Richmond’s innovative program to use social impact bonds to acquire, rehabilitate and resell blighted homes in the city is about to start work on its first property (not the one pictured).
This coming Wednesday, program representatives have invited the media to visit the first property that will transform from an unsightly nuisance into an affordable, livable home. The property is located at 623 17th St.
Program officials hope to rehab hundreds of Richmond homes that have long sat empty and have become a source of crime in neighborhoods, attracting squatting, fires and graffiti. A majority of the initial properties identified for rehab are located in the Belding Woods, Iron Triangle, Pullman, Santa Fe and Coronado neighborhoods.
The city’s social impact bond program has been discussed nationally as an innovative way to tackle blight and lack of affordable housing in communities. The strategy, pitched in 2014 by prominent attorney and Richmond resident John Knox, has the city issuing bonds targeting investors who want their investment to have a positive social impact, even if it means the returns are not as large. Their investment would be used by the nonprofit Richmond Community Foundation to buy vacant homes from lenders such as banks, and then rehab and sell the homes at affordable prices to lower-income homeowners.
Potential homeowners are identified by SparkPoint, a nonprofit financial education center in Richmond that guides low-income clients to becoming financially stable.
Following the sale of a home, a significant portion of the proceeds will be used to acquire and rehabilitate more blighted properties.
So far, the program has raised $3 million from Richmond-based Mechanics Bank to acquire, rehab and resell properties. Mechanics Bank is forgoing interest payments and capping their potential profit as part of its purchase of social impact bonds, program officials said. Turner Construction and Home Depot have agreed to favorable costs for building, they added.