The past five years have shown how difficult and challenging restoring boarded up and abandoned homes can be. However, we also learned how important this work is for rebuilding neighborhoods, long impacted by blight and disinvestment. Over the time of the pilot, RCF used the social impact bonds to fund the acquisition and renovation of targeted houses in specific neighborhoods for purchase by first-time homebuyers. The program focused on outputs that achieve financial return to investors as well as economic benefits to individuals, neighborhoods and the City. Such impact constitutes the program’s “social return on investment." Here was the challenge the pilot was designed to address: · Before 2015, there were over 200 blighted, abandoned single-family homes in the City of Richmond. · These houses were costing the City about $7,000 per house per year to maintain. · These blighted homes depressed property values and had significant unpaid property taxes and liens. · These houses had numerous health and safety violations. Our goals were to: · Reduce the incidence of vacant and blighted single-family houses. · Promote homeownership for low/moderate-income first-time homebuyers. · Finance the program using a new type of social impact bond as a funding source and recycle funding to maximize number of housing units in the program. So, what happened? What was the result of this program? Mission Impact: 19 properties were impacted by the program and 18 were sold to first time homeowners Financial Impact for Richmond – With its recycle fund model, the $ 3 million social impact bond invested $7,978,418 into the City of Richmond: · $6.5 million in local spending · $123,485 in permit fees paid · $205,583 in NSP City property acquisitions · $799,350 repaid in code enforcement liens and property taxes · $350,000 reduction in Code Enforcement costs Additional Impacts: The program has added $99,615 in yearly property tax revenue, and it is estimated that the new homeowners will bring approximately $697,000 per year to local economy (approximately $41,000 per household per year) $41,000 per household (NAHB). Unfortunately, the pilot phase of the social impact bond for the Richmond Housing Renovation program has ended. The innovative social impact bond, launched in 2015 in partnership with the City of Richmond and Orrick, Herrington Sutcliffe, LLP, was purchased by Mechanics Bank at zero percent interest for a period of five years. However, we are pleased to announce, on November 1, 2020, RCF Connects, the City of Richmond, and Mechanics Bank agreed to extend the program and the social impact bond financing for another 5 years. We are truly grateful for this partnership and the future looks bright for the program. We have also added some additional partners that are helping us ensure that the new homes are rebuilt and designed to be as energy-efficient as possible. Through our partnership with Energy Solutions, we will be incorporating new features into the new and refurbished abandoned homes so that the homes are highly efficient for first-time homebuyers, in other words, affordable to buy and affordable to operate and maintain. We are also pleased to be partnering with the Environmental Protection Agency. This partnership provides additional funds to assess and remediate toxins that might be on the property, such as lead, asbestos, or chemicals that might have leached into the soil from illegal dumping. In addition, the EPA is very interested in working with us to develop a Social Impact Bond Tool Kit based on RCF’s Housing Renovation Program and will work on the scope of the Tool Kit this winter. The Tool Kit will allow other communities to easily replicate the model we have created. At this moment, we have two brand new homes that are being completed and one remodel that has just been completed and we hope to have at least one more family in a home this holiday season. |
