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A New Loan Fund — Five Year Impact Return to Create and Preserve Affordable Homes

June 12, 2024 Category: MethodRepublished

Disclosures

This guest column was previously published by ImpactPHL Perspectives, and is reprinted with permission. It was written by Nora Lichtash, Co-Founder, Women’s Community Revitalization Project

After years of declining population, Philadelphia has become a more desirable place to live. However, as market-rate development increases, the effects of gentrification are displacing long-term residents. Rising housing costs coupled with stagnant household incomes are straining low-income families’ ability to stay in their homes. The Women’s Community Revitalization Project (WCRP) is a group working to address this issue in several Philadelphia neighborhoods. WCRP has created a Loan Fund to enable this effort to move forward.

The Women’s Community Revitalization Project has been developing affordable homes in Philadelphia for over 30 years. The group has built 350 homes, with more than 90 homes in the pipeline. Currently, WCRP is constructing 27 rental townhomes in the Grays Ferry section of the city and is planning to break ground on 32 units in Mantua by the summer.

“As market-rate development increases, the effects of gentrification are displacing long-term residents. Rising housing costs coupled with stagnant household incomes are straining low-income families’ ability to stay in their homes.”

As our capacity has grown and Philadelphia’s development environment has changed, substantial dollars are required for the early development costs, as well as the cost of land suitable for affordable development.

From our Partners

In January 2021, WCRP established an Acquisition and Development Loan Fund in partnership with our Community Land Trust to ensure we would have the resources to act on opportunities to develop high-quality, permanently affordable housing for low-income families and individuals. The fund’s purpose is to acquire development sites and finance early development expenses related to creating and preserving affordable homes for low-income families and individuals. We have raised $2 million and utilized $1.3 million to cover land acquisition and early development costs. WCRP’s Loan Fund accepts investments of at least $10,000 for a term of 5 years.

 

The Need:

In June 2024, Women’s Community Revitalization Project (WCRP) and Community Land Trust (CLT) will complete the Arlene Thorpe Townhomes in Grays Ferry. These 27 rental homes will be leased to low-income families, all in need of high-quality housing they can afford.

“The land underlying these homes is owned by the land trust, and CLT has placed deed restrictions on the land. There is a renewable 99-year ground lease. The properties, when sold, will remain affordable for low-income families and individuals.”

Grays Ferry is the latest in a line of Philadelphia neighborhoods undergoing rapid gentrification, leading to the displacement of long-term residents of these communities. Ten years ago, Grays Ferry and neighboring Point Breeze (the Mamie Nichols Townhomes site, which we completed in 2022) were affordable places to live and had been home to several generations of African American families. Since then, market-rate housing has sprung up on almost every remaining development site in these neighborhoods, selling at prices well beyond the reach of long-standing residents.

Arlene Thorpe and Mamie Nichols Townhomes reflect a new strategy to prevent more residents from being displaced from neighborhoods like Grays Ferry and Point Breeze. A unique partnership between WCRP and the Community Land Trust(CLT) guarantees these homes will remain permanently affordable.

Here’s how: The land underlying these homes is owned by the land trust, and CLT has placed deed restrictions on the land. There is a renewable 99-year ground lease. The properties, when sold, will remain affordable for low-income families and individuals.

These deed restrictions are essential. Most affordable housing is financed through programs that require only a 10- to 15-year affordability period. That means homes will often re-enter the private real estate market and no longer be affordable to low-income households. CLT’s ground lease ensures that Arlene Thorpe and Mamie Nichols Townhomes will remain affordable and that our investment will be sustained permanently.

 

Enter the Loan Fund:

WCRP and CLT can develop high-quality, permanently affordable homes. However, they face the challenges of land acquisition and early development costs. As private developers have expanded their search for development sites, WCRP faces intense competition to purchase land for affordable housing. Private developers have a distinct advantage: ready access to capital to pay for land acquisition. Our Land Acquisition and Development Fund provides resources for land purchase and covers the costs of early development.

 

Who are our investors:

The resources we have raised for the loan fund come primarily from individuals who have invested between $10,000 and $250,000 in low-interest 5-year loans. Foundations have also loaned dollars through their program-related investments (PRI) programs. In addition, an impact investment fund also provided early capital through a combination of loan and grant resources.

 

Utilization of the Loan Fund:

As WCRP continues to build toward our $3 million investment goal, we have used Loan Fund resources to move three development projects forward.

  • Land Acquisition: The loan fund was used to purchase property at 5500 Haverford Avenue in West Philadelphia, a site being developed as the Linda Lockman-King Apartments (33 units). $521K was used for this purpose.

  • Applications for project financing: Other uses of the fund include the costs of preparing applications for tax credit and other financing for the Lockman-King Apartments and the Abigail Pankey Apartments (32 apartments also to be located in West Philadelphia).

  • Early development expenses: The loan fund was tapped for a range of expenses incurred early in the development process for our three current sites (our two West Philadelphia sites and Arlene Thorpe Townhomes – 27 affordable homes in Grays Ferry). These expenses included architectural services, zoning, and environmental research fees.

Altogether, $1.375 million of the fund has been used to date. As seen from the above utilization figures, the Land Acquisition and Development Loan Fund has provided significant support for WCRP’s development activities.

 

Total Projected Impact of the Loan Fund:

By growing the fund to $3,000,000, WCRP and CJLT will be able to:

  • Purchase four development parcels

  • Leverage an additional $90 million to complete financial packaging and

  • Develop homes for 275 low-income families.

 

About the Partners

The Women’s Community Revitalization Project (WCRP) is committed to social and economic equity for low-income women and their families. We develop affordable housing, provide supportive services, advocate for policy change, and honor and promote leadership, dignity, and justice in our communities.

The Community Land Trust (CLT) promotes equitable development through community ownership in the City of Philadelphia. Community land trusts ensure permanent affordability and permanent community control by retaining ownership of the land and having decisions driven by the community.


About ImpactPHL Perspectives:

ImpactPHL Perspectives is a multi-part content series that explores the many facets of the impact economy in Greater Philadelphia from the perspectives of its doers, movers, shakers, and agents of change. Each volume is written directly by a leader in this space to discuss best practices and share lessons learned while challenging our assumptions about financial and impact returns. For more thought leadership like this, check out the full catalog of ImpactPHL Perspectives.

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