China is one of a small number of countries around the world that does not levy property tax on privately owned residential properties. After the Communist Party established a socialist regime in 1949, China adopted a public land ownership system and thereby lacked a real estate market until the reform era.

Since the reform, property sales, along with the economy as whole, have boomed. First-tier cities such as Shanghai and Beijing are now home to some of the world’s most expensive real estate. But taxes are imposed only at the point of property sales and transactions, not annually on ownership.

It may come as a surprise, then, that China is driving the evolution of valuation technology, particularly in Shenzhen—the brand-new southern city that has grown from a small town of 50,000 residents to a major metropolis of 12 million since 1982. The Shenzhen Assessment Center—a municipal statutory agency that was established to assist the collection of taxes on real estate sales and transactions—has developed what is arguably the most advanced property valuation system in the world. It is a logical extension of the computer-assisted mass appraisal (CAMA) system that the Lincoln Institute was instrumental in developing for desktop computers decades ago. The Peking University–Lincoln Institute Center for Urban Development and Land Policy (PLC) has helped several Chinese cities implement CAMA in anticipation of a future property tax. What makes Shenzhen’s system different is that it uses GIS technology and new techniques that elevate CAMA to the next level.

Today, CAMA is an international standard that has made it possible to assess entire metro areas from a desktop computer. But CAMA by nature is mainly a two-dimensional system, whereas modern geographical information system (GIS) software is capable of efficiently rendering three-dimensional (3-D) maps. The future of property assessment lies in marrying CAMA techniques with GIS tools in a system known, naturally, as “GAMA.”

CAMA systems are, broadly speaking, not overly exciting to look at, with lots of data tables and highly detailed two-dimensional maps. GAMA by contrast is dazzling. Using GIS tools, the system constructs 3-D models of entire cities, with streets, buildings, the individual properties within them, landscape features, and so on. Imagine the feel of an open-world video game. The aim is to be able to appraise every property from computers in the assessment office.

“In my view, Shenzhen is dragging CAMA into the next generation, doing things in their valuation that nobody else can do,” says George W. McCarthy, president and CEO of the Lincoln Institute.

Shenzhen: Center of Progress

In many ways, the development of Shenzhen’s property assessment system is the classic story of modern China: starting from far behind, absorbing knowledge from more advanced economies, adapting to local needs, and ultimately coming to rival the best in the world. The fact that it happened in Shenzhen—the Special Economic Zone that launched the experimentation that transformed China from a largely rural economy to a global power—is unsurprising. In 1979, as China was charting the course of its new reform, four cities were declared “Special Economic Zones (SEZs),” pilot projects where the government would experiment with market mechanisms. Shenzhen, a fishing town of just 30,000 people, was one of them. Adjacent to Hong Kong, which was administered at that time by the British and highly internationalized, Shenzhen was in a perfect position to perform the mission of SEZs—attract global companies to trade, bring in foreign direct investment, and obtain for China the tools necessary to forge a modern developed nation.

As investment poured in and factories sprang up, Shenzhen became the beating heart of China’s new economy, and one of the world’s most advanced cities. In just 30-odd years, it grew into a bustling metropolis of nearly 12 million. Its official GDP in 2016 was US$284 billion (RMB 1.88 trillion), with a per capita GDP of US$25,790 (RMB 171,013), more than triple China’s average. Sometimes called China’s Silicon Valley, it is home to some of the world’s most powerful tech companies, including Internet giant Tencent.

As early as 2003, the central government started to consider introducing a property tax. Six cities were selected as pilot experiment cities for mass appraisal of properties. Shenzhen was one of them. Shenzhen’s Center for Assessment and Development of Real Estate was founded that same year to commence the enormous task of citywide valuation. At first, they were more or less on their own and progress was slow. It took three years to designate basic prices in 56 neighborhoods, in order to assign a single price for the whole area.

The initiative coincided with the Lincoln Institute’s foray into China in 2003, when it began developing relationships with government agencies and conducting research projects on topics ranging from property tax and municipal finance to public land management and land expropriation. “We saw the changes as the economy was being opened up, and we figured there would be all sorts of land policy challenges to grapple with,” McCarthy says.

In 2007, the Lincoln Institute and Peking University, China’s oldest and most prestigious university, endeavored to open the PLC, a research institute staffed by both organizations. One of the PLC’s early tasks was to help the Chinese government understand how to create a property tax that works as a system of revenue. The PLC organized training events to disseminate international knowledge of property taxation and computer-assisted mass appraisal to China. The PLC invited experts from the International Association of Assessing Officers, International Property Tax Institute (IPTI), Rating and Valuation Department of Hong Kong, ESRI Canada, and others. To better demonstrate how CAMA worked, the PLC launched a pilot demonstration project that established a CAMA system for the financial district of Beijing. The PLC also mobilized international experts to assist Shenzhen and Hangzhou, and funded study tours for technical personnel, in the United States, Canada, and Hong Kong. The impact was enormous.

“The PLC was translating the professional literature on property valuation, and it was the first time we were encountering some of this stuff,” says Dr. Wang Youjie, head of the Shenzhen center’s mass appraisal department. “They also introduced us to CAMA.”

Aided by access to a developed body of knowledge, progress in Shenzhen rapidly accelerated. By 2010, the center had evaluated prices on a per-building basis for 170,000 buildings, and by 2011 had done basic evaluations for 1.5 million residential properties. “After understanding the theory better, 2010 to 2011 was a breakthrough point for us,” says Xia Lei, director of the Shenzhen Assessment Center.

Also important was the Lincoln Institute’s role as a connector, enlisting top foreign experts to host seminars and perform hands-on training and development work. To date, the Lincoln Institute has mobilized more than 20 property tax experts to China. For the assessment center in Shenzhen, no one was more familiar than Michael Lomax.

For 22 years, Lomax worked as property assessor for British Columbia Assessment, a province-wide assessment office in Canada. He was among the first people the Lincoln Institute brought to China in 2007, when he joined a government delegation. He has continued making trips to China even after leaving British Columbia Assessment in 2012 to take a position with ESRI, which specializes in GIS solutions.

“A lot of my work in China was to illustrate, convey, and help them install worldwide best practices,” says Lomax, who also teaches mass appraisal at the University of British Columbia. Around 2011, he began working more directly with the Shenzhen center and an appraisal firm hired by the city of Hangzhou, Zhejiang, a city not far from Shanghai. Like Shenzhen, Hangzhou is also known for its tech industry, including the headquarters of e-commerce titan Alibaba.

The speed at which these two cities were working was sometimes astonishing. During one trip to Hangzhou, Lomax spent an entire day critiquing the assessment system built by the local department. The next morning, they asked him to look again. “They had their programmers stay up all night at the hotel to fix all the problems I pointed out,” says Lomax, still a bit in awe. “This might take you six months to do in the West, and they did it in hours.”

The team in Shenzhen was equally impressive. According to Lomax, they took the computerized evaluation methods to the next level. “They are really advanced in fine-tuning the mathematics,” he says. “Shenzhen is far better at valuing properties dynamically, on the fly, than British Columbia.”

In other words, there was a clear opportunity in Shenzhen to advance the GAMA evolution. “It was Michael that gave us the idea of doing GAMA,” says Wang.

