the ground in Detroit also revealed another opportunity we had overlooked. While we were making good strides in our lending, we were missing entire swaths of the population who simply never had the opportunity to launch the kinds of projects we supported.
Opportunity has been historically driven by access to quality education to build quality jobs that build generational wealth. For residents of underestimated communities, access to the financing, training/education, and networks that would help them open businesses or engage in real estate development to build local wealth and health have been systematically denied.
That realization led to the creation of our EDI program – a program that provides training, mentorship, and access to capital for developers of color – which has since expanded beyond Detroit to the Washington metropolitan area; the San Francisco Bay Area; and Dallas, TX, and has served more than 200 developers.
Through our EDI program, developers across the country get a foothold into the real estate development industry, with training, mentorship, and access to capital.
In leading this investment in developers of color, we listened to their needs around access to capital. Listening to the financing gaps they experienced led to us creating the Diversity in Development Loan Fund in Detroit and the Washington metro area, which will soon be expanded nationally.
Our work in listening to community members to develop products and services to support their needs has not gone unnoticed. Fast Company recently recognized Capital Impact’s work in their 2022 list of the Most Creative People in Business.
It was this understanding of the need to listen to communities and ensure that our strategy addressed systemic issues and barriers that led to another seminal program.
In 2015, we created and have continued to manage our Co-op Innovation Award to amplify innovative co-op business models in communities living with low incomes and/or communities of color. Since that time, we have supported 17 co-ops nationwide and disbursed $685,000 in grants, which helped our awardees leverage more than $9.1 million in additional funding from foundations, investors, and government.
Cooperatives are powerful tools for economic stability and wealth building. Our Co-op Innovation Award has given seed funding to innovative co-ops fostering self-determination nationwide.
Cooperatives have so much power to create economic stability and self-determination for residents of underestimated communities, and the power becomes greater when it can be scaled. Another conversation that we have been taking part in is around the potential of employee co-op conversions to foster a deeper level of economic mobility and stability. These conversions happen when a business owner sells the business directly to their employees, rather than into the market. With Baby Boomers retiring, many healthy businesses have no one to inherit the business and no buyers; as a result, these businesses are closing in record numbers, and that trend was only exacerbated by the COVID-19 pandemic.
In 2018, we published “Co-op Conversions At Scale,” a market research report to assess the growth potential of employee ownership (worker co-op) conversions in several markets, and convened CDFIs, small banks, and credit unions to learn about opportunities for scaling and financing co-op conversions.
In 2021, we turned that research into action and financed the employee ownership conversion of Ward Lumber, a 130-year-old business in New York, allowing more than 40 employees to become worker-owners.
What we learned is that true transformation comes from deep investments in local ecosystems to change the systemic and historical issues that have kept communities from building generational wealth that would help them thrive.
New Horizons for Addressing Systemic Disinvestment
Today, we continue the throughline of our work, which centers on building prosperous communities through economic, social, and racial justice. We are challenging ourselves to think bigger and more creatively about how to work hand-in-hand with community members to foster equitable and inclusive opportunities for wealth building.
In July of 2021, Capital Impact Partners, CDC Small Business Finance, and Ventures Lending Technologies came together to create the Momentus Capital family of organizations. This milestone was achieved through two years of work to come together as a new enterprise.
Momentus Capital is a first-of-its-kind financial organization that brings together leading companies rooted in social mission. Momentus Capital offers a continuum of financial, knowledge, and social capital to help local leaders build inclusive and equitable communities and create generational wealth. Together, we are now able to leverage our 80+ years of experience to offer our borrowers and partners an even more comprehensive set of solutions – including lending and impact investments, training and access to networks, and innovative technology – while also being more innovative and nimble than we could when operating separately.
