In the predominantly white real estate development industry, a Seattle-based nonprofit hopes to help developers of color get much-needed affordable housing projects off the ground.
HomeSight, a nonprofit developer and lender, launched a new fund Tuesday to help small-scale developers in the early stages of building affordable for-sale homes.
Funded by Amazon, JPMorgan Chase and the Washington State Housing Finance Commission, the fund will offer $550,000 in grants for developers of color in the earliest stages of building, such as surveying possible job sites, getting legal help or putting money down to secure a property.
Another $1.5 million will fund low-interest loans for the next steps, such as hiring consultants, architects and engineers to put together plans and applying for building permits. Those initial development costs can vary based on the project. Uche Okezie, director of real estate development at HomeSight, estimates that predevelopment work on a town home development, for example, could average about $75,000 per home.
The fund is open to all developers of color with a focus on supporting Black developers. Given wealth disparities and discrimination, Black developers are more likely to start with smaller portfolios and face more challenges getting loans for construction projects, Okezie said in an interview.
“They don’t have the same financial backing as their white counterparts do and so it makes it a little bit harder to get started,” she said.
Builders of color all over the country face similar challenges. Nationwide, fewer than half a percent of developers are Black, by one estimate. A 2020 report found that just 5% of members of the Urban Land Institute, a real estate and land-use group, were Black. Organizations in Washington, D.C., and California have started similar efforts to support developers of color.
HomeSight has labeled its effort the Field Order 15 Fund, named for the 1865 order that designated land in the South for newly freed enslaved people, often referred to as the promise of “40 acres and a mule.” President Andrew Johnson later repealed the order. The organization calls the new program an attempt to “fulfill this abandoned equity goal.”
The new fund is part of a larger effort to help 1,500 low- and moderate-income Black households buy homes in South Seattle, South King County and North Pierce County. To reach that goal, HomeSight Executive Director Darryl Smith said the region needs to support more developers interested in building housing affordable to first-time homebuyers.
The Field Order 15 Fund will support developments of homes for sale that are affordable to those making 120% of area median income or less. That amounts to roughly $131,000 for a couple living in King County or $103,000 in Pierce County.
HomeSight hopes to begin distributing funds to developers in the next three to four months.
Diversifying the people building housing across the region can offer role models in the industry and diversify the types of developments being built, Okezie said.
“I would like to be able to say I bought my home from somebody who looks like me who built it,” she said. “They understand the things that I want, and also to keep the money in our community.”