Cleveland Moves to Level the Playing Field for Historically Excluded Real Estate Developers of Color
New program is being launched to increase diversity in Cleveland’s real estate industry and is expected to, in turn, uplift communities of color
July 19, 2023 (Cleveland) –– Entrepreneurs of color trying to develop real estate in Cleveland now have access to an innovative new program aimed at eliminating barriers to success and providing them with the tools they need to shape the future of the city’s communities.
Applications open today to register through August 6th for the Cleveland Equitable Development Initiative, which is designed to seed, mentor, support and create more opportunities for emerging real estate developers of color, particularly as they develop projects in the very communities they are from.
The initiative is a joint effort by Cleveland Development Advisors (CDA), which provides expertise and financing to real estate projects that advance economic and community development; Cleveland Neighborhood Progress, a local community development intermediary that invests in community revitalization work in Greater Cleveland; and Capital Impact Partners, a mission-driven nonprofit lender based in the Washington, D.C., metropolitan area.
“Around the country, there is a profound imbalance in the real estate industry with respect to diversity, and we’re taking measures to correct that inequity in Greater Cleveland,” said Yvette Ittu, president and CEO of Cleveland Development Advisors. A recent study revealed Black and Hispanic real estate developers make up less than one percent of the industry.
“This program is designed to ensure more minority developers have a seat at the table,” she continued. “This will not only help ensure that developers reflect Cleveland’s population, but we believe it will better address the needs and advance the economic growth of the underrepresented communities where they live, are from, and that they better understand.”
Capital Impact Partners has helped create similar, successful programs in other communities. Since 2018, more than 200 developers of color have completed the Equitable Development Initiative program in Dallas; Detroit; the San Francisco Bay Area; and the Washington metropolitan area. A similar program offered by Capital Impact recently launched in Austin, Texas.
“Over the past five years, the Equitable Development Initiative has sought to increase diversity, equity and inclusion for real estate developers of color in an industry where they are historically underrepresented,” said Ellis Carr, president and CEO of Capital Impact Partners, which is part of the Momentus Capital branded family of companies.
“We’ve heard from participants around the country about how important it’s been for them to receive the financial, knowledge, and social capital that they need to succeed,” Carr added. “We’re proud to be able to work with Cleveland Development Advisors and other Cleveland organizations to bring the Equitable Development Initiative to Cleveland. We want to help close the racial wealth gap for these developers and create more opportunities for the communities they serve.”
A priority objective for multiple civic partners
The EDI program is a part of a broader initiative, the Equitable Development Ecosystem Collaborative (EDEC), to support the success of minority developers with other community partners, including Cuyahoga County, the City of Cleveland, the Land Bank, LISC, Enterprise Community Partners, and Cleveland Neighborhood Progress.
“This is not an easy industry to break into and is a long overdue investment to help more minorities successfully navigate the real estate industry from project conception to completion,” said Mayor Justin Bibb. “Removing constraints on these developers is an important step toward addressing injustices that have made it harder for people of color to become players in this industry and to have an impact on their communities.”
Dione Alexander, President of Village Capital Corporation (a subsidiary of Cleveland Neighborhood Progress), said: “For decades, developers of color in Cleveland have not had equitable opportunities to participate and thrive in the real estate market. Part of the challenge has been the lack of access to capital and training, but a larger issue has been the lack of a coordinated network of service providers and mentors to support developers. The Equitable Development Initiative will partner high potential developers with the whole package of high-quality talent and resources Cleveland offers.”
Gina Merritt, a Black developer who will serve as a mentor to initiative participants, advocates for racial equity in part by developing more affordable housing in the Cleveland area to address the chronic shortage, with a focus on economic empowerment. She is principal of Northern Real Estate Urban Ventures, a social impact real estate development company that is working to transform the Hough neighborhood with the redevelopment of a vacant 116-unit Hough housing tower that will serve households earning 60% of the area median income, or $33,060 to $42,480 a year. She is also redeveloping MLK Plaza, which includes constructing 149 multi-family units, along with 7,500 sq. ft of commercial space and 6,700 sq. ft of live/work space. Future phases of the project will include townhomes and multi-family housing, along with 50 units of family housing on a vacant lot across the street.
“I look forward to serving as a mentor for the Cleveland Equitable Development Initiative and expanding access and social capital to increase diversity in Cleveland’s real estate industry and supporting a new generation of minority developers,” said Merritt.
In addition to Merritt, others who have volunteered to serve as mentors and advisors include Mitchell Schneider (First Interstate Development), Tom Charek (Welty Development), Arne Goldman (Marous Brothers Construction), Michael Panzica (M. Panzica Development), Andrew Iarussi (RHM Real Estate Group) and Scott Skinner (NRP Group), just to name a few.
This list will evolve as other developers are being recruited to be mentors and advisors in the program.
Council President Blaine Griffin said the program aligns with the priorities the City Council outlined in its recent Community Benefits Ordinance. “Council believes the growth and development of real estate developers of color is a win for Cleveland,” he said. “It creates more opportunities to grow the next generation of developers and assists in creating more family-sustaining jobs for Clevelanders of all backgrounds.”
What to Know About the Cleveland Equitable Development Initiative
The eight-month program will provide developers with training, technical assistance, mentorship, networking, and pathways to financing. Industry leaders will provide insights on the local review process, preparing financial applications and leveraging business partnerships with community members.
One of the many barriers to success is access to capital. There is a stark racial wealth gap when compared to white developers; developers of color are more likely to be denied for loans or to not receive the full amount they are seeking. They also historically have less access to friends and family who are able to provide investment funding. And while Cleveland has creative lending programs, those programs require attracting private equity, which can be a major issue for developers of color. Helping provide pathways to financing will be a key element of the curriculum.
The program will pair experienced developers with emerging developers to help launch their projects.
It is anticipated that 12 to 15 entrepreneurs will be selected for the program. Successful candidates will be selected based on the following criteria:
- Demonstrate experience as a small-scale developer (with either for-profit or nonprofit organizations) who is seeking to further their experience and/or growing their real estate business. As this is not an introductory program, candidates are expected to have some direct real estate development experience.
- Live in or have a strong connection to Cleveland.
- Commit to attend training on Wednesdays during the months of October through May for up to four hours per week. There will be 16 sessions, held twice a month in a combination of in-person and virtual meetings; tasks; a showcase event for pitching real development projects; and ongoing meetings with a mentor/advisor.
- Demonstrate interest in responding to Requests for Proposals (RFPs) for real estate development opportunities in Cleveland, with or without a development partner, within six months of completion of the program.
- A webinar for applicants will be held on Wednesday, July 26, from noon to 1:30 p.m. Sign up for the webinar here: Registration Link.
Finalists will be selected in September and the program will begin in October.