From Follower to Leader

ESRI, a global consulting firm specializing in GIS solutions, is helping to build GAMA models in several municipalities. There is Vancouver, where Lomax works; Maricopa County, Arizona, which encompasses Phoenix; and also Shenzhen. These projects are in varying stages of development, but the Shenzhen system is impressive nonetheless. Sitting in on a demonstration of the system is like inhabiting a painting inside a painting, as if you might spot your virtual self if you peeked in the right window. But what it can do in terms of assessment is even more impressive.

Of course, it factors in all the indicators accounted for by a traditional CAMA system: location, number of rooms, floor space, recent market prices, and so on. It can also estimate the value of being near a subway station or close to a school. The three-dimensional nature of the system boosts the functionality. Using vectors, it is possible to model the window vantage point of every single unit in a given building. From the desktop, the appraiser can determine if a resident has a sweeping view of beautiful Lianhuashan Park in central Shenzhen (think New York’s Central Park, except with palm and banyan trees), or just the boring façade of a neighboring high-rise. The system can also track a virtual sun across the sky, estimating how much daylight an apartment gets. In addition to modeling light, it can also model sound—a lower-floor unit facing a busy traffic intersection, for instance, is disadvantaged compared to a unit facing a peaceful courtyard.

The system weights all those factors and synthesizes the final valuation of a property. All told, these factors can amount to a 20 percent difference in value between two units in the same building.

The system is also being used to better execute property transaction taxes. Through this smaller trial, the efficacy of the tool is apparent: of the millions of properties valued so far, only 27,106 challenges have been made as of January this year, and of those only 282 assessments had to be readjusted.

The Shenzhen assessment project is not without challenges. First, the market is young, so there is a relative dearth of transaction data. On top of that, transactions are sometimes reported at artificially low prices, to avert transaction taxes. Finally, the housing market is highly heterogeneous, with fairly distinct groups of housing types.

Limited property transaction data can be among the biggest challenges to implementing a system such as this. In this regard, Shenzhen has a distinct advantage over just about any other city in the world in terms of the knowledge of its properties. The whole place is brand new, and this is especially true for the city center where the slick 3-D model is most impressive. That means the data on all the buildings and floor plans is existing, complete, and rendered in digital formats that are, relatively speaking, easy to adapt to the model.

The team in Shenzhen cleverly innovated around this with a system they call the “holistic” approach. Briefly, it treats those distinct groups of housing first as separate “sub-markets.” Then by establishing relationships among those sub-markets, they are better able to estimate prices across the entire market with fewer data points overall.

The system alone is marvelous from a technical standpoint, but it is also a testament to the advanced nature of the city as whole. In numerous ways, it is an “only in Shenzhen” achievement.

Shenzhen is unique in a purely Chinese context as well. Conjured by the pure political willpower that gave life to the Special Economic Zones, Shenzhen is not directly administered by the central government. However, as a prefecture-level municipality, Shenzhen enjoys closer relationship with the central government than other prefecture-level municipalities. The central government grants more freedom to Shenzhen to try new things.

“In Shenzhen, government agencies, such as the municipal commissions of planning and land, and finance and taxation, are cooperating to share data,” says Director Xia. In a country where interdepartmental data sharing is rare, it is difficult to understate how important this is. “The point is to be creative.”

Geng Jijin, who directed the assessment center before Xia, when development of the model was most intense, puts a more personal spin on it: “Everybody here is from different places in China. We have no choice but to figure out how to get along.”

The Road Ahead

The job of creating the GAMA system in Shenzhen is not yet finished. Partly because Shenzhen grew at such a breakneck pace, a significant portion of buildings from the newly annexed localities are rather poorly documented. According to Director Xia, bringing these properties into the system is a top priority going forward. Given the scale of Shenzhen, it will likely take a few years to work through the challenge.

The implementation of a property tax goes beyond the purview of the Shenzhen Assessment Center. It is a policy problem and the center does not make policy, Wang says, adding “If the policy is put forward, Shenzhen is ready for it.”

It is anyone’s guess when that might happen, given the politically sensitive nature of property tax in China. While there have been two pilot taxes in Shanghai and the southwestern city of Chongqing, they have been very limited and undertaken mainly as a signal that property taxes are coming. Pressure is, however, building. In the absence of a property tax, and as the net revenues from land lease sales that local governments rely on have declined, local budgets have become increasingly strained.

In the meantime, the assessment center is already helping to spread knowledge beyond its very special borders. Delegations have been sent from all around China to view the system, including from across the river in Hong Kong and all the way from Taiwan.

Lincoln Institute President McCarthy, for his part, is ready to see knowledge and experience flow west. Places such as Boston, where there has long been controversy over building near Boston Common due to the shadows it would cause, could use a system that models the sun.

Actually spreading the new GAMA system will likely be difficult, and there is no telling how long it might take. But nobody would have predicted that a fishing village could become a metropolis in three decades flat.

Tom Nunlist is editorial director at Sinomedia and managing editor of CKGSB Knowledge, on behalf of Cheung Kong Graduate School of Business in Beijing.

The author extends special thanks to Carolyn Wang, a mass appraiser at the Shenzhen Assessment Center, who helped arrange reporting in Shenzhen. This piece would not have been possible without her expert help and remarkable patience. 

Image Credit: Shenzhen Assessment Center

References

Chen, Xiangming, and Tomas de’Medici. 2009. “The ‘Instant City’ Coming of Age: China’s Shenzhen Special Economic Zone in Thirty Years.” Inaugural Working Paper Series, No. 2, Spring 2009. Hartford, CT: Center for Urban and Global Studies at Trinity College.

The Economist. 2012. “Time for a Property Tax: A Way to Stabilise Both China’s Wild Property Market and Its Weak Local Finances.” February 4. www.economist.com/node/21546014.

Shenzhen Municipal E-Government Resources Center. 2017. “Shenzhen Government Online.” http://english.sz.gov.cn/.

Wang, Da Wei David. 2016. Urban Villages in the New China: Case of Shenzhen. New York, NY: Palgrave Macmillan.

Xiao, Cai, Wang Yu, and Hu Yuanyuan. 2017. “Overall Govt Debt Risks ‘Under Control.’” China Daily USA, July 13. http://usa.chinadaily.com.cn/epaper/2017-07/13/content_30102302.htm.

Desde 2015, los representantes de varias entidades públicas, fundaciones y organizaciones sin fines de lucro del área de la Bahía de San Francisco, Los Ángeles y Denver han estado participando en forma conjunta en talleres de “absorción de capital” para forjar soluciones para la escasez de vivienda social en sus regiones por medio de estrategias para atraer suelo, capital y otros recursos. Representan a organizaciones no sólo de vivienda sino también de transporte público, planificación y desarrollo económico, partes interesadas que frecuentemente no se unen para resolver problemas, si bien trabajan en temas con muchos puntos en común y en geografías idénticas. 

