The cost of buying a home in metro Atlanta is officially considered unaffordable, according to the Federal Reserve Bank of Atlanta. The annual mortgage payment for homes in the metro-Atlanta counties of DeKalb, Gwinnett, Fulton and Dawson now exceeds 30% of the area’s median income. Atlanta needs at least 500,000 affordable homes. Building more homes for low- and moderate-income families and first-time homebuyers, is an essential part of a solving the homeownership crisis.
To combat the growing unaffordability in the region, Atlanta Mayor Andre Dickens recently announced a major housing investment by the City of Atlanta, as well as the creation of an Affordable Housing Strike Force to address the looming crisis. One of the tactics of the Strike Force is to partner with stakeholders, namely nonprofit and for-profit development firms, to identify and alleviate obstacles to development in order to add to the city’s housing supply.
Given the dire need, it is important that development firms are ready to add to the housing supply at scale, especially those that are led by people of color. In large part, this is thanks to their interest to work with local neighborhoods to create housing solutions that uplift and support underserved communities.
Unfortunately, affordable housing development firms led by people of color – both nonprofit and for-profit – are highly underrepresented in the housing industry; they also lack access to the capital and resources necessary to advance much-needed affordable housing projects to help their communities.
According to the Urban Land Institute’s 2019 report, a membership organization of land use professionals, 5% of its U.S. members are Black and 82% are white, though Blacks represent more than 13% of the U.S. population. One of ULI’s most celebrated benefits is that members can network with 45,000-plus and build a wider base of relationships with decision-makers in the real estate industry.
Developers of color face multiple challenges and obstacles in their field not experienced as frequently by white peers when it comes to:
- Business connections, family wealth, or the backing of a network of investors
- Access to development opportunities, or “a seat at the table”
- Capital limitations that are exacerbated as traditional underwriting standards work against Black and Brown developers
To confront the systemic barriers that have kept developers of color behind many of their white peers, barriers that have also limited the ability of communities of color to thrive, the Wells Fargo Foundation launched Growing Diverse Housing Developers (GDHD), a $40 million initiative focused on expanding the growth and success of real estate developers of color.
GDHD is a four-year program that will help 27 developers of color nationwide grow their businesses after facing generations of racism and disinvestment.
The much-needed support provided by this program—support which is rarely available to developers of color—will have a significant impact on their ability to build high-quality affordable housing across the United States.
Of the $40 million, $30 million is going to a cohort of 27 developers in California, Georgia, Texas, and the Baltimore, New York City, Philadelphia, and Washington, D.C. metropolitan regions (the remaining $10MM is aimed at the southwest). This cohort will be supported by three Community Development Financial Institutions (CDFIs) dedicated to helping disinvested communities get the resources they need to thrive. Capital Impact Partners, Low Income Investment Fund, and Reinvestment Fund will provide enterprise-level grants, which will be used to build and scale the businesses’ infrastructure, including hiring staff, upgrading technology, renting office space, and taking actions to increase access to industry connections and resources. The 27 participants are tasked with producing a total of 1500 housing units in four years.
“Catalyzing the growth of developers of color can directly increase our country’s affordable housing supply,” said Khaliff Davis, Reinvestment Fund’s Senior Director, Southeast. “They are invested in supporting underserved communities, and are ready to get to work.”
Seven real estate developers of color from the Atlanta area were selected to participate in the program, including:
- Leonard Adams, Quest Community Development Organization, Atlanta
- Daniel Alexander, Domos Coliving, Atlanta
- Shaun Belle, CMC Development Group, New York City and Atlanta
- Joel Dixon, Urban Oasis Development, Atlanta
- Darion Dunn, Atlantica Properties, Atlanta
- Sharon D. Guest, Radiant Development Partners, Atlanta
- Cherie Ong, Good Places LLC, Atlanta
These developers have collectively contributed hundreds of units of housing across the Atlanta metro over the past decade and understand the urgent need to increase production in key neighborhoods across the city.
All of them stated the GDHD program is timed perfectly to meet the strategic needs of their organization’s growth trajectory. Examples of how these developers of color will utilize the GDHD program include:
- Hiring additional staff to execute on an increased development pipeline enabling existing staff to secure new business, build out community-focused partnerships, and ensure project success
- Supplementing balance sheet needs through credit enhancement received by the GDHD program to improve their credit risk profile to obtain better debt & equity terms.
- Enabling stronger negotiating positions when entering into strategic partnerships and joint ventures
“I have said this before: Now is the time to engage and ensure that the philanthropic community and corporate community understands that affordable housing is a top three issue impacting people and this city. It needs to be properly supported and funded. Less plans, more action,” said Joel Dixon, Co-Principal of Urban Oasis Development, and a GDHD participant “Wells Fargo has stepped up in a major way to start making waves. I’m excited to see how much we can do and how far we will go in the next four years.”
“Reinvestment Fund is acutely aware of the challenges that developers of color face in fair access to capital and wealth-building opportunities in the housing industry and has committed to examining and addressing the practices that have contributed to these disparities,” said Amanda High, the Chief Impact, Development and Innovation Officer at Reinvestment Fund, which has offices in Atlanta, Baltimore and Philadelphia. “We are delighted to partner with other capital providers through this program to not only support a cohort of diverse developers but spur systemic changes that will help more developers of color and their communities grow and thrive.”
Learn more about Growing Diverse Housing Developers here.
Originally published in the Saporta Report, July 18, 2022