Affordable housing builder Enterprise Community Development is aiming to give more minority developers an ownership stake in neighborhood real estate projects through a joint venture program announced Tuesday.
The Baltimore-based nonprofit developer has launched Let’s Build Accelerator and will invest $5 million to give minority and faith-based developers equity in projects co-developed with Enterprise.
The round of funding is expected initially to support from five to seven projects in the MidAtlantic, possibly in the Baltimore area, that would get underway next year, said Brian McLaughlin, president of Enterprise Community Development.
– Original Credit: Courtesy photo
The affiliate of Enterprise Community Partners wants to form partnerships with developers who are Black, Indigenous or people of color who have experience and vision for improving communities but lack the equity to move a project forward, McLaughlin said.
“The real estate development industry in our region is not as inclusive as we at Enterprise would like it to be,” he said. “Those who are behind steering real estate projects don’t always reflect the neighborhoods where the projects are occurring.”
As a result, he said, “we don’t always get the kind of development in the best interest of the community.”
While lenders have made progress addressing inequities by targeting loans to developers in underserved areas, McLaughlin said he knows of no other programs offering the equity piece that can often make or break a project.
“We’re giving developers money they need to put into a project so they can own it and have more direct say in its direction,” he said.
Enterprise would then work with developers in joint ventures. Its partners typically would have up to a 20% stake.
Enterprise’s co-developers would earn returns such as fee income. Once the project is completed, the partner’s initial equity investment will be returned to a revolving fund to support future partnerships while the partner keeps all fees and earnings on its investment, along with a share of the appreciated value.
Enterprise Community Development, the nation’s sixth-largest nonprofit affordable housing developer and among the largest African American-led affordable housing developers, seeks partners who are proposing affordable housing of 60 units or more as well as mixed-use developments, retail, multifamily communities or senior communities.
Projects can be proposed anywhere in Enterprise’s footprint from Pennsylvania to Virginia.
McLaughlin said the first round of developers and projects would be selected early next year, with projects typically taking one to two years to complete.
“We’re trying to build our own competition,” he said. “If we end up pushing ourselves out of this region, great. If we can build a bigger bench of folks bringing a community perspective, we call that a success.”
