Illinois Launches Initiative to Encourage BIPOC Affordable Housing Developers

Rowena West was an outsider.

“When I came into housing, the development space was like an old boys’ club,” said West, who is employed by the federal government while pursuing a career in affordable housing. “You would be in the [early stage] discussions, but when the team got into predevelopment, design and construction and all aspects of financing and creating the capital stack, the meeting doors were closed.”

“You would overhear [developers] discussing projects and they’d have huge binders with 500 to 600 pages.” West said. “I guess it was all government regulations and paperwork, but it was totally foreign. Real estate development was not a space that was welcoming to females, certainly, if you weren’t an urban planner or architect.”

West, who is Black, said race also played a part.

“Developers couldn’t envision me in this role. In a lot of ways, I was invisible. Everything I have learned has been through a patchwork of programs and individual courses to gain a seat at the table. You get a piece here and a piece there, but there’s no place to get all the pieces.”

West and other developers who are Black, Indigenous and people of color (BIPOC) have a new opportunity. In late May, the Illinois Housing Development Authority (IHDA) board awarded $5 million to launch the Next Generation Capacity Building Initiative (Next Gen), a program to expand the talent pipeline and increase diversity in the housing development arena and related industries.

Local Initiatives Support Corporation (LISC) received the grant and will use funds to provide capital, training and technical assistance to expand access to housing resources administered by the state, focused on reducing barriers to entry in the low-income housing tax credit (LIHTC) space.

According to IHDA, there are three key goals for Next Gen:

• Using funds to establish a predevelopment loan fund administered by LISC for preconstruction and planning costs necessary to establish project design, scope, site control and other costs.
• In-depth training for program participants, including 160 hours of training curriculum delivered by LISC on affordable housing development and LIHTCs, with specific training for IHDA’s tax credit program and processes.
• Project-specific technical assistance for each BIPOC developer or team that receives a loan from the predevelopment loan fund as they work on their proposal.

Leveling the Playing Field

Training and networking are crucial.

“Leveling the playing field is important because access to these resources will help to dismantle longstanding structural barriers to success for BIPOC developers,” West said.

She highlighted that Black people and other people of color regularly confront economic and social disadvantages stemming from a long history of racism and discrimination. This includes redlining, with appraisal valuations consistently lower in BIPOC communities than in similar housing found in more affluent neighborhoods. As a result, most people of color do not have access to generational wealth that makes buying homes and building equity more accessible.

IHDA previously made moves to increase diversity among affordable housing developers, including incentives for having a BIPOC-led firm on the development team and for projects demonstrating proactive racial equity work related to the development planning process. In the most recent application round, all approved LIHTC applications had BIPOC participation on the development team.

This is the next step.

The Challenge

“The reality is people of color are underfunded and underrepresented in the real estate industry,” said Angela Bolden, executive director of LISC Central Illinois. “The challenge for BIPOC developers centers around securing capital and this program will address that by giving finances to support initial development expenses when determining the feasibility of a project.”

West is an example of those who could be helped. She began her career working in affordable housing as a marketing agent in an IHDA-funded development in Chicago. After several promotions, she left a realty company to start her own relocation and marketing firm.

When her mother became ill, she returned home to Alabama to care for her, which changed West’s career trajectory. She completed a master’s degree in social work, leading to a job with the federal government. But as she nears the end of her federal career, she has returned to her true passion–housing.

“I see myself as an emerging developer, despite having worked in various real estate capacities,” West said. “To educate myself, I completed a variety of programs that I often learned of by chance.”

West included training through the Chicago Rehab Network, Urban Land Institute and Elevated Chicago. The last of those culminated in her first development proposal, Good Life Cooperative, an intergenerational co-housing development that she collaborated on design work with Heidi Wang of Chicago’s WJW Architects and Albert Wang, of Baba Architects of Park Ridge, Illinois.

It’s for West and others nearer the start of their career that Next Gen is focused.

“The technical knowledge, high cost of entry and relationships required to develop affordable housing properties has historically made it challenging for new developers,” said Andrew Field, deputy director, communications department for IHDA. “Providing curated technical assistance will be challenging but we believe that is what new developers need to become a successful housing developer.”

Breaking Barriers for New Developers

West said the barriers to entry into affordable housing are substantial.

“You’re really starting at the bottom,” she said. “Someone needs to offer a hand because no one makes it in this industry alone. Many individuals contributed to my learning. Their encouragement and my real estate experience gave me an advantage that other new developers may not have.”

West likes that Next Gen is for new developers.

“Some programs say they’re created for new developers, emerging developers,” West said. “But what they’re calling ‘new’ or ‘emerging’ are people who are already doing this work … while a large contingent of people like myself are trying to find a point of entry to learn, grow and contribute to this industry.”

Bolden said the biggest need may be to help developers with applications. She said many BIPOC developers have talked about applying but not receiving the tax credits and then not fully understanding why they missed out.

“I’m a big proponent of education,” Bolden said. “You have to be in there to learn it–and having this training will fill in some missing pieces. Also, having access to predevelopment financing is crucial. We’ll offer no-interest financing that is forgivable if you’re not successful, which eliminates the risk that is a challenge for some BIPOC developers.”

Field said IHDA did its homework before launching Next Gen.

“IHDA connected with multiple state housing finance agencies, more than 50 developers and stakeholders and other partners involved in housing finance to talk best practices; lessons learned and share ideas,” Field said. “Everyone has differing resources available and long-term goals, so it was helpful for us to gain insight by hearing various thoughts and opinions.”

‘A Dream Come True’

Applications to Next Gen start this fall, with participant selection and training in early 2024.

Count West among those who are interested. “Despite my superb training, there are still competencies that I am missing in the development skillset,” she said. “To participate in Next Gen would help fill these gaps and be a dream come true.”

Bolden said the training will be limited to two cohorts of 15 people.

There is power in numbers.

“You will get to see that you’re not the only one facing challenges or the only one lacking in a certain area,” Bolden said. “This will help people build long-term relationships, not only with their peers, but with experts.”

West sees the future.

“While some things in our nation’s past cannot be undone, there is much that can be done,” she said. “By committing to increasing minority participation, we can change the systems that have made it difficult for people of color to succeed. We can create new opportunities and tap into vast potential that has long been ignored. I encourage Next Gen and similar programs to include people like me, even though I don’t have a 40-unit building being built with low-income tax credits. Yet.”

Bolden said IHDA is one of very few financing agencies with such a program.

“This is pretty amazing and pretty critical to our community,” Bolden said. “This is not the norm, and this is why part of the initiative is to collaborate with them to best design and needs of the developer.”