Strengthening Capacity and Access to Capital Among Black and Brown Developers
Wednesday, December 6, 2023, 9:30 a.m. - 11:45 a.m.
St. Luke's Episcopal Church | 435 Peachtree St NE, Atlanta, GA 30308
According to reporting by the New York Times, 99% of the nation’s 112,000 real estate development companies are white-owned, and of the 383 top-tier developers, one is Latino; none are Black.
According to the Survey of Consumer Finances, the national median net worth for white families is $188,200, compared to $24,100 for Black families and $36,200 for Latino families. In Atlanta, the Atlanta Wealth Building Initiative reports a gap of 46:1. The unattended wealth gap has meant that “many aspiring Black and Latino developers don’t have such investment-savvy friends and family with discretionary dollars” to invest in their development work.
In metro Atlanta, Reinvestment Fund reports that 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 and
Capacity. (See full story at SaportaReport.)
In recent years, several organizations in the region began focusing on expanding capacity and access to capital, including Invest Atlanta, Atlanta Neighborhood Development Partnership (ANDP), and Integral Development. Organizations with multicity presence are also elevating this work. These organizations include Reinvestment Fund, Enterprise Community Partners, Incremental Development Alliance, Center for Community Progress, Low Income Investment Fund, Capital Impact, and others.
There are a growing number of initiatives and cohorts underway that have helped to accelerate these efforts. Wells Fargo Foundation’s national $40M “Growing Diverse Housing Developers” program is supporting the work of 27 minority developers nationwide, including seven from the metro Atlanta region. In addition to Wells Fargo's initiative, Truist, JPMorgan Chase, and others are supporting similar efforts.
In addition to these inequities, the region suffers from a lack of affordable housing development. According to some estimates, the broader Atlanta metropolitan area needs 500,000 additional affordable housing units. Metro Atlanta nonprofit developers, mission-minded for-profit developers, and BIPOC developers are leading in the development of affordable housing. Efforts to address systemic inequities by supporting Black and brown developers help correct centuries of race-based policy AND build a larger supply of affordable housing and housing in general.
Despite efforts to increase BIPOC developers’ access to capital and build capacity, much progress is still needed to remove barriers, repair historic deficits, and improve underwriting standards.
HouseATL, the cross-sector initiative created to build the political and community will for a comprehensive and coordinated housing affordability action plan, has among its revised 2023 recommended actions a call for the expanded support of those focusing on long-term affordability – “with a specific focus on developers of color.” HouseATL recommends “increasing capacity through tools such as multi-year operating support, dedicated development funding, partnerships, and talent development.”
What are the barriers faced by under-represented development firms? How have recent programs begun to address these issues? What are policy solutions to address these barriers?
Miss the December 6 Forum? Watch the video linked above.
‘Excuse After Excuse’: Black and Latino Developers Face Barriers to Success
(New York Times – free article)