When people gather for the ribbon cutting at the neighborhood’s new grocery store, community center, or manufacturing facility, their excitement is justified. For the community resident, perhaps an unfulfilled personal need for nutritious food or a good job is, at last, being met. For the local economic development organization, the new development may be the achievement of a hard-fought goal of the community plan or the catalyst for additional investment. For the developer, it may represent individual wealth creation or wealth opportunities to the community. Suffice it to say, for probably everyone, the building behind the ribbon is a bricks-and-mortar affirmation – a deep satisfaction felt when a community investment comes to life.
To spur more community investment, particularly in Cook County’s underinvested neighborhoods, The Chicago Community Trust has created a fund to support the pre-development phase of equitable real estate development. To help developers of color compete with their white counterparts for project opportunities and capital to finance those projects, the Pre-development Fund will use grants to support community-based Black and Latinx developers in covering the costs of pre-development services – from market feasibility of the project to site due diligence to professional services. These are costs that are incurred before site acquisition and construction and pertain to due diligence and preliminary plans and specifications.
Select Pre-Development Fund grant recipients will also be eligible for technical assistance from the Community Desk and Enterprise Community Partners. The Desk, a recently launched partnership between the Trust, Boston Consulting Group and JPMorgan Chase Foundation to catalyze community-oriented development investment in underinvested neighborhoods, serves as a conduit between community projects or plans and the resources and capital necessary to bring those plans to reality. As Ja’Net DeFell, the Desk’s program manager, explains, “Communities of color are often challenged with balancing resources and expertise to be competitive in the marketplace. Hopefully, with the support of the Desk and Enterprise Community Partners, projects are positioned with the tools to be successful long-term.”
Why fund pre-development?
In real estate development, 70 percent of decisions that pertain to project outcomes are made within the first 10 percent of the development life cycle. For community-based developers in markets without a lot of capital, pre-development is fraught with multiple competing deadlines that complicate an already precarious development outlook. Developers frequently speak of the need for “no-cost capital” (i.e., non-recoverable grants) to cover pre-development services. These dollars bring a welcome degree of certainty to the project and allow community-based developers to compete with large for-profit developers that have the financial capacity to navigate pre-development. “A lack of resources for pre-development is a barrier to equitable and inclusive community development in Chicago,” says Andy Geer, vice president and market leader for the Enterprise Community Partners Chicago office. “An investment of a pre-development grant will be catalytic to the work of small or emerging Black and Latinx community developers who have the technical and financial expertise to implement community-driven real estate projects successfully,” he adds.
Real estate development in underinvested communities is complex during the best of times. The disproportionate impact of COVID-19 on Black and Latinx communities exacerbates that complexity, but it also underscores the need to leverage real estate development as an economic recovery measure. According to recent data, 27.1 percent of COVID-19 deaths in Illinois are Black residents and 20.6 percent are Latinx residents, and yet the state’s total population is just 14 percent Black and 17.5 percent Latinx. Even before COVID-19, residents of many South and West Side communities in Chicago were twice as likely to be unemployed, four times less likely to hold a bachelor’s degree, and had a life expectancy of up to 16 years lower than nearby majority-white communities. The spread of a dangerous respiratory virus in already-struggling communities was a recipe for crisis. Urban pollution, the absence of some combination of basic needs such as quality grocery stores, safe open space, accessible transportation and healthcare facilities, and the extremes of either overcrowding or social isolation make it all worse. As the region pivots from addressing the immediate needs of the crisis to building back better, real estate projects that incorporate racial equity, public health and the environment should take precedence. The Pre-Development Fund will make this possible.
The Pre-Development Fund is part of the Trust’s Catalyzing Neighborhood Investment strategy. To make the fund accessible and accommodating, the application process is rolling and the initial point of entry is through a letter of inquiry (LOI) rather than a full application. For more information on how to apply, please visit the Pre-Development Fund webpage.
Michael Davidson is Senior Director of Community Impact at The Chicago Community Trust. He leads the Trust’s Catalyzing Neighborhood Investment strategy.