The Brief: Real estate revitalization in West Baltimore’s ‘Black Butterfly’

Greetings Agents of Impact! We’re taking a Brief break for the Fourth of July holiday in the US. We’ll be back in your mailboxes on Monday, July 8. – David Bank

In today’s Brief:

• Reclaiming West Baltimore’s rowhouses, block by block
• Spain’s ‘deep green’ climate tech fund
• Scaling Africa’s homegrown climate resilience solutions
• Taming reporting for the Greenhouse Gas Reduction Fund

Featured: Real Revitalization

Parity buys back the block to drive community revival without displacement in West Baltimore (with photos). On a warm afternoon last month, Bree Jones pointed to the rows of vacant homes on N. Carrollton Ave, just off the main corridor of Harlem Park on Baltimore’s west side. “We pretty much will purchase anything in Harlem Park – pretty much anything on this block or any of the blocks we’re working on,” she said. “We will buy sight unseen.” Jones is the founder of Parity, a nonprofit housing developer that is looking to renovate the row houses and sell them, cheap, to people who share Jones’ goal of generating community wealth and recreating thriving neighborhoods. In his three-part series, Real Revitalization, ImpactAlpha’s Roodgally Senatus provides a visual tour of strategies that are restoring vacant houses in disinvested neighborhoods in West Baltimore without displacement. As she spoke, Jones’s team was putting the finishing touches on Parity’s third home renovation. Jones hopes for Parity to acquire and fix up 20 homes a year. “This model only works if you are purchasing at scale and if you’re purchasing in concentration.”

• People capital. When Jones quit her Wall Street job in 2018 and moved to Baltimore, it didn’t take long for her to fall in love with a city with a deep and often overlooked history of Black excellence. Jones started Parity with a focus on “people capital” over financial capital. Her idea was, “I want to live in this neighborhood, and I bet there are 100 other people like me,” she recounts. “Let’s create a groundswell of folks who believe that these neighborhoods have value, and who want to live and own homes here.” Jones lined up dozens of potential buyers before Parity purchased its first property. The buyers are what she calls “legacy residents” – people who once lived in Harlem Park or whose parents and great grandparents lived there. Parity has acquired 50 properties, 15 of which are currently under construction; three are completed and tenant ready.
  
• Equity boost. Philanthropic funding, mainly from corporate backers like JPMorgan Chase and Bank of America, Truist, PNC and Kaiser Permanente, helps Parity finance the acquisitions and renovations. The nonprofit spends around $350,000 to acquire and renovate each home. Parity sells the renovated homes to its legacy resident buyers for $280,000 – $100,000 less than the typical appraised value – giving the new homeowners an immediate equity boost. The windfall comes with restrictions. “Because we put a lot of grant money into the home, they can’t just flip it the next day and take it all out,” Jones says. “But if they adhere to our timelines, 100% of that wealth is theirs.” To acquire and renovate 20 homes a year, Parity is looking to raise up to $5 million in low-interest debt capital.
  
• Looking out for Ms. Josephine. The name Parity was drawn from the nonprofit’s mission to help reduce racial wealth disparities between White and Black households. The nonprofit helps long-standing residents get ready for homeownership with training on property taxes and ownership rights, insurance and mortgages, and credit repair. “We’re not only thinking about renovating existing homes, but we’re also thinking about legacy residents and doing development without displacement,” Jones says. “And making sure that Ms. Josephine, who’s 86 years old and who’s lived in her home since she was three, doesn’t get displaced as the neighborhood begins to heal.” The collective effort also guards against cultural displacement, when “you have neighbors coming in who don’t necessarily appreciate the existing culture,” she says. “Baltimore is a stoop city. We sit on our steps and talk to our neighbors and laugh out loud and play music.”
  
• Keep reading, “Parity buys back the block to drive community revival without displacement in West Baltimore,” by Roodgally Senatus on ImpactAlpha. Catch up on all of ImpactAlpha’s coverage of the Ownership Economy.

