Mosaic Development Partners works to bring people of color into the real estate market
Jul. 08, 2020
After graduating from Girls High, Brown University, and Villanova Law School and practicing law for several years, Leslie Smallwood-Lewis was hired at a Philly existent estate development visitor. She was the house's kickoff African-American hire.
The yr: 2001. Let that sink in.
Over the course of vii years at The Goldenberg Grouping, the mission-driven development firm with a philanthropic foundation and a commitment to supporting artists, Smallwood-Lewis rose through the ranks to become a senior vice president.
"I'm so thankful for my time there," she says. "I became a sponge. I worked hard and I learned and I grew in my tenure in that location." But she was continually disappointed to encounter very few people similar her in her field. "I noticed very early on—in going to meetings, in consortiums, conferences—at that place weren't people who looked similar me, across the lath, in existent estate," she says.
Greg Reaves, a former pharma exec at Merck and Johnson & Johnson, met Smallwood-Lewis when he started working at Goldenberg in 2004. He recognized the aforementioned disparity.
That, the two concur, has had devastating long-term effects on mostly Black neighborhoods and Blackness people in Philly, and around the country. A lack of diversity is a problem in all fields, simply it'southward particularly troubling in real estate, as that's how deep generational wealth has been built.
"These companies have been in existence for decades and hundreds of years for some of them. And information technology takes that long to actually get fully entrenched and established in this industry," Smallwood-Lewis says. And when Black people are shut out of real estate development at the industry level, Blackness people are also shut out of existent estate opportunities at the private level.
"I accept seen immediate how development has not been focused in [Black] communities and then when information technology was, it was developers who didn't look similar us, going into communities that do wait like us. That needed to alter," Smallwood-Lewis says.
The two felt a call to do something about it.
In 2008, Smallwood-Lewis and Reaves struck out on their own, founding Mosaic Development Partners (MDP) to create real estate opportunities—from housing to retail to pathways to investment—for people of color who for too many generations take been turned away, shut out.
They even invented a name for what they do, every bit they shared in a New York Times article last August: "gentrigation"—a "mixed-income approach that encourages racial and economic integration."
In the last 12 years, Mosaic Development Partners has invested $100 million in Philadelphia neighborhoods; completed i-million foursquare feet of redevelopment; and created hundreds of jobs in Fairhill, Strawberry Mansion, Brewerytown, Norris Foursquare, Germantown, Ludlow, West Philadelphia, and many more than frequently overlooked areas. Their projects take housed nearly 500 people, many of them with below-market rate rents. Upcoming projects will create homes for another 350 people.
Philly has a fair share of community-minded development groups, from nonprofits like Jumpstart Germantown and Women's Community Revitalization Project to for-profits similar D3 Developers and Shift Capital, a B Corp. None accept the core mission that MDP does: removing the systemic barriers to entry that have kept people of color out of the existent manor market.
Since their start in 2008, their company has non shied abroad from going into communities that others find risky. "The communities that Leslie and I choose are communities that probable feel uncomfortable to typical investors," Reaves says.
"Nosotros had to exist very artistic."
That, plus the timing of their launch, against the dour properties of the financial crisis, has forced them to be artistic when tackling challenges.
"Nosotros didn't get-go our company like typical development companies do, where they have capital that'due south secured and sitting there abreast them to be able to pursue opportunities," Smallwood-Lewis says.
They put in their 401Ks, and the Reinvestment Fund (TRF) —founded 35 years ago past the Citizen'southward late chairman, Jeremy Nowak—and The Food Trust provided them with a forgivable loan if they agreed to do a supermarket-anchored projection equally one of their first projects. "That'southward what we utilized moving forward. We had to be very creative," Smallwood-Lewis says.
When, for their first two projects, they began developing in Fairhill and Yorktown, those two communities were amid the near unsafe in the city—not the neighborhoods where traditional investors ordinarily look to put their coin.
"That'south part of what we encounter as the systemic racist mindset that is hidden. Because [traditional investors] volition invest in Center Urban center at a lower return, but they won't invest in communities where nosotros are at a college render considering of their comfort," Reaves says. "It's not the numbers, considering the numbers bear out. It's their comfort. We're dealing with that at every level of the system in real estate evolution, and that's what we find compelling and hard and troubling at the same fourth dimension. We have to pause downwardly every barrier to move these types of projects forward in a way that includes people."
In their first project, a pupil housing development in Fairhill, they included the local community group, Metamorphosis CDC, as an owner; the CDC owns xx percent of that project.