Most recently, we began looking at the opportunity to offer more than just loans and grants, but also actual equity investments in companies run by diverse entrepreneurs and/or serving communities of color. Much like in other areas we focus on, Black communities are drastically underserved by the venture capital community. We decided this was another place we could make a difference by offering. To address this issue, we launched our impact investments program, which combines venture debt, revenue/profit-sharing agreements, and preferred equity investments to aid growth-stage businesses led by diverse entrepreneurs and employee-owners.
While we invest in a broad range of companies, it is critical that cooperatives be represented.
One of our very first investments was in Obran Health, a unique company that operates worker-owned healthcare companies. When Obran Health sought to acquire Physicians Choice Home Health, a home health care provider in Los Angeles, we provided a $1 million preferred equity investment. This allowed Obran to avoid the traditional route of syndicated loans and debt which would have hampered their long-term growth.
Innovating Systems for Thriving Communities
The opportunity for community impact is immense. Healthy communities are built by their residents. Small business owners, developers, and other local leaders are the engines of job creation and economic activity in communities across the country. When these leaders have the opportunity to succeed, their communities, local residents, and our country – thrive.
And while we are looking forward to catalyzing profound community transformation through Momentus Capital, we recognize that we are here because of the 40 years of expertise we have built with our colleagues and partners. We will always remember our roots in the cooperative movement and will continue investments to expand that community. From loans and grants to seminal research and equity investments, our work through Momentus Capital opens up a whole new area where we can uplift co-ops and support their work.
I am so proud of where Capital Impact Partners has come in the course of the last 40 years, and I cannot wait to see how Momentus Capital will innovate holistic approaches to get resources into the hands of more local leaders, entrepreneurs, and their communities.
As we continue to celebrate this milestone year, watch our 40th anniversary video series. The series includes rich reflections from the very people who have helped make us who we are, like Terry Simonette, my predecessor and Capital Impact’s longest-serving CEO; Paul Bradley, president of ROC USA; alumni of our Equitable Development Initiative; and so many more.
Watch our 40th anniversary video series!
I invite you to subscribe to our YouTube channel to hear these stories and experiences first-hand. We’ll continue to reflect on, recognize, and celebrate our 40 years in the months to come. I look forward to our continued work together to foster communities of opportunity because we are stronger together, and together, we are creating new pathways to build inclusive and equitable communities by providing people access to the capital and opportunities they deserve.
While the essence of our mission has remained the same over the years, it’s the people – staff past and present, our partners, the communities we’ve had the privilege of working in, and the countless other stakeholders — who are responsible for our journey and our evolution. It’s you who I find the most inspirational. You are the ones who have helped Capital Impact Partners become who we are today — a national Community Development Finance Institution (CDFI) committed to building a nation of communities built on a foundation of equity, inclusiveness, and cooperation.
I’m proud to celebrate and share this milestone with all of you.
Oakland, Ca. is a vibrant place, a reflection of the communities within its borders. However, Oakland also experiences poverty, limited social services, and crime, which hold its communities back from achieving their full potential.
Over the past several years, Oakland has seen an influx of residents as the demand for housing in the San Francisco Bay area has driven many people there, on top of the residents who already called the city home.
Fruitvale Transit Village is a vibrant hub within Oakland, providing community development and a neighborhood center based on economic development and transportation.
In the early 2000s, Unity Council, based in Oakland, made a bold gamble: create a transit-oriented development that co-located housing, commercial development, and community space in the city’s Fruitvale neighborhood. Why? To expand access and opportunity through employment and transportation, while also creating ownership and small business opportunities to foster wealth creation.
Realizing that such an undertaking could not be done in a vacuum, the Fruitvale Transit Village brought together community members, stakeholders, government officials, and nonprofit and civic organizations to come up with a plan that would enhance local assets and help the neighborhoods build wealth and power.
The result: neighborhood transformation that centered the needs of the residents by providing easy access to social services, education, retail, and more. It is so popular that it quickly became the fourth busiest stop on the Bay Area’s subway system and a generator of wealth and community assets through local businesses and job creation.
