Interview with Fernando Abarca; Loan Fund Organizer of Right to the City Integrated Loan Fund
Jen: How was “Right to the City Integrated Loan Fund” Created?
Fernando: In August 2019, member leaders of our national alliance came together to strategize the future of our national campaign committees moving forward. Member leaders began identifying goals and strategies for removing land and housing from the speculative market and putting it into permanent community control. A proposal was put forward to explore the possibility of establishing a revolving loan fund as one core strategy for us to organize resources to provide non-extractive financing to develop permanently affordable and democratically governed housing that removes land from the speculative market. With the leadership of our membership, we are now set to put the vision in motion through the official launch of our Right To The City Loan Fund. We are looking to start with two to three loans in this pilot phase of our fund in 2023-2024.
Jen: How are your investment funds catalytic in a way that is different from other funds?
Fernando: Our loan fund looks to apply non-extractive lending practices to ensure our communities are not left worse off than before getting the loan. We are creating tools to help set transparent relationships and expectations between us (the lender) and our members (the loanees). Most of our members do not come from a development background. Most of our members are exploring alternative ways to develop and acquire housing projects to maintain affordable housing rates and establish collective stewardship over land and housing developments in rapidly gentrifying communities. We are redefining what it means to assess risks as we strongly emphasize and lean into the relationship and trust we have built with our members over 16 years.
Jen: How do you describe the kind of non-financial returns the fund offers?
Fernando: The most important return our fund offers is stabilizing entire under-resourced communities struggling to make rent due to the exorbitant increase in rental prices over the past several years. We help provide families of our member organizations with the opportunity to live in stable and affordable homes. Homes they can choose to own and steward, which are, unfortunately, opportunities they would not likely have in the traditional market. These alternative models of housing structures, like Community Land Trusts and Cooperatives, can provide families with access to stable and decent housing options in their communities.
We all collectively benefit from the returns of learnings and experiences through these emergent strategies and projects. We are taking lessons on how community residents can steward their homes by reshaping their relationship with property management and creating infrastructure and collective decision-making models to maintain, upkeep, and make decisions over their homes.
Jen: Can you describe how you use integrated capital to do your work?
Fernando: The Right to the City Loan Fund aims to bring in both investment and grant capital to support our members in their efforts to acquire and establish their community-stewarded projects. We use investment capital to provide long-term, non-extractive loans to member organizations of our alliance looking to acquire land or housing projects to remove them from the speculative market. We also understand that the transition from renters to stewards of a property is challenging and requires a level of resourcing. Our goal is to provide our members with grants to pair with the loans they receive to give them that extra bit of capital flexibility needed for technical assistance costs they identify. These areas of technical assistance can include hiring cultural organizers, property management staff from within the buildings acquired, training, and legal fees for costs related to establishing their cooperatives or community land trusts.
Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?
Fernando: The fund helps advance racial and economic justice by providing investments into projects that will be removed from the speculative market. Our strategy is premised on the belief that by removing more and more units of housing from the speculative market, we are not only ensuring people are able to remain in their homes, but over time, it will also help stabilize the market because rents will largely increase marginally over time compared to the housing market.
Over time, rents will become more affordable for the residents of these homes as their wages increase while ensuring that rents stay at the same affordable levels. This will create new possibilities and open up different opportunities for the residents living in these affordable units because of the flexibility that having an affordable and stable place to live offers families.
Jen: Can you share with us an example of an investment?
Fernando: The RTTC Loan Fund provided its first loan to the Monte Vista Community Cooperative in Denver, Colorado. We are investing $1.5 million for 30 years at a 3% interest rate. This loan will be part of a larger capital stack to support the current residents of the Capital Cities Mobile Home Park in acquiring their park and owning their homes. The owner of the Mobile Home Park was looking to sell, and the residents were able to organize and raise the capital to purchase the property. This investment is a culmination of years of organizing mobile home parks in Denver, CO, by Right to the City member organizations like 9to5 Colorado and Justice For the People Legal Center, who have pushed both the city and state to change policies to strengthen protections for mobile home park residents who are at the mercy of the owners of the land their parks sit on. Housing organizers in Denver have also fought to pass new legislation to make it more accessible for mobile home park residents to purchase their parks and prevent families’ displacement from their homes. The investment for Monte Vista Community Cooperative goes beyond the acquisition of the property, it epitomizes the long and challenging organizng arch that community residents have to go through to obtain their goal for an affordable and decent place to call home.
Jen: What do you tell people who think your fund is risky?
Fernando: BIPOC communities, entrepreneurs, and projects are often assessed as “risky” based on historical stereotypes and biases. These prejudices are the ones that lead to the extractive financial products that keep Black Indigenous People of Color (BIPOC) communities in perpetual debt while continuing to take from them the limited resources they accumulate.
We need to redefine risk and who bears the onus of it in investments targeted at BIPOC communities. In this current moment in our country where the Supreme Court has deemed being houseless a crime, it is salient that we change these preconceived notions of risk because not doing so now could potentially lead to hundreds of thousands of people being persecuted for not having access to an affordable place to call home.
There is a level of risk involved when doing something different and trying to launch an emergent project that strays away from the norm. However, the current system is already not working for our most vulnerable community members. In many ways, investing in cooperative models and land trusts based on the notion of shared responsibility and accountability to one another may be less of a risk than the traditional ways in which we have been conditioned to see real estate deals.
We are indebted to communities that have been exploited and have been under-resourced, and extracted from. The investments into our fund provide the necessary capital to ensure the long-term organizing efforts of the community do not come to a halt because they lack the capital to make the final step in their dreams possible. These are investments in fights that are 10, 15, 20 years long. These are investments in families, friends, and communities that have looked out for one another for 15, 25, 30 years. We are betting on strong relationships and trust. That, to us, is a risk worth taking. Because a greater risk is to refrain from investing in our communities at all.
Investment Thesis/What is your rationale for your approach to investing?
Around the country, RTTC members are using capital strategies to take land and housing off the speculative market and transfer them into democratically-governed, community-stewarded models like community land trusts and limited equity housing cooperatives. From urban multi-family tenant buildings to rural mobile home parks, neighbors are coming together to stop displacement, kick out their landlords, and collectively determine the future of their communities.. The Right to the City Loan Fund was born out of the need to find ways to access investment capital to acquire land and preserve already existing affordable housing units that our members identified. The RTTC Integrated Capital Fund is our vehicle to raise and deploy non-extractive investment capital needed to support our members in acquiring and transitioning land and housing projects that center community stewardship.
Geography: United States
Year Founded: 2023
# of Investments: 2
# of Investors: 2 (donors, funders, supporters, investors)
Funds Raised: 1,000,000 since inception
What’s on Fernando’s Mind?
Book: The Color of Law by Richard Rothstein
Song: Land of Honey by Flying Lotus, Solange
Podcast: The Dissect Podcast