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Local affordable housing developers, facing hurdles new and familiar since the pandemic, are still waiting to see how the outpouring of promises to invest in developments led by people of color will help them.
Following the fervent calls for racial equity that erupted in 2020, many banks made “amazing, gorgeous marketing statements and promises” to invest heavily in minority-owned and BIPOC-led organizations, Innovative Housing Opportunities CEO Rochelle Mills said during Bisnow's Los Angeles Affordable Housing Development and Finance event, held at the J.W. Marriott L.A. Live.
“I have yet to find the string that unravels that generous amount of cash flow that is being promised,” Mills said.
Mills asked anyone in the audience who worked for a BIPOC- or minority-led developer to raise their hands. About six hands went up. Then she asked those who had actually received funds from any of the banks or funders who had made such statements in 2020. Three hands stayed up.
Langdon Park Capital Head of Acquisitions Raymond Junior said that the real estate investment company, which is Black-owned and focuses on investing in majority Black and Latino neighborhoods, has a number of “soft commitments” from a few banks that fall into that category.
“But it is certainly not at the level you would expect based on the number of press releases,” he said.
On a national level, there have been some multimillion-dollar commitments to companies owned by people of color, though firm evidence of how many companies have delivered on their promises is scant.
Philadelphia-based Mosaic Partners received a $10M investment from Apollo Global Management at the beginning of the year to support minority- and woman-owned businesses. Goldman Sachs launched its Black Developers Initiative Affordable Housing Fund with a $75M investment.
Panelists named a number of other challenges, from state and local funding shortfalls to painfully long development timelines. But speakers on multiple panels at the half-day event touched on the tendency for affordable housing to be narrowed in popular perception to just those projects that house the most vulnerable, including the chronically homeless.
“If we’re not careful, what we’re doing is creating what we call the bowtie,” KeyBank Senior Relationship Manager and Senior Banker Matthew Haas said. On one side of the bowtie are the market-rate and luxury projects that are the majority of what commercial real estate deals in, and on the other side are the projects that serve the poorest and most disadvantaged populations.
“We're missing out on this entire missing middle,” Haas said. “And what we're actually doing, if we're not careful, is we're just pushing more and more people down the pipe.”
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