Capital Impact Partners is proud to have partnered with Unity Council to support this community-centered development, as well as specific community partners within the development, such as La Clinica de la Raza. This type of collocation investment fits right in with our focus on holistic, community-centered development that community members value, as well as our commitment to financing to close the wealth gap.
In this Q&A, Unity Council’s Director of Development and Communications Dana Kleinhesselink and Director of Real Estate Development Aubra Levine talk about the community will and economic investment that made this innovative project possible, and why they feel this model is invaluable for other communities and developers across the country.
Q: What is the history of the Fruitvale community in Oakland?
Dana: Fruitvale is the largest Oakland neighborhood with this many people coming from various cultures and speaking various languages.
Q: What kind of investment has there been in this neighborhood?
Dana: Fruitvale lacked traditional banks or lending products over the course of decades. Home ownership development was not really a focus here. Additionally and unfortunately, there is crime in the area, which has been the main news story and really has overshadowed the positive things that this community brings.
Q: What was the genesis of Fruitvale Transit Village? How did the transit-oriented part come about?
Dana: In the 1990s, Bay Area Rapid Transit (BART) revealed a plan to create a four-story parking garage right in the middle of what is now the Village. Fruitvale had a bad reputation, there was crime and poverty, and the idea was to make a seamless transition for riders from their vehicle to BART, without interacting with the community. Our neighbors and our founder saw that as really problematic and they started countering the narrative, because our community is a BART rider as well. Our community deserves to have a seamless experience from their home to BART.
So, the community started organizing to say, “okay, why don’t we find a better way, and let’s bring BART in as a partner.” And that is what we did. Now we have a strong relationship, and I think Fruitvale is the fourth busiest station in the system. The amount of revenue generated by riders there, and the amount of revenue generated in the community because BART is so accessible, is really unquantifiable.
Q: What community needs does this development address?
Dana: Unity Council was looking for ways to stabilize the Fruitvale neighborhood by owning and controlling real estate. We had done a few real estate development projects already. And the idea — to quote our founder, Arabella Martinez — was, “In order to have wealth in this neighborhood, the community must own and control the assets.” We conducted broad outreach over a long period of time to make sure that what we were proposing was actually consistent with community needs.
We were committed to lifting up local businesses instead of installing a whole bunch of big box stores and national chains; we made sure that community services were a key feature. The Village includes a high school, a library, a health clinic, an early childhood development center, and a senior center. Most of the commercial square footage in the Village is actually community serving. It was never really intended to be a cash cow. It was intended to be a place for the community. Additionally, we know that community ownership leads to stability. Unity Council wanted to bring community members to the table and create ways for the community to engage in economic growth through ownership.
In order to have wealth in this neighborhood, the community must own and control the assets.
Arabella Martinez, Unity Council founder
Q: This project provides multiple services in a central location. Why is that valuable?
Dana: It’s incredibly important to have a hub of services, and we’ve actually incorporated this into our five-year strategic plan, under a strategy we call “Neighborhood Hub Approach.” In the growing body of research regarding vital social services, there is wide recognition that a broad range of social, economic, and environmental factors shape individual and community health outcomes. The Unity Council defines a “healthy neighborhood hub” as a place where people live healthy lives, feel safe, have a sense of belonging, are able to — and want to — stay in their neighborhood, and where they can access supportive services.
The cluster of services accomplishes two practical functions:
it draws in a wide range of people to visit for a variety of reasons.
There are reasons for children under five, commuters, seniors living with low incomes, and high school students to all come to the Transit Village, which provides a solid consumer base for the community organizations and businesses located there. It provides a sense of vibrancy all day and evening long. People come to shop and eat at the restaurants, but they may also be coming to go to their local health care provider or visit a resident that lives in an apartment on-site; and
co-locating services lowers the barriers to access to those services for people most in need.
