Reinvestment Fund financing is helping Jumpstart Philly expand its support to small-scale housing redevelopment in Philadelphia’s neighborhoods.
Jumpstart was established in 2015 as a developer training program in the Germantown neighborhood. The highly successful program includes a classroom curriculum offered four times a year, a mentoring program to connect novice developers to more experienced professionals, and a loan program originating construction loans for Jumpstart participants. Jumpstart’s current loan program is limited to developers buying and rehabbing properties in the Germantown and Mt. Airy sections of Philadelphia, where it has originated 132 loans totaling $14.4 million. With Reinvestment Fund’s financing, the program will begin to serve more Philadelphia neighborhoods.
Jumpstart targets start-up and small-scale redevelopers and seeks to demystify and democratize real estate development as a tool for individual wealth-building. The program explicitly seeks to enable local residents to invest and develop in their neighborhoods and build wealth locally. Most program participants are expected to be women and/or people of color, both demographics who are largely underrepresented in real estate development. Approximately 85% of Jumpstart Germantown’s borrowers have been women and/or people of color.
Supported by Reinvestment Fund’s capital, Jumpstart Philly will make short-term loans to help developers acquire and rehab properties. Alternative capital sources for startup and small-scale developers – largely hard money lenders and private investors – for construction lending charge high rates (12-15% or more) and may not be as reliable and responsive. Jumpstart loans will also help to build the capacity of first-time developers, ideally to make them attractive and financeable by traditional lenders as they grow in capacity with future projects.
The program plans to support the stabilization and vitality of neighborhoods where acquisition costs are generally low, but there is still a viable market for home sales or investment for rental. The program will focus on middle- and lower-income neighborhoods that have had active Jumpstart training programs through local CDCs and others. This includes neighborhoods such as Hunting Park, West Philadelphia, Southwest Philadelphia, Tioga/Nicetown, and Strawberry Mansion, Allegheny West, and Brewerytown.
The developers will largely undertake the rehab of unsubsidized affordable housing, which will help to preserve rowhouse housing stock and in some cases, ameliorate dangerous vacancy issues. Developers will be required to either sell or rent units at affordable rates up to 70% AMI for rental and 90% AMI for homeownership. Actual rents and sales prices will likely be lower based on market prices.
Jumpstart was established by Ken Weinstein, a Philadelphia-based real estate developer with over 30 years’ experience. Ken is the owner of Philly Office Retail, which has renovated and restored more than 300 vacant and deteriorated commercial and residential properties in Philadelphia. Philly Office Retail currently owns and manages more than 800,000 square feet of commercial and residential space in the Philadelphia region.