Picture a real estate developer in your mind, and you’re probably not imagining the folks gathered last month in Minneapolis’ Mill District. In Minnesota, the vast majority of developers, finance, and construction are white men.
If you’re the folks at Twin Cities LISC, the local branch of a national development nonprofit called the Local Initiatives Support Corporation, that’s a problem. LISC has been working for over a year to cultivate cohorts of people of color interested in becoming developers. That’s why they launched a program called the Developers of Color initiative, hosting the recent meet-and-greet. It’s intended to change who’s included in the local real estate conversation.
“We are a national intermediary, with a goal to elevate and emphasize Black wealth in our communities,” Gretchen Nicholls, LISC’s senior program officer, told me. “After George Floyd, we started this work interviewing Developers of Color, to understand the obstacles and challenges they were facing. We designed a program in response.”
For many organizations in the Twin Cities, the murder of George Floyd reinforced how deep and undeniable inequity has become in the Twin Cities. Twin Cities LISC is a nonprofit ideally placed to intervene in the realm of housing and commercial construction. They’ve been running workshops for over a year, bringing together about two dozen people of color interested in becoming developers. The nonprofit runs trainings, networking events, and provides advice aimed at breaking down barriers for people of color in the Twin Cities’ metro.
“Our first year was fascinating,” said Nicholls. “(It was) informative to walk alongside these developers, to watch and observe things they were up against, (and) to figure out how to troubleshoot the things they were struggling through.”
A few months ago, Twin Cities LISC inaugurated their second program cohort, 14 people who have begun getting to know each other and exchanging tips and stories about working in a difficult field.
“There are challenges from the capital side, but also other things,” said Koa Mirai, a senior program officer focusing on lending. “We’re growing out of our experiences from last year. This year is to offer more up-front trainings. There were things we noticed people were getting stuck on last year as their projects proceeded.”
[image_credit]MinnPost photo by Bill Lindeke[/image_credit][image_caption]Sir Boxing Club on Arcade Street in St. Paul was developed by Georgia Fort, a participant in the first local LISC cohort.[/image_caption]Bringing in experience
Unlike most of the rest of the cohort, Nawal Noor had experience in real estate development before joining the program. But, as a member of Minneapolis’ East African community, she’s faced additional challenges growing her business. For example, Noor found difficulty reconciling real estate investment with the Islamic prohibition on charging interest. (She explained that there are some caveats to the prohibition around commercial uses for property, but it remains a challenge.)
Noor has run a development company named Noor Companies for years, building housing on lots in South Minneapolis including a small housing project on Park Avenue and 22nd Street. She says that the trainings and connections have been invaluable in thinking about moving forward to her next endeavor.
Noor is currently excited about a 39-unit low-income housing tax credit project that’s set to close in a few months, with a 124-unit market rate development also in the works.
“I’ve worked on projects on a smaller scale, purchas(ing) vacant lots and developing affordable housing projects. This really helped me start learning what a development looks like,” she said, referring to necessary skills like assembling a pro forma, a key financial planning document. “LISC was always there if I needed a resource or to connect me to someone.”
Noor isn’t alone in having plenty of experience before entering the Twin Cities LISC program. Every one of the burgeoning developers I spoke with had already been running successful businesses (and often more than one). These were not people who lacked experience, but rather people who needed the extra bit of insider knowledge, and especially the connections, that a group like LISC can provide.
“The most existing part is just the overall process,” said Liam Cavin, a businessman who ran a construction company for years before branching out with development projects.
This year, Cavin has been working on a 44-unit apartment building on Northeast Broadway Avenue, but he hinted effusively that there’s another project in the works, a partnership with a larger firm that he’s excited about.
“Over the years building buildings, the greatest satisfaction I get is always just the response from that end user. Once they’re in the space and I see the smile on their face, it’s just so satisfying,” said Cavin.
Another member of his cohort, Victoria Yepez, has a similar pedigree, having run companies in the commercial real estate and building management side of the industry. She added a general contractor license to her portfolio a few years ago, something she says is invaluable when it comes to working on a new real estate development.
“The network is everything,” Yepez said. “So far it’s been really those connections to the network and having that name behind you. ‘I’m part of LISC’, it’s a powerful entity on its own.”
She’s currently submitting applications after completing a mixed-use affordable housing project in Brooklyn Center.
Spreading out opportunity
The cohort meets every month for trainings on topics ranging from banking to credit to what to look for in legal counsel. Then there are the mixers, where Twin Cities LISC invites influential people to enjoy snacks and meet, as Nicholls puts it, “14 very dynamic and visionary people in our communities that are really trying to make a difference.”
Spreading the opportunity and diversifying industries are the key to building a Black middle class, and a more diverse set of actors in the Twin Cities. Not to mention, it’s a more equitable way to address the housing shortage. Developers who come from the communities they’re working in are far more able to navigate the difficult terrain of housing politics, and help bring investment into overlooked communities.
According to LISC’s Nicholls, bridging the gaps in accessing equity financing is the key to broadening who works in real estate. But for these developers of color, there’s the equity gap, and then there’s the equity gap. This program is aimed at solving both of those problems.
Editor’s note: This story has been updated to correct the spelling of the names of Gretchen Nicholls and Koa Mirai and the name of the Local Initiatives Support Corporation.
Sounds good, but be careful of scams. White guy Richard Brustad (Brighton Development Corporation) started and ran Brighton Development Corporation, but he would claim that it was female-controlled (woman president) and diverse (the other director, an Asian-American woman).