Many of the programs and services at the Fruitvale Transit Village are targeted to families living with low incomes. It is almost a “one-stop shop” approach for many of these families who may receive child development services from the Head Start facility, health care from La Clinica de la Raza, and legal support from Centro Legal de la Raza, all in one location.
Q: Why Fruitvale? What made this location/community right for this development?
Dana: Fruitvale has a rich history of activism and organizing and really doing for ourselves what others will not do for us. This community tries to find ways to build capacity within our own people, which has created so many opportunities today. The Fruitvale Transit Village is just an incredible economic engine.
We see many small business owners using community lending products like Kiva loans and nontraditional financial products that help because they have been excluded from traditional financial products. We see a lot of cooperative businesses here as well. We have found that the Fruitvale Transit Village, by being this anchor development, and with Unity Council working with so many partners locally, has really helped to foster opportunity in this area.
UCLA conducted a 10-year longitudinal study on Fruitvale Transit Village’s effectiveness, in terms of improving educational outcomes, increasing financial wealth for families in the neighborhood, and small business development. It showed that the makeup of the community as well as the age diversity has really stayed the same over 10 years, while rates of home ownership, rates of small business ownership, and rates of educational attainment have all increased.
Q: Fruitvale Village is unique, being a mixed-use, transit-oriented development. Did you experience any difficulty in finding a lender for this project?
Aubra: We did have a bit of difficulty in finding a lender. The feedback that we received was really in that it comprises commercial uses, residential uses, and community facilities. A lot of the lenders that we reached out to were really interested in supporting our mission, but did not understand how to underwrite those three things together. They could not quite wrap their heads around the mixed-use components.
We are very mission-aligned with Community Development Financial Institutions, and we have developed relationships with larger banks as well. There is a lot of support for the work that we do.
It was really wonderful to work with Capital Impact Partners because you got it right away. Capital Impact is local, and understood the project in a very literal way, having stood there. It was really wonderful to be able to find that in a lender.
It was really wonderful to work with Capital Impact Partners because you got it right away. Capital Impact is local, and understood the project in a very literal way, having stood there. It was really wonderful to be able to find that in a lender.
Aubra
Q: What tools did Capital Impact provide that made the process work?
Aubra: Capital Impact Partners, from the start, was willing to be collaborative. The commitment to making it work, to saying yes, to finding the “where there’s a will, there’s a way” mentality was crucial to making the transaction happen. The team that we engaged with on a day-to-day basis was really well organized and on top of the underwriting. They made the process feel seamless, especially as they were coordinating with the co-lender on this refinance, LISC.
Additionally, through the Bond Guarantee Program, Capital Impact was able to provide more competitive terms than other lenders that we reached out to.
Combining transit orientation with vital social services like health care, education, and affordable housing creates Unity Council’s vision of a “healthy neighborhood hub.”
Aubra: Our mission as an organization is to build wealth for the community. It is to reduce poverty and disrupt cycles of poverty that are generational. What we know is that to attack poverty head on, you cannot do it in a piecemeal manner. You cannot just look at education or home ownership or workforce development or career development. You really need to work holistically and weave them together and provide a safety net that is truly integrated.
That multifaceted, easily-accessible, integrated approach is probably the most labor intensive way to do it, but I think it is the most effective, our neighborhood hub approach.
Equally, it was important that this community was already an existing transit hub. I do not think the Transit Village would have worked as well if we just decided to form a hub around a random bus stop.
Q: What would your advice be to other organizations looking to build similar projects in their community?
Aubra: I think that Unity Council paved the way and made it a little bit easier for community organizations, for funders, to learn from our path and see that this is possible in their community, there is return on this investment, and that is the right thing to do. I definitely think it is possible, and I recommend it.
Dana: Have a bold vision, be collaborative, work with the right partners, and engage community stakeholders for their input to make sure it is consistent with community needs.
Contact us today to start a conversation about how Momentus Capital can support your journey to success.