Dealflow: Climate Tech

Spain’s Seaya inks €300 million for Andromeda climate tech fund. Woman-led Seaya, which manages three investment funds, attracted backing from Spanish energy company Iberdrola, banks Santander, BNP Paribas, Bpifrance, as well as Nortia and Next Tech Fund. Its Andromeda fund for climate technologies aims to invest between €7 million to €40 million ($7.5 million to $43 million) in Series A to C-stage startups supporting the energy transition, decarbonization, sustainable food systems, and the circular economy. The fund is among the first climate tech funds in southern Europe to get Article 9 designation under the EU’s Sustainable Finance Disclosure Regulation.

• Deep green. Seaya’s raise is a bright spot for so-called “deep green” Article 9 funds in Europe and could signal renewed investor interest. A refresher: Article 9 funds must invest intentionally for impact and adhere to strict disclosure requirements. They’re more stringent than “light green” Article 8 funds, which take more of a “do no harm” approach. Investors have been withdrawing capital from Article 9 funds for the past year in the high interest-rate environment. Article 8 funds finally saw a rebound last quarter after nearly two years of losses and stagnation.
  
• Top five. Seaya’s Andromeda fund has so far made five investments, including London-based maker of waste picking robots, Recycleye. Aegir Insights is a software company that supports off-shore wind projects. San Francisco-based Pachama uses remote sensing and AI to track and evaluate forest carbon credit projects. Spain’s 011h is a sustainable construction planner and developer that uses low-carbon materials. Seabery, also in Spain, leverages augmented reality to provide green training to industrial metal workers.
  
• Check it out. 

Ten African innovators land $55,000 each to scale their solutions for climate resilience. Homegrown climate tech startups are key to Africa’s green transition. Ten companies working on plastics recycling, sustainable stormwater drainage, and other climate solutions were selected for an accelerator program focused on Africa’s blue and green economies. The startups, half of which are women-led, will receive $55,000 each to scale their solutions. The Regen Wave and the $1 million Blue Wave startup initiatives were launched last year by emerging markets impact firm BFA Global, development finance agency FSD Africa, the International Union for Conservation of Nature, or IUCN, and other African climate and ocean innovators. “Unleashing the regenerative potential of our economic engine represents the best chance” for addressing Africa’s climate crisis, said the IUCN’s Thomas Sberna.

• Accelerating solutions. In Kenya, Africa Renewables Katalyst helps renewable energy projects obtain International Renewable Energy Certificates to generate income and subsidize costs. Plas Tech turns plastics from local waste collectors into cooking gas. In Rwanda, Eco Guardian is creating a sensor to monitor greenhouse gas emissions, while Lima Aja is using sensors to create pH-correcting organic fertilizers. Tanzania’s Sunwave provides solar-powered cold storage for small-scale fish farmers. Xi Bassile from Mozambique designs and constructs municipal bioswales, which collect and filter stormwater. 

• African ingenuity. The 10 were chosen from a broader group of founders that participated in a fellowship program supported by Regen and Blue Waves for restorative solutions that enable sustainable livelihoods. “The diversity and ingenuity of these startups reflect the continent’s potential for sustainable development,” said Rasima Swarup of BFA Global, which manages the Waves programs through its venture building studio, Triggering Exponential Climate Action, or TECA. “We are confident they will drive significant positive change in their communities and beyond.”
  
• Share this.

Dealflow overflow. Investment news crossing our desks:

• Universal Hydrogen, which was developing hydrogen fuel storage and retrofits for passenger airplanes for green air travel, is shutting down. The Los Angeles-based company had raised more than $100 million from investors and airline companies including GE Aviation, American Airlines and the venture arms of Toyota, Airbus and JetBlue. (Seattle Times)
  
• Chilean Retorna, a woman-led fintech venture, raised $1.2 million from Impacta VC, Amplifica Capital and other investors to facilitate remittance payments to Venezuela from Chile, Colombia and Peru. (Startups Latam)
  
• Nigeria’s Blueroomcare raised seed funding from EHA Impact Ventures, TVC Labs and Innovest Africa to make mental health therapy in Africa accessible and affordable. (Disrupt Africa)
  
• Costa Rican insect farming venture ProNuvo raised $2 million from the International Finance Corp. to make sustainable animal feed. (Contxto)

Signals: Deploy!

