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‘Neighborhood investment company’ helps Los Angeles residents buy back the block

  • The Echo Park Neighborhood REIT will be structured as a public-benefit corporation and managed for the long term health of the community. Individuals will be able to invest as little as $100 and own a share of the income produced by the real estate portfolio as well as its underlying value.

Moving from community development to community wealth

<span style="font-weight: 400;" data-mce-style="font-weight: 400;"><em>ImpactAlpha, Oct. 29</em> – With inequality at an all-time high, cities are rethinking their decades-old approach to community revitalization.  </span><span style="font-weight: 400;" data-mce-style="font-weight: 400;">A “quiet revolution” is transforming their work, particularly in underinvested urban areas, according to a <a href="https://acceleratorforamerica.com/sites/default/files/2019-10/Drexel_NMFL_CommunityWealth_Final%20%281%29.pdf" data-mce-href="https://acceleratorforamerica.com/sites/default/files/2019-10/Drexel_NMFL_CommunityWealth_Final%20%281%29.pdf">new repor</a>t. </span><i><span style="font-weight: 400;" data-mce-style="font-weight: 400;">Out:</span></i><span style="font-weight: 400;" data-mce-style="font-weight: 400;"> top-down, one-size-fits-all, debt and subsidy-dependent solutions. </span><i><span style="font-weight: 400;" data-mce-style="font-weight: 400;">In:</span></i><span style="font-weight: 400;" data-mce-style="font-weight: 400;"> locally-driven, collaborative solutions that foster community ownership and prosperity. </span><span style="font-weight: 400;" data-mce-style="font-weight: 400;">Opportunity Zones legislation, aimed at long-term equity investments in neighborhoods, is accelerating the shift. The emerging community wealth model focuses on “developing people rather than buildings, with a blend of public, private, civic and community leadership and capital," write </span>Ross Baird<span style="font-weight: 400;" data-mce-style="font-weight: 400;"> and </span>Daniel Palmer<span style="font-weight: 400;" data-mce-style="font-weight: 400;"> of Blueprint Local, Accelerator for America partner </span>Bruce Katz<span style="font-weight: 400;" data-mce-style="font-weight: 400;"> and </span>Jihae Lee<span style="font-weight: 400;" data-mce-style="font-weight: 400;"> of the Nowak Metro Finance Lab at Drexel University in <em>Towards A New System of Community Wealth</em>. </span><span style="font-weight: 400;" data-mce-style="font-weight: 400;">The approach “has the potential to bring hundreds of billions of market and civic capital off the sidelines and spark transformative outcomes for disadvantaged communities.” </span><span style="font-weight: 400;" data-mce-style="font-weight: 400;">Among the strategies the authors suggest:</span><b>Uncover community assets</b><span style="font-weight: 400;" data-mce-style="font-weight: 400;">Big data can  reveal hidden economic potential, for example, by identifying street corners that are ripe for market rejuvenation or categorizing the nation’s 8,762 opportunity zones into distinct typologies, facilitating investment. </span><b>Expand businesses owned by people of color </b><span style="font-weight: 400;" data-mce-style="font-weight: 400;">Increasing the number, size, and scale of businesses owned by their residents is central to the new community wealth building. Key ingredients: capital, physical spaces, rich ecosystems and the support of anchor institutions. In Chicago, where just 2% of local businesses are Black-owned and less than 6% are Latinx-owned, Accion Chicago and Small Business Majority have stepped up to take on the role of ecosystem builders.</span><b>Integrate capital</b><span style="font-weight: 400;" data-mce-style="font-weight: 400;"> </span><span style="font-weight: 400;" data-mce-style="font-weight: 400;">The ‘two-pocket” divide between philanthropic giving and market investment is beginning to give way as investors align their investments with their values. That’s especially important when it comes to place-based investment. “One-pocket investment marries private and civic capital and channels the vast stores of local wealth back into local communities,” write the authors. </span><b>Spread the wealth </b><span style="font-weight: 400;" data-mce-style="font-weight: 400;"> </span><span style="font-weight: 400;" data-mce-style="font-weight: 400;">New structures and mechanisms are needed to enable residents to share in the value created by investments in their neighborhoods. Rent-to-own models, employee stock ownership, and 'neighborhood trusts' build local ownership and control. One example: Shift Capital is looking to test the idea of a neighborhood trust, a mashup of a community development corp. and community land trust, in Philadelphia. </span>