En una de estas reuniones, en enero de 2016, Abigail Thorne-Lyman, gerente del programa de desarrollo orientado al transporte público (TOD, por su sigla en inglés) de Bay Area Rapid Transit (BART) —un sistema de transporte público que presta servicio anualmente a más de 125 millones de pasajeros a lo largo de la región— se dio cuenta de que su agencia podría hacer una contribución sin precedentes para resolver la crisis local de vivienda, que es una de las más grandes del país. Más de 250.000 hogares de muy bajos ingresos de la región carecen de acceso a vivienda a su alcance. La mediana del valor de una vivienda en San Francisco es de US$1.147.300, en comparación con US$197.500 en todo el país; la mediana de un alquiler mensual es de US$4.350, más de tres veces la mediana de alquiler nacional de US$1.500. Casi la mitad de los inquilinos locales gastan más del 30 por ciento de sus ingresos en alquiler.

Cada equipo regional de 6 integrantes que participó en este taller había confeccionado una hoja de cálculo con todos los proyectos de desarrollo pendientes que contemplaban unidades de vivienda social. “Cuando analizamos nuestra lista, nos dimos cuenta de que la restricción principal que impedía la construcción de vivienda no era el capital”, explica Thorne-Lyman. “Lo que necesitábamos —el eslabón perdido, digamos— era el suelo”. 

“En el área de la Bahía, los emprendedores no compran el suelo hasta que estén seguros de conseguir la financiación necesaria para su proyecto, lo cual dificulta la competencia en un mercado inmobiliario recalentado”, dice Thorne-Lyman. Pero BART ya poseía 120 hectáreas en la región. 

Esa noche, Thorne-Lyman comenzó a imaginar la posibilidad de que BART pusiera a disposición su suelo para todos los emprendimientos que incluyeran vivienda social. Al hacer los cálculos, “Me di cuenta de que podíamos producir alrededor de 30.000 unidades usando nuestro suelo”, explica, de las cuales 10.000 podían ser vivienda social, una cantidad significativa, dado que el emprendimiento típico de vivienda social en el área de la Bahía produce entre 50 y 200 unidades. “Y si somos los primeros en hacer este ofrecimiento, quizás otras agencias de transporte público en otros condados nos acompañaran”, ya que BART sólo abarca cuatro de los nueve condados en el área de la Bahía. Esto podría aportar una solución considerable. “Las 30.000 unidades se podrían convertir en 60.000 unidades, todas ellas en suelo público”, dice Thorne-Lyman. 

Thorne-Lyman y el resto del equipo de absorción de capital entregaron su análisis a la gerente general de BART, Grace Crunican. Tanto Crunican como la Junta Directiva de BART decidieron aumentar el compromiso de la agencia con el desarrollo de vivienda social y vivienda a precios de mercado en suelo de BART. Después pidieron a Thorne-Lyman y su equipo que generaran modelos que superaran los cálculos que habían imaginado en privado. 

“La conversación con Grace fue como una catapulta”, dice Thorne-Lyman. “Tuvimos estas ideas y las desarrollamos. Después la Junta Directiva nos pidió que imagináramos una visión aún más ambiciosa para nuestro suelo. A través de nuestro trabajo con el equipo de absorción de capital, teníamos todos estos socios interesados —como activistas de vivienda social, instituciones financieras de desarrollo comunitario y fundaciones— que apoyaron la idea y la difundieron al público”. 

Los nuevos objetivos de desarrollo para el programa TOD de BART, adoptados en diciembre de 2016, establecen una meta de 20.000 unidades de vivienda nuevas y 400.000 m2 de superficie edificada para oficinas en suelo de BART para el año 2040. Por lo menos el 35 por ciento de estas unidades, o sea 7.000, se destinarán a hogares de bajos y muy bajos ingresos. Hasta ahora, BART ha producido 760 unidades de vivienda social en su suelo, así que queda mucho trabajo por realizar. De todas maneras, Thorne-Lyman se ha entusiasmado con este desafío. “California tiene una crisis de vivienda social, y podemos decir que BART contribuirá a la solución”, explica. “Tenemos el suelo. Y estamos dispuestos a aportarlo”. 

“Alguien tiene que pensar en grande sobre cómo abordar esta crisis. Y nosotros estamos ofreciendo algo grande”, dice.

El Marco de Absorción de Capital

Los talleres de absorción de capital a los que asistió Thorne-Lyman son parte de un programa diseñado para ayudar a las ciudades a atraer y distribuir inversiones comunitarias y aprovechar otros recursos críticos para alcanzar sus metas, como suelo y conocimiento técnico. Las inversiones comunitarias se definen como “inversiones que tienen por objeto brindar beneficios sociales y medioambientales en comunidades necesitadas, como préstamos, bonos, créditos tributarios y vehículos de inversión estructurada”. 

La arquitecta principal del programa, Robin Hacke, dice: “Es una manera de dirigir los recursos a lugares donde no irían naturalmente, de contrarrestar las fallas del sistema financiero para producir la cantidad suficiente de vivienda social, y reducir las disparidades de salud o minimizar el impacto del cambio climático en lugares vulnerables, entre otros factores ligados al uso del suelo”. 

Hacke, directora del nuevo Centro de Inversiones Comunitarias en el Instituto Lincoln, está haciendo un ensayo piloto de una nueva estrategia de “cambio de sistemas” que diseñó en colaboración con sus colegas David Wood de la Iniciativa para Inversiones Responsables de la Universidad de Harvard, Katie Grace Deane y Marian Urquilla. El modelo, denominado Marco de Absorción de Capital, se basa en la idea de que los mercados de capital tradicionales frecuentemente no resuelven las necesidades de las comunidades de bajos ingresos, por lo cual hace falta una metodología sistemática para reparar esta carencia y obtener resultados significativos a escala (a diferencia de proyectos individuales que son difíciles de implementar y que, aun cuando sean exitosos, no tienen un impacto significativo sobre el problema). Al “reunir en la misma mesa” a diversas partes interesadas que pocas veces se unen para resolver este tipo de problemas a pesar de tener intereses alineados, el modelo también aumenta la cantidad de activos y de poder, ayudando a identificar nuevas herramientas y estrategias efectivas para abordar las necesidades insatisfechas de la comunidad.

Los sistemas cambian

Para poder superar los efectos de la discriminación y la falla en los mecanismos del mercado para proporcionar bienes, servicios y oportunidades adecuadas a comunidades necesitadas, tenemos que asegurar que fluya capital hacia esos lugares. Para que los residentes puedan progresar hay que encontrar maneras de financiar vivienda social y desarrollar entornos saludables con acceso a comida fresca y lugares seguros para caminar, andar en bicicleta y jugar, y proporcionar acceso a una educación y puestos de trabajo de calidad. No basta simplemente con invertir en un solo proyecto y esperar que los lugares se transformen. El Centro de Inversión Comunitaria se compromete a robustecer los sistemas que impulsan a una comunidad a planificar su futuro, creando una plataforma y red de relaciones que unan instituciones con individuos con la capacidad de concretar la visión de la comunidad; desarrollando y ejecutando proyectos de inversión que implementen dicha visión; y adoptando las políticas y prácticas que aceleran cómo estos proyectos se llevan a cabo.

