To unlock opportunity at a scale that cannot be reached through one-off projects, CCI’s capital absorption framework focuses on creating a set of deals and projects that can synergistically advance a community towards achieving its shared priorities. This set of deals and projects is what we call the pipeline.
In Coachella Valley, California, the Connect Capital team is using the capital absorption framework to help address the region’s massive shortage of affordable housing. The team began its work by examining the region’s need for affordable housing and trying to understand its pipeline by assessing how many additional units were being produced each year. Looking at the gap between the growing need and the rate of development suggested that a new approach was required.
The team then asked how it might intervene to expand the capacity of the community investment system. Team members began engaging other stakeholders, including a range of for-profit and non-profit housing developers that had completed deals in Coachella Valley but had been inactive in the area in recent years, as well as those that were currently active in the region and might consider doing even more. They also reached out to various public agencies to inquire about unused or underutilized parcels of public land that might be available for development.
When they turned to identifying their pipeline, that is, putting together a list of deals in progress, the team was surprised to see more housing-related activities and opportunities in Coachella Valley than they initially believed. If they batched these potential deals, they would be more likely to attract the interest of Los Angeles banks and community development financial institutions (CDFIs), whose potential interest in the region had previously been deterred by the prospect of driving long distances for a single transaction. They also noticed that affordable housing was frequently being sited in locations without good access to quality jobs, nutritious food, and other building blocks of good health and economic stability. In response, the team is strategizing how best to engage actors in higher-opportunity communities to increase the availability of affordable housing in their areas, including exploring the possibility of mixed-use developments.
By identifying their pipeline of active housing deals and opportunities for new projects and making that information accessible to all relevant parties, the team has increased the likelihood that they will achieve their shared priority. At the same time, the pipeline analysis is serving as a tool for engaging a wider range of stakeholders and identifying new resources that will improve the local community investment system as a whole.
Analyzing the pipeline helps to diagnose what is happening in the system and consider avenues to resolve issues. Building the pipeline helps to ensure that the community has sufficient deals in process to achieve its goals. Executing the pipeline efficiently and strategically, by prioritizing and batching deals, further enhances the likelihood of success and can improve the community investment system as a whole at the same time as it accomplishes the community’s goals. In the end, the pipeline is where community investment becomes much more than the sum of its parts.