One of the first steps in the creation of affordable housing is the role of developers. A developer is responsible for purchasing the land, obtaining the necessary permits, creating building lots, and overseeing nearly every foundational aspect of the home. However, to be a developer one needs equity. Equity can come in the form of investments from friends, family, and private homes, meaning small developers without connections to wealthy firms get little support in their endeavors.
Because developers are so reliant on generational wealth or wealthy networks, there is a massive racial divide in the industry. Just 5 percent of the Urban Land Institute’s members described themselves as Black, a percentage that has remained stagnant over the years (New York Times). There are many reasons that may account for this disparity, but Black developers who were surveyed by the New York Times report that the biggest challenge to them in the industry is gaining access to the capital, loans, and equity needed to be in the field. This is exacerbated by the fact that the asset management industry, which consists of institutional investors and private equity groups, is overwhelmingly white and thus more likely to focus its business on white developers (Washington Post). Because of this, Black developers are less likely to receive the equity needed to get started, further contributing to the racial wealth gap.
We need to bring more resources and support to Black developers. Not only would this diversify the development field, but Black developers are more likely to hire Black contractors and other workers (NYT), bringing more jobs and wealth to the Black community. This would be a big step towards lessening the disparity in the development field and breaking down the institutional barriers that Black developers and contractors have faced for so long.
For these reasons, RNHS recently launched our fall 2021 cohort for the Emerging Developers Program. This program is an effort to maximize the resources targeted directly at Black-led development and real estate firms. Our goal is to function as the “community quarterback” and align resources between community-based technical assistance providers and lenders. The entire teaching staff for this pilot is composed of people of color, particularly Black real estate professionals, in order to ensure culturally competent technical assistance.
The program has two main aims:
- To coordinate existing businesses and expand technical assistance to Black developers in Oakland (through curriculum, tracking performance, and addressing gaps)
- To utilize direct partnerships with institutions to scale this model of wrap-around assistance.
Get more information here.