—Robin Hacke

Este marco es una respuesta a los problemas que enfrentaron Hacke y Urquilla mientras trabajaban en la Iniciativa de integración, un programa de US$80 millones de dólares iniciado en 2010 para mejorar las vidas de residentes de bajos ingresos en cinco ciudades piloto: Baltimore, Cleveland, Detroit, Minneapolis/St. Paul y Newark. La idea, administrada por el programa Living Cities (Ciudades Vivientes), era alinear los intereses de una serie de participantes y capitales de inversión en barrios que tradicionalmente no tienen acceso a fondos de financiamiento.

“La Iniciativa de integración demostró que las ciudades participantes carecían no sólo de capital sino también de la capacidad para absorber y utilizar los fondos asignados por medio del programa”, dice Hacke.

“La distribución espacial desigual de personas de bajos ingresos en los Estados Unidos es producto de muchas décadas de políticas públicas que básicamente privaron de capital a las comunidades, ya sea por trabas burocráticas de los bancos o trabas burocráticas impuestas o toleradas por la Administración Federal de la Vivienda”, dice George McCarthy, presidente y gerente ejecutivo del Instituto Lincoln de Políticas de Suelo, quien participó de la Iniciativa de integración durante su trabajo en la Fundación Ford.

“Como las comunidades carecían de capital, pensamos que la mejor manera de ayudarlas a recuperarse es darles dinero. Pero en realidad durante todos esos años no sólo le quitamos el capital sino también la capacidad para ayudarse a sí mismos. Muchas personas del movimiento de desarrollo comunitario creen que, si sólo encontramos una manera de aportar más capital a esos lugares, el problema se va a resolver. Pero una de las lecciones que aprendimos es que, aunque les demos dinero, no necesariamente tendrán una forma de usarlo. Puede sonar como que estoy culpando a la víctima, pero no es así. En realidad, se trata de comprender que cuando uno priva de recursos críticos a un lugar por un tiempo prolongado y después se los da, la comunidad puede no estar preparada para usarlos. Es como la gente. Si uno le niega comida a alguien por demasiado tiempo y después se la ofrece, quizás no pueda comerla”.

Cómo alinear los recursos necesarios

“Para utilizar el capital con éxito, los lugares tienen que identificar las fuentes de capital y también los proyectos que lo pueden utilizar. Los proponentes de inversiones con impacto se han concentrado en organizar la oferta de capital; nuestro enfoque es en la demanda de inversión”, dice Hacke. “Por ejemplo, en Detroit, Baltimore y Cleveland, no estaban considerando principalmente proyectos de vivienda. Querían acelerar todo tipo de emprendimientos, como proyectos comerciales y de uso mixto. Pero para negociar convenientemente los proyectos y las condiciones adecuadas para que estos tuvieran la capacidad necesaria hubo que aportar mucho más que simplemente el capital de inversión. El trabajo tomó más tiempo que lo esperado y requirió mucha más coordinación de recursos de lo que pensábamos”, agregó.

“A pesar de la grandes necesidades de estas comunidades, las partes interesadas tienen que superar obstáculos mayores para completar sus proyectos”, dice Hacke. “Si la gente cree que la probabilidad de concretar un proyecto no es alta, se da por vencida. Así que organizamos las partes interesadas para resolver los problemas más urgentes, y alineamos los recursos que puedan aumentar la probabilidad y confianza de concretar estos proyectos críticos”.

La falta de confianza se debe a la fría realidad de que los proyectos de desarrollo comunitario en general son difíciles de concretar (figura 1). Hacke ataca esta realidad de frente pidiendo a los participantes que identifiquen lo que ella llama “proyectos de impacto comunitario ejemplares. Los proyectos que la gente identifica como representativos son complejos, prolongados y políticamente trabados, ya que tienen que equilibrar los intereses de muchas partes interesadas y combinar las múltiples fuentes de capital con diversas restricciones y requisitos. Los participantes evocan el lenguaje de misiones heroicas para describir estos proyectos”.

La identificación y el análisis de estos “proyectos ejemplares” son útiles por partida doble. Primero, realzan la naturaleza compleja y enrevesada de muchos proyectos de inversión comunitaria, resaltando la necesidad de una estrategia más eficiente y expansible. En segundo lugar, y más importante aún, el análisis de proyectos ejemplares puede ayudar a las partes interesadas a determinar los recursos y restricciones potenciales del sistema de desarrollo comunitario en general, incluyendo el nivel de participación de las diversas partes, la disponibilidad de una serie de destrezas y recursos, y las oportunidades de colaboración.

Tres componentes de un sistema de inversión comunitaria efectivo

Una vez que las partes interesadas de una región hayan usado el marco de proyectos ejemplares para analizar cómo está funcionando actualmente el sistema de inversión comunitaria, el próximo paso es identificar maneras de mejorar el funcionamiento del sistema para que pueda proporcionar impacto a gran escala. De acuerdo al marco, un sistema efectivo requiere tres elementos, que son el foco del trabajo de Hacke con las comunidades.

Identificar prioridades compartidas

Primero, las partes interesadas tienen que articular un juego bien definido de prioridades ampliamente aceptadas a través de la comunidad. La vivienda social no es siempre el ancla para establecer estas prioridades, pero en los ensayos pilotos organizados por Hacke han sido el punto de partida más fácil, parcialmente porque este aspecto cuenta con fuentes de financiamiento confiables y eficaces, como el crédito tributario para vivienda de bajo ingreso, y una red sólida de organizaciones experimentadas.

“Nos esforzamos mucho por reunir y fortalecer relaciones a lo largo de diversos sectores, para poder operar con un juego de prioridades compartidas”, dice Thomas Yee, encargado de iniciativas de LA THRIVES, una organización sin fines de lucro que se propone avanzar el tema de equidad por medio de crecimiento inteligente, y que participa en el ensayo piloto del Marco de Absorción de Capital.

“Van a existir desacuerdos entre los activistas políticamente progresivos, los funcionarios electos y los emprendedores privados, así que es necesario colaborar mucho, generar confianza y encontrar puntos en común. Pero esa es la manera de organizar metodologías a nivel de sistemas. Permite reducir el trabajo a unos pocos principios que entusiasman a la gente y la mantiene enfocada en el sistema, en vez de su barrio o proyecto en particular”.

Una de las prioridades compartidas que surge del trabajo en Los Ángeles es la importancia de asegurar que LA Metro, la agencia pública responsable por el servicio ferroviario y de autobús en el condado de Los Ángeles, preste un servicio efectivo a los residentes de bajos ingresos, que son los usuarios de base de los servicios de la agencia.

Antes de participar en los talleres, LA Metro sabía que sus usuarios de base eran residentes de bajos ingresos. Un estudio de investigación comisionado por la agencia antes de incorporarse al equipo de Los Ángeles describió cómo podían ayudar a esos usuarios a vivir cerca de las líneas de transporte público. LA Metro estaba generando metas agresivas de construcción de vivienda en suelo de su propiedad cuando se unió a la colaboración con LA THRIVES.

“Se produjo una confluencia que obligó a LA Metro a pensar cómo estaba administrando sus operaciones, qué iba a pasar si esos usuarios de base vivían cada vez más lejos de los sistemas de transporte público existentes”, explica Yee.

Según Yee, LA Metro estaba interesada en encontrar maneras adicionales de contrarrestar el desplazamiento de sus usuarios, y su colaboración con LA THRIVE fue “realmente el riego que necesitaba para hacer crecer esas semillas”.

