That’s why Forterra is bringing our nearly 30 years of expertise negotiating land transactions in wilderness and farms to our cities. Whether it’s open spaces for nature and play, or affordable homes and vibrant, diverse communities, it all begins with land.
In urban real estate, social good often loses out to profit. Realizing that resources were the missing element to impactful projects in the urban space requiring that, we created the Strong Communities Fund, a social investment fund dedicated to keeping our region inclusive and welcoming to all. The Strong Communities Fund, with $10.25M raised in its first round of funding, now allows Forterra to have greater capacity to compete with other buyers in a tense real-estate market. The fund is already helping secure properties for community space, affordable housing and small businesses in areas under intense development pressure.
The fund has attracted angel investors from the tech industry and the support of a wide swath of institutions and individuals. “Land is the most fundamental catalyst to the health of our ecosystems and cities,” remarks Nick Hanauer, co-founder of venture capital firm Second Avenue Partners and another early investor in Amazon. “This private equity fund buys and deploys targeted community real estate to grow neighborhoods into welcoming and affordable places for all. Efforts like this will keep Seattle and Puget Sound from becoming one-class enclaves, diminishing everyone.”
In addition to its strong social return, participants in the Strong Communities Fund will recoup their capital plus a simple 2% preferred return over the fund’s 10-year term. Forterra will be actively working to capitalize additional tranches of the Fund, mindful that $10.25 million only scratches the surface of the need.
“The energy in our local economy is exciting to see,” comments Tom Alberg, co-founder and managing director of Madrona Venture Group and an early investor in Amazon—as well as first investor in the Forterra Strong Communities Fund. “But there’s more to a great community than strong businesses. We also need cultural vitality, meaning a city that provides space and opportunity for people of all kinds. The Strong Communities Fund can help keep the qualities that have always made this place special.”
First Official Fund Investments
Immediately upon closing, part of the equity in the new Strong Community Fund’s was deployed for two high-profile properties. The projects have inspired national media attention from the Wall Street Journal and from the Puget Sound Business Journal.
The first project, in partnership with Africatown Community Land Trust and Homestead Community Land Trust, closed on January 4, 2018. It involves an 8,000 square foot parcel on South Walker Street near Rainier Avenue—an area under particularly acute development strains.
The aim is to build homes that lower-income families, including families of color, can affordably buy—and start stanching a trend The Seattle Times recently headlined “The rise and dramatic fall of King County’s black homeowners”. (In 1970, almost half of King County’s black households owned their home—well above the national average of 42 percent. Today’s rate is 28%, making this the country’s fifth-worst county.)
Land is the most fundamental catalyst to the health of our ecosystems and cities.
The Fund loaned $775,000 for the purchase. “Owning property is the American dream,” asserts Michelle Connor, Forterra’s Vice President of Strategic Enterprises, who brokered the deal. “It’s key to community identity, stability and self-determination. We’re honored to join with the Africatown and Homestead to advance a critically-needed affordable-ownership model that will help more families have a home they can own, love—and build wealth from, like others in our country have done for generations.”
Thanks to the way the project is being structured, new homes will be sold to income-qualified buyers for roughly half what they’d cost in the open market. In exchange, upon selling owners will accept a more modest return, letting the homes will remain affordable to the next generation of income-qualified buyers.
On January 5, 2018 the Fund invested $3M to purchase a motel and surrounding property in Tukwila, a suburban community near SeaTac Airport. The land is on International Boulevard across from the Abu Bakr Islamic Center, the cultural and spiritual center for Puget Sound’s 30,000-strong Somali community—and Forterra’s project partner.
The long-term vision is to help the immigrant community buy the property and build a large affordable housing and mixed-use commercial space. Zoning will allow for a six-story building with a couple hundred apartments.
Short term, the plan is to turn the motel into an international market for a dozens of of refugee- and immigrant-owned micro-enterprises that are facing displacement in this fast-changing community, with other parts of the property serving as start-up housing for just-arrived immigrant and refugee families.
“It’s going to mean a great deal to those of us involved in the Abu Bakr Islamic Center, and to our whole community,” says Tukwila community member Zak Idan. “This property could have so easily been lost to some other less community-oriented purpose. Thankfully, because of Forterra’s know-how and its Strong Community Fund, our community can start to dream a bigger dream.”