“This program will accomplish the important task of acquiring and rehabilitating distressed homes in order to improve neighborhoods and provide safer and more affordable housing for Richmond residents,” said Mayor Tom Butt. “The City will, as a whole, benefit from the practice of social impact investing because the bonds are paid solely from the revenues generated from the sale of the rehabilitated properties.”
Richmond’s Code Enforcement Department currently manages more than 250 blighted, abandoned properties, keeping them boarded up, cutting weeds, removing illegal dumping etc. This costs the City of Richmond approximately $7,000 per house annually.
The program has several goals:
- Create clean, safe and decent housing – appropriate to neighborhood
- Provide opportunities for First Time Home Buyers through SparkPoint
- Stabilize neighborhoods
- Create Social Impact Bond Financing Model to recycle funding to maximize number of housing units in the program
While the project is blight strategy, it will have several other benefits. These include:
- Increased neighborhood homeownership rates
- Reduced code enforcement costs and police calls for service
- Stabilized neighborhood property values
- Increased property tax revenue for the City of Richmond
Key to the success of the development of the program model has been John Knox, Attorney at Orrick, Herrington & Sutcliffe, LLP. Mr. Knox and his team provided pro bono legal services to create the Loan Agreement, Indenture and Purchase Contracts, and supported the development of the Social Impact Bond Ordinance. Other partners include Backstrom McCarley Berry & Co., LLC; Community Housing Development Corporation; Contra Costa Tax Collector; Contra Costa District Attorney; Federal Reserve Bank; Fisher Realtors; The Home Depot; Old Republic Title; RBC Capital Markets, LLC; Richmond Build; Richmond Economic Development Commission; Richmond Neighborhood Coordinating Council; SparkPoint Contra Costa; County Supervisor John Gioia; Turner Construction Group; Valero Realty; and Wright Real Estate.
On January 26th, key partners toured one of the first properties to be renovated through this program - construction will begin on two houses in early February! Read the front page article in the Contra Costa Times here.
For more information about the program, you can watch this short video of Joshua Genser, Richmond Community Foundation Board Chair, speaking at SOCAP15 (the premier international conference on social capital markets) in October.