With the COVID-19 pandemic still impacting communities across the country, particularly communities of color, the work of community health centers and clinics (CHCs) is more urgent than ever.
Boyle Heights is a bustling Latino neighborhood just east of downtown Los Angeles with a history dating back before the Mexican-American War. However, it’s the pressures of the present day that weigh heavily here. Approximately 66 percent of the population lives below 200 percent of the federal poverty level, 22 percent are uninsured, and few primary care doctors remain. The systemic poverty the residents grapple with creates ripple effects throughout their lives.
The ability to access affordable health care is among the most critical challenges. Many in Boyle Heights, and similar communities across California, wait until they are so sick that they are forced to visit the emergency room because they cannot afford health insurance. Having to make such decisions can have negative ramifications not only on their own long-term health but for the entire health care system in the region.
OLE Health and other CHCs have become frontline providers of many kinds of care, taking on care that they historically have not provided.
In the face of such struggles in Boyle Heights and communities like it, there are a few health care providers that provide a safety net for local residents. In the northwest area of Boyle Heights, for example, White Memorial Community Health Center serves approximately 20,000 patients. This community health center (CHC) provides crucial primary and preventative care, behavioral health and dental services, and serves as an alternative to emergency room care for low-income patients in a generally underserved community.
East of San Francisco, Tri-City Health Center offers primary and preventative health care services to low-income and uninsured patients in the Alameda County area. In a new 20,000 square foot facility amid a large immigrant population, Tri-City implements a Patient Centered Medical Home model — which coordinates care across teams (i.e. medical, behavioral health, lab) — serving 8,000 patients and employing staff that cover 20 languages, which is reflective of the surrounding community.
Urban and rural communities alike would fall through the cracks without the services provided by CHCs like White Memorial and Tri-City. It is their ability to serve residents, no matter their socio-economic status or ability to pay, that creates an equitable system of care necessary to build healthier communities.
In order to continue providing this kind of high-quality community care, CHCs need adequate financing to grow to reach more patients and provide more patient-centered, whole-person care. But financing can be hard to come by. Too often, CHCs operate in areas deemed too risky by traditional financial institutions.
As a mission-driven organization focused on social impact and equitable access, it is critical to Capital Impact Partners to help CHCs fill that gap. That is why we collaborated with long-term partner The California Endowment (TCE) to find ways to better support the growth and innovation of CHCs and ensure that communities do not have to go without the critical health care services on which they depend.
Adapting to Create Sustainable Community Health Impact
Our teams at Capital Impact Partners have spent time talking to health center operators to better understand their needs and how we could help. What struck us most during those conversations was how clinics are expanding their services to take on care that they historically have not provided.
As more older adults seek care at CHCs, health care providers are expanding these services to address their needs.
Hospitals and Federally Qualified Health Centers (FQHCs) are partnering to better serve local populations. FQHCs mainly focus on primary care, but some are moving into urgent care to reduce emergency room visits at local hospitals. CHCs are incorporating dental and urgent care, as well as new wellness and preventative care services, including healthy food counseling, yoga, and disease prevention and management support.
Ensuring that we could create sustainable social impact for California communities meant that we had to adapt alongside CHCs. To meet that need, Capital Impact and TCE established The Healthier California Fund, a $20 million initiative providing loans, grants, and capacity building. Our goal with this new effort was not only to support traditional growth and expansion, but also to foster new innovations in care among CHCs. By helping these organizations meet their range of needs, the CHCs can focus on what they do best: support each patient with care from physical and dental care to behavioral health and overall wellness.
“Health centers provide a core service for their communities,” said Ian Wiesner, manager, Business Development at Capital Impact. “They increasingly are stretching above and beyond their normal mandate, both integrating additional services to address the complete wellness of their patients and taking on new patient segments to address the needs of the whole community. Creating the Healthier California Fund provided a unique opportunity to support this expansion of innovative care, particularly for communities where patients struggle to access vital health services affordably from traditional providers.”