La idea de que los usuarios de bajos ingresos iban a ser desplazados a mayor distancia también causó preocupación en otros miembros del equipo piloto de Los Ángeles. Los planificadores de transporte público criticaron el costo e ineficiencia de ampliar el servicio a zonas más alejadas, mientras que los conservacionistas se preocupaban por su impacto sobre el medio ambiente. Los activistas comunitarios estaban preocupados por el aislamiento económico y social, y las organizaciones de vivienda temían por la falta de vivienda social en los anillos periféricos de la ciudad. La resolución correcta de este problema presentaría una oportunidad para abordar en forma simultánea estas preocupaciones aparentemente no relacionadas entre sí, convirtiéndose en una prioridad compartida en la colaboración. Gracias a ello, LA Metro adoptó un nuevo término para pensar sobre el transporte público en el contexto del desplazamiento de sus usuarios: el Marco de Comunidades Orientadas al Transporte Público.

Pero LA Metro quería hacer más aún. A diferencia de BART, la agencia no contaba con mucho suelo adicional para albergar las miles de unidades de vivienda social necesarias. En su lugar, LA Metro, en sociedad con otros miembros del equipo, creó un fondo de préstamo para respaldar el desarrollo de vivienda social y retener unidades existentes no restringidas de alquiler bajo cerca de las líneas de transporte público de la agencia. Lo importante es que estas unidades no tienen que estar en suelo propiedad de la agencia, sino sólo lo suficientemente cerca como para brindar fácil acceso al sistema de transporte público.

“Estamos tan entusiasmados de que LA Metro esté dispuesta a realizar inversiones fuera de sus propiedades”, dice Yee. “El desarrollo de vivienda social en suelo de la agencia es importante, sin duda un paso enorme por sí mismo. Pero ir más allá del suelo de su propiedad es una gran innovación y demuestra un compromiso para limitar el desplazamiento de los usuarios de base”.

Establecer una lista de proyectos a ejecutar

Una vez que las partes interesadas hayan identificado una serie de prioridades estratégicas, pueden concentrarse en establecer una lista de proyectos a ejecutar, el segundo paso de la implementación del marco. Las partes interesadas comienzan examinando los proyectos en marcha y analizando si responden a las prioridades fijadas y si puede haber brechas.

La práctica de examinar la lista de proyectos también permite identificar los recursos necesarios para concretarlos con éxito.

Para el equipo de Denver, el análisis de la lista de proyectos municipales le permitió reconocer que el equipo se tenía que concentrar más en atraer capital privado acorde con la misión, dice Dace West, uno de los líderes del programa piloto de Denver y en ese momento director ejecutivo de Mile High Connects, una organización sin fines de lucro cuya misión es asegurar que el sistema de transporte regional de la zona metropolitana de Denver promueva comunidades que ofrezcan a todos los residentes la oportunidad de tener una alta calidad de vida.

“Se produjo este momento crucial como comunidad cuando nos dimos cuenta de que la manera en que realizábamos nuestras actividades de desarrollo comunitario estaba gobernada en realidad por fuentes de financiamiento específicas y restrictivas, propias de sistemas más maduros, como los créditos tributarios, que han llegado a su límite, o, en otros casos, fuentes de capital que no son muy predecibles”, dice West, refiriéndose a las conclusiones del análisis de la lista de proyectos.

“Nos dimos cuenta de que frecuentemente nos quedamos cortos en los emprendimientos que abordamos debido a que no podemos obtener y utilizar el capital de manera sistemática. Así que, de aquí en más, estamos muy enfocados en cómo aprovechar el capital de impacto del sector privado en el sistema, utilizando las fuentes de capital tradicionales de nuevas maneras y esforzándonos por incorporar una cantidad significativa de capital que está buscando lugares donde invertir”, dice West.

“Gracias a un trabajo profundo e intencional, hemos descubierto que el término ‘impacto’ tiene distintos significados para los inversores de impacto. Cuando algunos de ellos dicen que quieren generar un impacto, lo que realmente quieren es poder otear el futuro y ver buenas ganancias; eso les basta, porque lo que quieren en última instancia es liquidez y una buena tasa de retorno. Nosotros pensamos: ‘Es bueno saberlo, porque hemos estado perdiendo el tiempo en estas otras cosas que a nadie le importa’. Ahora nos podemos enfocar en cuestiones tales como: ¿cuál es la tasa de retorno buscada? y ¿cuáles son los lugares correctos para utilizar este tipo de capital en vez de otros tipos? Y ese fue un descubrimiento esencial, el reconocimiento de que los emprendimientos inmobiliarios, que habíamos considerado una inversión más tradicional, pueden ser en verdad una inversión de impacto comunitario, que crea conexiones nuevas e interesantes”.

Una de esas conexiones es con la agencia de financiamiento de vivienda de Denver. 

“A medida que fuimos pensando en maneras de aprovechar este nuevo capital, hemos descubierto que tenemos una agencia de financiamiento de vivienda muy inusual. Es muy creativa y flexible y ya está administrando una enorme cantidad de fondos estructurados separados que tienen alguna forma de propósito comunitario”, dice West. “Estamos trabajando para construir una plataforma que usa la agencia como base para atraer capital que puede destinarse a canales específicos pero que también se puede usar para rellenar esas brechas e implementar proyectos impulsados por la comunidad y sus necesidades. La agencia de financiamiento de la vivienda no está respondiendo meramente a las fuentes de financiamiento existentes; está actuando como un intermediario amplio para trabajar con otras agencias del sistema”.

Crear un entorno habilitante

Después de crear una lista de proyectos a ejecutar, el próximo paso natural es la última pieza del marco: fortalecer el “entorno habilitante”. Esto se define como “las condiciones latentes que conforman las operaciones del sistema”, como “la presencia o ausencia de destrezas y capacidades necesarias, las realidades políticas, las relaciones formales e informales entre los actores clave, y las normas y comportamientos culturales que se manifiestan en forma distinta dependiendo del lugar”.

En los talleres de absorción de capital, se les pide a los participantes que analicen cuáles áreas del entorno funcionan bien y cuáles no, y cuáles políticas y prácticas afectan en forma directa sus prioridades estratégicas. Al hacerlo, pueden comprender mejor las oportunidades y limitaciones inherentes en el sistema actual.

Para Thorne-Lyman y el resto del equipo de San Francisco, el análisis del entorno habilitante —o sea qué recursos están o no disponibles y funcionan bien o no en el ecosistema de vivienda social— reveló inmediatamente el problema de la escasez de suelo.

Centro de Inversión Comunitaria

Thorne-Lyman no es la única persona entusiasmada por el trabajo generado por el Marco de Absorción de Capital. McCarthy también se muestra optimista.

“El suelo es uno de los recursos más valiosos y escasos de una comunidad”, dice. “Las políticas de suelo pueden jugar un papel central en atraer o generar la inversión necesaria para hacer uso de lotes vacantes y desperdiciados por mercados de suelo disfuncionales, o para abordar el impacto desigual de la polución y el cambio climático sobre familias pobres y necesitadas”.

