One trend that is gaining momentum among these investors is place-based investing, which is a site-specific commitment of capital to local businesses, financial institutions, non-profits or infrastructure with an expected financial return. Community Capital Management, a Florida-based institutional fixed income manager and a registered investment advisor, shares their expertise on place-based investing and how investors can get involved in a recent white paper.
So, what would one of these investments entail?
For example, a derelict public housing development may be demolished to re-build a new, mixed-income complex that can include retail space and a park area for recreation and exercise. This renovation would be designed to revitalize the local community and would be funded by single or multiple investors, such as the aforementioned impact investors.
Benefits of Place-Based Investing
A major benefit of place-based investing is how it offers an opportunity for collaborative efforts between municipal governments and investment supporters that may result in improved economics and communal strength in a particular area. These projects can also result in job creation, revitalization, smart growth and affordable housing.
The Low-Income Housing Tax Credit (LIHTC)
Impact investors may take advantage of the Low-Income Housing Tax Credit (LIHTC), established in 1997 by US Department of Housing and Urban Development (HUD). This program provides allocating agencies nearly $8 billion annually to issue tax credits toward the acquisition, rehabilitation or construction of new rental housing for lower-income families
Other ways include working with financial intermediaries. To learn more about this trend, the types of projects it benefits and the financial vehicles available, check out the full white paper by Community Capital Management, “Place-Based Investing and the Role of the Impact Investor.”
To learn more about Community Capital Management, visit their website here.