“The California Endowment is committed to improving the health of all Californians,” said Amy Chung, director, Program Related Investments at The California Endowment. “Our partnership with Capital Impact Partners through the Healthier California Fund has not only increased access to critical health services but also supported innovative models of holistic, whole patient care.”
We were able to put this effort into action with LifeLong Medical Care, which serves the Richmond community twelve miles north of Oakland, California. A high proportion of the city’s racially diverse population lives below 200 percent of the federal poverty line. Providing for the needs of this underserved community as the only FQHC meant, for years, that Lifelong had to find any space possible to accommodate patient visits. After working out of three separate sites throughout the city, LifeLong needed to centralize its operations out of one location so it could better serve 7,400 local residents.
With financing through our Fund, that site will become the William Jenkins Health Center, a new three-story, 34,784 sq. ft. clinic offering primary care, behavioral health services, dental care, urgent care, and lab and imaging services. The new medical center will also provide wellness services such as diabetes prevention, smoking cessation, music and art groups, and stress management classes. In addition, LifeLong is increasingly serving older adult patients referred to them by regional hospitals.
Like the residents of Richmond, patients of both White Memorial and Tri-City have benefitted from more whole-person care financed through the Healthier California Fund, including behavioral and dental health and urgent care services.
Empowering Community Health Centers Through Capacity Building
Before CHCs could expand their innovative services, they needed the skills to manage the process. Many small community health centers work with a lean administrative staff and often do not have the capacity or expertise to take on the additional work involved with planning and constructing a new health care facility. They needed assistance before taking on these projects to make sure they were prepared and had fully considered the impacts the project could have on their operations. Grants were given to prospective CHCs at the beginning of the Healthier California Fund to build their capacity to manage the loans they later received.
“We knew that in order to support innovation and help grassroots health centers grow, we needed to provide more than capital. The Healthier California program allowed us to match our capital with the technical assistance these administrators needed to properly plan their projects,” said Wiesner.
One grantee that has benefitted from this capacity building element is Roots Community Health Center. Roots CHC was created to reduce health disparities and improve health outcomes among residents of East Oakland, California, one of the most disinvested neighborhoods in the city. Roots CHC serves nearly 10,000 patients, most of whom either use Medi-Cal or are uninsured. Roots provides a range of services, including primary care, behavioral health, workforce navigation, and job creation programs for formerly incarcerated people. Its services also link to transitional housing and entrepreneurship training.
Roots needed a loan to purchase and renovate a building and transform it into a health facility to better meet the demands of their community. But this small community organization had never taken on this type of project before, and had to be sure that taking on this building — and the associated construction — was financially and logistically feasible. A grant from the Healthier California Fund enabled Roots to bring on a consultant to help forecast the financial implications of the project and prepare the team for the construction process. Now Roots is ready to bring the project to fruition.
Capital Impact is currently working with several more health centers to provide capacity building to get them ready for financing and construction. Combined, these grantees could impact more than 21,000 patients.
Overall, the Healthier California Fund has financed seven community health centers that will provide more than 91,000 patients with vital health care. Community members will receive more and more diverse kinds of care as clinics and hospitals collaborate to divide and conquer the health care needs of their patients.
Combining capacity building and financial support through Healthier California has helped CHCs expand high-quality and efficient health care for their target clientele. Our continued partnership with TCE will help us expand our work as the largest health care lender in California; we have provided financing to more than 50 percent of all FQHCs in the state. We remain committed to ensuring that CHCs acquire the skills and capital that they need to remain vibrant, vital parts of their community fabric.
To learn more about how Capital Impact supports expanding equitable health care access nationwide, visit our Health Care page.
As wildfires burned through California’s Napa and Sonoma Counties in late 2017, Sandy Cesario was forced to evacuate her home and all she knew. Like many of the 5,000 residents of her small Calistoga town, she took refuge at one of the county’s evacuation centers filled with uncertainty.
