A new concept is coming to Southeast Colorado Springs, one that will move community members from “owing to owning,” says Pastor Ben Anderson of the Solid Rock Community Development Corp.
The organization is partnering with Mercy Corps to create a community investment trust in Southeast. The trusts are a way for low-income people to start investing their money to grow funds for the future.
“There are three things that we focus on — affordable housing, business development and infrastructure improvement,” Anderson said. “We’re currently going to ground-break for 80 [affordable housing] units in October. We are investing in affordable housing, but at the same time we have to bring our community along, and that’s why we have the community investment trust. It’s not enough for us to provide affordable housing, because those are rental units. We want our community to go from owing to owning.”
The community investment trusts are a financial product, a stock offering within the state, said John Haines, executive director of Mercy Corps.
“It’s a low-dollar investment, $10, $15, $25 investment,” he said. “It’s within a prescribed geography by zip code. The property is a commercial retail property that people buy. They buyout the down payment money in a property over time as they make their investment. We have roughly 250 families involved in our project [in Portland].”
Mercy Corps’s Portland project purchased a 29,000-square-foot strip mall in Southeast Portland in 2017. It is currently home to nearly 30 businesses and nonprofits and is paying dividends to the community.
“It’s been really, really successful and we’re grateful how well it’s done during COVID,” said Haines. “It’s delivering, on average, a 9 percent dividend to the investors every year. The share price changes based on an appraisal every year. The share price has gone from $10, in three years of appraisals, up to $17.05. It’s worked really well. We have roughly 30 businesses and nonprofits in the building, and those really reflect what the community told us they want and need. It’s a super diverse range of nonprofit and for-profit tenants. It’s really become kind of a hub for the neighborhood, and a place where we’ve had art events, a number of health-related events, greenscaping, performance, all sorts of things. It’s made the space much more active and the investors take great pride in the events and things that happen in the building.”
Not only do community investment trusts help residents build investment income, they also allow community members to take ownership in commercial real estate, which can prevent gentrification and urban blight, both growing concerns in Southeast.
“That’s the goal: Find properties that we can make better, renovate them and multiply the process,” said Anderson.
A recent report from Realtor.com found that 80916 is the No. 1 area in that nation for new home sales, a good omen for a real-estate-based investment product like a community investment trust.
“The goal of this is to build true community wealth and community ownership of assets that should belong to the community,” said Anthony Carlson of 6035 Strategies, a consulting firm involved in the process. “Allowing the community to take ownership of certain properties, and to be able to see themselves as someone who eventually owns a property versus somebody who is always owing somebody else rent is really at the core of this program.”
In addition to being a low-cost investment, the community investment trust would also be low-risk.
“It’s downside risk-protected, so investors can get their money out any time with guaranteed no-loss,” said Haines. “The only requirement is that you’re 18, you live in the neighborhood, and you take this course that we designed called ‘Moving From Owing to Owning’ and then you’re in. You commit to a dollar amount every month. Nobody touches cash, it goes through an investment portal and a stock offering agent that we manage. Our goal is to put people who otherwise don’t invest, don’t understand investing and don’t get the opportunity to invest in real estate to get them into that asset class at a loss-protected, affordable level.”
The investors for the Southeast project will be a mix of community members and ‘impact investors,’” said James Johnson of Solid Rock CDC. “Modeling off of Portland right now, they need 600 community investors, invested, to buy out the property. We are working with other impact investors, which are those individuals that are like, ‘Hey, we want to do $200,000 because we understand the impact this can have.’”
Johnson said Solid Rock’s goal is to have the community investment trust up and running by the end of the year.
“We’re looking at, if everything works out, by the end of this year,” he said. “Hopefully by the end of this month we’ll know for sure on the property, and it’s still going to take us some time to do our due diligence on it, to make sure it makes sense for our impact investors and the community. We’re looking to get it done in the next 120 days, if not sooner.”