Their 2d projection was Edison Square, in the shuttered Edison Loftier School, from which more students who went to Vietnam died than whatever other high schoolhouse in the country. Recognizing that African Americans represent about 12 or thirteen pct of the nation's population only are over-represented in war machine service, specially during war times, Smallwood-Lewis and Reaves wanted to honor that legacy.
So MDP congenital a shopping middle there that created meaning jobs, with the aid of TRF and PIDC, simply they also congenital a 66-unit veterans' housing project that had its grand opening in Feb. Residences are intentionally affordable, ranging from 20- to lx-percent below AMI; several residents receive vouchers that cover the departure between the rent and what they can afford. Most of the residents, Reaves says, are people of color.
While MDP is mission-driven, it is decidedly not a nonprofit organisation. "We believe that at that place are economical solutions to solving bug. And what we establish is that when nosotros look to sustain communities and include communities and make them a part of the solution, they don't distinguish whether we're making profits or not. They await at really the value of what we're doing to the neighborhood," Reaves says.
For example, they did a projection in Strawberry Mansion called Eastern Lofts, in a building that had been shuttered for more than three decades. "It was a complete eyesore to the community, and well-nigh people wanted to tear it down. But we had a different approach"—they concluded upward winning a preservation award for it—"only what was most important to united states was how we put the project together," Reaves says.
Eastern Lofts is a mixed-utilize commercial building, with part of its mixed-use being to back up small minority- and women-owned businesses. They brought in about eight different businesses, all of them women- and minority-endemic, because that addressed a existent need in the community.
"Minority- and women-endemic businesses don't get the admission to capital, they don't have the access to capacity, they don't become the benefit of loftier-profile locations. And so we realized that in our business concern model, along with our financing, we have to provide a subsidized rent profile that allows people to come in and be able to exist successful and limits the burden of toll of them operating there," Reaves says.
A meaningful investment opportunity for residents …
Part of the Mosaic Development Partners model is addressing ways to provide subsidized rent to businesses so that they have the time to ramp up and exist successful and grow and add employees and add a benefit to the community.
Smallwood-Lewis spearheaded the launch of a meaningful investment opportunity for residents as well. "Most real estate development projects crave individual equity and debt. We typically heighten equity from high net worth investors," she explains.
But since 2009, when the Jobs Human action was passed, non-accredited investors can now invest in real estate projects for as little every bit $500 and will receive the same return on their investment as wealthy investors. Because the non-accredited investor is usually not every bit knowledgeable about investing, this method of investment is highly regulated and must exist done through an approved platform. (MDP uses Small Alter, which also requires them to publicly post all data about the project.)
"We all know that wealth has been earned and derived through real manor, and nosotros have hundreds of years that we need to catch up on. And in order to do that, these kinds of programs need to exist put into identify for us to exist able to really be effective in this real estate industry," she adds.
Neither Smallwood-Lewis nor Reaves desire their team to abound too big, but they're ambitious about the projects they can accept on. They're finalists, in partnership with other development companies, in the RFPs for both the Navy Grand and Penn's Landing.
They besides started Mosaic Brokerage Group, with 15 agents who help them lease their commercial and residential spaces. With projects they take in the pipeline and the extensive piece of work they're doing at Cheyney Academy, they're considering bringing on iii or four more full-time people.
And moving frontward, they programme to exist very focused on affordable workforce housing. "When nosotros get into communities and nosotros bring a shiny new building or a rehabbed edifice, we know that we tin can gentrify those neighborhoods," Reaves says. But they intentionally don't seek the highest rents in the market because they know that will exclude people of colour.
When a young Blackness higher grad gets her first job, she's non only statistically likely to get paid less than her white counterpart, merely to have more debt and a lower credit score, which will of grade penalize her when she goes to apply for housing. "Nosotros recognize all of that, and that we tin can't just brand a blanket statement and say yous have to meet a 700 credit score, you have to have this kind of income," he adds.
Which brings us back to the kind of systemic racism that touches every aspect of real estate. Smallwood-Lewis and Reaves say that nosotros tin all play a function in changing the narrative. One fashion, Smallwood-Lewis says, is through early investment in upcoming projects, providing the blazon of coin that is riskier—and therefore typically commands a higher render.
"The i main thing that Greg and I take ever come confronting is early capital," she says. "We need to find means for more than companies that look like us to exist able to accept access to that earlier uppercase."
"I would just like the broader community, particularly people who aren't people of color, to realize how hard it is for communities of colour to be able to create wealth," Reaves says. "And if we're not given existent opportunities to participate at every level of wealth-building, we're going to see this problem for another 100 years."
Source: https://thephiladelphiacitizen.org/mosaic-development-partners/
0 Response to "Mosaic Development Partners works to bring people of color into the real estate market"
Post a Comment