That was the last place she expected to see her personal doctor.
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.
By Candace Baldwin, Director of Strategy, Aging in Community
Wouldn’t we all like to age in our homes and communities, surrounded by what is familiar, supported by a health care team that really understands who we are and how to serve us as individuals with unique needs? This kind of age-friendly health system has generally been an anomaly in the United States, particularly for low-income, older patients. Coupled with the fact that 90 percent of older adults want to age in their own homes, integrated care models are best supported at the community level.
By Katherine Groves & Daniel Ramirez, Loan Originations Team
When Tri-City Health Center (TCHC) opened in Fremont, CA in 1970, it was one of just a handful of clinics serving low-income, minority women from Fremont and the neighboring Alameda county cities of Union City and Hayward.
Since its founding more than 40 years ago, the Tri-City has expanded to include four health clinics, a dedicated dental site, and a mobile health clinic. Together, these sites serve more than 23,500 patients from Fremont, Hayward, Union City, Newark, and San Leandro. As a Federally Qualified Health Center (FQHC), the clinic’s mission is to provide medical and behavioral health care for patients covered by MediCal and other programs under the Affordable Care Act (ACA) umbrella.
Implementation of the ACA has required FQHCs in California to meet a growing demand for services. Tri-City saw an opportunity to meet that demand, but that effort required a significant expansion of its clinic.
That two-step process began with purchasing an existing two-story, 20,000 square foot property in downtown Fremont. To secure the necessary financing, we worked with the Nonprofit Finance Fund (NFF), a partner Community Development Financial Institution. Each organization put in half of the needed $6 million loan in December of 2015.
Now that TCHC owns the building, it needs to complete a major renovation to turn the building into a state-of-the-art medical clinic. Once again we joined with NFF to provide another $2 million in financing to support that effort, with each of us contributing $1 million.
Our Healthier California Fund loan was a perfect source for the capital we needed. We debuted this fund in early 2016 to support health centers and clinics serving low-income patients in California, and to bolster the state’s efforts to meet ACA requirements in new and innovative ways. This project represents our first transaction through the fund!
As a bonus, using the Fund to deliver the Tri-City Health Center financing allowed us to provide a lower interest rate, and helped them put more of their money into services instead of paying off the loan. This deal is win-win-win for them, their patients, and Capital Impact’s mission-driven lending efforts.
There is a lot to like about this project: the new clinic will have ten exam rooms and ten dental exam rooms, and the expansion will allow TCHC to see 8,000 new patients annually. Almost all of these patients are low-income and approximately 70% are Medi-Cal beneficiaries.
The clinic is strategically located near Five Corners, where many people in the area already shop and work. With free parking and access to multiple public transit routes, the clinic will be easily accessible.
Improving Healthcare for Local Families
This increase in clinic capacity can only improve the care for patients like Maria Guizar, who sought treatment at TCHC for her son Armando’s asthma after several trips to the emergency room failed to provide him relief.
“They referred him to a specialist and thanks to all the treatment, now Armando can play and be a healthy kid. I am very happy with services of TCHC. All the staff has treated me and my family well. Dr. Mogri even tries to speak Spanish and I like that she makes an effort to communicate with me.”
Staff at the clinic speak 20 languages, a necessity in the ethnically-diverse Bay Area. More than a third of the clinic’s patients speak a language other than English, including Maria, who is a native Spanish speaker. Her appointments are attended by a translator so that Maria and Armando get the best health care possible.
“Armando’s condition was making me lose sleep. His condition would have worsened if I had not found Dr. Mogri and TCHC. Dr. Mogri has helped me to improve the life of my family.”
Tri-City has already had a tremendous impact on the area’s low-income residents who otherwise would not have access to quality health care. This expansion makes them that much stronger. That is why all of us at Capital Impact are proud to be part of this project.
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