Por esa razón, el Instituto Lincoln de Políticas de Suelo ha lanzado recientemente el Centro de Inversión Comunitaria con el respaldo de la Fundación Kresge y otras fundaciones nacionales importantes. El Centro es una iniciativa de investigación, construcción de capacidad y desarrollo de liderazgo para ayudar a que las comunidades movilicen el capital y aprovechen el suelo y otros activos para implementar sus prioridades económicas, sociales y medioambientales. Hacke dirigirá el nuevo centro y lo usará como plataforma para desarrollar el modelo de absorción de capital.

“Hemos visto una y otra vez que el suelo es realmente una parte importante de la solución, ya sea que se trate de la salud de la gente, o infraestructura verde y la salud de los ecosistemas naturales. Ser parte del Instituto Lincoln, que tiene un conocimiento tan amplio en el uso de suelo para generar y recuperar plusvalías, es una gran ventaja para nosotros”, dice Hacke.

En Lincoln, Hacke espera ampliar su trabajo con programas pilotos en comunidades adicionales. Aquellos que integran su cohorte actual alientan a estas ciudades a aprovechar esta oportunidad. “Cuando comenzamos a trabajar hace dos años, esto parecía un ejercicio académico abstracto repleto de ‘tareas para el hogar’. Pero persistimos con su metodología y hemos podido encontrar mucho valor en el marco”, dice Christopher Goett, un alto administrador de programa en California Community Foundation y uno de los que respaldan el programa piloto de Los Ángeles. “Robin, Katie, David y Marian han construido un espacio seguro para poder realizar trabajos difíciles, y han creado un sistema de apoyo que se ha ido fortaleciendo con el tiempo. En retrospectiva, estas actividades han constituido momentos críticos para nuestra evolución y crecimiento”.

“El trabajo de desarrollo comunitario y económico se aborda frecuentemente por medio de programas aislados, pero esa no es la manera en que funciona el mundo”, dice Goett. “El angelino promedio se despierta y usa el transporte público para ir a trabajar o llevar a sus hijos a la escuela. Los sistemas de vivienda, empleo y educación interactúan entre sí, y esta es la manera en que está diseñado el marco del Centro”.

“Para alguien que administra una cartera de crecimiento inteligente aquí en California Community Foundation, el marco es cada vez más útil; el crecimiento inteligente es, por naturaleza, integrado. Tenemos que pensar sobre la salud pública al mismo tiempo que pensamos sobre infraestructura y vivienda, y con este marco podemos promover el desarrollo orientado al transporte público y aun así ver el ángulo de la prevención de desplazamiento y la vivienda”.

Loren Berlin es una escritora y consultora de comunicaciones independiente del área metropolitana de Chicago. 

Fotografía: Sharon Hahn Darlin

Referencias

Bay Area Council Economic Institute. 2016. “Solving the Housing Affordability Crisis: How Policies Change the Number of San Francisco Households Burdened by Housing Costs.” (Octubre). www.bayareaeconomy.org/files/pdf/BACEI_Housing_10_2016.pdf

Hacke, Robin, David Wood y Marian Urquilla. 2015. “Community Investment: Focusing on the System.” Documento de trabajo. Troy, MI: Kresge Foundation. 

Truong, K. 2016. “Here Are 11 Solutions to the Bay Area Housing Crisis.” San Francisco Business Times. Octubre 11.

Zillow.com. “San Francisco Home Prices and Values.” https://www.zillow.com/san-francisco-ca/home-values/

Zillow.com. “United States Home Prices and Values.” https://www.zillow.com/home-values/

https://www.zillow.com/home-values/

https://www.zillow.com/san-francisco-ca/home-values/

http://www.bayareaeconomy.org/files/pdf/BACEI_Housing_10_2016.pdf

Since 2015, representatives from various public agencies, foundations, and nonprofit groups in the San Francisco Bay Area, Los Angeles, and Denver have been jointly participating in “capital absorption” workshops, to forge solutions to local affordable housing shortages through strategies that attract land, capital, and other resources. They represent not just housing, but transit, planning, and economic development organizations—stakeholders that often don’t join forces to solve problems, even though they work on overlapping issues in identical geographies.

At one of these meetings in January 2016, Abigail Thorne-Lyman, program manager for transit-oriented development (TOD) at Bay Area Rapid Transit (BART)—a public transportation system that annually shuttles more than 125 million passengers across the region—realized her agency might be able to make a game-changing contribution to solving the local housing crisis, which is among the nation’s largest. More than 250,000 of the region’s very low-income households lack access to affordable housing. The median home value is San Francisco is $1,147,300, compared to $197,500 nationally; the median monthly rent is a whopping $4,350, more than three times the national median rent of $1,500. Nearly half of local renters spend more than 30 percent of income on rent.

Each six-member team of participants from each region had drafted a spreadsheet of all pending development projects that included affordable housing units. “Staring at our list, we realized that capital wasn’t the primary constraint to building more housing,” explains Thorne-Lyman. “What we needed—the missing piece, so to speak—was land.”

In the Bay Area, developers don’t buy land until they are confident they can assemble the necessary financing for their project, making it difficult to compete in a hot real estate market, Thorne-Lyman says. But BART already owned 300 acres across the region.

That evening, Thorne-Lyman started imagining scenarios in which BART made all its land available for developments that included affordable housing. She ran the numbers. “I saw that we could produce maybe 30,000 units if we put our land in play,” she explains, and 10,000 could be affordable—which is significant, given that the typical affordable housing development in the Bay Area produces 50 to 200 units. “And if we put ourselves out there first, maybe other transit agencies in other counties would come along,” as BART serves only four of the Bay Area’s nine counties. Together they could make a bigger dent. “The 30,000 units could turn into 60,000 units, all on public land,” says Thorne-Lyman.

Thorne-Lyman and the rest of the capital absorption team delivered the analysis to BART’s general manager, Grace Crunican. Both Crunican and the BART board of directors decided to increase the agency’s commitment to both market-rate and affordable housing on BART land. Then they asked Thorne-Lyman and the team to model scenarios above and beyond any they had privately imagined.

“That conversation with Grace was like a slingshot,” says Thorne-Lyman. “We had these ideas and played them out. Then the board asked for an even more ambitious vision for our land. Through our work with the capital absorption team, we had all these willing partners—including the affordable housing advocates, community development financial institutions, and foundations—who backed up the idea and pushed it out to the public.”

BART’s new TOD development targets, adopted in December 2016, call for production of 20,000 new housing units and 4.5 million square feet of office space on BART land by 2040. At least 35 percent of these units—7,000, to be exact—will be affordable to low- and very low-income households. So far, BART has produced 760 affordable units on its land, meaning the agency has some work to do. Nonetheless, Thorne-Lyman is encouraged by the challenge. “California has this affordable housing crisis, and we can say that BART will be part of the solution,” she explains. “We have land. And we are willing to offer it up.” “Someone has to be thinking big about how to address this crisis. We are putting forward something big,” she says.

The Capital Absorption Framework

The capital absorption workshops that Thorne-Lyman attended are part of a program designed to help cities attract and deploy community investment and to leverage other critical resources, such as land and expertise, to achieve their goals. Community investment is defined as “investments intended to achieve social and environmental benefits in underserved communities—such as loans, bonds, tax-credit equity, and structured investment vehicles.”

