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Los Angeles-based housing developer SoLa Impact has received a $25M investment from PayPal to be used for developing affordable housing in Black and Brown California neighborhoods. The move is "an example of somebody living up to the hype,” SoLa Impact CEO Martin Muoto said.
About a year and a half ago, many high-profile corporations made public announcements about how they were going to support communities of color, Muoto said. PayPal was one such firm, announcing plans in June 2020 to commit $535M toward projects, funds and organizations closing the racial wealth gap and pushing for racial equity. As of June 2021, it had committed $510M.
“I think it's really important that organizations be held accountable, but that we celebrate the ones that are living up to what they announced," Muoto said.
The investment in SoLa's Black Impact Fund is part of PayPal's "ongoing focus on sustained engagement and progress in areas of economic equality and social justice,” PayPal Senior Vice President Aaron Anderson said in a statement.
The Black Impact Fund includes two funding vehicles for investments in opportunity zones and OZ-adjacent areas. PayPal invested in the latter fund.
“Affordable housing is key to building financial health and we are committed to doing our part to break the cycle of inequality by partnering with SoLa Impact.”
In total, the Black Impact Fund has raised over $250M and has a hard cap of $300M, Muoto said.
SoLa Impact acquires existing apartment projects and ground-up development opportunities in Black and Brown neighborhoods, primarily in Southern California, though deals in Northern California are pending. The firm counts 1,500 units in its portfolio with another 1,500 in the works.
The funds from PayPal are to be used for projects in Southern California, and they will get the developer closer to its goal of building 4,000 additional affordable units throughout the state over the next two years.
About half of SoLa’s current units are covenanted affordable housing, with income restrictions for tenants. The other half are considered naturally occurring affordable housing, where rents are typically 25% to 30% below neighborhood market rates, Muoto said.
Muoto has been a vocal critic of investors that have shied away from investing in social impact endeavors like affordable housing in disenfranchised communities. But he remains optimistic that corporations, especially those that have made claims that have yet to turn into action, will step up.
“I'm hoping that other institutional investors, other corporate investors follow [PayPal’s] lead, not necessarily investing in SoLa Impact, but that they find their own vehicle, whether it's a local vehicle or a national one, to get more involved and to really live up to those statements,” Muoto said.
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