Software to tackle the hard problems of reporting on green infrastructure projects. Sometime this month, the Environmental Protection Agency is expected to begin disbursements from the $27 billion Greenhouse Gas Reduction Fund to green banks and community lenders, which will work to transform the federal dollars into clean, non-polluting energy, lower heating and cooling bills, electric vehicle charging, and other projects meant to benefit underserved communities. With the funding will come a mountain of paperwork. The EPA estimates the awardees could log more than 200,000 hours a year in reporting compliance, with costs ranging from $1.6 million to more than $3.5 million per year. That could be especially burdensome for smaller lenders and projects, which often have an outsized impact. “The time to tackle this challenge is now,” says Banyan Infrastructure’s Amanda Li in a guest post on ImpactAlpha. “Together, we can create a common language to scale capital deployment and develop a robust, sophisticated project finance industry.”

• Scattered spreadsheets. Metrics and accountability are important to demonstrate how the GGRF, as it’s known, is working and impacting local communities. But the rapid scale-up of community infrastructure projects magnifies a longstanding challenge in project finance: widely diverging information-gathering methods and reporting standards. Most project data is scattered across Excel spreadsheets, emails, PDFs and other documents; assembling it to make investment or performance decisions is time-consuming (for background, see “Lenders face a steep learning curve in deploying capital for green community infrastructure”). Li urges the EPA to work with community lenders, green banks and project finance experts to clarify the program’s requirements and definitions. 

• Green financing ecosystem. Li co-founded San Francisco-based Banyan, which makes software to streamline project finance, after experiencing firsthand the data challenges in green development projects. The GGRF is quickly creating a complex ecosystem of awardees and sub-awardees that will distribute the funds. “Tracking multiple projects through software,” Li says, “allows funds to roll them up into a portfolio, giving a 360-degree view of investments, cash flow waterfalls, impact metrics, and more.” Li calls for collaboration between GGRF lenders with deep links to communities and Wall Street financiers that can mobilize additional capital. “GGRF provides the perfect catalyst to build the green financial infrastructure our country urgently needs.” 

• Keep reading, “Software to tackle the hard problems of reporting on green infrastructure projects,” by Amanda Li on ImpactAlpha.

Dueling priorities as green infrastructure projects meet prevailing wage requirements. The Inflation Reduction Act is expected to create more than 400,000 new jobs, a quarter of them permanent. Federal funds supporting those green jobs – no surprise! – come with strings attached. One example: a Depression-era federal law requiring that laborers and mechanics on public works projects be paid local prevailing wages. The longtime rule got a shakeup when the Davis-Bacon Act of 1931 was tweaked by the Department of Labor last year. The agency said the revision gives workers “pathways to the middle class” via boosted pay and benefits. 

• Rural meets urban. The revision means that most IRA project developers must consider the higher wages of urban locales when calculating wages for nearby rural workers – a boon for rural labor. But pinning down labor costs for rural workers on solar projects can be hard in isolated areas with no such pre-existing industry. “It’s going to cost more to pay for these projects,” says Michael Schrier, government contracts lawyer with Husch Blackwell in Washington, DC.

• Dive in

Agents of Impact: Follow the Talent

McKnight Foundation taps Tamika Gibson as a program and grants associate for its vibrant and equitable communities program… Moody’s lays-off more than 100 employees in its ESG solutions business and strikes a strategic partnership with MSCI “to bring greater transparency on ESG and sustainability to markets.”

New Majority Capital seeks program managers, a program coordinator, and an administrative assistant in Boston… Impact Finance Belgium is recruiting a new CEO… New Forests is hiring an investment manager… The Belgian Investment Company for Developing Countries has an opening for a junior development and sustainability intern.

Sunwealth seeks a project finance associate in Cambridge, Mass… Climate United is looking for a climate impact specialist, a portfolio compliance director, and a chief operating officer… JUST is on the hunt for a finance director in Texas… Impact Charitable seeks a capital activation client and project manager in Denver.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– July 3, 2024