The program’s chief architect, Robin Hacke, says, “It’s a way to make resources go to places where they’re not going by themselves, to address the failures of mainstream finance to produce enough affordable housing, reduce health disparities, or minimize the impact of climate change on vulnerable places, among other factors tied to land use.”

Hacke, who is the director of the new Center for Community Investment at the Lincoln Institute, is piloting a new “systems change” strategy that she designed in collaboration with colleagues David Wood of Harvard University’s Initiative for Responsible Investment, Katie Grace Deane, and Marian Urquilla. Called the Capital Absorption Framework, the model is predicated on this idea that mainstream capital markets frequently fail to address the needs of low-income communities, requiring a systemic approach to repair this breakdown and achieve meaningful outcomes at scale (opposed to one-off projects that are difficult to accomplish and, even when successful, fail to move the needle in a significant way). By “bringing to the table” stakeholders who rarely join forces to solve problems despite having aligned interests, the model also augments available assets and power, helping to identify effective new tools and strategies to address unmet community needs.

Systems Change

In order to overcome the effects of discrimination and the market’s failure to deliver adequate goods, services, and opportunities to disadvantaged communities, we need to ensure that capital can flow to those places. Ensuring that residents can thrive means finding ways to finance affordable housing; developing healthy environments with access to fresh food and safe places to walk, bike, and play; and providing access to quality education and jobs. It is not enough simply to invest in a single project and expect places to be transformed. The Center for Community Investment is committed to strengthening the systems that engage a community in planning for its future, creating a platform and network of relationships that unite the institutions and individuals with the capacity to advance the community’s vision; developing and executing investment transactions that implement that vision; and shaping the policies and practices that accelerate how transactions proceed.

—Robin Hacke

The framework is a response to challenges Hacke and Urquilla faced while working on The Integration Initiative, an $80 million program begun in 2010 to improve the lives of low-income residents in five pilot cities—Baltimore, Cleveland, Detroit, Minneapolis/St. Paul, and Newark. Administered by Living Cities, the idea was to align interests across a range of players and invest capital in neighborhoods that traditionally can’t access funds.

The Integration Initiative demonstrated that participating cities not only lacked capital; they lacked the capacity to absorb and deploy the funds allotted to them through the program, says Hacke.

“Spatially inequitable distribution of low-income people across the United States is an outgrowth of decades of public policy that basically starved communities of capital, whether through redlining by banks or redlining aided and abetted by the Federal Housing Administration,” says George McCarthy, president and chief executive of the Lincoln Institute of Land Policy, who was involved in The Integration Initiative during his tenure at the Ford Foundation.

“Because we starved communities of capital, we think the way to help them recover is just to provide them with money. But that misses the point that over the years we didn’t just strip out the capital but also the capacity of those places to help themselves. Many people in the community development movement believe that if we just find a way to get more capital to places, then good things are going to happen. But one of the hard lessons we have learned is that, even if you can get the money to those communities, they don’t necessarily have a way to use it. It may sound like I’m blaming the victim, but that’s not it. Rather, it’s understanding that when you deny a place critical resources for long enough and then suddenly provide it, the community may not be ready to deploy it. It’s like people. If you starve someone for too long and then provide food, that person may not be able to eat it.”

Managing the Pipeline

“To deploy capital successfully, places need to identify sources of capital as well as projects that can use it. Proponents of impact investment have focused on organizing capital supplydemand for investment,” Hacke says. “For example, in Detroit, Baltimore, and Cleveland, they were not primarily looking at housing. They wanted to accelerate all kinds of development, including commercial and mixed-use developments. Getting the right set of deals and the right conditions to supply capacity to those deals required much more than just investment capital. The work both took longer than we expected and required much more upfront arrangement of the plumbing than we had anticipated,” she adds.

“Despite the great need in disadvantaged communities, stakeholders have to overcome major obstacles to complete projects,” says Hacke. “If people don’t believe that the deals have a decent-sized chance, they give up on them. So we organize stakeholders around what is most urgent at that time and organize the resources that way as well to increase the probability and the confidence that the critical deals will get done.”

The lack of confidence stems from the cold truth that community development projects are usually difficult to realize (figure 1). Hacke confronts that fact head-on by asking participants to identify what she calls “exemplary community impact deals. The ones that stick out in people’s minds as representative of the field tend to be complex, time-consuming, and politically fraught, balancing the interests of many stakeholders and blending many different sources of capital with varied constraints and requirements. Practitioners evoke the language of heroic quests to describe these deals.”

Identifying and examining “exemplary deals” is helpful in two ways. First, it highlights the complex and convoluted nature of many community investment projects, clarifying the need for a more efficient, scalable strategy. More importantly, analyzing exemplary deals can help stakeholders determine the potential resources and constraints of the larger community development system, including the engagement level of various players, the availability of an array of skills and resources, and opportunities for collaboration.

3 Components of an Effective Community Investment System

Once stakeholders in a region have used the exemplary deals framework to examine how the community investment system is currently operating, the next step is to identify ways to improve the functioning of that system so that it can deliver impact at greater scale.  As organized by the framework, an effective system requires three things, which are the focus of Hacke’s work with communities.

Identify Shared Priorities

First, stakeholders must articulate a well-defined set of priorities that are widely embraced across the community. Affordable housing is not always the anchor for establishing these priorities, but it has proven the easiest starting point in Hacke’s pilots—in part because the field has reliable, effective funding sources, such as the Low-Income Housing Tax Credit, and a robust network of experienced organizations.

“We work really hard to convene and build cross-sector relationships so that we can operate from a set of shared priorities,” says Thomas Yee, the Initiatives Officer at LA THRIVES, a nonprofit that works to advance the equity agenda around smart growth and participates in the Capital Absorption Framework pilot.

“There’s going to be disagreement among really progressive advocates, elected officials, and private developers, so it takes a lot of working together, building trust, and finding common ground. But that’s the way to organize system-level approaches. It allows you to boil down the work to a few principles that excite people and keep them focused on the system instead of their particular neighborhood or project.”

One of the shared priorities to emerge out of the Los Angeles work is the importance of ensuring that LA Metro, the public agency responsible for bus and rail services in Los Angeles County, effectively serves low-income residents, who are the agency’s core riders.

Prior to joining the workshops, LA Metro knew its core riders were low-income. Based on the findings of a research study the agency had commissioned prior to joining the Los Angeles team, the agency also understood how it could assist those riders to live near transit lines. It was developing aggressive housing targets on agency-owned land when it joined the LA THRIVES collaborative.

“The sea change was coming together to get LA Metro to think about what that means for how the agency runs its business—about the bottom-line question of what happens if those core riders are living farther and farther away from existing transit systems,” explains Yee.

According to Yee, LA Metro was interested in additional ways to counter displacement, and joining the collaborative was “really the water needed to grow those seeds.”

The idea that low-income riders would be pushed farther afield disturbed the other members of the pilot’s Los Angeles team. The transportation planners balked at the cost and inefficiencies of expanding service to outlying areas, while the conservationists worried about the environmental impact. The community advocates were concerned about economic and social isolation, and the housing folk feared there was a lack of affordable housing in the outer ring areas. Resolving this issue correctly would present an opportunity to simultaneously address these seemingly unrelated concerns, and so it became a shared priority among the collaborative. In response, LA Metro adopted a new term for thinking about transit in the context of displacement: the Transit-Oriented Communities frame.

But LA Metro wanted to do more. It was clear that, unlike BART, the agency did not have much additional land that could allow for thousands of new affordable housing units. Instead, LA Metro, in partnership with other members of the team, created a loan fund to support the development of affordable housing and retention of existing low-rent, nonrestricted units near the agency’s transit lines. Critically, the units do not have to be on agency-owned land, but they must be close enough to provide easy access to the transit.

“We are so excited that LA Metro is willing to make investments off their property,” says Yee. “Making it easier to develop affordable housing on agency-owned land is one thing—and obviously a huge step in and of itself. But for them to go beyond agency-owned land is a big innovation and demonstrates a commitment to limiting the displacement of core riders.” 

Establish a Pipeline of Deals

Once stakeholders identify a set of strategic priorities, they can then focus on establishing a pipeline of deals—the second step in implementing the framework. Stakeholders begin by examining deals in progress, analyzing whether they support the priorities and where there may be gaps.

The practice of examining the deal pipeline also helps to highlight the resources that are necessary for success.

For the Denver team, analyzing the city’s pipeline resulted in the recognition that the team needed to focus more on attracting mission-driven private capital, says Dace West, a leader of the Denver pilot and, at the time, executive director of Mile High Connects, a nonprofit with a mission to ensure that the Metro Denver regional transit system fosters communities that offer all residents the opportunity for a high quality of life.

“We had this powerful moment as a community when we realized that the way we are doing community development work is really driven by specific, restrictive funding sources that are more mature systems—like tax credits, which are oversubscribed—or, in other cases, sources of capital that are not very predictable,” says West, referring to the takeaways from the pipeline analysis.

“We realized that we are so often falling short in the developments we are working on because of an inability to be very systematic about the way we draw down and deploy capital. So, going forward, we are very focused now on how we leverage private-sector impact investment capital into the system, looking at traditional capital sources in new ways and at what we need to do to unlock significant capital seekng a place to land,” West says.

“We have discovered, from deep and intentional work, that impact means really different things to impact investors. When some say they want impact, what they are really saying is that they want to be able to squint and see something good; that is good enough for them, because what they really want is liquidity and rates of return. We think, ‘That’s good to know, because we have been wasting our time on these things that aren’t real issues.’ Now we can focus on questions such as: what is that target rate of return, and where are the right places to leverage that capital versus other kinds of capital? And that’s been a real ‘aha’ moment—this recognition that real estate, which is something we had been thinking of as a more traditional investment, can be an actual community impact investment, which creates new and interesting connections.”

One of those connections is to Denver’s housing finance agency.

“As we have been thinking about ways this new capital could land, we have discovered that we have a very unusual housing finance agency. It is very creative and flexible and is already managing a huge number of siloed, structured funds that have a community purpose in some way,” says West. “We are working to build out a platform that uses the agency as a base to draw in capital that can go to specific sleeves but can also flow across those gaps and allow us to pursue projects driven by the community and its needs. The housing finance agency is not responding merely to existing funding sources any longer; it’s acting as a broad-based intermediary that can work across and among agencies in the system.”

Create an Enabling Environment

After building out a pipeline of deals, it’s a natural next step to the final piece of the framework—strengthening the “enabling environment.” This is defined as “the latent conditions that shape the system’s operations,” including but not limited to “the presence or absence of needed skills and capacities, political realities, formal and informal relationships among key actors, and the cultural norms and behaviors that manifest differently in different places.”

In the capital absorption workshops, participants are asked to figure out which areas of the environment are or are not working well, and which policies and practices directly affect their strategic priorities. In doing so, they can better grasp the opportunities and limitations inherent in the current system.

For Thorne-Lyman and the rest of the San Francisco team, it was analysis of the enabling environment—of what resources are and are not available and functioning well in the ecosystem of affordable housing—that immediately revealed that shortage of land.

Center for Community Investment

Thorne-Lyman is not the only one excited by the work that has come out of the Capital Absorption Framework. McCarthy is also encouraged.

“Land is one of a community’s most valuable and scarce resources,” he says. “Land policies can play a central role in attracting or generating the investment needed to tackle vacancies and blight produced by dysfunctional land markets or to address the disparate impact of pollution and climate change on poor and disadvantaged families.”

For that reason, the Lincoln Institute of Land Policy has recently launched the Center for Community Investment with support from The Kresge Foundation and other major national foundations. The Center is a leadership development, research, and capacity-building initiative to help communities mobilize capital and leverage land and other assets to achieve their economic, social, and environmental priorities.Hacke will direct the new center and use it as a platform to advance the capital absorption model.

“We have seen over and over again that land really is an important part of the solution, whether we are talking about the health of people or green infrastructure and the health of natural ecosystems. Being at the Lincoln Institute, which has such tremendous expertise in the use of land to generate and capture value, is a real boon for us,” says Hacke.

At Lincoln, Hacke hopes to expand her work by piloting it in additional communities. Participants in her current cohort encourage those cities to seize on the opportunity. “When we started this work two years ago, it felt like an abstract academic exercise replete with homework assignments. But we hung in there with their approach and have seen such value in the framework,” says Christopher Goett, a senior program officer at the California Community Foundation, one of the supporters of the Los Angeles pilot. “Robin, Katie, David, and Marian pulled together a safe space that allowed us to tackle difficult work and created a support system that strengthened over time. In hindsight, these activities have been critical moments for us in our evolution and growth.”

“Community and economic development work is often addressed through programs in their own respective silos, but that’s not how the world operates,” Goett says. “Average Angelenos wake up and use transit to get to work or drop off their children at school. Systems such as housing, employment, and education all interact, and that’s how the Center’s frame is laid out.” 

“For someone who manages a smart growth portfolio here at the California Community Foundation, the framework continues to become increasingly useful; smart growth is, by its nature, integrated. We have to think about public health at the same time we think about infrastructure and housing, and with this frame we can walk through the transit-oriented development door and still see the anti-displacement and housing angles.”

Loren Berlin is a writer and independent communications consultant in Chicago.

Photograph: Sharon Hahn Darlin

References

Bay Area Council Economic Institute. 2016. “Solving the Housing Affordability Crisis: How Policies Change the Number of San Francisco Households Burdened by Housing Costs.” (October). http://www.bayareaeconomy.org/files/pdf/BACEI_Housing_10_2016.pdf

Hacke, Robin, David Wood, and Marian Urquilla. 2015. “Community Investment: Focusing on the System.” Working paper. Troy, MI: Kresge Foundation. 

Truong, K. 2016, October 11. “Here Are 11 Solutions to the Bay Area Housing Crisis.” San Francisco Business Times. October 11.

Zillow.com. “San Francisco Home Prices and Values.” https://www.zillow.com/san-francisco-ca/home-values/

Zillow.com. “United States Home Prices and Values.” https://www.zillow.com/home-values/

https://www.zillow.com/home-values/

https://www.zillow.com/san-francisco-ca/home-values/

http://www.bayareaeconomy.org/files/pdf/BACEI_Housing_10_2016.pdf